| Tue 9 Oct 2001, 0:00 | | Cycad - Audited Results And Further Cautionary Ann |
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CYCAD FINANCIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/008637/06)
Share code CYD ISIN ZAE000017729
("Cycad" or "the company")
AUDITED RESULTS
for the year ended 30 June 2001 and further cautionary announcement
NET ASSET VALUE PER SHARE
30 June 30 June
2001 2000
(cents) (cents)
Directors' valuation at 30 June 2001 116 181
Net asset value after
post-balance sheet
general portfolio provision to reflect
current market conditions 58 -
The calculation of net asset value
per share is based on the following:
Directors'/Market valuation of
net assets* (R'000) 106 686 126 674
Post-balance sheet general
portfolio provision (R'000) (53 343) -
Net asset value after post-balance sheet
general portfolio provision (R'000) 53 343 126 674
Number of shares in issue ('000) 91 796 70 060
The directors' valuations are calculated in accordance with the group's
accounting policies whereby investments are valued at cost for the first two
reporting periods during which they are held (with provision being made for
any permanent impairment of value) and thereafter they are revalued to fair
value.
This valuation policy is thus based on the premise that the investments
will be held on an on-going basis until maturity.
In September 2001 the board resolved to create a general provision for
potential diminution of 50% of the valuation of the portfolio at 30 June
2001. This decision was based on current market conditions and the resultant
uncertainty surrounding the valuation of newly established technology
businesses.
* Listed investments are valued at market value.
GROUP BALANCE SHEETs
2001 2000
Notes R'000 R'000
Non-current assets
Associate companies 5.1 40 963 20 646
Other investments 5.1 29 587 85 602
Goodwill 5.3 45 381 -
Net investment portfolio 115 931 106 248
Current assets
Cash and short-term deposits - 13 935
Net other assets 748 460
116 679 120 643
Capital, reserves and liabilities
Shareholders' funds 100 529 118 145
Interest bearing non-current liabilities 4 581 1 722
Current liabilities 11 569 776
- Bank overdraft 8 2 530 -
- Interest bearing (other) 7 897 -
- Non-interest bearing 848 776
- Provisions 294 -
116 679 120 643
GROUP INCOME STATEMENTS
2001 2000
Notes R'000 R'000
Net interest (paid)/received (387) 4 612
Net operating costs (6 014) (6 505)
Amounts written-off investments
to reflect directors' valuations 2.2 (37 440) (1 387)
Loss before and after taxation 5.4 (43 841) (3 280)
Share of retained income from
associate companies 5.2 142 948
Headline and attributable loss (43 699) (2 332)
Headline and attributable loss
per ordinary share (cents) (62) (3)
The calculation of loss per share
is based on the following:
Headline and attributable loss (R'000) (43 699) (2 332)
Weighted average number of shares
in issue ('000) 70 060 70 060
STATEMENT OF CHANGES IN EQUITY
Preference Non-
Share Share share distributable Accumulated
R'000 capital premium capital reserve loss Total
Balance at
1 July 2000 701 123 224 1 1 248 (7 029) 118 145
Shares issued
to acquire
additional interest
in eCompany
(note 4.3) 217 25 866 26 083
Share of
retained income
from associate
companies 142 142
Net operating loss
after interest and
finance charges (6 401) (6 401)
Amounts written-off
investments to
reflect directors'
valuations (37 440) (37 440)
Balance at
30 June 2001 918 149 090 1 1 390 (50 870) 100 529
GROUP CASH FLOW MOVEMENTS
2001 2000
R'000 R'000
Increase in long-term borrowings 2 859 1 722
Cash generated/(utilised) by
operations and short-term funding 1 945 (5 780)
Net cash (invested)/generated by
investing activities (21 129) 5 469
- Proceeds on disposal of investment - 50 000
- Acquisition of investments (21 015) (44 161)
- Net acquisition of fixed assets (114) (370)
Options redeemed (140) -
Balance at beginning of year 13 935 12 524
Balance at end of year (2 530) 13 935
COMMENTARY
1. Overview
Our four largest investments comprise in excess of 80% of our total net
asset value and will be the foundation on which future growth is generated.
eCompany and Absolute Systems are starting to see benefits flowing from
their proprietary technology with local and foreign sales. CoreSource is a
solid business which has established itself as one of the dominant players
in Southern African staff outsourcing. We are addressing the strategic
repositioning of Sportal Asia to recoup value.
2. Valuations
2.1 Cycad's investment strategy is to invest in technolgy and service
businesses with global value potential and to realise value by holding these
to a stage of appropriate maturity. These comprise high risk businesses in
which an investment stake is acquired at an early stage of the business'
development. The valuation of these businesses is difficult with extensive
debate at both a regional and an international level. While a number of
theoretical models exist the only practical measure of value is when an
investment is realised. The value of technology businesses have decreased
significantly during the period under review. However, technology remains
integral to the global economy and will continue to grow through innovation
and demand.
2.2 We have written-down the value of specific investments at 30 June 2001
by R37,4 million primarily to reflect the international reduction in values
of internet-related businesses and specifically our investment in Sportal
Asia, where we have taken a 75% write-down (R27,2 million) on our cost.
2.3 The Group's investment in 5 million EC-Hold shares has been valued at
R1,00 per share in accordance with an offer made by MGX Holdings Limited to
all EC-Hold shareholders. This offer is subject to the findings of a
Securities Regulation Panel appeal hearing which might increase this R1,00
offer price.
2.4 The Cycad portfolio of investments is generally not at a stage of
maturity where we would currently contemplate realising these investments.
In the light of recent international developments and market uncertainty we
have in addition made a general post-balance sheet portfolio provision of
50% to highlight the possible effects of realising investments prematurely
in the current market. The effects of the provision are shown in the net
asset value figure presented above and no adjustment has been made to the
group financial statements as at 30 June 2001.
3. INCOME STATEMENT
As we aim to generate value through growth in asset value, in the absence of
actual investment realisations, neither the income statement nor the
consequent loss per share are representative of performance. Generally
Accepted Accounting Practice prescribes the format of the income statement
which does not communicate any meaningful perspective of the Group's
sustainable performance.
4. Investment activity
4.1 New investment activity was limited to:
- a R26 million increase of our stake in eCompany from 17% to 32% through
the issue of Cycad shares at R1,20 each;
- a transfer of our investment in Birdie Holdings into a holding in Sportal
Asia coupled with a further investment of R6,3 million (US$850 000)
resulting in a 10% interest in Sportal Asia; and
- acquiring a 32,5% interest in Intelleca Vocalis for R4 million.
4.2 We have refined our focus by restructuring the Cycad Trafalgar Fund and
terminating our relationship with NQBeta, thereby eliminating any further
capital commitment from Cycad to both entities.
4.3 Cycad purchased 30 686 000 further shares in eCompany for a total
purchase consideration of R26 083 100, settled by the issue of 21 735 917
Cycad shares at an issue price of R1,20 per share on 6 August 2001. This
transaction was in substance concluded before year-end as sufficient
shareholder support for the transaction was obtained before 30 June 2001.
The transaction was thus accounted for as at 30 June 2001 with the result
that eCompany is reflected as an associate company.
5. Accounting
5.1 Associate companies are:
CoreSource, eCompany, Intelleca Vocalis, RTEC and Spinnaker.
Investments are:
Absolute Systems, Cycad Trafalgar Fund, EC-Hold, Sharon Technologies and
Sportal Asia.
5.2 The share of retained income of associate companies reflected in the
consolidated income statement includes the results of only three of the five
associate companies, one of which incurred start-up losses during the period
under review.
5.3 The goodwill reflected on the consolidated balance sheet mainly relates
to eCompany (R43,9 million), resulting from its reclassification as an
associate company at 30 June 2001.
5.4 No taxation has been provided for, as the group has assessed losses.
6. Capital Commitments
At the date of this announcement, the group has an outstanding investment
commitment to Absolute Systems of R3,25 million. Payment of the committed
capital is subject to the achievement by Absolute Systems of certain
performance milestones.
7. Dividends
No dividend was declared or paid during the year under review.
8. Prospects and renewal of cautionary announcement
Shareholders' attention is drawn to the cautionary announcement dated 6
September 2001. Shareholders are advised that the company is still
considering various restructuring alternatives which, if successfully
concluded, may have an effect on the price of the company's shares.
Shareholders are accordingly advised to continue exercising caution when
dealing in the company's shares until a further announcement is made.
The Group's working capital requirements are being, inter alia, addressed
with current restructuring proposals.
By order of the board
L H Fine A J Frost
Chief Executive Officer Executive Director
Johannesburg
10 October 2001
Registered office Transfer secretaries
15 Girton Road Mercantile Registrars Limited
Parktown 2193 10th Floor
Tel: (011) 507-2000 11 Diagonal Street
Fax: (011) 507-2004 Johannesburg, 2001
email: cycadfinhold@cycadfinhold.co.za (PO Box 1053,
Website: www.cycadfinhold.co.za Johannesburg, 2000)
Sponsor
Deutsche Securities (SA)(Proprietary) Limited
Member of the Deutsche Bank Group
(Registration number 1995/011798/07)
Directors
A J Behrmann (Chairman), L H Fine (CEO), G K Y Cachalia (Executive), S
Cohen, A J Frost (Executive) (alt. L Klaff), J M Kahn, W Y N Luhabe, P G
Joubert, P H Parker (British), L van Zyl
