| Mon 2 Apr 2001, 0:00 | | Ec-hold - Audited Group Results |
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EC-Hold Limited
Registration number 1998/020093/06
("EC-Hold" or "the company")
Audited group results
for the sixteen months ended 31 December 2000
Consolidated income statement
Audited Audited
16 months to year to
31 December 31 August
2000 1999
R'000 R'000
Revenue 72 439 27 221
Operating (loss)/income before depreciation (3 752) 7 962
Depreciation (1 072) (369)
Operating (loss)/income (4 824) 7 593
Net finance income 3 126 1 961
Net (loss)/income before taxation (1 698) 9 554
Taxation (490) 1 536
Net (loss)/income for the year (1 208) 8 018
Share of profits of associates 196
Outside shareholders' interest (239)
(Loss)/income attributable to
ordinary shareholders (1 208) 7 975
Weighted average number of ordinary shares
in issue (thousands) 104 040 60 767
Headline earnings per ordinary share (cents) (1,2) 13,1
Earnings per ordinary share (cents) (1,2) 13,1
Summarised consolidated balance sheet
Audited Audited
31 December 31 August
2000 1999
R'000 R'000
Assets
Non-current assets 34 007 29 797
Fixed assets 1 397 1 347
Research and development 3 669
Deferred tax 28 658 28 254
Financial assets 283 196
Current assets 52 351 68 635
Cash resources 26 990 46 242
Other current assets 25 361 22 393
Total assets 86 358 98 432
Equity and liabilities
Shareholders' equity 48 087 68 629
Vendor loan 7 600 9 600
Non-current liabilities:
Interest bearing 8 018 6 970
Current liabilities 22 653 13 233
Total equity and liabilities 86 358 98 432
Number of ordinary shares in
issue (thousands) 104 040 104 000
Net tangible asset value per
ordinary share (cents) 14,9 38,6
Summarised consolidated cash flow statement
Audited Audited
16 months to Year to
31 December 31 August
2000 1999
R'000 R'000
Cash generated from operations
before working capital changes (3 104) 7 953
Working capital changes 6 537 (6 906)
Net finance income 3 126 1 960
Cash flow from operating activities 6 559 3 007
Cash flow from investing activities (24 959) (5 259)
Cash flow from financing activities (852) 48 494
Net (decrease)/increase in cash and
cash equivalents (19 252) 46 242
Cash and cash equivalents at the
beginning of the period 46 242
Cash and cash equivalents at the end
of the period 26 990 46 242
Statement of changes in equity
Non-Outside
Distri- distri- share-
Share Share butable butable holders'
capital premium reserve reserve interest Total
Balance 1 September 1999 1 040 30 452 7 975 28 923 239 68 629
Net loss for the period (1 208) (1 208)
Issue of share capital 100 100
Intangibles written off (19 434) (19 434)
Balance 31 December
2000 1 040 11 118 6 767 28 923 239 48 087
Commentary
Operational review
The net loss of R1,2 million for the 16 months ended 31December 2000 reflects
the difficult trading conditions for the period, as well the development costs
of new technologies and skills. Shareholders were advised that short-term
profitability would be negatively impacted by these development costs.
Most of the people that were employed by the original EC-Hold business at the
time of listing, including the two founding executive directors, are no longer
with the company. Appropriate management is now in place and the trading
operations of the company have been restored to a satisfactory level of
profitability.
Exsol has invested in adapting and realigning its product offering to meet
broader customer requirements. A number of large projects started towards the
end of the year and the business is now trading profitably.
The ISA Network Security division experienced market changes in line with
global trends. These required it to refocus its business away from products to
consultancy and services. The South African market has not yet recognised the
importance of network security to the same degree as other more developed
markets. ISA is expected to be profitable for the year.
Barlows and EC-Botswana both traded profitably and are expected to show
meaningful growth.
The group changed its accounting policy for deferred taxation in order to
comply with the revised AC 102. The comparatives have been amended accordingly.
Investments
During the period, a 16% interest in Correlate was acquired for R12,1 million.
Correlate develops knowledge management technologies. A 22,5% interest in
Intervate was also acquired for R5 million. Intervate develops products for
intranet and knowledge management applications. Both of these investments, as
well as the investment in Connect One, are performing in line with expectations
Funding in the venture capital sector has become restrictive and EC-Hold will
be required to fund these investments for the foreseeable future.
Goodwill attributable to the above investments has been set off against the
share premium account.
Offer to shareholders of EC-Hold
In September 2000, MGX Holdings Limited (MGX), announced its intention to make
an offer of R1 per share for 100% of EC-Hold. Following a complaint led by the
two founding directors of EC-Hold, the Securities Regulation Panel is
investigating an allegation of concert party purchases of EC-Hold shares by
MGX. The board of MGX advised its shareholders that it refutes this allegation
and is defending it vigorously. The result of the above is that MGX's offer to
EC-Hold shareholders has lapsed. MGX subsequently advised that, providing the
allegations are declared groundless, and subject to any statutory requirement
that may exist, MGX will in due course decide whether it will proceed with any
offer to EC-Hold shareholders, whether it will retain its current investment in
EC-Hold, reduce it, or unbundle it to its shareholders.
Prospects
EC-Hold has adequate cash resources and its trade investments are expected to
provide satisfactory returns over the medium term. The trading divisions now
have appropriate strategies in place and are expected to show above average
growth in profits in the future.
Directors
During the period D E Herdan, J E Ziniades and ARLeng resigned from the Board.
Subsequent to year-end SCohen, R S Price and C S Hills resigned from the Board
and R D Shirley was appointed to the Board as a non-executive director.
Amir Lubashevsky, Chief executive officer
Tzvi Appel, Director
2 April 2001
Directors
A Lubashevsky, T H Appel, R Brickhill, RShirley*
* Non-executive
