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EC HOLD LIMITED - REVIEWED GROUP RESULTS FOR THE EIGHTEEN MONTHS ENDED 30 JUNE
2002 AND FURTHER CAUTIONARY ANNOUNCEMENT
EC-Hold Limited
Registration number 1998/020093/06
Share code: ECH ISIN code: ZAE000016705
("EC-Hold" or "the company")
Reviewed group results for the eighteen months ended 30 June 2002
Consolidated income statement
Reviewed Audited
18 months to 16 months to
30 June 31 December
2002 2001
R`000 R`000
Revenue 192 344 72 439
Operating 4 090 (6 749)
income/(loss)
before
depreciation
Depreciation (1 906) (1 744)
Operating 2 184 (8 493)
income/(loss)
Net finance 147 3 126
income
Net 2 331 (5 367)
income/(loss)
before
taxation
Taxation 6 057 (491)
Net loss for (3 726) (4 876)
the year
Loss on sale (1 208) -
of division
Impairment of (11 273)
investments
Outside (74)
shareholders`
interest
Loss (16 281) (4 876)
attributable
to ordinary
shareholders
Weighted
average number
of
ordinary 104 040 104 040
shares in
issue
(thousands)
Headline loss (3,7) (4,7)
per ordinary
share (cents)
Loss per (15,6) (4,7)
ordinary share
(cents)
Headline loss
reconciliation
Attributable (16 281)
loss
Loss on sale 1 208
of division
Impairment of 11 273
investments
Headline loss (3 800)
Summarised consolidated balance sheet
Reviewed Audited
30 June 31 December
2002 2001
R`000 R`000
Assets
Non-current assets 2 099 30 339
Fixed assets 723 1 397
Deferred tax - 28 659
Financial assets 1 376 283
Current assets 62 105 52 351
Cash resources 2 089 26 990
Other current 60 016 25 361
assets
Total assets 64 204 82 690
Equity and
liabilities
Shareholders` 12 795 44 419
equity
Vendor loan - 7 600
Non-current
liabilities:
Interest bearing 10 886 8 018
Current liabilities 40 523 22 653
Total equity and 64 204 82 690
liabilities
Number of ordinary 104 040 104 040
shares in issue
(thousands)
Net tangible asset 12,0 14,9
value per ordinary
share (cents)
Summarised consolidated cash flow statement
Reviewed Audited
18 months to 16 months to
30 June 31 December
2002 2001
R`000 R`000
Cash generated from
operations
before working 1 097 (3 104)
capital changes
Working capital (12 801) 6 537
changes
Net finance income 147 3 126
Taxation paid (1 086) -
Cash flow from (12 643) 6 559
operating
activities
Cash flow from (4 702) (24 960)
investing
activities
Cash flow from (7 556) (851)
financing
activities
Net decrease in (24 901) (19 252)
cash and cash
equivalents
Cash and cash
equivalents at the
beginning
of the period 26 990 46 242
Cash and cash 2 089 26 990
equivalents at the
end of the period
Statement of changes in equity
Non- Outside
Distrib- distrib- share-
Share Share utable utable holders`
capital premium reserve reserve interest Total
Balance as
at
30 December
2000
as 1 040 11 118 6 768 28 923 239 48 088
previously
stated
Prior year (3 669) (3 669)
adjustment
Restated
balance
at 30
December
2000 1 040 11 118 3 099 28 923 239 44 419
Net loss (16 281) 74 (16 207)
for the
period
Vendor
liability
transferred 7 600 7 600
Deferred
taxation
written 5 906 (28 923) (23 017)
back
1 040 11 118 (7 276) 7 600 313 12 795
Commentary
Trading Review
Revenue increased 165% to R192,3 million with operating income increasing from a
loss of R8,5 million to a profit of R2,2 million. The attributable loss before
abnormal items moved from a loss of R4,9 million to a loss of R3,8 million for
the 18 months to 30 June 2002. Obsolete stock and overdue debtors were written
off in Sun Botswana, totalling R12 million. A change in the accounting policy
for Research & Development also negatively affected the current year loss by
R1,8 million.
In terms of AC 102, the deferred taxation asset has to be assessed each year
end. Considering that EC Hold has made losses for the two previous reporting
periods, the deferred taxation asset has been written down until such time that
it is probable that future taxable profits can be utilised against this asset.
The effect of this has increased the income statement taxation charge by R5,9
million.
Investments
Intervate
The business secured additional investment from the IDC of R10 million. The
receipt of R5 million is in the current period`s cash flow, whilst the
additional R5 million is due by the end of September subject to signing at least
two international value-added resellers. These milestones have been achieved.
Correlate
Correlate received an amount of $500K in the form of an external investment. EC
Hold diluted as a result and its holding in Correlate is now 10%.
Connect One
EC Hold`s investment in Connect One has been written down due to the fact that
the business no longer has synergy with our current business.
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the most recent cautionary announcement of 16
August 2002 and are advised that on 8 August 2002 MGX Holdings Limited received
the reasons for the 19 March 2002 ruling of the Securities Regulation Panel. MGX
is at present considering alternative courses of action. Accordingly, EC-Hold
shareholders are advised to continue to exercise caution when dealing in their
shares until a further announcement is made.
Prospects
After the effects of the various write-offs reflected in the results, EC-Hold is
expected to return to profitability in the forthcoming year.
Dividends
The directors have decided that the interests of the shareholders are best
served if the company does not pay a dividend. Cash generated will be reinvested
in the group.
Accounting policies
The accounting policies used in the preparation of the financial statements for
the year ended 30 June 2002 comply with Statements of Generally Accepted
Accounting Practice and are consistent with those applied in the prior year,
other than the write-off of research and development in respect of AC 129, which
is in line with the holding company. The financial effect is also shown in the
prior year comparatives.
Review by independent auditors
The financial information set out in this announcement has been reviewed, but
not audited, by Grant Thornton Kessel Feinstein, whose review reports are
available for inspection at the company`s registered office.
Amir Lubashevsky, Chief executive officer
27 September 2002
Directors: A Lubashevsky, T H Appel, R D Shirley* * Non-executive
Transfer secretaries
Computershare Investor Services Limited, 70 Marshall Street, Johannesburg
Registered office
22 Milkyway Avenue, Linbro Business Park
Date: 30/09/2002 05:20:00 PM Produced by the JSE SENS Department
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