| Wed 2 May 2001, 0:00 | | Paradigm - Results |
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Paradigm Capital Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/012038/06)
("Paradigm" or "the company" or "the Group")
Interim Report for the six months TO 31 December 2000
SUMMARISED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Dec. 31 Dec. 30 June
2000 1999 % 2000
R000's R000's Change R000's
Revenue 33 657 103 129 (67) 269 182
Operating income
before interest (8 048) 27 948 (129) 71 643
Net interest
received/(paid) (17 390) 1 552 (19 110)
Profit before taxation (25 438) 29 500 (186) 52 533
Taxation (7 721) 7 214 11 853
Profit from
ordinary activities (17 717) 22 286 (179) 40 680
Exceptional items (187 649) 0 (70 433)
Net profit/(loss)
for the period (205 366) 22 286 (1 022) (29 753)
Headline earnings/
(loss) per share (8.8) 13.2 (167) 21.8
Earnings/(loss) per
share (101.9) 13.2 (872) (16.0)
Weighted number of
shares in issue (000's) 201 511 168 757 186 344
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 Dec. 31 Dec. 30 June
2000 1999 2000
R000's R000's R000's
Share capital and premium
Balance at beginning of period 79 102 74 807 74 807
Issue of shares during the
period 6 364 0 4 295
Balance at end of period 85 466 74 807 79 102
Accumulated profit
Balance at beginning of period 73 923 103 676 103 676
Net profit/(loss)
for the period (205 366) 22 286 (29 753)
Balance at end of period (131 443) 125 962 73 923
SUMMARISED GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Dec. 31 Dec. 30 June
2000 1999 2000
R000's R000's R000's
ASSETS
Non-current assets 11 247 79 237 71 017
Property, plant and equipment 3 921 10 576 9 446
Goodwill 0 0 11 976
Interest in associated companies 0 15 000 0
Investments 3 448 42 353 48 008
Long-term loan receivable 3 878 0 0
Loan to share incentive scheme 0 11 308 1 587
Current assets 27 954 191 590 382 272
Inventories 1 688 26 624 29 233
Accounts receivable 25 658 88 331 344 602
Cash on deposit 608 9 635 8 437
Net amounts due on sale
of subsidiaries and
associated companies 0 67 000 0
Total assets 39 201 270 827 453 289
EQUITY AND LIABILITIES
Capital and reserves (45 977) 200 769 153 025
Issued capital 85 466 74 807 79 102
Accumulated profit/(loss) (131 443) 125 962 73 923
Non-currrent liabilities 27 369 14 080 155 817
Interest bearing borrowings 27 369 46 146 017
Deferred taxation 0 14 034 9 800
Current liabilities 57 809 55 978 144 447
Accounts payable 18 065 25 687 55 903
Bank overdraft 39 704 23 072 35 383
Taxation 0 7 149 12 768
Current portion of
interest-bearing borrowings 40 70 40 393
Total equity and liabilities 39 201 270 827 453 289
Net tangible asset
value per share (22.5) 119.0 75.7
SUMMARISED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Dec. 31 Dec. 30 June
2000 1999 2000
R000's R000's R000's
Cash generated by/
(utilised in) operations (17 609) 19 556 (149 418)
Cash generated by/
(utilised in) investment
activities 6 924 (8 860) (7 803)
Cash generated by/
(utilised in) financing
activities 6 364 (265) 145 706
Net increase/(decrease)
in bank overdrafts (4 321) 10 431 (11 515)
At beginning of period (35 383) (23 868) (23 868)
At end of period (39 704) (13 437) (35 383)
Comments
The period under review has been marked by severe cash flow constraints in the
group as a result of past mismanagement. As a consequence, trading in the
rental division was limited as the banks assessed the viability of the group.
This had a knock on effect on the distribution division, which subsequently has
been placed into liquidation. The disability assessment and absentee monitoring
division, The Soma Initiative (Pty) Ltd, ("Soma") continued to make good
progress, however the business is still in a development stage and did not
contribute to the group's profits in this period. Following the resignation of
the former CEO and Chairman ("the resignations") of Paradigm, the corporate
advisory division no longer forms part of the group. No results were included
for Paradigm Insurance Brokers, which never formed part of the group and
Valuefin, which was previously purported to be a wholly-owned subsidiary, is
now accounted for as a 35% associated company. The exceptional items are
summarised as follows:
(R000)
- Investments and other
balances as at 30 June 2000 written down 37 458
- Closure of subsidiaries 71 435
- Effects of debt rescheduling 70 509
- Other 8 247
Total 187 649
Debt rescheduling
After the resignations, the new management team discovered firstly, that the
company had in many instances discounted revenue streams, which included
revenue relating to future obligations. Instead of placing these funds in
trust, it was squandered on bad investments. Thus, the future obligations
linked to the rental contracts have to be met from the operations cash flows of
the group. Secondly, certain consumer rental contracts were renewed
continuously on a basis that prejudiced the group's short-term cash flow
position. As a consequence, the group is experiencing the effects of a "black
hole" that absorbs cash flow generated by the group. A comprehensive debt
rescheduling is being negotiated with all the banks and financiers of the
group. A detailed announcement in this regard will be made in the near future.
In the interim, shareholders should note that certain financiers have agreed to
the subordination of their loans. Based on the subordination, the revised net
asset value is as follows:
(R000)
- Net asset value at 31 Dec 2000 (45 977)
- Subordination of debt 49 704
- Revised net asset value 3 727
Litigation
Following the resignations, the group was engulfed by an orchestrated barrage
of litigation, which included four liquidation applications and six other
urgent applications. Although the liquidation application against Paradigm by
Hertfort Trade Finance Limited, an associate of the group, was dismissed with
costs, a new application has been launched against a subsidiary of Paradigm.
The Board is confident that the application will be successfully defended. All
other cases were either dismissed with costs or withdrawn on the basis of
settlement negotiations with the particular parties. An amicable settlement was
recently concluded in respect of Paradigm's purported obligations under a golf
sponsorship arrangement.
Future prospects
The problems experienced by the group during the interim period will continue
to effect trading during the remainder of the financial year. In the short
term, the group's activities will be focused on the corporate rental and Soma
divisions. Following the implementation of the debt rescheduling, a
comprehensive business plan will be presented to the Board and thereafter to
the banks and financiers of the group.
Dividends
No dividends will be declared in respect of the period under review.
By order of the board
Cape Town
30 April 2001
Directors:
DP Cohen (Chairman); W Alberts (Managing);
ACP Cotterell; AH Davison; CK Herman.
