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Aqua - REVIEWED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Aqua Online Holdings Limited
Making e-Business a Reality
REVIEWED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Registration number 1971/005628/06
("Aqua" or "the group")
Share code: AQU
ISIN code: ZAE000024360
Consolidated income statement
Audited
30 June 30 June
2003 2002
Notes R"000 R"000
Revenue 29 750 65 670
Loss before interest, taxation,
depreciation and amortisation (3 463) (11 771)
Translation foreign exchange
(loss) gain (5 082) 3 878
Depreciation (2 786) (5 411)
Amortisation of goodwill (2 115) (2 115)
Net finance income 958 494
Loss before taxation and
exceptional items (12 488) (14 925)
Exceptional items 1 (3 377) (6 437)
Loss before taxation (15 865) (21 362)
Taxation 2 - 1 134
Attributable loss (15 865) (20 228)
Headline earnings adjustments in
respect of :
- Exceptional items 3 377 6 437
- Utilisation of prior year provision
for restructure costs (1 309) -
- Amortisation of goodwill 2 115 2 115
Headline loss (11 682) (11 676)
Headline loss per share (cents) (4,46) (4,46)
Loss per share (cents) (6,06) (7,73)
Weighted number of shares in issue
and to be issued (000) 261 753 261 753
Consolidated balance sheet
Audited
30 June 30 June
2003 2002
R"000 R"000
Assets
Non-current assets 11 799 18 934
- Equipment 5 328 10 325
- Goodwill 6 344 8 459
- Loan to share incentive trust 127 150
Current assets 23 143 43 764
- Trade and other receivables 5 285 14 334
- Taxation 888 1 003
- Deposit 4 482 -
- Bank and cash 12 488 28 427
Total assets 34 942 62 698
Equity and liabilities
Equity
- Capital and reserves 21 416 37 281
Current liabilities 13 526 25 417
- Trade and other payables 9 044 15 076
- Short term borrowings 4 482 -
- Bank overdraft - 10 341
Total equity and liabilities 34 942 62 698
Net asset value per share
(cents) ("NAV") 8,18 14,24
Net tangible asset value per
share (cents) ("NTAV") 5,76 11,01
Number of shares in issue and to be
issued (000) 261 753 261 753
Consolidated cash flow statement
Audited
30 June 30 June
2003 2002
R"000 R"000
Cash absorbed by operations (1 190) (8 963)
Net finance income 958 494
Translation of foreign entities (5 082) 7 973
Taxation 115 186
Cash flows from operating activities (5 199) (310)
Cash flows from investing activities (4 881) (11 415)
Cash flows from financing activities 4 482 (120)
Net movement in cash resources (5 598) (11 845)
Opening cash resources 18 086 29 931
Closing cash resources 12 488 18 086
Consolidated statement of changes in equity
Audited
30 June 30 June
2003 2002
R"000 R"000
Opening balance 37 281 56 954
Adjustment to purchase consideration
of businesses acquired - (3 420)
Share issue and listing expenses
written off - (120)
Translation difference 4 095
Attributable loss (15 865) (20 228)
Closing balance 21 416 37 281
Notes to the financial statements
Audited
30 June 30 June
2003 2002
R"000 R"000
1 Exceptional items
Goodwill written off on premature
termination of contract - 6 171
Recoupment of goodwill previously w
ritten off - (1 390)
Loss on disposal of equipment 581 347
Loss on impairment of equipment 2 796 -
Provision for restructure costs - 1 309
3 377 6 437
2 Taxation
No provision for taxation has been made,
as the group has accumulated tax losses
3 Commitments
Operating leases
Payable
- within one year 692 3 687
- thereafter 1 840 7 097
2 532 10 784
COMMENTS
INTRODUCTION
Aqua continued to experience difficult trading conditions, both in the online
gaming industry and e-services market, during the current financial year.
In the second half of the financial year, the Gaming and Enablement Divisions
stabilised and operating cashflows improved. Notwithstanding this improved
performance, the financial results were below expectations. Limited growth
prospects continue to undermine the feasibility of the group as a listed entity.
PROPOSED TRANSACTION TO DELIST AQUA
Shareholders are referred to the press announcements published 5 December 2002
and 6 March 2003 detailing a proposed transaction to dispose of Aqua"s
businesses, delist and voluntarily wind up the listed entity (the "proposed
transaction").
The implementation of the proposed transaction has been delayed by Aqua"s
inability to receive certain regulatory approvals to date. However, the Aqua
board of directors ("the board") are confident that these approvals are
imminent.
The delay and unforseen costs incurred in the implementation of the proposed
transaction has impacted Aqua"s ability to make an initial distribution of 14
cents per share as initially anticipated.
The board expects the revised distribution dividend to be at least 12 cents per
share. An announcement updating shareholders on the revised details of the
proposed transaction will be made shortly.
THE PERIOD UNDER REVIEW
The Group experienced an improved financial performance in the second half of
the year. Operational risk was reduced through effective cost rationalisation
and strategic focus. The Gaming and Enablement Divisions are currently cashflow
positive.
Gaming Division revenues declined as a result of continued pressure on its
clients" businesses and were impacted negatively by the strengthening of the
Rand. The Enablement Division has stabilised during the period although certain
service lines continue to face margin pressure.
Retrenchment and relocation costs negatively impacted trading results for the
period. All business operations are now conducted out of South Africa,
subsequent to the relocation of the foreign-based Gaming business.
ACCOUNTING POLICIES
The accounting policies used in the preparation of the results are consistent
with those used in the prior year except for the application of Circular 7/2002
- Headline Earnings, issued by the South African Institute of Chartered
Accountants. The prior years headline earnings have been adjusted accordingly.
The results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice.
FINANCIAL RESULTS
Revenue for the period decreased to R29,8 million compared to R65,7 million for
the previous financial year.
The group reported a loss of R3,5 million before interest, taxation,
depreciation and amortisation (2002: R11,8 million) and a headline loss of R11,7
million (2002: R11,7 million).
As a result of the strengthening of the Rand, the group incurred a R5 million
translation foreign exchange loss. Exceptional items of R3,4 million comprise
principally the write down of assets impaired.
Cash absorbed by operations was R1,2 million (2002: R9 million). The cash
balance on hand at the end of the financial period was R12,5 million (R18
million).
OUTLOOK
The board does not expect short to medium term conditions to improve materially
and believes that the proposed transaction to delist is the best strategic
alternative to allow shareholders to maximise and protect value.
The board is conscious of the potential implications to all stakeholders of the
delay in implementing the proposed transaction and is focused on resolving all
outstanding regulatory issues timeously and satisfactorily.
DIRECTORATE
As previously announced Mr MH Sacks resigned as a non-executive director of Aqua
with effect from 30 May 2003 and Mr J Hamburger (previously alternate to Mr
Sacks) remains a non-executive director.
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 30 May 2003, 11
July 2003 and 1 September 2003 and are advised that the company still awaits
certain regulatory approvals before the circular to shareholders can be issued.
Accordingly, shareholders are advised to continue to exercise caution when
dealing in Aqua"s securities until a further announcement is made.
INDEPENDENT REVIEW
The preliminary results for the year ended 30 June 2003 have been reviewed by
Fisher Hoffman PKF (Jhb) Inc. Their unqualified review opinion is available for
inspection at Aqua"s registered office.
DIVIDEND
In line with group policy, no dividend has been declared for the year.
By order of the board
Brent Shahim
CEO
1 October 2003
Directors:
Jeff Liebesman (Chairman)* Brent Shahim (CEO) Dionne Ellerine* Jade Hamburger*
Tal Harpaz* Gideon Shachat*
*Non-executive director
Registered office:
Sanlam Arena cnr Bolton Road and Cradock Avenue Rosebank
PO Box 742 Parklands 2121
Transfer secretaries:
Computershare Limited 70 Marshall Street Johannesburg 2001
PO Box 61051 Marshalltown 2107
Company secretary:
Corpcapital Company Secretaries (Proprietary) Limited
2 Arnold Road Rosebank
PO Box 471917 Parklands 2121
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Date: 01/10/2003 05:45:08 PM Produced by the JSE SENS Department
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