| Fri 8 Mar 2002, 0:00 | | Aqua Online - Unaudited Interim Results For The Si |
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2001
(AQUA ONLINE HOLDINGS LIMITED)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER2001
Making e-Business a Reality
Registration number 1971/005628/06
www.aquaonline.com
ISIN number ZAE000024360
Share code AQU
- Salient features
- Appointed as worldwide distributor of premier online casino software
- Results in line with updated earnings forecast
- Strong cash resources of R42 million
- 76% Revenue in foreign currency
- Trading update
Consolidated income statements
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 June
2001 2000 2001
Notes R'000 R'000 R'000
Revenue 43 042 36 249 78 472
Earnings before
interest, taxation
depreciation and
amortisation 5 643 11 063 23 744
Depreciation (2 446) (1 256) (3 185)
Amortisation of goodwill (937) - (358)
Interest received 449 1 165 2 166
Income before taxation
and exceptional item 2 709 10 972 22 367
Exceptional item 2 (6 171) - (1 051)
(Loss) income before
taxation (3 462) 10 972 21 316
Taxation 1 (358) (537) (882)
Attributable (loss)
earnings (3 820) 10 435 20 434
Headline earnings
adjustments in respect of
- Exceptional item 6 171 - 1 051
- Amortisation of
goodwill 937 - 358
Headline earnings 3 288 10 435 21 843
Headline earnings per
share (cents) 3 1,24 3,97 8,30
(Loss) earnings per
share (cents) (1,44) 3,97 7,76
Shares in issue and to
be issued (000) 265 841 262 549 263 181
Consolidated balance sheets
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 20 360 6 251 23 239
Property, plant and
equipment 11 084 6 251 7 693
Goodwill 8 437 - 15 546
Loan to share trust 839 - -
Current assets 56 564 41 968 46 569
Trade and other
receivables 14 399 9 918 16 566
Taxation - - 72
Cash resources 42 165 32 050 29 931
Total assets 76 924 48 219 69 808
Equity and liabilities
Equity
Capital and reserves 68 930 37 586 56 954
Non-current liabilities
Deferred taxation 17 48 17
Current liabilities 7 977 10 585 12 837
Trade and other
payables 7 696 9 438 12 837
Taxation 281 1 147 -
Total equity and
liabilities 76 924 48 219 69 808
Net asset value per
share (cents) 25,93 14,32 21,42
Consolidated cash flow statements
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 June
2001 2000 2001
Note R'000 R'000 R'000
Cash generated from
operations 4 2 644 7 518 16 786
Interest received 449 1 165 2 166
Translation difference 15 846 1 642 2 563
18 939 10 325 21 515
Taxation (5) - (1 595)
Cash flows from
operating activities 18 934 10 325 19 920
Cash flows from
investing activities (6 650) (3 051) (14 787)
Cash flows from
financing activities (50) - 22
Net movement in
cash resources 12 234 7 274 5 155
Opening cash resources 29 931 24 776 24 776
Closing cash resources 42 165 32 050 29 931
Consolidated statements
of changes in equity
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 June
2001 2000 2001
R'000 R'000 R'000
Opening balance 56 954 25 509 25 509
Shares issued and to
be issued 11 - 803
Adjustments to goodwill
written off - - 8 426
Share issue and listing
expenses written off (61) - (781)
Translation difference 15 846 1 642 2 563
Attributable (loss)
earnings (3 820) 10 435 20 434
Closing balance 68 930 37 586 56 954
Notes to the financial statements
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2001 2000 2001
R'000 R'000 R'000
1. Taxation
South African normal tax
- Current - - 885
Foreign tax 358 537 (3)
- Current 358 537 28
- Deferred (31)
358 537 882
No provision has been made
for South African taxation
as the South African entities
have incurred losses.
2. Exceptional item
Goodwill written off on
premature termination of
contract 6 171 - -
Investment written off - - 1 051
3. Headline earnings per share
Headline earnings per share
is based on headline earnings
of R3 287 630 (2000: R10 435 000)
and a weighted average of
265 841 358 (2000: 262 548 787)
shares in issue and to be issued.
4. Cash generated from operations
Income before taxation and
exceptional items 2 709 10 972 22 367
Adjustments 2 909 91 1 214
- Depreciation 2 446 1 256 3 185
- Interest (449) (1 165) (2 166)
- Amortisation of goodwill 937 - 358
- Translation adjustment on
investment - - (167)
- (Profit) loss on sale of
property, plant and equipment (25) - 4
(Increase) decrease in
working capital (2 974) (3 545) (6 795)
Trade and other receivables 2 167 (1 194) (7 842)
Trade and other payables (5 141) (2 351) 1 047
2 644 7 518 16 786
COMMENTS
Introduction
The directors of Aqua Online Holdings Limited ("Aqua" or "the group")
present the unaudited interim results for the six months ended 31 December
2001 ("the interim period").
As set out in the announcement dated 16 November 2001 ("the announcement"),
Aqua has concluded a worldwide software distribution agreement with
International Merchant Services Limited ("the distribution agreement"), to
distribute and support the IMS online casino software ("the IMS software").
The trading effects on Aqua of migration by its e-gaming clients to the IMS
software, and the group's significant investment in infrastructure to
support its obligations under the distribution agreement, have depressed
profits in the interim period as anticipated in the announcement.
Profile
Aqua's primary divisions of Enablement and Administration together build and
service e-businesses:
c Enablement consults around strategic e-business models, CRM and brand
strategy, and translates this into the required software functionality which
it then builds and integrates.
c Administration provides infrastructure to run and maintain e-businesses.
It offers the full spectrum of back-office processing and management
services, with specialised focus on the online gaming and leisure industry.
The distribution agreement has enabled the group to derive maximum benefit
from its established niche competency in servicing the online gaming and
leisure industry.
Review of Operations
The group is successfully effecting the rollout of the IMS software. Aqua
has already concluded a distribution contract with a new operator and has a
promising client pipeline for the next six months to year-end. Aqua
participates in both the upfront and ongoing licence fees generated by its
distribution of the IMS software.
The distribution agreement has enabled the group to deliver a price-
competitive, high-quality e-gaming services solution. Consequently, Aqua is
well placed to capitalise on increased margin pressure faced by online
casino operators.
Dedicated technical and sales teams established during the interim period,
will continue to drive the commercialisation of the enhanced Aqua service
offering going forward.
The worldwide slowdown in information technology spending by corporates has
placed Enablement margins under some pressure. While this is expected to
continue, operational efficiencies, contracted pipeline and continued
working capital discipline should ensure an improvement in the profitability
of this division.
ACCOUNTING POLICIES
The accounting policies at 31 December 2001 are consistent with those
applied at 30 June 2001. These results have been prepared in accordance with
Statements of Generally Accepted Accounting Practice.
FINANCIAL RESULTS
As expected, earnings before interest, taxation, depreciation and
amortisation (EBITDA) decreased to R5,6 million from R11,1 million, and
headline earnings per share (HEPS) reduced from 3,97 cents per share to 1,24
cents per share.
The group grew its cash resources to R42 million, aided by the depreciation
of the Rand and strict working capital management.
Aqua continues to earn the majority of its revenues and profits in foreign
currency. During the period under review, 76% of revenues were US-Dollar
denominated. The group's interest income is earned primarily on foreign
currency deposits.
Following the subsequent termination of service agreements with clients
acquired from Integrity Limited, the value of the business has been impaired
and goodwill of R6,2 million written off. Aqua has historically recouped the
majority of the cost of the Integrity acquisition through revenues earned
from servicing the back-office requirements of Integrity's clients.
PROSPECTS AND TRADING UPDATE
Aqua's value proposition, underpinned by the cost-effective IMS software,
has positioned the group to become a prominent global solutions provider to
the e-gaming industry. This industry continues to offer attractive growth
potential, with the progressive move online by the formal gaming sector
presenting an exciting prospect for Aqua.
The full negative impact of the lower earnings from Aqua's e-gaming clients
during their migration to the IMS software, the termination of contracts by
certain e-gaming clients operating off alternative platforms and investment
in infrastructure, will be reflected in the second half of the current
financial year. Aqua therefore anticipates a material headline loss for the
full financial year ending 30 June 2002.
Restructure initiatives, including the recent move to South Africa of part
of the group's call centre and back office operations, should unlock
significant cost-savings in the medium term.
The positive financial benefits of the distribution agreement and investment
in infrastructure are expected to materialise in the 2003 financial year.
People
Aqua thanks its management and staff who enthusiastically help realise its
potential. The group also thanks its business advisors, and its shareholders
and customers for their ongoing, invaluable support.
Interim Dividend
In line with group policy, no dividend has been declared for the interim
period.
By order of the Board.
Brent Shahim Tal Harpaz
(Joint CEO) (Joint CEO)
8 March 2002
Directors:
Dionne Ellerine* Tal HarpazX Jeffrey Liebesman* (Chairman)
Martin Sacks* Gideon Schachat Brent ShahimX
(*Non-executive) (XJoint CEO)
Registered office:
Ground Floor Sanlam Arena c/o Bolton Road and Cradock Avenue Rosebank PO
Box 742 Parklands 2121 South Africa
Telephone 447-0877 Facsimile 447-0878 www.aquaonline.com
Transfer Secretaries:
Mercantile Registrars Limited
11 Diagonal Street Johannesburg 2001
P O Box 1053
Johannesburg 2000
Company Secretary:
Corpcapital Company Secretaries (Proprietary) Limited
2 Arnold Road Rosebank P O Box 471917 Parklands 2121
