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EC HOLD - REVIEWED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2003 AND FURTHER
CAUTIONARY ANNOUNCEMENT
EC Hold Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1998/020093/06)
(Share Code: ECH)
(ISIN: ZAE000016705)
REVIEWED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2003 AND FURTHER CAUTIONARY
ANNOUNCEMENT
SUMMARISED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
12 months 18 months
to 30 June to 30 June
R000 2003 2002
Revenue 62 987 186 066
Operating loss before
foreign exchange
loss, depreciation,
exceptional items and
interest (11 724) (6 287)
Foreign exchange loss/(profit) 5 302 (1 836)
Operating loss before
depreciation,exceptional
items and interest (17 026) (4 451)
Depreciation 717 1 066
Operating loss before
exceptional items and
interest (17 743) (5 517)
Exceptional (income)/
expense (3 974) 12 481
Operating loss before
interest (13 769) (17 998)
Net interest (received)/paid (48) 227
Loss before taxation (13 721) (18 225)
Taxation 64 6 057
Loss after taxation (13 785) (24 282)
Outside shareholders"
share of income 33 74
Attributable loss (13 818) (24 356)
Number of ordinary shares
in issue (000) 104 040 104 040
Weighted average number of
ordinary shares in
issue (000) 104 040 104 040
Headline loss per ordinary
share (cents) (17.1) (11.3)
Loss per ordinary share (cents) (13.3) (23.4)
Reconciliation of prior
period attributable
earnings as a result of
prior period adjustment
Attributable earnings as
previously stated (19 081)
Cost of sales (2 486)
Foreign exchange loss (1 915)
Operating costs (500)
Interest (374)
Attributable loss as restated (24 356)
Reconciliation of headline
earnings
Attributable loss (13 818) (24 356)
(Profit)/loss on sale of
property, plant and
equipment (47) 93
Capital (profit)/loss on
sale of division and/or
subsidiary (5 437) 1 208
Impairment of investments,
loans and fixed assets 1 463 11 273
Headline loss restated in
terms of AC306 (17 839) (11 782)
Loss on sale of fixed asset (93)
Prior period adjustment 5 275
Headline loss as previously
stated (6 600)
SEGMENTAL ANALYSIS BY REGION
Operating
loss before
exceptional
items and Operating
R000 Revenue interest assets
Reviewed 18 months
ended 30 June 2002
South Africa 97 904 140 34 507
Botswana 88 162 5 377 28 135
Total 186 066 5 517 62 642
Reviewed 12 months
ended 30 June 2003
South Africa 25 602 3 369 20 384
Botswana 37 385 14 374 -
Total 62 987 17 743 20 384
SEGMENTAL ANALYSIS BY REGION (continued)
Capital
Depre- expen-
R000 Liabilities ciation diture
Reviewed 18 months
ended 30 June 2002
South Africa 21 578 997 322
Botswana 36 344 69 254
Total 57 922 1 066 576
Reviewed 12 months
ended 30 June 2003
South Africa 29 265 551 736
Botswana 137 166 115
Total 29 402 717 851
SUMMARISED CONSOLIDATED BALANCE SHEET
Reviewed Audited
as at as at
30 June 30 June
R000 2003 2002
ASSETS
Non-current assets 536 2 097
Property, plant and equipment 536 721
Financial assets - 1 376
Current assets 19 848 60 545
Inventories 3 325 8 291
Trade and other receivables * 4 052 48 925
Taxation 531 66
Bank balances 11 940 3 263
Total assets 20 384 62 642
EQUITY AND LIABILITIES
Equity capital and reserves (9 018) 4 720
Ordinary shareholders" interest (9 364) 4 407
Outside shareholders" interest 346 313
Non-current liabilities
Interest-bearing borrowings
- MGX Holdings 11 000 24 615
Current liabilities 18 402 33 307
Short-term interest-bearing
borrowings - MGX Holdings 8 687 29
Trade and other payables 5 396 31 644
Deferred revenue 4 307 460
Bank overdrafts 12 1 174
Total equity and liabilities 20 384 62 642
* Included in trade and other receivables are amounts totalling R1.8m relating
to intercompany trade transactions.
STATEMENT OF CHANGES IN EQUITY
Non
distrib-
Share Share utable
R000 capital premium reserves
Balance at
31 December 2000 1 040 11 118 28 923
Loss for the year - - -
Vendor liability
transferred - - 7 600
Deferred taxation
written back - - (28 923)
Restated Balance at
30 June 2002 1 040 11 118 7 600
As previously stated 1 040 11 118 7 600
Prior period adjustment - - -
Loss for the year - - -
Foreign currency
translation reserve - - 47
Balance at
30 June 2003 1 040 11 118 7 647
STATEMENT OF CHANGES IN EQUITY (continued)
Distrib-
utable
R000 reserve Total
Balance at 31 December 2000 3 099 44 180
Loss for the year (24 356) (24 356)
Vendor liability transferred - 7 600
Deferred taxation written back 5 906 (23 017)
Restated Balance at
30 June 2002 (15 351) 4 407
As previously stated (10 076) 9 682
Prior period adjustment (5 275) (5 275)
Loss for the year (13 818) (13 818)
Foreign currency translation
reserve - 47
Balance at 30 June 2003 (29 169) (9 364)
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
12 months 18 months
to 30 June to 30 June
R000 2003 2002
Cash utilised in operations
before working capital
changes (13 300) (2 443)
Increase/(decrease)
in net working capital 22 625 (21 982)
Cash generated by/
(utilised in) operations 9 325 (24 425)
Net interest received/(paid) 48 (227)
Normal taxation paid (529) (1 263)
Net cash inflow/(outflow)
from operating activities 8 844 (25 915)
Net cash inflow/(outflow)
from investing activities 312 (13 697)
Net cash inflow from
financing activities 683 14 711
Net increase/(decrease) in
cash and cash equivalents 9 839 (24 901)
Cash and cash equivalents
at the beginning of
the year 2 089 26 990
Cash and cash equivalents
at the end of the year 11 928 2 089
Bank balances 11 940 3 263
Bank overdrafts (12) (1 174)
COMMENTS
THE YEAR IN RETROSPECT
EC-Hold continued to incur losses in all of its operations (other than Barlows
Communications). These losses were funded by the MGX Group.
Magic and cdpAfrica were sold in the current year and disposals of Intervate and
Exsol are in progress.
RESULTS
EC-Hold incurred a substantial loss for the year. The exceptional losses were
reduced by a profit made on the sale of cdpAfrica relative to its negative
carrying cost. This gain was reduced by losses on MGX group loans to cdpAfrica
that EC-Hold incurred as a result of the sale.
The consolidated balance sheet reflects an excess of liabilities over assets.
MGX Holdings has subordinated R11.0m of its total claims of R19.7m to enable the
group to continue trading as a going concern.
Arising from the year end audit, it was concluded that the net asset value and
results of EC-Hold for the period ended 30 June 2002 were overstated by R5.3m
due to the omission of a liability in Sun Botswana (Pty) Limited. The prior
period comparatives have been adjusted accordingly.
In addition, prior year"s revenue and cost of sales were both adjusted by R6.3m
to reflect a more appropriate accounting presentation for commissions. This
change has had no net effect on the income statement or balance sheet.
BOARD STRUCTURE AND MEETINGS OF SHAREHOLDERS
The board had less than four members for certain periods in 2002 and 2003. This
has been rectified with the appointment on 21 November 2003 of Linda Wengrowe
and Rory Shirley to the board.
On the basis of the information available to the board and the results of the
forensic audit performed by Deloitte & Touche, the properly constituted board
has ratified the transactions undertaken by the company during the period that
it had less than four directors but subject to the approval of shareholders at
the annual general meeting.
Certain minority shareholders recently requisitioned a general meeting to
request the consideration of certain matters and pass various resolutions. The
questions submitted were considered by Deloitte & Touche in its forensic report.
This is now available to shareholders for inspection at the registered office.
The adjourned meeting will take place on 1 December 2003 unless the requisition
is withdrawn by the relevant shareholders.
ACCOUNTING POLICIES AND CHANGE IN PRESENTATION
The accounting policies and methods of computation are in compliance with the
South African Standards of Generally Accepted Accounting Practice. They are
consistent with those used in the prior financial year other than for the
introduction of AC133 and amended presentation of commissions as referred to
above.
REVIEWED RESULTS
Results for the period have been reviewed by the group"s new auditors, Messrs
Deloitte & Touche and their unqualified review report is available for
inspection. The report contains a matter of emphasis with respect to going
concern, which does not have an effect on the opinion.
Audited financial statements are expected to be despatched to shareholders
within six weeks.
CONTINGENT LIABILITY
A contingent liability that is unlikely to exceed R650 000 exists for the
indemnification of guarantees provided by MGX on behalf of the EC-Hold Group.
GOING CONCERN
The financial statements have been prepared on a going concern basis and on the
assumption that the actions of the company during periods when the board was not
fully constituted, are ratified by the properly constituted board and approved
by shareholders. The continuation of EC-Hold is dependent on the continued
support of its shareholders.
DIVIDENDS
No dividend has been declared or is anticipated in the near future.
FURTHER CAUTIONARY ANNOUNCEMENT: SRP ISSUE
OFFER TO SHAREHOLDERS
Shareholders have been advised of the interaction between MGX, the Mandy Rebecca
Price Trust and the Securities Regulation Panel (SRP) relating to a possible
offer to certain of the shareholders of EC-Hold, and the court action recently
instituted by the SRP against these parties.
Shareholders are also referred to the announcement of 11 November 2003, relating
to the possible change of control of EC-Hold from MGX to Eurevest and a cash
offer of 20 cents per share that would need to be made by Eurevest as a result.
MGX has made announcements today in terms of which a section 311 creditors
scheme of arrangement has been proposed. This includes a possible
acknowledgement of any claims by EC-Hold shareholders at the relevant dates
against MGX arising from the SRP ruling at 240 cents per share provided that
these claims are settled through the issue of subordinated loan notes in MGX
ranking pari passu with other MGX creditors. EC-Hold shareholders would need to
consider the merit of this offer relative to any cash offer that might be made
by Eurevest and relative to the possible outcome of the SRP action.
Accordingly, EC-Hold shareholders are advised to continue to exercise caution
when dealing in their shares until a further announcement is made.
DELISTING OF EC-HOLD
Due to the high costs of maintaining the listing of EC-Hold, the Board may
consider either a de-listing or a voluntary winding-up of the company.
PROSPECTS
Current prospects for the continuation of the EC-Hold Group are uncertain.
Roy Midlane Norman Webster
Acting CFO Director
27 November 2003
Johannesburg
Directors:
SR Midlane, NJ Webster
Registered office:
22 Milkyway Avenue, Linbro Business Park
Transfer secretaries:
Computershare Limited, 70 Marshall Street, Johannesburg, 2001
Investor & Media relations:
contact Kathy du Plessis, Tel: (011) 728 4701, Fax: (011) 728 2547 or e-mail:
gen@dpapr.com
Sponsor: Brait Sponsors
Date: 27/11/2003 04:02:12 PM Produced by the JSE SENS Department
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