| Wed 14 Jun 2006, 14:36 | | Decillion - Reviewed Provisional Results For The Y |
|
DEC
DEC
Decillion - Reviewed Provisional Results For The Year Ended 28 February 2006
Decillion Limited
(Registration number 1998/011692/06)
(Incorporated in the Republic of South Africa)
("Decillion" or "the company" or "the group")
JSE code: DEC & ISIN: ZAE000017612
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006
KEY FEATURES
Diluted headline earnings for the year of 10,2 cents per share as compared
to a diluted headline loss of 66,3 cents for the comparative period;
Headline profit for the year of R16,9 million (2005: headline loss
R109,7 million) comprises:
- a headline profit for the South African operations of R29,0 million;
- a headline loss for the International operations of R12,1 million.
Save for its equity broking operation in London, for which offers have been
received, all operating divisions have been disposed of to conclude the
conversion of Decillion"s assets into cash.
Settlement has been reached with ABSA Bank on the group"s outstanding
exposure in respect of its proprietary trading positions, which have been
taken over by ABSA.
INCOME STATEMENT
year ended 28 February 2006
Reviewed Audited
2006 2005
R000"s R000"s
Revenue 204 429 176 454
Operating income/(loss)
- proprietary returns 35 004 (19 319)
Operating expenses
Fair value provisions,
impairments and write-offs - (74 700)
Other operating expenses (219 205) (192 632)
Operating income/(loss) 20 228 (110 197)
Finance income 4 196 58 151
Finance expense (2 250) (58 364)
Net income/(loss) before disposals 22 174 (110 410)
Disposal of subsidiary undertakings 11 312 2 129
Net income/(loss) after disposals 33 486 (108 281)
Goodwill impaired (16 598) (11 406)
Net income/(loss) before taxation 16 888 (119 687)
Taxation (5 938) 94
Net income/(loss) after taxation 10 950 (119 593)
Attributable to:
Equity holders of the company 10 950 (118 992)
Outside shareholders - (601)
10 950 (119 593)
Determination of headline earnings
Income/(Loss) attributable to
equity holders of the company 10 950 (118 992)
Loss/(Profit) on disposal of
property, plant and equipment 657 (1)
Goodwill impaired 16 598 11 406
Disposal of subsidiary undertakings (11 312) (2 129)
Headline earnings/(loss) 16 893 (109 716)
Weighted number of shares in issue (000"s) 164 913 165 413
Basic earnings/(loss) per share (cents) 6,6 (71,9)
Headline earnings/(loss) per share (cents) 10,2 (66,3)
Diluted weighted number of shares (000"s) 164 913 165 413
Diluted earnings/(loss) per share (cents) 6,6 (71,9)
Diluted headline earnings/(loss)
per share (cents) 10,2 (66,3)
CASH FLOW STATEMENT
year ended 28 February 2006
Reviewed Audited
2006 2005
R000"s R000"s
Operating income/(loss) 20 228 (110 197)
Elimination of non-cash items 151 45 501
(Increase)/Decrease in working capital (32 292) 75 766
Cash flows from operating activities (11 913) 11 070
Finance income 4 196 58 151
Finance expense (2 250) (58 364)
Taxation (paid)/received (3 461) 1 857
Net cash (outflow)/inflow from
operating activities (13 428) 12 714
Cash flows from investing activities
Additions to property, plant and equipment (1 495) (2 064)
Proceeds on disposal of
property, plant and equipment 2 079 19
Additions to goodwill (10 874) (7 425)
Additions to intangible assets - (2 171)
Disposal of investments 24 225 17 672
Net cash inflow on disposal of subsidiaries 11 799 1 967
Net cash inflow from investing activities 25 734 7 998
Cash flows from financing activities
Decrease in long-term liabilities (12 077) -
Purchase of treasury shares (66) (25)
Net cash outflow from financing activities (12 143) (25)
Net increase in cash and cash equivalents 163 20 687
Effects of exchange rate changes 2 598 (4 268)
Cash and cash equivalents at
the beginning of the year 93 929 77 510
Cash and cash equivalents at
the end of the year 96 690 93 929
BALANCE SHEET
as at 28 February 2006
Reviewed Audited
2006 2005
R000"s R000"s
ASSETS
Non-current assets 12 256 45 887
Investments 10 252 32 567
Property, plant and equipment 2 002 6 369
Deferred taxation 2 1 227
Goodwill - 5 724
Current assets 269 347 917 785
Cash 96 690 93 929
Tradable securities 1 248 50 121
Accounts receivable 168 541 771 213
Taxation 2 868 2 522
281 603 963 672
EQUITY AND LIABILITIES
Capital and reserves 47 963 36 461
Share capital 1 649 1 655
Share premium 149 871 149 932
Non-distributable reserves (5 581) (6 200)
Distributable reserves (97 976) (108 926)
Non-current liabilities - 72 077
Long-term liability - 12 077
Tradable securities - 60 000
Current liabilities 233 640 855 134
Accounts payable 177 946 789 341
Tradable securities 53 432 65 126
Taxation 2 262 667
281 603 963 672
Actual number of shares (000") 164 913 165 413
Net asset value per share (cents) 29,1 22,0
Tangible net asset value per share (cents) 29,1 18,6
Diluted number of shares in issue (000") 164 913 165 413
Diluted net asset value per share (cents) 29,1 22,0
Diluted tangible net asset value per share (cents) 29,1 18,6
STATEMENT OF CHANGES IN EQUITY
year ended 28 February 2006
Reviewed Audited
2006 2005
R000"s R000"s
Share capital
Opening balance 1 655 1 655
Treasury shares (6) -
Closing balance 1 649 1 655
Share premium
Opening balance 149 932 149 598
Treasury shares (61) 334
Closing balance 149 871 149 932
Non-distributable reserves
Opening balance (6 200) (8 884)
IFRS 1 - transfer to distributable reserves - 8 984
Restated opening balance (6 200) 100
Transfer to distributable reserves - (100)
Currency translation differences 619 (6 200)
Closing balance (5 581) (6 200)
Distributable reserves
Opening balance (108 926) 18 950
IFRS 1 - transfer from
non-distributable reserves - (8 984)
Restated opening balance (108 926) 9 966
Transfer from non-distributable reserves - 100
Attributable income/(loss) for the year 10 950 (118 992)
Closing balance (97 976) (108 926)
Total shareholders" funds
Opening balance 36 461 161 319
Changes in equity 11 502 (124 858)
Closing balance 47 963 36 461
FINANCIAL REVIEW
Reviewed Audited
28 February 28 February
2006 2005
Income statement
- Net income/(loss) before taxation R"m 16,9 (119,7)
- Headline earnings/(loss) R"m 16,9 (109,7)
- Attributable earnings/(loss) R"m 11,0 (119,0)
- Diluted headline earnings/(loss)
per share cents 10,2 (66,3)
- Diluted earnings/(loss)
per share cents 6,6 (71,9)
- Headline return on average
tangible shareholders"
funds - annualised % 42,9 (129,0)
Capital
- Total share capital and reserves R"m 48,0 36,5
- Tangible share capital
and reserves R"m 48,0 30,7
- Diluted tangible NAV per share
(excl. treasury shares) cents 29,1 18,6
- Diluted tangible NAV per share
(incl. treasury shares) cents 23,5 15,1
- Market capitalisation R"m 18,1 66,2
Share statistics
- Share price cents 11 40
- Number of shares (excl.
treasury shares) million 164,9 165,4
- Number of shares (incl.
treasury shares) million 203,7 203,7
- Diluted number of shares million 164,9 165,4
- Diluted weighted
number of shares million 164,9 165,4
FINANCIAL REVIEW
The group generated a headline income of R16,9 million (2005: headline loss
of R109,7 million) and net profit of R11,0 million (2005: net loss of
R119,0 million) for the year.
Overhead cost structure by year-end has been reduced to support only the
ongoing maintenance and integrity of historical financing transactions and
the wind-down of the remaining structures within the group.
All remaining goodwill on consolidation has been impaired at year-end.
SEGMENTAL ANALYSIS
28 February 28 February
2006 2005
R000"s % R000"s %
Capital Markets (836) (3,8) (79 458) 71,9
Funds Management 16 093 72,6 (3 168) 2,9
Corporate and
Institutional Finance 15 661 70,6 (639) 0,6
Head Office and Investments (8 744) (39,4) (27 145) 24,6
Net income/(loss) before
disposals and goodwill 22 174 100,0 (110 410) 100,0
Onshore 32 685 147,4 (74 658) 67,6
Offshore (10 511) (47,4) (35 752) 32,4
Net income/(loss) before
disposals and goodwill 22 174 100,0 (110 410) 100,0
REVIEW OF OPERATIONS
Capital Markets - local
The division realised a profit before disposals and goodwill of R17,8
million for the year (2005: loss of R45,0 million).
A profit was generated on the settlement and cancellation of all outstanding
proprietary trading positions with counter-parties.
REVIEW OF OPERATIONS
Capital Markets - International
The division incurred a loss before disposals and goodwill of R18,6 million
(2005: loss of R34,4 million).
The group"s bonds broking operation in London was closed down in August 2005
following poor trading conditions in the bond markets and the inability of
the desk to recover from the tragic loss in the Asian tsunami of its key
member. A loss of R13,7 million was incurred for the year. The equity
broking team (Kappa) generated a profit of R0,8 million for the year.
The Swiss broking operation incurred a loss of R5,7 million. This business
was sold after year-end (see below).
Funds Management
The division generated a net profit before disposals and goodwill of R16,1
million (2005: loss of R3,2 million).
The improvement against the previous year is mainly due to the closure of
the smaller hedge funds in the previous year.
All three remaining funds (Big Rock, Headlands and Fairtree) generated a
profit for the year.
Corporate and Institutional Finance
The division generated a profit before disposals and goodwill of R15,6
million (2005: loss of R0,6 million).
The profit for the division was mainly as a result of the advising fees
earned on the closing of a major corporate finance transaction.
Head Office
Head Office loss before disposals and goodwill amounted to R8,8 million
(2005: loss of R27,1 million) and includes cost related to the disposals and
winding-down of the operations.
GROUP RESTRUCTURING AND STRATEGIC INITIATIVES
An outline of the strategic initiatives is as follows:
Before year-end Decillion has concluded the following disposals:
- Decillion Treasury Management Solutions (Proprietary) Limited ("DTMS"), a
subsidiary of the group that conducted the business of foreign exchange
execution and outsourced treasury management services, for a consideration
of R2,3 million; and
- its Agricultural and Commodities broking business ("Agri") for a total
effective net consideration, after settlement of all third party
liabilities, of R26,3 million.
Decillion has signed agreements for the disposal of Decillion Funds
Management ("the DFM disposal") as well as its Swiss international broking
operation ("the International disposal"), which transactions are in the
process of being closed and implemented. Save for its equity broking
operation in London, for which offers have been received, these disposals
conclude the conversion of Decillion"s assets into cash.
Settlement has been reached with ABSA Bank ("ABSA") on the group"s
outstanding exposure on the two ring-fenced special purpose vehicles that
were created to address the difference in valuation between the group"s
long-dated structured finance swaps (Decab I) and the cross-currency swaps
(Decab II). The settlement amount has been paid after year-end and almost
all trading positions were taken over by ABSA.
All other forms of proprietary trading have been discontinued.
Irrevocable undertakings in respect of all the disposals have been received
from shareholders holding more than 50% of the voting rights exercisable at
the general meeting to be convened.
A detailed announcement containing details of the Agri disposal, the DFM
disposal and the International disposal (collectively, "the disposals"), as
well as any further contemplated corporate actions, will be made as soon as
possible. The announcement will also deal with the cost structure that will
be required for the ongoing maintenance and integrity of historical
financing transactions and the wind-down of the remaining structures within
the group. The announcement will be followed by a combined circular to
Decillion shareholders and notice of a general meeting to be convened for
purposes of obtaining the required shareholder approval for the disposals.
DISPOSALS
Disposals comprise the profit on the disposal of the operating entities
following the strategy of the group to convert its assets into cash.
ACCOUNTING POLICIES
The group changed its reporting framework from Generally Accepted Accounting
Practice (GAAP) to International Financial Reporting Standards ("IFRS") as
required by the Listings Requirements of the JSE Limited. Being a first-time
adopter of IFRS for the 2006 financial year, the group"s date of transition to
IFRS is 1 March 2004. The group"s opening balance sheet on 1 March 2004 and
the comparative information for 2005 have been restated to comply with IFRS.
The following elections are made in accordance with IFRS 1:
Business Combinations: The group is electing not to retrospectively apply
the requirements of IFRS 3 for business combinations that occurred prior to
the transitional date. As a result, the carrying amount of goodwill is the
depreciated amount on 29 February 2004 and previously amortised and impaired
goodwill, and goodwill eliminated against reserves, are not reinstated.
Cumulative Translation Differences: The group is electing to deem the
cumulative translation differences for all foreign operations to be zero at
1 March 2004. Any gain or loss on a subsequent disposal of any foreign
operation shall exclude translation differences that arose before 1 March
2004 and shall include later translation differences.
REVIEWED RESULTS
The unqualified review opinion of Decillion"s auditors, PKF (Jhb) Inc,
Chartered Accountants (SA), on the provisional results is available for
inspection at Decillion"s registered office.
By order of the Board
14 June 2006
Directors
J F Marais* (Chairman), A J N Smit, Dr M Mostert, Prof N I Morgan*, J
Molobela* (*non-executive)
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
Registered office
5th Floor, Jowell Glyn & Marais House, 72 Grayston Drive, Sandton, 2196
Company registration
Decillion Limited
(Registration number 1998/011692/06)
(Incorporated in the Republic of South Africa)
("Decillion" or "the company" or "the group")
JSE code: DEC & ISIN: ZAE000017612
Date: 14/06/2006 02:36:16 PM Produced by the JSE SENS Department
