| Fri 9 Nov 2001, 0:00 | | Maxtec Limited - Annual Results For The Twelve Mon |
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Company Registration No 1998/004039/06
Alpha code: MEC
ISIN code: ZAE000016721
ANNUAL RESULTS FOR THE TWELVE MONTHS ENDED 31 AUGUST 2001
The directors of Maxtec Limited hereby announce the annual results for the
year ended 31 August 2001.
NATURE OF BUSINESS
Classified under the Information Technology sector of the JSE Securities
Exchange, Maxtec Limited (`MEC') provides complete high-end mass storage
solutions. Maxtec's offerings cover all aspects of the total IT storage
solution including: consulting, outsourcing, implementation, repair,
maintenance, education and training.
TRADING ENVIRONMENT
The IT industry is undergoing a period of extreme market pressure as the
rand/dollar exchange rate continues to deteriorate. Due to low levels of
business confidence, corporate IT spend has tapered down. Despite this,
there is a growing realization in the market place of the importance of
managing data storage as the volume and size of data traffic increases.
FINANCIAL PERFORMANCE
Compared to the twelve month period ended 31 August 2000, turnover grew by
44,7%, up from R81,4 million to R117,8 million. This however, did not
translate into an increase in net profit after tax, which declined from a
R7,87 million profit to a loss of R10,27 million this year.
Compared to the headline profit of R7,87 million (9,2 cents per share) for
the comparable period, Maxtec reported a headline loss of R6,39 million (7,2
cents per share) for the year under review.
The operating income decreased from a profit of 13,22% in 2000 to a loss of
7,62% in 2001.
In terms of AC102 of Generally Accepted Accounting Practices, deferred tax
has been raised as an asset in determining the headline loss above.
The group's poor results reflect a difficult trading climate. This was
exacerbated by costs relating to establishing the end-user business in a
depleted business climate; gearing up with technical skills to enter the end-
user market; changes in routes to market by several vendors; tighter margins
from vendors; a write down of R5,4 million worth of inventory; restructuring
costs; poor sales in the local authority division due to elections,
demarcation and resulting postponement of decisions; as well as a write down
of R3,7 million of the loan to the Share Incentive Trust.
Sagitta Performance Systems Ltd, the UK Storage Area Network specialist in
which Maxtec holds a 20% stake, continues to outperform their current
market.
The accounting policies are consistent with those used the previous year
and those disclosed in Maxtec's most recent financial statements. The
attached report complies with AC 127.
OPERATIONAL REVIEW
Maxtec's key differentiator is translating customer information into an
enhanced value proposition by providing a complete storage solution that
focuses on the bottom-line. Customers benefit from the synergistic flow of
services through our three business divisions; Maxtec Peripherals, Maxtec
Global Support Services (MGSS), and Enterprise Storage Solutions (ESS).
Distributing hardware through the reseller channel, Maxtec Peripherals has
broadened its product range to include current technology leaders as a
method of increasing margins and growing the business via resellers.
Maxtec Global Support Services offers IT storage consultation, strategy
development, installation, solution maintenance and client training.
The local authority division has been consolidated with our Johannesburg
office, with service centers in the Free State, KwaZulu Natal and Western
Cape. With enhanced software and maintenance capabilities, our local
authority offering is rapidly developing as a revenue management model.
Internally developed, our Meter Management software, hardware, installation
and support services assist municipalities in gathering information from
electricity/water handheld terminals and measuring devices.
Good profits have been achieved with our CAD software, which now forms an
integral part of MGSS. We are involved exclusively in the sale and
implementation of various e-engineering solutions from a software and
hardware point of view.
ESS offers independently a complete end-to-end solution, including hardware,
software and remote storage management. These storage disciplines, as well
as ESS' association with Sagitta, provide the company with an advance view
of customers' requirements. One of the principal areas of activity within
ESS, is storage virtualisation and, in the main, focused on the open systems
environment.
FalconStor software was used in a recently introduced solution, Ubiquistor,
allowing enterprises to fully utilise their legacy systems and as a result
improve their return on investment. The software is one of the most
sophisticated data management software solutions in the market.
Currently, ESS is focusing on market segmentation to accurately identify
their various target audiences within the industry. The company will be
focusing on striking strategic alliances with resellers that can provide
network and data solutions, advanced technology, skills, etc. and that can
be integrated into its business infrastructure to offer a more extensive
product range.
What provides ESS with a competitive edge is its Total Storage Solutions
Centre (TSSC), which it has established in partnership with the IBM
Corporation. This centre provides prospective clients the opportunity to
view the use and functionality of latest storage products in the market.
Subsequent to year-end, Maxtec has entered into a joint venture with Afrinet
through associate company VitalData as its black empowerment arm.
MANAGEMENT
Following the reengineering of the business during difficult trading
conditions, a number of changes have been made at management level to
balance workload and to optimise resources for future growth. With the
resignation of Graham Hayes as group managing director, executive chairman
and founder of the Maxtec group, George Talbot, took on the overall
management of the group. Tony Strutt, previously in charge of the Cape Town
operations, was appointed managing director of Maxtec Peripherals. Appointed
as chief operating officer, Perry Hutton will focus on the day-to-day
operations across all subsidiaries, as well as the contractual and
logistical areas. Anthony Bruce has been appointed sales director of ESS.
PROSPECTS
Although market conditions may not improve, management believes that the
changes implemented will enable profitability to be restored in the
financial year ahead.
DIVIDENDS
No dividend has been declared.
For and on behalf of the Board
L G B TALBOT
Executive Chairman
AC WILSON CA (SA), H Dip Tax
Company Secretary and Financial Director
Registered Address
1 - 8th Avenue, Rivonia, Sandton
(PO Box 69938, Bryanston, 2021)
Transfer Secretaries
Computershare Services Ltd
4th Floor, Edura House, 41 Fox Street, Johannesburg, 2001
(PO Box 62931, Marshalltown, 2107)
Maxtec Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/004039/06) ("Maxtec")
JSE Code (MEC)
MAXTEC LIMITED Audited Audited
Year ended Year ended
GROUP INCOME STATEMENT 31 Aug 2001 31 Aug 2000
R'000 R'000
Revenue 117,823 81,410
Operating (Loss)/Profit (8,981) 10,764
Net interest paid (1,202) (151)
Profit from associate 829 418
Loss on write down of loan to Share Incentive Trust (3,699) -
(Loss)/profit before taxation (13,053) 11,031
Taxation 2,785 (3,154)
Net (loss)/profit after tax for the year (10,268) 7,877
Depreciation 1,319 744
Net interest paid (1,202) (151)
Interest received (1,253) (815)
Interest paid 51 664
(Loss)/earnings per share (cents) (11.6) 9.2
Headline (loss)/earnings per share (cents) (7.2) 9.2
Fully diluted headline (loss)/earnings
per share (cents) (7.2) 9.0
Weighted average number of shares in issue (millions) 88.2 86.1
Calculation of Fully diluted earnings
Actual number of shares in issue 88,154,507 86,110,607
Shares issued subsequent to year end in
respect of acquisition of subsidiary in
previous year - 2,043,900
88,154,507 88,154,507
Reconciliation of headline earnings
Net (loss)/profit after tax for the year (10,268) 7,877
Loss on write down of loan to Share Incentive Trust 3,699 -
Amortisation of goodwill in associate 181 -
Headline earnings (6,388) 7,877
Audited Audited
Year ended Year ended
GROUP BALANCE SHEET 31 Aug 2001 31 Aug 2000
R ' 000 R ' 000
ASSETS
Non-current assets 12,904 13,797
Plant and equipment 5,201 4,625
Investment in associate company See note 5,371 4,882
Deferred taxation 1,870 -
Loan to share incentive trust 462 4,290
Current assets 30,928 42,024
Inventories 18,032 26,248
Trade and other receivables 12,896 13,451
Cash resources 2,325
TOTAL ASSETS 43,832 55,821
EQUITY AND LIABILITIES
Capital and reserves 22,838 26,578
Issued capital 9 9
Share premium 18,446 11,918
Accumulated profit 4,383 14,651
Non current liabilities 203 995
Interest-bearing borrowings 203 78
Deferred taxation - 917
Current liabilities 20,791 28,248
Trade and other payables 12,915 16,774
Provisions 637 449
Loans payable - 6,528
Current portion of interest-bearing borrowings 121 156
Taxation 2,394 4,341
Bank overdraft 4,724 -
TOTAL EQUITY AND LIABILITIES 43,832 55,821
Note: Directors valuation of investment
in associate. 10,319 4,969
Audited Audited
Year ended Year ended
GROUP STATEMENT OF CHANGES IN EQUITY 31 Aug 2001 31 Aug 2000
R'000 R'000
Ordinary shareholders equity at beginning of year 26,578 21,937
Changes in share capital
Shares issued-2 043 900 of 0.01c each - -
Changes in share premium 6,528 (3,236)
Shares issued 6,528 -
Goodwill written off - (3,236)
Changes in accumulated profits
Attributable (loss)/profit for the year (10,268) 7,877
Ordinary shareholders equity at the end of the year 22,838 26,578
Audited Audited
Year ended Year ended
GROUP CASH FLOW STATEMENT 31 Aug 2001 31 Aug 2000
R'000 R'000
Cash flows from operating activities (5,383) (2,097)
Cash receipts from customers 118,379 85,074
Cash paid to suppliers & employees (120,611) (84,542)
Cash generated from operations (2,232) 532
Interest received 51 664
Interest paid (1,253) (815)
Taxation paid (1,949) (2,478)
Cash flows from investing activities (1,885) (7,097)
Additions to plant & equipment (2,371) (4,209)
Proceeds on sale of plant and equipment 487 348
Increase in investment in associate (1) -
Acquisition of subsidiaries-net of cash required - (3,236)
Cash flows from financing activities 219 354
Decrease in loan to share incentive trust 129 -
Increase/(decrease) in finance leases 90 (96)
Net raising of finance liabilities - 450
Net (decrease)/increase in cash resources (7,049) (8,840)
Cash resources at the beginning of the year 2,325 11,165
Cash resources at the end of the year (4,724) 2,325
