| Fri 20 Oct 2006, 16:10 | | Cyberhost - Audited Results: 14 Months ended 31 Au |
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CYB
CYB
Cyberhost - Audited Results: 14 Months ended 31 August 2006 and Acquisitions
CYBERHOST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013649/06)
Share code: CYB & ISIN Code: ZAE000017471
("Cyberhost" or "company")
AUDITED RESULTS FOR THE 14 MONTHS ENDED 31 AUGUST 2006 AND THE ACQUISITIONS OF
THE OPEN PLAN IT PLATFORM ("OPEN PLAN") AND CERTAIN BRANDS ("THE TOP RESTAURANTS
BRANDS") FROM TOP RESTAURANTS HOLDINGS (PTY) LTD ("TOP RESTAURANTS")
Balance Sheets
Audited Reviewed Unaudited Audited
31 August 30 June 31 30 June
2006 2006 December 2005
R"000 R"000 2005 R"000
R"000
ASSETS
Non-current assets 3 712 179 66 81
Plant, equipment and 1 1 1 1
vehicles
Intangible asset 150 150 --
Long-term receivable 28 28 65 80
Deferred tax 3 533 -- --
Current assets 243 215 112 108
Accounts receivable trade 231 203 106 100
and other
Cash resources 12 12 6 8
Total assets 3 955 394 178 189
EQUITY AND LIABILITIES
Capital and reserves 3 546 (94) (140) (145)
Shareholders" funds 3 546 (94) (140) (145)
Non-current liabilities 210 210 210 210
Long-term liabilities 210 210 210 210
Current liabilities 199 278 108 124
Accounts payable and 199 278 108 124
provisions
Total equity and liabilities 3 955 394 178 189
Net asset value per share
information
Ordinary shares in issue at 101 388 101 388 101 388 101 388
period end (000"s)
Net asset value per share 3.50 (0.09) (0.14) (0.14)
(cents)
Net tangible asset value per 3.35 (0.24) (0.14) (0.14)
share (cents)
Income Statements
Audited Reviewed Unaudited Audited
14 months 12 months 6 months year
ended ended ended ended
31 August 30 June 31 30 June
2006 2006 December 2005
R"000 2005
R"000 R"000
R"000
Revenue 209 73 5 70
Cost of sales -- -- -- 2
Gross profit 209 73 5 68
Operating expenses (52) (23) (1) (8)
Operating profit 157 50 4 60
Other income -- -- -- 43
Finance cost -- -- -- --
Net profit from activities 157 50 4 103
before tax
Taxation 3 534 -- -- --
Net profit from activities 3 691 50 4 103
after tax
Headline earnings for the 3 691 50 4 103
period
Earnings per share
information
Weighted average shares in 101 388 101 388 101 388 101 388
issue (000"s)
Attributable earnings per 3.64 0.05 0.01 0.10
ordinary share (cents)
Headline earnings/(loss) per 3.64 0.05 0.01 0.10
share (cents)
Abridged Cash Flow Statements
Audited Reviewed Unaudited Audited
31 August 30 June 31 30 June
2006 2006 December 2005
R"000 R"000 2005 R"000
R"000
Net cash inflow/(outflow) 102 (48) (16) (6)
from operating activities
Net cash outflow from (150) -- -- --
investing activities
Net cash inflow from 52 52 15 --
financing activities
Net increase/(decrease) in 4 4 (1) (6)
cash and cash equivalents
Cash and cash equivalents at 8 8 8 14
beginning of period
Cash and cash equivalents at 12 12 7 8
end of period
Statement of Changes in Equity
Share Share Accumulated Total
Capital premium loss R"000
R"000 R"000 R"000
Balance at 1 July 2004 101 20 481 (20 830) (248)
Profit for the year -- -- 103 103
Balance at 1 July 2005 101 20 481 (20 727) (145)
Profit for the 14 month -- -- 3 691 3 691
period
Balance at 31 August 101 20 481 (17 036) 3 546
2006
COMMENTARY
The directors of Cyberhost are pleased to present the audited results for the 14
months ended 31 August 2006 and the reviewed results for the 12 months ended 30
June 2006. The accounting policies adopted for purposes of this report comply,
and have been consistently applied in all material respects, with International
Financial Reporting Standards. The same accounting policies and methods of
computation have been followed as compared to the prior year. The IFRS
transition date of the company is 01 July 2005 and no adjustments to the results
of the prior period are required. The results for the 14 month and 12 month
periods have been audited, and reviewed respectively, by Horwath Lubbes
Chartered Accountants and the detailed financial statements and unqualified
audit and review reports are available at the registered office of the company.
Previous announcement
On 29 November 2004, the company entered into an agreement to acquire the shares
in Top Restaurants, a restaurant holding subsidiary of Queensgate Leisure
Holdings ("Queensgate"), and it"s IT Platform.
Following a presentation to the Alternative Exchange ("AltX") advisory
committee, the Cyberhost directors, in conjunction with the directors of
Queensgate, have reviewed their vision regarding the future activities of the
company and taking into account certain points raised by the AltX advisory
committee, decided to change their business model, hence the delay and
restructuring of the proposition to Cyberhost.
The directors have accordingly decided to cancel the previous proposed
transaction Top Restaurants and on 21 August 2006, entered into an agreement to
acquire the Open Plan IT platform and certain brands from Top Restaurants,
effective 1 September 2006. The revised business plan has been presented to the
JSE Committee and formal approval to proceed with a circular to shareholders has
been received. Shareholders are referred to the acquisition announcement below.
Results
Cyberhost"s operations are focussed on software, information technology,
communications, web hosting and internet connectivity. During the period under
review, the company entered into a distribution agreement with Top Restaurants
for the web-based integrated Open Plan restaurant management system in
anticipation of entering into formal agreements with Queensgate and Top
Restaurants.
This has resulted in the company realising a profit during the period under
review. Due to the poor performance and financial position of the company over
the last few years, the company has not previously been able to raise deferred
tax on their assessable losses. As a result of the revenue earned from the
distribution agreement during the year under review and the acquisitions
announced in the acquisition announcement below, the company has returned to
financial stability and profitability. This enabled the company to raise a
deferred taxation asset as at 31 August 2006, which has had a once-off large
positive impact on the earnings of Cyberhost.
The results for the 14 months ended 31 August 2006 reflect attributable and
headline earnings of 3.64 cents per share (2005: 0.10 cents per share).
Changes in directors
V Stoliarov was removed from the board on 11 July 2005. LM Wright was appointed
to the board on 19 November 2005.
Subsequent events
On 21 August 2006, the company entered into an agreement to acquire the Open
Plan IT Platform and certain brands from Top Restaurants, effective 01 September
2006. Shareholders are referred to the acquisition announcement below.
Dividends
No dividend has been declared for the 14 months ended 31 August 2006.
ACQUISITION ANNOUNCEMENT
Introduction
Following the signing of agreements dated 21 August 2006, the board of directors
of Cyberhost are pleased to announce the acquisition by Cyberhost of the Open
Plan IT platform and certain Brands from Top Restaurants with effect from 01
September 2006, subject to the conditions precedent set out in paragraph 4
below. Following the signing of the agreements, as the acquisitions will
constitute a reverse listing; the company was required to submit a detailed
business plan and projections to the JSE Limited. The agreements were subject
to the JSE providing permission to proceed with the reverse listing application
and accordingly the announcement is now being made following such approval being
received.
The Open Plan IT platform is a web-based, real-time, complete management
information and control system that integrates back office information with the
point-of-sale systems. The system allows management to draw down into the
information of each restaurant, anywhere in the world through the internet.
This software will be hosted to the restaurant industry. The purchase
consideration for the Open Plan IT platform is R2 000 000 which will be paid by
the issue of 189 311 792 ordinary shares at 1,06 cents each to Top Restaurants.
No intangible assets are included in the purchase price of R2 000 000, which
will be allocated to fixed assets - software.
In addition, with effect from 01 September 2006, Cyberhost has acquired
restaurant brands from Top Restaurants including The Famous Butchers Grill,
Upstairs Asian Fusion, Amici"s and The Cape Fish Company. The purchase price of
the Top Restaurants Brands is R13 000 000 to be settled by the issue of 170 000
000 ordinary shares to Vendor at an issue price of 7.64 cents each. The full
purchase price of R13 000 000 relates to intangible assets.
Warranties
Queensgate, the controlling shareholder in Top Restaurants, has warranted profit
before taxation from the assets being acquired (before any non-cash flow
adjustments which might be required in terms of IFRS) of R2 million for the year
ending 31 August 2007 in relation to the Open Plan acquisition and has warranted
profit before taxation of R4 million for the year ending 31 August 2008, on a
similar basis, relating to the business operations from the combined
acquisitions. Queensgate also owns shares in other leisure assets such as the
Radisson Hotel at the Waterfront in Cape Town, Park Inn on Greenmarket Square
and Tinga Lodge in the Kruger National Park.
Rationale for the acquisitions
The rationale for the acquisitions of Open Plan and the Top Restaurants Brands
is to create a captive client base for the internet and web-hosting products of
Cyberhost and to deliver a superior product and service to its intended client
base. In addition, the company plans to diversify its operations into other
sectors in the leisure industry, which is seen by the directors as a growth
industry in South Africa. Cyberhost already holds the distribution license for
Open Plan.
Neither Queensgate not Top Restaurants currently hold shares in Cyberhost and
are not related parties. After the implementation of the acquisitions,
Queensgate, will hold an effective 71.8% shareholding in Cyberhost and thus be
the controlling shareholder of Cyberhost. The Open Plan IT platform is an
integral part of the strategy forward to expand the Top Restaurants brands.
Queensgate"s intention is to house all its restaurant brands and its Open Plan
IT Platform within Cyberhost in order to create a branded restaurant package on
a franchise basis that is IT driven.
Financial Effects of the acquisitions
The table below summarises the pro forma financial effects of the acquisitions
of Open Plan and the Top Restaurants Brands on the audited results of Cyberhost
as published in this announcement for the 14 months ended 31 August 2006. Open
Plan and the Top Restaurants Brands acquired have not been operated as a
separate identifiable business unit before 01 September 2006 and accordingly no
revenue or related costs, other than those noted below, have been assumed for
purposes of the financial effects on the earnings for the 14 months ended 31
August 2006. The financial effects on the net asset value have been based on
the value as though the acquisition occurred as at 31 August 2006. The pro
forma financial effects is the responsibility of the directors, have been
prepared for illustrative purposes only and due to their nature, may not give a
fair reflection of the balance sheet, statement of changes in equity, results of
operations or cash flow of Cyberhost after the acquisitions.
Published Pro forma Percentage Pro forma Percentage
31 August after A(2) change after change
2006 A and B(3)
Before(1) (%) (%)
Attributable and 3.64 1.064 (71)% 0.704 (81)%
headline earnings
per share (cents)
Net asset value 3.50 1.62 (54)% 3.67 5%
(cents)
Tangible net 3.35 1.57 (53)% 1.04 (69)%
asset value per
share (cents)
Weighted average 101 388 330 000 225% 500 000 393%
shares in issue
(`000)8
Shares in issue 101 388 330 000 225% 500 000 393%
at year end
(`000)
Notes:
1. The Before column is based on the audited financial information as
published by Cyberhost for the period ended 31 August 2006.
2. "After A" shows the effect of the issue of shares for the acquisition
of Open Plan.
3. "After A and B" shows the combined effect of the issue of shares for
Open Plan and the brands.
4. Open Plan and the brands acquired have not been operated as a separate
identifiable business unit before 01 September 2006 and accordingly no
income has been assumed for purposes of the financial effects. No
amortisation or impairment of intangibles has been assumed, because
the company has decided to fair value its intangible assets at the end
of each financial period in terms of IFRS.
5. The transaction costs of R793 000 will be written off against share
premium and will be settled primarily through shares issued in
relation to the acquisitions.
6. No goodwill will arise from the acquisitions; the purchase price will
comprise tangible assets of R2 000 000 and intangible assets of R13
000 000.
7. Depreciation on the IT platform has been provided for over 7 years.
8. The shares for the acquisitions are assumed to be in issue for the
full period.
Conditions precedent
The acquisitions are subject to the normal conditions precedent that would be
applicable to transactions of this nature, which conditions comprise the
approval of the JSE, the Securities Regulation Panel and the Cyberhost
shareholders in a general meeting.
Lifting of suspension of trade in securities
Shareholders are advised that approval of the acquisition will result in a
change of control and application will be made to the SRP for the waiver of an
offer to minority shareholders. In addition, shareholders are advised that the
transaction will constitute a reverse listing, which is subject to the approval
of the JSE. Application will be made for the lifting of the suspension of trade
in the company"s securities; however shareholders are advised that this will be
at the discretion of the JSE.
Documentation
A circular containing full details of the acquisitions, the change in control,
revised listing particulars and a notice of general meeting of Cyberhost
shareholders is in the process of being prepared and will be posted to
shareholders within 28 days of this announcement.
By order of the Board
Colin Human
Chairman
19 October 2006
Johannesburg
Company Secretary and Registered Office
Arcay Client Support (Pty) Ltd (Registration number 1998/025284/07)
Arcay House, Number 3 Anerley Road, Parktown, 2193 (PO Box 62397, Marshalltown,
2107)
Directors
JC Human Chairman*, MH Weetman, MS Langman*, LM Wright*
(*Non-executive)
Sponsor
Arcay Corporate Services
Transfer Office
Computershare Investor Services 2004 (Pty) Limited
Date: 20/10/2006 04:10:13 PM Produced by the JSE SENS Department
