| Wed 13 Mar 2002, 0:00 | | Cycad - INTERIM REPORT For The Six Months Ended 31 |
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CYCAD FINANCIAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/008637/06)
JSE Share code: CYD ISIN: ZAE000017729
("Cycad" or "the company")
INTERIM REPORT
for the six months ended 31 December 2001
NET ASSET VALUE PER SHARE
31 December 30 June 31 December
2001 2001 2000
Reviewed Audited Reviewed
Directors' valuation of
net assets (cents) 58 58 172
The calculation of net asset value
per share is based on the following:
Directors'/market valuation of
net assets (R'000) 106 686 106 686 120 458
Provisions against directors'/
market valuation of
net assets (R'000) (53 343) (53 343) -
Net asset value after
provisions (R'000) 53 343 53 343 120 458
Number of shares in issue ('000) 91 796 91 796 70 060
The directors' valuations are calculated in accordance with the Group's
accounting policies which value the investments at cost for the first two
reporting periods during which they are held (with provision being made for
any permanent impairment of value) *Listed investments are valued at market
value.
This valuation policy is thus based on the premise that the investments
will be held on an ongoing basis until maturity.
In September 2001 the board resolved to create a general provision for
potential diminution of 50 % of the directors' valuation of the portfolio
at 30 June 2001.
This decision was based on market conditions and the resultant
uncertainty surrounding the valuation of young technology businesses. The
directors reviewed the provision as at 31 December 2001 and concluded that
it is appropriate.
GROUP BALANCE SHEETS
31 December 30 June 31 December
2001 2001 2000
(R'000) Notes Reviewed Audited Reviewed
Net investment portfolio 74 865 115 931 125 577
Associate companies 59 875 86 344 24 602
Other investments 14 990 29 587 100 975
Current assets
Cash and short term deposits - - 1 552
Net other assets 358 748 1 399
75 223 116 679 128 528
Capital, reserves and
liabilities
Shareholders' funds 53 343 100 326 117 312
Interest bearing non-current
liabilities 1 7 426 4 581 4 615
Provisions 178 294 -
Current liabilities 14 276 11 478 6 601
- Bank overdraft 1 7 486 2 530 -
- Interest bearing (other) 1 5 930 7 897 5 180
- Non-interest bearing 860 1 051 1 421
75 223 116 679 128 528
STATEMENT OF CHANGES IN EQUITY
Preference
Share Share share Accumulated
capital premium capital NDR loss Total
(R'000)
Balance at
1 July 2001 918 148,887 1 1,390 (50,870) 100,326
Share of retained
losses from
associate
companies - - - (1,390) (1,277) (2,667)
Net loss after
taxation - - - - (44,316) (44,316)
Balance at
31 December 2001 918 148,887 1 - (96,463) 53,343
GROUP CASH FLOW MOVEMENTS
31 December 30 June 31 December
2001 2001 2000
(R'000) Reviewed Audited Reviewed
Cash (utilised)/generated
by operations and
borrowings (3 694) 4 804 7 033
Net cash invested (1 262) (21 129) (19 416)
Net advances to investments (1 235) (21 015) (19 352)
Net acquisition of fixed assets (27) (114) (64)
Options redeemed - (140) -
Balance at beginning
of period (2 530) 13 935 13 935
Balance at end of period (7 486) (2 530) 1 552
GROUP INCOME STATEMENTS
31 December 30 June 31 December
2001 2001 2000
(R'000) Notes Reviewed Audited Reviewed
Net interest (paid)/received (1 494) (387) 177
Net operating costs (3 187) (5 897) (2 465)
Goodwill amortised (2 682) (117) -
Adjustments to investments (36 953 (37 440) 560
Loss before and after taxation 3.3 (44 316) (43 841) (1 728)
Share of retained (loss)/
income from associate
companies 3.2 (2 667) 142 895
Attributable loss (46 983) (43 699) (833)
Attributable loss per ordinary
share (cents) (51) (62) (1)
Headline loss per ordinary
share (cents) (48) (62) (1)
The calculation of attributable and
headline loss per share is
based on the following:
Attributable loss (R'000) (46 983) (43 699) (833)
Goodwill amortisation (R'000) 2 682 117 -
Headline loss (R'000) (44 301) (43 582) (833)
Weighted average number of
shares in issue ('000) 91 796 70 060 70,060
COMMENTARY
1. OVERVIEW
The rights issue for recapitalising and restructuring Cycad is currently
underway and closes on 5 April 2002. This aims to raise approximately R30
million of which R20 million has been committed. Management and certain non-
executive directors have undertaken to commit R10 million of the R20 million
alongside certain shareholders and third parties. The rights offer and
restructuring will:
- streamline the group structure;
- retire debt;
- significantly reduce operating costs; and
- create a limited pool of capital to fund follow-on investment and
operating costs.
Details of the rights issue and restructuring are set out in the circular
to shareholders posted on 11 March 2002.
Cycad will become a closed-end investment holding company, focusing on
realising value from investments over the next 36 months. The restructuring
entails Cycad entering into a management agreement with the existing
executive management team at a market related management fee.
Cycad's four main investments, which comprise over 80% of net asset
value, have made progress since the financial year-end at 30 June 2001.
Salient aspects of the progress made in this regard are detailed under
paragraph 4 below.
2. NET ASSET VALUE
Cycad's net asset value per share at 31 December 2001 was 58 cents. The
net asset value per share takes into account the general 50% portfolio
provision referred to in the Annual Report for the year ended 30 June 2001,
which was created to reflect the effect of realising technology investments
in the then prevailing markets. The directors have reviewed this provision
and concluded that it is appropriate.
3. ACCOUNTING
3.1 These summarised interim financial statements are prepared in accordance
with the accounting policies adopted by the Cycad group in the preparation
of the annual financial statements for the year ended 30 June 2001. These
accounting policies comply in all material respects with South Africa
statements of Generally Accepted Accounting Practice.
3.2 The share of retained losses of associated companies reflected in the
consolidated income statement includes the results of eCompany Holdings
Limited ("eCompany") and Absolute Systems (Pty) Limited ("Absolute Systems")
for the first time, which reflect the costs of developing proprietary
software. Progress has been made in these companies which are generating
local and foreign revenues and it is expected that both entities should be
profitable in the foreseeable future.
3.3 No taxation has been provided for, as the group has assessed losses.
4. INVESTMENT REVIEW
Cycad's main investments are eCompany, Coresource Investments (Pty) Ltd
("Coresource"), Worldsport Interactive Limited (previously Sportal Asia
Limited) ("Worldsport Interactive") and Absolute Systems.
eCompany (www.ecompany.co.za) develops, delivers and operates e-commerce
platforms in the following selected markets:
* Livebet (www.livebet.co.za) - online sports betting and gaming; and
* iVeri (www.iveri.co.za) - secure payment processing.
Livebet licences have now been sold internationally and there is an
exclusive agreement between iVeri and Nedbank in South Africa.
Coresource (www.twg.co.za) is a profitable strategic staffing outsourcing
company with a national footprint of 48 branches and an average of 9 000 -
10 000 contracted staff in the field at any stage.
Worldsport Interactive (www.sportalasia.com) is now aligned to support
the objectives of World Sport Group plc, an international player in major
sporting events, which is listed on the London Stock Exchange's Alternative
Investment Market. As part of a restructuring of shareholder interests,
following the liquidation of Sportal Holdings BV, Cycad's shareholding has
increased from 10% to 30% at no additional cost. The company has entrenched
its revenue streams and is operating at a small loss.
Absolute Systems (www.absolutesys.com) specialises in developing and
deploying software to manage ATM's and financial transactions. Orders have
been secured with major South African banks and retail groups and
international opportunities are being pursued.
In addition to the above, Cycad holds 5 million shares in EC-Hold Limited
("EC-Hold"). On 7 August 2001, the Securities Regulation Panel ("SRP") ruled
that MGX Holdings Limited ("MGX") should make an unconditional mandatory
cash offer of R2,35 per share to all existing minority shareholders of EC-
Hold. MGX has appealed this decision and the ruling by a full SRP panel is
awaited.
5. DIRECTORATE
The board deeply regrets the recent passing of our Chairman, Mr Tony
Behrmann who made a significant contribution to our strategies. Mr Fine will
act as executive Chairman and CEO until further notice.
Mr L van Zyl resigned as director with effect from 26 February 2002.
6. DIVIDENDS
No dividend was declared or paid during the period under review.
7. REVIEW OF THE INDEPENDENT AUDITORS
The interim report has not been audited, but has been reviewed by our
auditors Fisher Hoffman PKF (Jhb) Inc. This review has been performed in
accordance with the guidelines issued by the South African Institute of
Chartered Accountants and a copy of the review report is available for
inspection at the registered office of the company.
8. PROSPECTS
Subsequent to the rights issue and restructuring, Cycad will focus on
managing its portfolio of investments to appropriate levels of maturity.
By order of the board
L H FINE A J FROST
Executive Chairman Executive director
Johannesburg
13 March 2002
Transfer secretaries Registered office
Mercantile Registrars Limited 15 Girton Road
11 Diagonal Street Parktown, 2193
Johannesburg, 2001
(PO Box 1053, Johannesburg, 2000) Tel: (011) 507-2000
Fax: (011) 507-2004
email: cycadfinhold@cycadfinhold.co.za Website: www.cycadfinhold.co.za
Directors:
L H Fine (Executive Chairman), 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)
Date: 13/03/2002 08:41:54 AM Produced by the JSE SENS Department
