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CCI Holdings Limited - Reviewed Results For The Year Ended 31 December 2002 And
Continuation Of Cautionary Announcement
CCI Holdings Limited
(Formerly Y2KTec Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1999/002149/06)
SHARE CODE: CCG - ISIN CODE: ZAE000018420
("CCI" or "the company")
REVIEWED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002 AND CONTINUATION OF
CAUTIONARY ANNOUNCEMENT
CONDENSED CONSOLIDATED INCOME STATEMENTS
Year ended 31 Ten months ended 31
Dec 2002 Dec 2001
R R
Revenue
10,117,781 7,822,579
Operating
(loss)/profit (954,878) 2,248,892
Net finance costs
(723,476) (235,473)
Exceptional loss
(776,521) (7,839,729)
Loss before taxation
(2,454,875) (5,826,310)
Taxation
- -
Attributable loss
(2,454,875) (5,826,310)
Statistics
Number of shares in
issue (000"s)
- end of period
343,057 292,487
- weighted average
336,757 202,487
Headline
(loss)/earnings per (0.50) 1.05
share (cents)
Loss per share
(cents) (0.73) (2.88)
Reconciliation of
headline earnings
Attributable loss
(2,454,875) (5,826,310)
Amortisation of
goodwill - 108,140
Reversal of
impairment provision (2,475,000) -
on loan
Impairment of loans
receivable 1,306,776 -
Loss on disposal of
investments 432,050 -
Software written off
737,379 -
Goodwill written off
775,316 7,839,729
Headline
(loss)/earnings (1,678,354) 2,121,559
CONDENSED CONSOLIDATED BALANCE SHEETS
31 December 31 December
2002 2001
R R
Assets
Non current assets
2,074,039 2,884,579
Furniture, equipment
and vehicles 793,496 1,875,607
Long term loan
receivable 335,543 1,008,972
Goodwill
945,000 -
Current assets
2,336,473 5,078,485
Inventories
112,874 390,128
Accounts receivable
2,011,321 3,155,848
Prepaid expenses
98,980 293,421
Cash and cash
equivalents 113,298 1,239,088
Total Assets
4,410,512 7,963,064
Equity & Liabilities
Shareholders deficit
(5,765,486) (3,161,941)
Share capital and
premium 22,317,768 22,079,205
Accumulated loss
(28,083,254) (25,241,146)
Non current
liabilities 4,891,540 3,777,004
Interest bearing
4,891,540 3,714,004
Non-interest bearing
- 63,000
Current liabilities
5,284,458 7,348,001
Accounts payable
3,059,151 3,513,392
Bank overdraft
467,503 1,542,109
Provisions
72,819 106,754
Short term portion of
non-current 1,684,985 2,185,746
liabilities
Total equity and
liabilities 4,410,512 7,963,064
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Year ended Ten months
31 Dec 2002 ended 31
Dec 2001
R R
Cash (outflow)/inflows from
operating activities (21,469) 754,895
Cash outflows from investing
activities (1,121,626) (9,877,455)
Cash inflows from financing
activities 1,091,911 8,585,992
(Decrease) / increase in cash
and cash equivalents (51,184) (536,568)
Cash and cash equivalents at
beginning of year (303,021) 233,547
Cash and cash equivalents at
end of year (354,205) (303,021)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Accumulated Total
Capital premium loss
R R R R
Balance 1 March 2001
6,750 17,572,455 (19,414,836) (1,835,631)
Issue of ordinary
shares 22,500 4,477,500 4,500,000
Net profit/(loss) for
the period (5,826,310) (5,826,310)
Balance at 31
December 2001 29,250 22,049,955 (25,241,146) (3,161,941)
Prior year adjustment-
unrecorded liability (387,233) (387,233)
Restated balance as
at 31 December 2001 29,250 22,049,955 (25,628,379) (3,549,174)
Issue of ordinary
shares 5,056 233,507 - 238,563
Net profit/(loss) for
the period (2,454,875) (2,454,875)
Balance 31 December
2002 34,306 22,283,462 (28,083,254) (5,765,486)
Overview
The final results of the Group reflect a disappointing loss at the headline
earnings level. During the year a number of significant changes were made. Loss
making divisions were closed and by 31 December the group comprised three
operating units. These are all performing satisfactorily and first quarter 2003
results are as forecast. The three divisions closed were responsible for trading
losses of R 542 000. The remaining divisions reflect trading profits of R 1 563
000. Corporate costs of R2 699 000 made up the balance of the headline loss;
these costs have been significantly reduced and current negotiations centre
around reducing these further.
MMJ Acquisition
The acquisition of this business has not been successful. The transaction is in
the process of being partially reversed.
In terms of the agreement the 12 600 000 shares already issued
are to be repurchased back and cancelled. This share repurchase requires
shareholder approval and until such approval has been obtained at the Annual
General Meeting, the Goodwill and Share Capital of R 945 000 have been kept on
the balance sheet. A final termination agreement is being negotiated with the
vendor. The amount under negotiation of R 630 000 has been fully impaired under
exceptional items.
Share Incentive Trust
The loan due from the share incentive trust has been impaired under exceptional
items.
People Human Resources and Payroll Management Services
The Group acquired the payroll outsourcing business of this company for R 173
000, with effect from 7 January 2003. The initial payment of R 73 000 has been
made and the final payment, which is subject to a reduction formula based on
client retention is due on 30 June 2003.
Going Concern Assumption and Future Funding
The current year attributable loss of R2,4 million as well as R 5,8 million in
the previous year has obviously placed significant pressure on the Group"s cash
flow.
As a result the Group has not been meeting its commitments regarding repayments
on long term interest bearing debt. Negotiations with regard to restructuring
the interest bearing debt and the repayment structure are at an advanced stage
and, although not finalised, the Directors are confident that a satisfactory
agreement will be reached in the near future. This, along with the cash flow
pressure due to trading losses, has created a material uncertainty as to the
Group"s ability to continue as a going concern.
The restructuring of the Group"s business units has created three operating
units which forecast both profit and positive cash flow for the 2003 financial
year. It is clear however, that the success of these business units will depend
on the successful finalisation of the debt restructure.
It is also clear that the costs of being a listed holding company are excessive,
relative to the profit generating capability of its business units. As advised
in recent cautionary announcements, negotiations with several parties are at an
advanced stage.
These negotiations are focused on a combination of opportunities in which this
hurdle can be overcome.
Accounting policies
The condensed consolidated financial statements for the year ended 31 December
2002 are prepared in accordance with South African Statements of Generally
Accepted Accounting Practice. The accounting policies of the Group are
consistent with those of the previous year.
Auditors" review opinion
The condensed consolidated financial statements for the year ended 31 December
2002 have been reviewed by KPMG Incorporated.
The auditors" modified review opinion is available for inspection at the
company"s registered office. The auditors have modified their review opinion
based the material uncertainty regarding the Group"s ability to continue to
operate as a going concern.
Continuation of cautionary
Shareholders are advised to continue to exercise caution in their dealings in
the shares of the company.
Directors
Mr MK Hill resigned as director during the year on 31 August 2002, Mr R Muzariri
was appointed during the year and Mr M van Houten was appointed and subsequently
resigned after the year end.
Dividend
No dividend has been declared. The Group"s policy on dividends is however
reviewed on annual basis.
For and behalf of the Board
GA Coetser
Chairman
MC Purves
Chief Executive Officer
14 April 2003
Northcliff
Sponsor
The Janus Corporation (Pty) Ltd
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