| Fri 15 Mar 2002, 0:00 | | Micrologix Limited - Abridged Audited Financial St |
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MICROLOGIX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/018118/06)
JSE Share code: MRX ISIN: ZAE000016911
("Micrologix" or "the company")
ABRIDGED AUDITED FINANCIAL STATEMENTS
for the year ended 31 December 2001
Highlights:
Micrologix turns a new page with proposed acquisition of Spectrum Shipping
ABRIDGED AUDITED BALANCE SHEET
as at 31 December 2001
Group Group
2001 2000
R R
ASSETS
Non-current assets 6 334 457 8 979 586
Plant and equipment - 427 042
Intangible assets - 2 500
Deferred taxation 6 323 957 8 539 544
Employee share trust 10 500 10 500
Current assets 2 146 280 922 577
Inventories - 247 630
Accounts receivable 2 137 286 643 008
Cash and cash equivalents 8 994 31 939
Total assets 8 480 737 9 902 163
EQUITY AND LIABILITIES
Capital and reserves 7 744 380 2 574 676
Issued capital 93 722 164 93 722 164
Accumulated loss (85 977 784) (91 147 488)
Non-current liabilities
Loans payable 415 500 74 138
Current liabilities
Accounts payable and provisions 320 857 7 253 349
Total equity and liabilities 8 480 737 9 902 163
Net asset value per share (cents) 5,2 1,7
Net tangible asset value
per share (cents) 5,2 1,7
ABRIDGED AUDITED CASH FLOW STATEMENT
for the year ended 31 December 2001
Group Group
2001 2000
R R
Cash flows from operating
activities (629 964) (1 866 763)
Cash receipts from customers 418 090 2 225 981
Cash paid to suppliers and employees (1 048 460) (3 982 781)
Cash utilised in operating activities (630 370) (1 756 800)
Interest received 474 48 649
Interest paid (68) (158 612)
Cash flows from investing activities 263 157 296 919
Cash flow to maintain activities
Plant and equipment acquired - (3 369)
Plant and equipment sold 263 157 300 288
Cash flows from financing activities 343 862 74 138
Loans raised 343 862 74 138
Increase/(Decrease) in cash
and cash equivalents (22 945) (1 495 706)
Cash and cash equivalents
at the beginning of the year 31 939 1 527 645
Cash and cash equivalents
at the end of the year 8 994 31 939
ABRIDGED AUDITED INCOME STATEMENT
for the year ended 31 December 2001
Group Group
2001 2000
R R
Revenue 255 995 2 100 694
Cost of sales (254 630) (2 942 343)
Gross profit/(loss) 1 365 (841 649)
Operating costs (944 301) (28 436 993)
Gain on compromise settlement 6 565 457 -
Operating profit/(loss)
before interest and taxation 5 622 521 (29 278 642)
Interest received 474 48 649
Finance costs (68) (158 612)
Net profit/(loss) before taxation 5 622 927 (29 388 605)
Share of profit of Spectrum
Shipping Company (Pty) Ltd 1 762 364 -
Taxation (2 215 587) 1 999 817
Net profit/(loss) for the period 5 169 704 (27 388 788)
Earnings/(loss) per share (cents) 3,4 (18,3)
Headline earnings/(loss)
per share (cents) 0,4 (3,6)
More comparative headline
earnings/(loss) per share (cents) (0,4) -
ABRIDGED AUDITED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2001
Share Share Accumulated
capital premium loss Total
Group R R R R
Balance at 1 January 2000 150 000 89 272 164 (59 458 700) 29 963 464
Fundamental error - 4 300 000 (4 300 000) -
Restated balance 150 000 93 572 164 (63 758 700) 29 963 464
Net loss before
fundamental error - - (27 856 340) -
Fundamental error - - 467 552 -
Net loss for the period - - (27 388 788) (27 388
788)
Balance at 1 January 2001 150 000 93 572 164 (91 147 488) 2 574 676
Net profit for the period - - 5 169 704 5 169 704
Balance
at 31 December 2001 150 000 93 572 164 (85 977 784) 7 744 380
COMMENT BY THE BOARD OF DIRECTORS
Review of Results
The board is pleased to report on two significant developments during the
past year that changed the course of the company. Both events have been
discussed in more detail in the following sections. The first development,
namely the Section 311 Compromise Offer with creditors, not only restored
the company's solvency, but also represented effectively the final chapter
in Micrologix's unhappy history as an IT company. The once-off gain on the
compromise settlement accounted for an abnormal profit of R6,565 million
during the year.
The second event relates directly to the company's future prospects. The
directors have negotiated, subject to shareholder approval, the acquisition
of the business of Spectrum Shipping Company (Pty) Ltd ("Spectrum Shipping")
with effect from 1 July 2001 by way of a reverse takeover. As a consequence,
income in the amount of R1,762 million has been accounted for as
Micrologix's share of the profits of Spectrum Shipping in the event that the
shareholders approve the transaction at a general meeting to be held on 19
March 2002.
Given the magnitude and unusual nature of these events, the 2001 Annual
Financial Statements, although providing a fair accounting representation of
the year's events, are in actual fact of very little consequence when
considering the new business nature and future prospects of Micrologix.
Profit/ Net profit/
(loss) Taxation (loss)
R R R
2000
Net loss (27 388 788) - (27 388 788)
Write-down of investments 31 527 - 31 527
Abnormal item 22 000 000 - 22 000 000
Profit on sale of fixed assets (3 070) 921 (2 149)
Headline loss (5 360 331) 921 (5 359 410)
2001
Net profit 5 169 704 - 5 169 704
Gain on compromise
settlement (6 565 457) 1 969 637 (4 595 820)
Loss on sale of fixed assets 106 000 (31 800) 74 200
Headline (loss)/profit (1 289 753) 1 937 837 684 084
Share of profit - Spectrum
Shipping Company (Pty) Ltd (1 762 364) 528 709 (1 233 655)
More comparative headline loss (3 052 117) 2 466 546 (585 571)
Pre-restructuring activities
As previously reported in the 2000 Annual Report, the company encountered
numerous problems since its listings in December 1998. With expected
synergies not materialising and development costs exceeding projections, the
previous directors embarked on an unsuccessful restructuring programme. To
make matters worse, control was also lost over the Penta business. The
resultant severe financial distress led to a change in control of the
company to Gandalf Trust on 27 October 2000, who then proceeded to launch a
rescue operation. New directors were appointed, operational trading
activities were down-scaled and direct head office costs were eliminated
with immediate effect.
Section 311 Compromise Offer with creditors
The next important phase of the rescue operation entailed Gandalf Trust
acting as proposer in a scheme of compromise between the company and its
creditors in terms of section 311 of the Companies Act (Act 61 of 1973), as
amended. The offer was accepted by the creditors of the company at a meeting
held on 6 March 2001, sanctioned by the High Court of South Africa
(Transvaal Provincial Division) and registered with the Registrar of
Companies on 15 March 2001. Acceptance of the offer resulted in all
creditors being settled and solvency being restored to the company.
Proposed acquisition of the business conducted by Spectrum Shipping
Company (Pty) Ltd
Following the restoration of the company's solvency for future trading,
the directors negotiated an acquisition on behalf of Micrologix which they
are confident will restore the fortunes of the company. This proposed
transaction has been described in detail in a circular to shareholders dated
25 February 2002, which incorporates a notice of a general meeting of
shareholders to be held on 19 March 2002 at which time shareholders will
vote on the acquisition.
In brief, it is proposed that Micrologix acquires as a going concern the
clearing and forwarding business conducted by Spectrum Shipping with effect
from 1 July 2001. The acquisition will result in a change of control in
Micrologix. The consideration amount of the acquisition is R6 million, to be
settled by the issue to the vendor of 600 000 000 consideration shares in
the company at one cent per share. The directors have negotiated this
transaction at a substantial discount to the net asset value of R11,3
million of Spectrum Shipping as at 30 June 2001. This is a considerable
achievement, particularly given the services-oriented nature of the business
of Spectrum Shipping.
The directors of Micrologix recommend that the shareholders vote in
favour of the resolutions required to implement the acquisition and matters
relating thereto to be proposed at the general meeting of the shareholders.
Those directors of Micrologix who own or control Micrologix shares intend to
vote in favour of the resolutions to be proposed at the general meeting.
New nature of business
Micrologix, which will change its name to Spectrum Shipping Limited
should the suspensive conditions governing the acquisition be fulfilled,
will operate as a clearing and forwarding intermediary to local exporters
and importers. Spectrum Shipping occupies a niche position in the clearing
and forwarding market as an independent company with an established track
record, a diversified and growing client base and exposure to key growth
industries. The revenue model of Spectrum Shipping exhibits typical rand-
hedge qualities and it is ideally positioned to benefit from the ongoing
opening up of the South African economy.
Future prospects
The future prospects of Micrologix will be completely dependent on the
business activities of Spectrum Shipping should the acquisition be approved.
Spectrum Shipping has identified opportunities in a number of areas in which
to expand, both organically and through acquisition. These include:
* broadening its geographical representation and exposure, for instance, in
the large and lucrative Johannesburg market;
* increasing its exposure in the forwarding market, which will create a
further opportunity for the company in that it will be able to leverage the
growth in its volume of shipments and its existing relationships with vessel
owners and road transporters to facilitate in the negotiation of transport
and freight rate on behalf of customers; and
* adding to its existing exporter client base.
A cautionary statement, dated 12 February 2002, was issued to advise
shareholders that they should exercise caution in dealing with Micrologix
shares since the company is in negotiations, which if successfully
concluded, may have a material effect on the company's share price.
Dividend
No dividends were declared or recommended during the year.
Share capital
There were no changes to the authorised and issued share capital of the
company during the accounting period under review. In the event that the
Spectrum Shipping transaction be approved by shareholders, the authorised
share capital of the company will be increased to 2 000 000 000 (two
billion) ordinary shares and the issued share capital to 750 000 000 (750
million) ordinary shares.
Accounting policies
The Annual Financial Statements were prepared in accordance with
Generally Accepted Accounting Practices. The accounting policies are
consistent with those used during the previous financial period.
Directors
Three new directors, Messrs. Tadeusz Tomaszewski, David Kelly and Rajin
Singh, all of whom are actively involved in directing the affairs of
Spectrum Shipping, were appointed as directors of Micrologix. It is proposed
that Messrs. K J Gribnitz and J P Nel will remain on the board of Spectrum
Shipping Ltd.
For and on behalf of the board
Karl Gribnitz Madeleen Botha
Pretoria
Corporate Advisor
Radagast Capital (Pty) Ltd
(Registration number 2000/030942/07)
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
