| Thu 3 Oct 2002, 18:02 | | Aqua Online Holdings Limited - Reviewed Preliminar |
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Aqua Online Holdings Limited - Reviewed preliminary results
Aqua Online Holdings Limited
Reviewed preliminary results for the year ended 30 June 2002
Making e-Business a Reality
Registration number 1971/005628/06
("Aqua" or "the group")
Share code: AQU
ISINcode: ZAE 000024360
Salient features
- Losses in line with forecast at interim stage
- Board considering strategic alternatives to continued listing
- Further cautionary announcement
Summarised consolidated income statement
30 June 30 June
2002 2001
Notes R`000 R`000
Revenue 65 670 78 472
(Loss) earnings before interest,
taxation, depreciation and
amortisation (11 083) 23 744
Unrealised foreign exchange gain 3 878 -
Depreciation (5 411) (3 185)
Amortisation of goodwill (2 115) (358)
Net finance income 494 2 166
(Loss) income before taxation and
exceptional items (14 237) 22 367
Exceptional items 2 (7 125) (1 051)
(Loss) income before taxation (21 362) 21 316
Taxation 1 1 134 (882)
Attributable (loss) earnings (20 228) 20 434
Headline (loss) earnings adjustments
in respect of:
- Exceptional items 7 125 1 051
- Amortisation of goodwill 2 115 358
Headline (loss) earnings (10 988) 21 843
Headline (loss) earnings
per share (cents) (4.20) 8.30
(Loss) earnings per share (cents) (7,73) 7,76
Weighted number of shares in issue
and to be issued (000) 261 753 263 181
Summarised consolidated balance sheet
30 June 30 June
2002 2001
R`000 R`000
Assets
Non-current assets 18 934 23 249
- Property, plant and equipment 10 325 7 693
- Goodwill 8 459 15 546
- Loan to share incentive trust 150 10
Current assets 43 764 46 559
- Trade and other receivables 14 334 16 556
- Taxation 1 003 72
- Bank and cash 28 427 29 931
Total assets 62 698 69 808
Equity and liabilities
Equity
- Capital and reserves 37 281 56 954
Non-current liabilities
- Deferred taxation - 17
Current liabilities 25 417 12 837
- Trade and other payables 15 076 12 837
- Bank overdraft 10 341 -
Total equity and liabilities 62 698 69 808
Net asset value per share (cents) 14,24 21,42
Net tangible asset value per share (cents) 11,01 15,58
Number of shares in issue and to be issued (000) 261 753 265 841
Summarised consolidated cash flow statement
30 June 30 June
2002 2001
R`000 R`000
Cash (absorbed by) generated from operations (4 053) 16 786
Interest received 494 2 166
Translation of foreign entities 4 095 2 563
Taxation received (paid) 186 (1 595)
Cash flows from operating activities 722 19 920
Cash flows from investing activities (12 447) (14 787)
Cash flows from financing activities (120) 22
Net movement in cash resources (11 845) 5 155
Opening cash resources 29 931 24 776
Closing cash resources 18 086 29 931
Consolidated statement of changes in equity
30 June 30 June
2002 2001
R`000 R`000
Opening balance 56 954 25 509
Shares issued and to be issued - 803
Adjustment to purchase consideration
of businesses acquired (3 420) 8 426
Share issue and listing expenses written off (120) (781)
Translation difference 4 095 2 563
Attributable (loss) earnings (20 228) 20 434
Closing balance 37 281 56 954
Notes to the financial statements
30 June 30 June
2002 2001
R`000 R`000
1 Taxation
South African normal tax (160) 885
- Current - 885
- Overprovision in respect of prior year (160) -
Foreign tax (974) (3)
- Current (779) 28
- Deferred 15 (31)
- Overprovision in respect of prior year (210) -
(1 134) 882
No provision has been made for taxation as
the group entities have incurred losses
2 Exceptional items
Goodwill written off on premature
termination of contract 6 171 -
Impairment of loan to share incentive trust 688 -
Recoupment of goodwill previously written off (1 390) -
Loss on disposal of property, plant and equipment 347 -
Provision for restructure costs 1 309 -
Investment written off - 1 051
7 125 1 051
3 Commitments
Operating leases
Payable
- Within one year 3 687 1 404
- Thereafter 7 097 1 762
10 784 3 166
Capital committed and authorised 1 222 -
COMMENTS
Introduction
The directors of Aqua present the reviewed preliminary results for the year
ended 30 June 2002 ("the year").
In line with forecasts announced on 16 November 2001 and in the interim results
announcement on 8 March 2002, Aqua has sustained a material headline loss for
the year. While the year`s group restructure has positively impacted operational
costs, Aqua continues to experience difficult trading conditions both in the
online gaming industry and
e-services market. The ongoing feasibility of the group as a listed entity is
being re-evaluated in light of revised prospects.
Profile
The group comprises two core businesses:
- Gaming provides the full spectrum of back-office processing and management
services to online casino operators. Following conclusion of its distribution
agreement with International Merchant Services Limited ("IMS"), the business
distributes the IMS online casino software ("the IMS software").
- Enablement builds e-businesses, from consulting around strategic
e-business models through devising CRM and brand strategy to integrating
software functionality.
THE YEAR UNDER REVIEW
Gaming profits have been depressed as a result of costs associated with the roll
out and support of the IMS software and underperformance by Aqua`s existing e-
gaming clients in tough market conditions.
Enablement revenues and margins have remained under pressure from the worldwide
slowdown in corporate internet spend despite cost rationalisation and continued
strict working capital discipline in this business.
The cost of restructure initiatives during the year, including relocating
international operations to South Africa and improving operational efficiency in
the Enablement business locally, have contributed to the year`s losses. The
reduced operational costs have not reversed the group`s current financial
performance as expected given lower revenues across the businesses.
FINANCIAL RESULTS
Revenue for the year decreased to R65,7 million from R78,5 million for the year
ended 30 June 2001.
The group reported a loss of R11,1 million before interest, taxation,
depreciation and amortisation and a headline loss per share of 4,2 cents.
Net cash was reduced to R18,1 million from R29,9 million in the previous year.
Subsequent to the restructure, effective 1 October 2001, the foreign businesses
are integral operations as defined in AC112 and the resultant translation
differences were included in the income statement. Prior to that date the
businesses were independent foreign entities and associated foreign exchange
movements were taken directly to a non-distributable reserve.
ACCOUNTING POLICIES
The accounting policies used in the preparation of the preliminary results are
consistent with those applied in the previous year ended 30 June 2001, and
comply with South African Statements of Generally Accepted Accounting Practice.
INDEPENDENT REVIEW
The preliminary results for the year ended 30 June 2002 have been reviewed by
Fisher Hoffman PKF (Jhb) Inc. Their unqualified review opinion is available for
inspection at Aqua`s registered office.
OUTLOOK
The online gaming industry has changed fundamentally over the past six months
due primarily to stricter regulation of e-gaming credit card transactions by
large American issuing banks. The industry has consolidated and new entrants
have slowed in the face of raised barriers to entry, which has impacted Aqua`s
software distribution pipeline. Management accordingly does not expect short to
medium term Gaming prospects to improve materially.
Enablement anticipates limited growth opportunities and continued tight margins
with a focus on servicing its existing client base.
FURTHER CAUTIONARY ANNOUNCEMENT
In light of weak prospects for Aqua`s businesses going forward, the benefit to a
continued listing of the group has been reviewed. Associated costs, the
inability to raise capital and staff incentivisation have also been considered.
The Board is accordingly assessing strategic alternatives for the group to
maximise and protect shareholder value that may include delisting the group and
returning capital to shareholders.
Shareholders are referred to the cautionary announcement dated 29 August 2002
and are advised to continue exercising caution when dealing in Aqua`s securities
pending further announcements.
OUR PEOPLE
Aqua thanks its management and staff for their ongoing dedication and
perseverance. The group also thanks its customers and business advisors for
their invaluable support.
DIVIDEND
In line with group policy no dividend has been declared for the year.
By order of the Board
Brent Shahim
(CEO)
3 October 2002
Directors: Jeff Liebesman (Chairman)*, Brent Shahim (CEO), Dionne Ellerine*,
Jade Hamburger (alternate)*, Tal Harpaz*, Troels Henriksen, Martin Sacks*,
Gideon Shachat.
*Non-executive director
Registered office: Sanlam Arena, cnr Bolton Road and Cradock Avenue, Rosebank.
PO Box 742, Parklands 2121.
Transfer secretaries: Computershare Investor Services Limited, 11 Diagonal
Street, Johannesburg 2001. PO Box 1053, Johannesburg 2000.
Company secretary: Corpcapital Company Secretaries (Proprietary) Limited, 2
Arnold Road, Rosebank. PO Box 471917, Parklands 2121.
Date: 03/10/2002 05:15:20 PM Produced by the JSE SENS Department
