| Fri 29 Jun 2001, 0:00 | | Hicor |
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Summary of Results
for the year ended 31 March 2001
Hicor Limited (Registration number: 1981/011496/06)
Abridged group income statement
R'000
6 months 6 months
ended ended (Reviewed) (Audited)
31 March 30 September 31 March 31 March
2001 2000 2001 2000
Gross Revenue 12 110 24 067 36 177 37 588
Continuing operations 12 110 10 471 22 581 11 239
Discontinuing operations - 13 596 13 596 26 349
Gross income 1 396 11 569 12 965 18 306
Operating expenses (726) (11 503) (12 229) (16 525)
Net operating income/(loss) 670 66 736 1 781
Continuing operations 670 279 949 1 781
Discontinuing operations - (213) (213) -
Losses on discontinued
Operations (9 440) (928) (10 368) -
Net finance costs 1 784 (1 926) (142) (1 504)
Exceptional items (317) (317) - (18 154)
Pre-tax profit/(loss) (7 303) (2 788) (10 091) (17 877)
Income tax expense (815) 532 (283) (611)
Profit/(loss) after taxes (8 118) (2 256) (10 374) (18 488)
Outside shareholders'
Interest (50) 38 (12) (4)
Net attributable
income/(loss) (8 168) (2 218) (10 386) (18 492)
Headline earnings
per share (cents) 2.2 (0.4) 1.8 0.2
Earnings per share (cents) (8.0) (2.5) (10.0) (21.0)
Weighted shares in
issue (thousand) 100 000 90 000 100 000 90 000
Abridged group balance sheet
R'000
(Reviewed) (Audited)
31 March 2001 31 March 2000
Non-current assets
Fixed assets 847 1 201
Intangible assets 18 477 4 535
Investments - 7 085
Non-current receivables 429 1320
Current assets 17 236 32 018
Total assets 36 989 46 159
Capital and reserves
Shareholders' interest 1 958 10 333
Outside shareholders' interest 137 123
2 095 10 456
Non-current liabilities 25 730 924
Current liabilities 9 164 34 779
Total equity and liabilities 36 989 46 159
Net asset value per share (cents) 2.1 11.6
Shares in issue (thousand) 100 000 90 000
Abridged group cash flow statement
R'000
31 March 2001 31 March 2000
Cash generated from operations (9 031) 7 240
Continuing operations 1 550 1 293
Discontinuing operations (10 581) 5 947
Net finance costs (142) (1 504)
Tax paid (15) (16)
Working capital change 10 989 (4 207)
Net cash (absorbed) / generated 1 801 1 513
Net cash outflow from
investing activities (10 131) (11 902)
Net cash inflow from
financing activities 10 391 10 716
Net movement in cash resources 2 061 327
Opening cash resources (1 408) (1 735)
Closing cash resources 653 (1 408)
Additional information
R'000
6 months 6 months
ended ended
31 March 30 September 31 March 31 March
2001 2000 2001 2000
Included in
operating income
Depreciation 356 382
Amortisation 1 467 476
Headline earnings
reconciliation
Net attributable
Income (8 168) (2 218) (10 386) (18 492)
Losses on
Discontinued
Operations 9 440 928 10 368 -
Exceptional loss - - - 18 154
Restructuring costs 317 - 317 -
Amortisation of
Goodwill 609 858 1 467 476
Headline earnings
On continuing
Operations 2 198 (432) 1 766 138
Delivery against 7 point plan to turn the company around announced in
October 2000 is still on track:
1.Reduce financial exposure and risks
Long term liabilities and contingencies down from R59,6M to R25,7M and the
Current Ratio up from 0,9 to 1,9
2.Reduce risk associated with international trading
Exited from acquisition of USA company with no further financial risks or
claims
3.Improve management of assets
Net finance costs down from R1,5M to R0,1M
4.Improve recurring revenue base
Appointed as SARS e-Filing Service Provider for Tax returns and payments via
the Internet
5.Improve product distribution channels
Entered into mutual product distribution agreements with USA based company
6.Strict adherence to corporate governance
Appointment of new Board and use of external consultants to review past and
present practices
7.Once Balance Sheet restructuring issues are under control, focus on
generating profits
Well on track with 102% growth in Gross Revenue and Headline Earnings per
share up from 0,2 cents to 1,8 cents
Comments
The results for the year reflect the activities of the ongoing businesses as
well as the cost of the discontinued operations. Despite, amongst other
issues, the considerable losses in cash reserves and other financial and
legal complexities due to Hicor's earlier divestment of its Consumer
Electronics legacy, the implementation of its seven point plan to turn the
company around as announced by the newly appointed Board in October 2000, is
still on track and is reflected in the reduction of the overall risk and
improved Balance Sheet.
The main objective of this seven point plan was originally outlined by the
Hicor Board in October 2000 to reduce the overall risks and improve the
Balance Sheet from which to realise the profits generated by the core on-
going business of Hicor. Over the last 6 months of the year in review Hicor
managed to substantially reduce the financial risks and contingencies,
return to profitability and the Board is convinced that the original plans
should still be followed through to its conclusion as planned originally.
Hicor was also able to successfully exit from the acquisition agreement with
BCE Emergis in the USA. As a result, there will be no further potential
claims against Hicor for the US$5M balance that was due in terms of the
acquisition agreement signed on December 15, 1999. Furthermore, BCE Emergis
will now distribute and support the products of Hicor on a non-exclusive
basis in the USA and Canada and in return, Hicor will continue to distribute
and support the BCE Products in South Africa and Europe.
Hicor was not able to complete the divestment of the non-core subsidiary
Phonetech (Pty) Ltd as planned and announced in the annual report of last
year and Phonetech was placed into liquidation by a third party in April
2001.
Results: The continuing activities of the group showed an increase of 102%
in gross revenue from
R11,2 million to R22,6 million for the year under review, with the six
months ended 31 March 2001 being particularly rewarding. This has been
achieved despite the difficult corporate environment that the group has been
operating under and it can be mainly ascribed to the growth in the domestic
and European demand for the products and services that the group provides.
Fortunately the corporate and legal issues have now been largely identified
and renegotiated, thereby enabling the management to further concentrate on
the lucrative core businesses that remain.
Net finance cost incurred represents the servicing of the debt attributable
to the ongoing IT and telephone distributor. The reduction from R1,5 million
to R0,1 million can be directly ascribed to stringent cash and working
capital measures employed at the various operating levels.
The group's losses on the liquidation of a subsidiary and the further losses
incurred from the liquidated prior subsidiary are reflected as exceptional
losses.
Taxation charges are mainly provisions for deferred taxation in the
companies where capital and tax allowances per the current legislation are
greater than the amortisation and depreciation charges written off. Deferred
tax assets are not recognised or provided for by the group.
Balance Sheet: The current balance sheet reflects the endeavors of
management to renegotiate, and where possible, to settle the debts and
commitments of the group and its previous subsidiaries which contributed
largely to the serious debt issues arising during the last year. Short term
debts and contingent exposures have either been eliminated by renegotiation
or the nature has been altered to make them long term, as opposed to the
previous year when the current exposure of the group was exceedingly high.
Interest bearing debt, capital commitments and contingent liabilities have
been reduced from
R59,6 million in March 2000 to a more manageable level of R25,7 million in
March 2001.
The increase in intangible assets is as a result of goodwill arising from
the final settlement of the purchase price of the subsidiaries acquired in
the previous periods. During the year the group negotiated employment
contracts with all staff to ensure the continued operational and managerial
viability of the group. This cost, together with the cost of acquiring the
minorities in a subsidiary amounted to
R3,6 million and has also been provided and capitalised as goodwill and
intellectual property. The details of these intended transactions will be
made available once this shareholders' information has been circulated and
approved. A further possible risk arising after the previous year end and
amounting to R13,3 million has also been eliminated and/or renegotiated.
The non current liabilities include amounts totalling R15,1 million which
will by agreement be converted to equity after shareholder approval has been
obtained. This will constitute the bulk of the recapitalisation envisaged to
address the losses suffered attributable to discontinued operation in the
past which severely affected the Net Asset Value of the group. In addition a
contingency provision that was disclosed in the results for the year ended
31 March 2000 has been renegotiated and new terms are being implemented at
present. An amount of R9,2 million has been provided as a long term
liability for this.
Contingent liabilities: The group is currently in the process of defending a
claim from a group of individuals that transacted for the sale of their
business with a previous subsidiary for which the parent company bound
itself as co-principal debtor. The original case was successfully defended
some years ago, but it has now been escalated to the Appeal Court and Hicor
intends resisting the possible claim. It is impossible to ascertain the cost
implications, but in the opinion of respected senior council, the
probability of the group suffering any losses as a result of this action is
low. Provision has been made in the accounts for the legal costs.
Prospects: Hicor's customer base continued to grow steadily over the year in
review and the company had particular success in obtaining several blue chip
accounts locally and internationally.
With more than 15 banks in South Africa using Hicor's locally developed
Hicor Interchange(tm)
e-Commerce messaging product which was launched during last year, it is fast
becoming a significant player in the financial sector of the market locally
and the company plans to extend this success to the European market in the
next year.
The e-commerce services through which Hicor will earn annuity style
recurring revenues from transaction fees, will commence on July 1, 2001. As
part of phase one of this service Hicor was appointed as one of the e-Filing
Service Providers by SA Revenue Services and users are now able to submit
TAX returns (VAT, PAYE, SDL and Provisional Taxes) and associated payments
via the Internet (www.paybills.co.za). Hicor entered into strategic
partnership agreements with several blue chip companies through whom this
service will be delivered to their client base of small, medium and large
enterprises. The second phase of the service will include the electronic
delivery and presentment of bills (statements and invoices) and the
associated payments via the Internet and is expected to go live by October
2001.
Directors: D J Pringle, J de Bruin, J H Wolfaardt, P W Durandt, A P C
Brink*, D M van der Merwe*
Company secretary: J H Wolfaardt
Registered Office: Development Trust Chambers, 1 Quintin Brand Street,
Persequor Techno Park, Brummeria, Pretoria, 0184
Transfer secretaries: Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001
* non-executive director
