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DECILLION LIMITED - AUDITED ABRIDGED RESULTS FOR THE 14 MONTHS ENDED 29 FEBRUARY
2004
DECILLION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/011692/06)
Share code: DEC
ISIN: ZAE000017612
(`Decillion` or `the company`)
AUDITED ABRIDGED RESULTS FOR THE 14 MONTHS ENDED 29 FEBRUARY 2004
The company published its reviewed provisional results for the 14 months ended
29 February 2004 on 28 May 2004 and will distribute its annual report to
shareholders of the company on 31 August 2004. The annual report contains
disclosure modifications to the aforementioned published provisional results.
Operating and attributable results, and net asset value are not affected by
these modifications.
FINANCIAL RATIOS
Audited Restated
14 months 12 months
29 Feb 2004 31 Dec 2002
Income statement
- Headline earnings R`m 22,6 34,2
- Attributable R`m (72,6) 22,4
(loss)/earnings
- Diluted headline cents 14,0 17,6
earnings per share
- Diluted (loss)/earnings cents (44,9) 11,5
per share
Selected ratios
- Headline return on % 11,7 13,2
tangible average
shareholders` funds
- Cost to income ratio % 93,3 93,1
Capital
- Total share capital and R`m 161,3 335,8
reserves
- Tangible share capital R`m 139,4 248,9
and reserves
- Diluted tangible NAV cents 84,2 135,6
per share
- Market capitalisation R`m 140,6 172,4
Share statistics
- Share price cents 85 105
- Number of shares million 165,5 164,2
- Diluted number of million 165,5 183,5
shares
- Diluted weighted number million 161,5 193,9
of shares
- Diluted headline price times 6,1 6,0
earnings ratio
(historical)
ABRIDGED SEGMENTAL ANALYSIS
Audited Restated
14 months to 12 months(*)
29 Feb 2004 31 Dec 2002
R000`s % R000`s %
Capital markets (5 293) (20,1) (7 439) (21,4)
Funds management 14 243 54,2 10 120 29,1
Corporate and 16 614 63,2 41 372 119,1
Institutional
Finance
Head office and 706 2,7 (9 311) (26,8)
investments
Net income before 26 270 100,0 34 742 100,0
disposals
Onshore 8 529 32,5 29 811 85,8
Offshore 17 741 67,5 4 931 14,2
Net income before 26 270 100,0 34 742 100,0
disposals
(*) restated for new divisional structure and goodwill adjustment
ABRIDGED INCOME STATEMENT
14 months ended 29 February 2004
Audited Restated
14 Months to 12 Months to
29 Feb 04 31 Dec 02
R000`s R000`s
Revenue 376 067 413 931
Operating income: Proprietary 7 307 33 507
returns
Operating expenses (357 853) (416 673)
Operating income 25 521 30 765
Finance income 59 574 67 291
Finance expense (58 825) (63 314)
Net income before disposals 26 270 34 742
Disposals (3 721) -
Net income after disposals 22 549 34 742
Goodwill amortised, impaired (91 282) (11 832)
and change in estimate
Net (loss)/income before tax (68 733) 22 910
Taxation (2 709) (2 478)
Net (loss)/income after tax (71 442) 20 432
Attributable to outside (1 121) 1 928
shareholders
Attributable (loss)/income (72 563) 22 360
Weighted number of shares in 161 539 174 498
issue (`000)
Basic (loss)/earnings per share (44,9) 12,8
(cents)
Basic headline earnings per 14,0 19,6
share (cents)
Diluted weighted number of 161 539 193 872
shares (`000)
Diluted (loss)/earnings per (44,9) 11,5
share (cents)
Diluted headline earnings per 14,0 17,6
share (cents)
Reconciliation of headline
earnings
Attributable (loss)/income (72 563) 22 360
Loss on disposal of property, 180 -
plant and equipment
Disposals 3 721 -
Goodwill impaired and amortised 91 282 11 832
Headline earnings 22 620 34 192
ABRIDGED CASH FLOW STATEMENT
14 months ended 29 February 2004
Audited Restated
14 Months to 12 months to
29 Feb 04 31 Dec 02
R000`s R000`s
Operating income before 25 521 30 765
interest
Elimination of non-cash items 12 814 23 936
Increase in working capital (53 703) (51 128)
Cash flows from operating (15 368) 3 573
activities
Finance income 59 574 67 291
Finance expense (58 825) (63 314)
Dividends paid (4 875) (2 375)
Taxation paid (8 902) (10 953)
Net cash outflow from operating (28 396) (5 778)
activities
Cash flows from investing
activities
Additions to property, plant (7 192) (6 812)
and equipment
Additions to goodwill (15 975) (11 189)
Additions to intangibles (11 089) (3 024)
Disposals of investments 29 783 25 616
Disposal of subsidiaries 189 -
Net cash (outflow)/inflow from (4 284) 4 591
investing activities
Cash flows from financing
activities
Increase in long-term 5 849 38 737
liabilities
Movement in treasury shares (8 191) (24 805)
Net cash (outflow)/inflow from (2 342) 13 932
financing activities
Net (decrease)/increase in cash (35 022) 12 745
and cash equivalents
Effects of exchange rate (9 543) (14 605)
changes
Cash and cash equivalents at 122 075 123 935
the beginning of the period
Cash and cash equivalents at 77 510 122 075
the end of the period
ABRIDGED BALANCE SHEET
as at 29 February 2004
Audited Restated
29 Feb 04 31 Dec 02
R000`s R000`s
ASSETS
Non-current assets 195 710 307 069
Investments 164 307 212 097
Property, plant and equipment 8 477 7 988
Deferred taxation 1 002 -
Goodwill 9 705 82 831
Intangible assets 12 219 4 153
Current assets 1 606 833 496 183
Cash 86 510 132 075
Tradable securities 53 989 53 110
Accounts receivable 1 458 661 309 023
Taxation 7 673 1 975
1 802 543 803 252
LIABILITIES AND EQUITY
Non-current liabilities 24 153 96 029
Long-term liability 24 153 92 643
Deferred taxation - 3 386
Current liabilities 1 616 470 370 884
Accounts payable 1 507 666 321 188
Tradable securities 96 031 39 696
Taxation 3 773 -
Bank overdraft 9 000 10 000
Capital and reserves
Share capital 1 655 1 642
Share premium 149 598 147 325
Non-distributable reserves (8 884) 13 490
Distributable reserves 18 950 173 381
Total shareholders` funds 161 319 335 838
Outside shareholders` interest 601 501
161 920 336 339
1 802 543 803 252
Actual number of shares (`000) 165 463 164 197
Net asset value per share (cents) 97,5 204,5
Tangible net asset value per 84,2 151,6
share (cents)
Diluted number of shares in issue 165 463 183 480
(`000)
Diluted net asset value per share 97,5 183,0
(cents)
Diluted tangible net asset value 84,2 135,6
per share (cents)
ABRIDGED STATEMENT OF CHANGES IN EQUITY
14 months ended 29 February 2004
Audited Restated
14 Months 12 Months
to to
29 Feb 04 31 Dec 02
R000`s R000`s
Share capital
Opening balance 1 642 1 745
Shares issued net of expenses - 93
Treasury shares 13 (196)
Closing balance 1 655 1 642
Share premium
Opening balance 147 325 161 753
Shares issued net of expenses - 7 948
Treasury shares 2 273 (22 376)
Closing balance 149 598 147 325
Non-distributable reserves
Opening balance as previously 13 490 34 512
stated
Restatement of prior year - 674
goodwill
Restated opening balance 13 490 35 186
Transfer (to)/from distributable (600) 500
reserves
Currency translation differences (21 774) (22 196)
Closing balance (8 884) 13 490
Distributable reserves
Opening balance as previously 173 381 167 872
stated
Restatement of prior year - (6 016)
goodwill
AC133 transitional adjustment (77 593) -
Restated opening balance 95 788 161 856
Dividends paid (4 875) (2 294)
Share capitalisation issue - (8 041)
Transfer from/(to) non- 600 (500)
distributable reserves
Attributable (loss)/income for (72 563) 22 360
the period
Closing balance 18 950 173 381
Total shareholders` funds
Opening balance 335 838 365 882
Changes in equity (174 519) (30 044)
Closing balance 161 319 335 838
AC133 ADJUSTMENT
The introduction of AC133 resulted in the group adopting a market quotation base
of measurement on all its trading portfolios. The effect of the revised
valuation methodology is a downward adjustment of R77,6 million against the
opening balance of retained income, in accordance with the transitional
provisions of AC133. The R77,6 million includes an adjustment of R26,2 million
announced in the first interim results in June 2003 and a final R51,4 million
adjustment made at period end. The adjustment of R26,2 million represented the
conversion to a full mark-to-market valuation of all trading positions other
than five specifically structured and long-dated interest rate swaps, maturing
between September 2008 and June 2016. As provided for in terms of AC133, a mark-
to-model approach was applied in the group`s interim financial results in the
valuation of these five transactions as the market for these swaps is not well
established.
Subsequent to the financial period end, Decillion has entered into an agreement
with its counter party to these swaps in terms of which these transactions,
together with supporting hedges, will be ring-fenced and managed until maturity
in an SPV on the mark-to-model basis as previously applied in the valuation of
these transactions. The SPV will continue to be consolidated by the group in
terms of AC412 (Consolidations - Special purpose entities). Notwithstanding the
contractual agreement with regard to the valuation of these swaps, the Audit
Committee has recommended, and the Board has approved, the application of a mark
to-market approach in accordance with AC133 on these specific contracts for its
financial period ended 29 February 2004, for reasons of prudence and consistency
in future reporting. Although this approach resulted in a further adjustment of
R51,4 million against the group`s opening retained income, it will have no cash
flow impact on the group.
The income statement for the period includes the impact of the implementation of
AC133 on the trading portfolio since 31 December 2002.
GOODWILL AMORTISED, IMPAIRED AND WRITTEN OFF
An impairment of goodwill was taken as a result of a more conservative view
adopted as previously announced. The table below provides a breakdown of
goodwill amortised on the previous basis, goodwill amortised due to a change in
estimate, goodwill impaired and goodwill written off on disposal.
2004
Description R million
Goodwill impaired 46,2
Change in estimate 27,3
Normal amortisation 17,8
91,3
The remaining goodwill in the balance sheet as at 29 February 2004 will be
amortised over the next two financial years.
RESTATEMENTS
The table below provides a detailed breakdown of the effect of the following
restatements on the 2002 financial statements:
Reallocations
In the financial year ended 31 December 2002, the group disclosed goodwill as
part of intangible assets. During the current period goodwill is disclosed
separately on the balance sheet. The group also disclosed its proprietary
return income as revenue. During the current period it is disclosed separately
as other income on the income statement.
Legal costs
In the financial year ended 31 December 2001 and 31 December 2002, the group
capitalised as goodwill certain legal costs related to claims pending at the
time of the acquisition of the International broking business, which was
acquired during the financial year ended 31 December 1999. As a result of a
revision of this accounting treatment, the group concluded that these amounts
should have been expensed when incurred and have as a consequence restated prior
periods.
Finance income/(expense)
In the financial year ended 31 December 2002, the group netted off its finance
income and finance expenses on its scrip lending activities. It also netted off
the finance expenses on its promissory note against its preference dividends
received. As a result of a revision of this accounting treatment, the group
concluded that it is more appropriate to disclose the finance income and
expenses on a grossed-up basis in the financial statements.
Cash flow
The cash flow statement has been restated to reflect the effect of exchange
differences line by line.
Audited Restated
12 months to 12 months to
31 Dec 02 Restatement 31 Dec 02
R000`s R000`s R000`s
Income Statement
Revenue 447 438 (33 507) 413 931
Operating income: - 33 507 33 507
Proprietary
returns
Operating expenses (413 522) (3 151) (416 673)
Finance income 27 610 39 681 67 291
Finance expense (23 633) (39 681) (63 314)
Goodwill (12 777) 945 (11 832)
amortised,
impaired and
change in estimate
Attributable 24 566 (2 206) 22 360
income
Headline earnings 37 343 (3 151) 34 192
Basic earnings per 14,1 (1,3) 12,8
share (cents)
Basic headline 21,4 (1,8) 19,6
earnings per share
(cents)
Diluted earnings 12,7 (1,2) 11,5
per share (cents)
Diluted headline 19,3 (1,7) 17,6
earnings per share
(cents)
Balance Sheet
Goodwill - 82 831 82 831
Intangible assets 93 599 (89 446) 4 153
Non-distributable 11 883 1 607 13 490
reserves
Distributable 181 603 (8 222) 173 381
reserves
Net asset value 208,6 (4,1) 204,5
per share (cents)
Diluted net asset 186,6 (3,6) 183,0
value per share
(cents)
Cash flow
Statement
Operating income 33 916 (3 151) 30 765
before interest
Eliminations of 21 932 2 004 23 936
non-cash items
Increase in (65 772) 14 644 (51 128)
working capital
Finance income 27 610 39 681 67 291
Finance expense (23 633) (39 681) (63 314)
Net interest 3 977 - 3 977
received/(paid)
Taxation paid (10 926) (27) (10 953)
Additions to (3 343) (3 469) (6 812)
property, plant
and equipment
Additions to - (11 189) (11 189)
goodwill
Additions to (18 665) 15 641 (3 024)
intangibles
Disposal of 23 158 2 458 25 616
investments
Increase in long- 38 810 (73) 38 737
term liabilities
Purchase of (22 572) (2 233) (24 805)
treasury shares
Effects of - (14 605) (14 605)
exchange rates
ACCOUNTING POLICIES
Accounting policies adopted for purposes of this reporting period comply with
South African Statements of Generally Accepted Accounting Practice as well as
with applicable legislation. Other than the implementation of AC133, the
accounting policies are consistent with those adopted in the prior financial
year.
AUDITORS REPORT
These results have been audited by Decillion`s external auditors, Deloitte &
Touche, Chartered Accountants (SA), and their unqualified audit opinion is
available for inspection at the company`s registered office.
NOTICE OF ANNUAL GENERAL MEETING
The annual general meeting of the members of Decillion will be held at 10h00 on
29 September 2004 at the company`s registered office, 1st Floor ABN AMRO House,
No. 2 Exchange Square, 85 Maude Street, Sandton, 2196, to transact the business
as stated in the notice of annual general meeting included in the annual report.
By order of the Board
31 August 2004
Directors: AJN Smit (CEO), JF Marais* (Chairman), TJ Davis, Dr M Mostert, WF
Spruyt*, Prof NI Morgan*, J Molobela* (*non-executive)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg, 2001
Registered Office: 1st Floor, ABN AMRO House, 2 Exchange Square, 85 Maude
Street, Sandton, 2196
Telephone: +27 11 217 9000 Facsimile: +27 11 883 0165
Company Secretary: Laurinda da Camara e-mail: laurindad@decillion.net
Results on internet: www.decillion.net
Date: 31/08/2004 04:12:30 PM
Produced by the JSE SENS Department
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