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Maxtec Limited Annual Results Year End 31 August 2002
Maxtec Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/004039/06)
("Maxtec")
Share Code: MEC
ISIN: ZAE000016721
MAXTEC LIMITED Audited Audited Audited
Year ended Year ended Year ended
GROUP CASH FLOW STATEMENT 31 Aug 2002 31 Aug 2002 31 Aug 2002
R`000 R`000 R`000
Total Continuing Discontinued
operations operations
Cash flows from operating (2,170) (5,747) 3,576
activities
Cash receipts from customers 86,470 69,842 16,628
Cash paid to suppliers & (85,769) (72,828) (12,942)
employees
Cash generated from 701 (2,986) 3,686
operations
Dividend received 1,139 1,139 -
Interest received 101 89 12
Interest paid (1,702) (1,502) (200)
Taxation paid/received (2,409) (2,487) 78
Cash flows from investing 7,213 7,295 (81)
activities
Additions to plant & (1,539) (1,344) (195)
equipment
Proceeds on sale of plant and 265 151 114
equipment
Increase in investment in - - -
associate
Proceeds on disposal of 6,995 6,996 -
associate
Proceeds on disposal of 1,492 1,492 -
subsidiaries
Cash flows from financing (93) 312 (405)
activities
Decrease in loan to share - - -
incentive trust
Increase/(decrease) in (93) (37) (56)
interest-bearing liabilities
(Decrease/Increase in amounts - 349 (349)
due to group companies
Net (decrease)/increase in 4,950 1,860 3,090
cash resources
Cash resources at the (4,724) (1,749) (2,975)
beginning of the year
Cash resources at the end of 226 111 115
the year
MAXTEC LIMITED Audited Audited Audited
Year ended Year ended Year ended
GROUP CASH FLOW STATEMENT 31 Aug 2001 31 Aug 2001 31 Aug 2001
R`000 R`000 R`000
Total Continuing Discontinued
Operations operations
Cash flows from operating (5,383) (2,402) (2,981)
activities
Cash receipts from customers 118,379 91,545 26,834
Cash paid to suppliers & employees (120,611) (91,679) (28,932)
Cash generated from operations (2,232) (134) (2,098)
Dividend received -
Interest received 51 25 26
Interest paid (1,253) (975) (278)
Taxation paid/received (1,949) (1,318) (631)
Cash flows from investing (1,885) (823) (1,062)
activities
Additions to plant & equipment (2,371) (917) (1,454)
Proceeds on sale of plant and 487 95 392
equipment
Increase in investment in associate (1) (1) -
Proceeds on disposal of associate - - -
Proceeds on disposal of - - -
subsidiaries
Cash flows from financing 219 (539) 758
activities
Decrease in loan to share incentive 129 129 0
trust
Increase/(decrease) in interest- 90 8 82
bearing liabilities
(Decrease)/increase in amounts due - (676) 676
to group companies
Net (decrease)/increase in cash (7,049) (3,764) (3,285)
resources
Cash resources at the beginning of 2,325 2,015 310
the year
Cash resources at the end of the (4,724) (1,749) (2,975)
year
Audited Audited
Year ended Year ended
GROUP BALANCE SHEET 31 Aug 2002 31 Aug 2001
R ` 000 R ` 000
ASSETS
Non-current assets 7,917 12,904
Plant and equipment 1,811 5,201
Investment in associate company - 5,371
Deferred taxation 5,797 1,870
Loan to share incentive trust 309 462
Current assets 27,460 30,928
Inventories 9,618 18,032
Trade and other receivables 17,616 12,896
Cash resources 226 -
TOTAL ASSETS 35,377 43,832
EQUITY AND LIABILITIES
Capital and reserves 15,392 22,838
Issued capital 9 9
Share premium 18,446 18,446
Accumulated profit (3,063) 4,383
Non current liabilities - 203
Interest-bearing borrowings 203
Current liabilities 19,985 20,791
Trade and other payables 19,533 12,915
Provisions 384 637
Current portion of interest-bearing 38 121
borrowings
Taxation 30 2,394
Bank overdraft - 4,724
TOTAL EQUITY AND LIABILITIES 35,377 43,832
Audited Audited Audited
Year ended Year ended Year ended
GROUP STATEMENT OF CHANGES IN 31 Aug 2002 31 Aug 2002 31 Aug 2002
EQUITY
R`000 R`000 R`000
Total Continuing Discontinued
operations operations
Ordinary shareholders equity 22,838 21,032 1,806
at beginning of year
Changes in share premium - - -
Changes in accumulated
profits
Attributable (loss)/profit (7,446) (7,654) 208
for the year
Ordinary shareholders equity 15,392 13,378 2,014
at the end of the year
Audited Audited Audited
Year ended Year ended Year ended
GROUP STATEMENT OF CHANGES IN 31 Aug 2001 31 Aug 2001 31 Aug 2001
EQUITY
R`000 R`000 R`000
Total Continuing Discontinued
operations operations
Ordinary shareholders equity at 26,578 22,352 4,226
beginning of year
Changes in share premium 6,528 6,528 -
Changes in accumulated profits
Attributable (loss)/profit for the (10,268) (7,848) (2,420)
year
Ordinary shareholders equity at the 22,838 21,032 1,806
end of the year
Audited Audited Audited
Year ended Year ended Year ended
GROUP INCOME STATEMENT 31 Aug 2002 31 Aug 2002 31 Aug 2002
R`000 R`000 R`000
Total Continuing Discontinued
operations operations
Revenue 92,848 79,395 13,453
Operating (Loss)/Profit (12,023) (13,562) 1,539
Net interest paid (1,601) (1,413) (188)
Profit from associate 665 665
Profit from sale of associate 2,257 2,257
company
Dividend received/paid - 738 (738)
Loss from sale of (474) (474)
subsidiaries
Loss on write down of loan to (153) (153) -
Share Incentive Trust
(Loss)/Profit before taxation (11,329) (11,942) 613
Taxation 3,883 4,288 (405)
Net (loss)/profit after tax (7,446) (7,654) 208
for the year
Depreciation 1,917 1,457 460
Net interest paid (1,601) (1,413) (188)
Interest received 101 89 12
Interest paid (1,702) (1,502) (200)
(Loss)/earnings per share (8.4)
(cents)
Headline (loss)/earnings per (9.3)
share (cents)
Fully diluted headline (9.3)
(loss)/earnings per share
(cents)
Weighted average number of 88.2
shares in issue (millions)
Calculation of Fully diluted
earnings
Actual number of shares in 88,154,507
issue
Reconciliation of headline
earnings
Net (loss)/profit after tax (7,446)
for the year
Loss on write down of loan to 153
Share Incentive Trust
Profit from sale of associate (2,257)
company
Loss from sale of 474
subsidiaries
Amortisation of goodwill in 159
associate
Profit on sale of fixed 2
assets
Impairment loss 726
Headline earnings (8,189)
Net asset value per share 17.46c
Audited Audited Audited
Year ended Year ended Year ended
GROUP INCOME STATEMENT 31 Aug 2001 31 Aug 2001 31 Aug 2001
R`000 R`000 R`000
Total Continuing Discontinued
operations operations
Revenue 117,823 91,156 26,667
Operating (Loss)/Profit (8,981) (5,970) (3,011)
Net interest paid (1,202) (950) (252)
Profit from associate 829 829 -
Profit from sale of associate - - -
company
Dividend received/paid
Loss from sale of subsidiaries - - -
Loss on write down of loan to Share (3,699) (3,699)
Incentive Trust
(Loss)/Profit before taxation (13,053) (9,790) (3,263)
Taxation 2,785 1,942 843
Net (loss)/profit after tax for the (10,268) (7,848) (2,420)
year
Depreciation 1,319 594 725
Net interest paid (1,202) (950) (252)
Interest received 51 25 26
Interest paid (1,253) (975) (278)
(Loss)/earnings per share (cents) (11.6)
Headline (loss)/earnings per share (7.2)
(cents)
Fully diluted headline (7.2)
(loss)/earnings per share (cents)
Weighted average number of shares 88.2
in issue (millions)
Calculation of Fully diluted
earnings
Actual number of shares in issue 88,154,507
Reconciliation of headline earnings
Net (loss)/profit after tax for the (10,268)
year
Loss on write down of loan to Share 3,699
Incentive Trust
Profit from sale of associate -
company
Loss from sale of subsidiaries -
Amortisation of goodwill in 181
associate
Profit on sale of fixed assets -
Impairment loss -
Headline earnings (6,388)
Net asset value per share 25.90c
MAXTEC LIMITED ANNUAL RESULTS YEAR END 31 AUGUST 2002
The directors of Maxtec Limited hereby announce the annual results for the year
ended 31 August 2002.
Nature of business
Classified under the Information Technology Hardware sector of the JSE
Securities Exchange, Maxtec Limited (`MEC`) provides complete high-end mass
storage solutions as well as offering a range of related applications. Maxtec
covers all aspects of IT storage solutions including: consulting, outsourcing,
implementation, repair, maintenance, education and training.
BASIS OF PREPARATION
The financial statements of the Group have been prepared in accordance with the
South African Statements of Generally Accepted Accounting Practice, which
policies are consistent with those of the prior year.
AUDIT OPINION
The annual results have been audited by Fisher Hoffman PKF (JHB) Inc., the
Group`s auditors. Their unqualified audit report is available for inspection at
the Group`s registered office during normal office hours.
Trading environment & Financial Performance
Due to low levels of business confidence and the rand`s deteriorating buying
power, corporate IT spend has tapered down.
Compared to the twelve month period ended 31 August 2001, turnover decreased
from R117,8 million to R92,9 million, with the operating loss increasing to
R12.0 million (R8,9 million: 2001). A competitive trading environment driven
partly by various original IT equipment manufacturers entering the storage
solutions market with branded hardware, and after the disposal of its investment
in the associated company and certain subsidiaries, Maxtec reported a headline
loss of R8,189 million or (9.3) cents per share for the financial year under
review.
As a result of the Group`s restructure and the reduction in borrowings, the
future of the continuing operations and the Group has been greatly improved.
Inventory levels are sharply down from R18,0 million to 9,6 million owing to the
conservative view taken on slow moving stock as well as the management of stock
levels and the sale of the subsidiaries. Though trade receivables and payables
reflect a steep increase, these amounts relate to two large transactions
concluded before year-end amounting to nearly R10 million. Receivables and
payables returned to normal levels by the end of September.
Over the past year, management focused on improving inventory management and
cash flow. Most business activities have been consolidated under Maxtec
Peripherals. Taking a conservative view, the R726 000 costs associated with the
development of an in-house storage virtualisation software solution have been
written off in full.
Maxtec aims to effect further improvements by continuing the focus in data
storage distribution via the reseller channel, and growing service-related
annuity income.
The company has concentrated its efforts on rebuilding its distribution channel,
and confidence is growing that resellers will seek out the company as a
preferred supply partner as the demand-side for IT infrastructure improves. IBM
remains an esteemed Principal for the company.
It is unlikely that the company will turn in a profit over the current six-month
operating period, which includes the historically lower trading months of
December and January. Management is optimistic that the company will return to
profitability based on changes effected during the past financial year coupled
with hard work and improved trading conditions.
Operational Review
Management has focused the activities of the group to consulting, outsourcing,
implementation and the distribution of storage products; disposing non-core
operations in an effort to free working capital and reduce borrowings. The
company disposed of its non-core local authority company Maxtec Global Support
Services (Pty) Ltd (MGSS). This had a minimal effect on Maxtec`s net asset
value, since goodwill relating to the initial acquisition had been written off
in full against the share premium in prior years. The company disposed of its
20% equity interest in associated company, Sagitta Performance Systems Ltd,
raising R6,996 million net, enabling Maxtec to recapitalise its local
operations.
In broadening the company`s reseller base, Maxtec has divested from direct sales
to the end-user, transferring the business activities of Enterprise Storage
Solutions (ESS) to that company`s management.
Prospects
Maxtec has established various new supplier alliances and distribution
agreements that will, together with increasing services business activities,
improve the group`s performance.
Dividends
No dividend has been declared.
For and on behalf of the Board
L G B TALBOT
Executive Chairman
AC WILSON CA (SA), H Dip Tax
Company Secretary and Financial Director
Registered Address
1 - 8th Avenue, Rivonia, Sandton
(PO Box 69938, Bryanston, 2021)
Transfer Secretaries
Ultra Registrars (Pty) Ltd
(PO Box 4844, Johannesburg, 2000)
Sponsors
Exchange Sponsors (Pty) Ltd
(PO Box 411216, Craighall, 2024)
Date: 15/11/2002 01:57:01 PM Produced by the JSE SENS Department
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