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EC-HOLD LIMITED - UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2003 AND FURTHER CAUTIONARY ANNOUNCEMENT
EC-Hold Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/020093/06)
JSE Share code: ECH
ISIN: ZAE000016705
("EC-Hold" or "the Company")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003 AND
FURTHER CAUTIONARY ANNOUNCEMENT
Summarised Consolidated Income Statement
Unaudited Unaudited Audited
six months six months 12 months
to to to
31 December 31 December 30 June
R"000 2003 2002 2003
Revenue 9 386 43 020 62 987
Operating loss before foreign
exchange loss, depreciation,
exceptional items and interest (2 151) (4 704) (11 724)
Foreign exchange loss (120) (2 909) (5 302)
Operating loss before
depreciation, exceptional
items and interest (2 271) (7 613) (17 026)
Depreciation (159) (285) (717)
Operating loss before
exceptional items and interest (2 430) (7 898) (17 743)
Exceptional income/(expense) 148 (1 007) 3 974
Operating loss before interest (2 282) (8 905) (13 769)
Net interest (paid)/received (976) 363 48
Loss before taxation (3 258) (8 542) (13 721)
Taxation (109) (283) (64)
Loss after taxation (3 367) (8 825) (13 785)
Outside shareholders" share
of income (76) (104) (33)
Attributable loss (3 443) (8 929) (13 818)
Number of ordinary shares
in issue ("000) 104 040 104 040 104 040
Weighted average number
of ordinary shares in issue ("000) 104 040 104 040 104 040
Headline loss per ordinary
share (cents) (3,4) (7,6) (17,1)
Loss per ordinary share (cents) (3,3) (8,6) (13,3)
Reconciliation of current
and prior periods restated
headline earnings
Attributable loss (3 443) (8 929) (13 818)
Loss/(Profit) on sale of property,
plant and equipment 35 - (47)
Capital profit on sale of
division and/or
subsidiary/investments (197) - (5 437)
Impairment of investments,
loans and fixed assets 49 1 007 1 463
Headline loss restated in terms
of AC 306 (3 556) (7 922) (17 839)
Consistent treatment of headline
earnings adjustments (1 007) -
Prior period adjustment
- Foreign exchange loss (1 915) -
- Operating costs (874) -
Headline loss as previously stated (11 718) (17 839)
Segmental analysis by region
Unaudited Six Months Ended 31 December 2003
Operating
loss before
exceptional Capital
items and Operating Deprecia- expen
R"000 Revenue interest assets Liabilities tion diture
South Africa 9 386 2 430 4 879 17 127 159 82
- Continuing 3 543 747 4 289 15 545 65 48
- Discontinuing/
discontinued 5 843 1 683 590 1 582 94 34
Botswana - - - 137 - -
- Continuing - - - 137 - -
- Discontinuing/
discontinued - - - - - -
9 386 2 430 4 879 17 264 159 82
Summarised Consolidated Balance Sheet
Unaudited Unaudited Audited
at at at
31 December 31 December 30 June
R"000 2003 2002 2003
ASSETS
Non-current assets 320 1 411 536
Property, plant and
equipment 320 766 536
Deferred taxation - 645 -
Current assets 4 559 35 374 19 848
Inventories 889 4 266 3 325
Trade and other receivables 1 555 25 261 4 052
Taxation 566 - 531
Bank balances 1 549 5 847 11 940
Total assets 4 879 36 785 20 384
EQUITY AND LIABILITIES
Equity capital and reserves (12 385) (1 309) (9 018)
Ordinary shareholders" interest (12 807) (1 726) (9 364)
Outside shareholders" interest 422 417 346
Non-current liabilities
Interest bearing borrowings 14 000 15 198 11 000
Current liabilities 3 264 22 896 18 402
Interest bearing
borrowings 779 14 8 687
Taxation - 1 541 -
Trade and other payables 1 220 18 849 5 396
Deferred revenue 1 265 2 492 4 307
Bank overdrafts - - 12
Total equity and liabilities 4 879 36 785 20 384
Summarised Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months 12 months
to to to
31 December 31 December 30 June
R"000 2003 2002 2003
Cash utilised in operations
before working capital
changes (2 236) (7 613) (13 300)
(Decrease)/Increase in net
working capital (2 287) 17 219 22 625
Cash (utilised in)/generated by
operations (4 523) 9 606 9 325
Net interest (paid)/received (976) 363 48
Normal taxation (paid)/received (143) 680 (529)
Net cash (outflow)/inflow from
operating activities (5 642) 10 649 8 844
Net cash inflow from investing
activities 171 40 312
Net cash (outflow)/inflow from
financing activities (4 908) (6 931) 683
Net (decrease)/increase in cash
and cash equivalents (10 379) 3 758 9 839
Cash and cash equivalents
at beginning of period 11 928 2 089 2 089
Cash and cash equivalents
at end of period 1 549 5 847 11 928
Bank balances 1 549 5 847 11 940
Bank overdrafts - - (12)
Statements Of Changes In Equity
Non-
distri- Distri-
Share Share butable butable
R"000 capital premium reserves reserves Total
Balance at
31 December 2000 1 040 11 118 28 923 3 099 44 180
Loss for period - - - (24 356) (24 356)
Vendor liability
transferred - - 7 600 - 7 600
Deferred taxation
written back - - (28 923) 5 906 (23 017)
Restated balance at
30 June 2002 1 040 11 118 7 600 (15 351) 4 407
- As previously stated 1 040 11 118 7 600 (10 076) 9 682
- Prior period adjustment - - - (5 275) (5 275)
Loss for the year - - - (13 818) (13 818)
Foreign currency
translation reserve - - 47 - 47
Balance at
30 June 2003 1 040 11 118 7 647 (29 169) (9 364)
Loss for the period - - - (3 443) (3 443)
Balance at
31 December 2003 1 040 11 118 7 647 (32 612) (12 807)
COMMENTS
THE PERIOD IN RETROSPECT
Profile
EC-Hold has a 70% interest in Barlow Communications (Pty) Limited, which is an
exclusive distributor of RADCOM, suppliers of network diagnostic equipment. EC-
Hold also has investments in Correlate Technologies (Israel) and Connect One
(USA) (the carrying values of both continue to be fully impaired). The Company"s
interest in Exsol was sold on 1 January 2004. EC-Hold is listed in the
"Development Capital" sector of the JSE Securities Exchange South Africa lists.
Its shares are currently suspended.
Results
EC-Hold again incurred a loss for the reporting period but at a lower level than
in the prior year. Most of the loss was incurred by Exsol, which was sold for
R1,00 with effect from 1 January 2004. However the reversal of provisions for
Exsol and the recovery of certain consolidated losses will result in a profit on
disposal of R900 000 in the next reporting period.
The investment in Intervate Holdings was sold for R197 000 in December 2003, all
of which was profit on sale as the investment had previously been fully
impaired.
The consolidated balance sheet at 31 December 2003 reflects liabilities
exceeding assets. MGX Holdings Limited ("MGX") has however subordinated R14
million of its loan claims against EC-Hold until 30 June 2005 and has agreed to
waive interest on its entire loan claims against the Company for the period from
1 January 2004 to 30 June 2005. In addition, MGX has also provided a letter of
support to EC-Hold subject to certain conditions. This action will enable EC-
Hold to continue trading as a going concern for the foreseeable future.
Fundamental errors for the period to 30 June 2002 were amended in the 2003
Annual Report. The comparative figures for the six months to 31 December 2002
have been adjusted accordingly.
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 periods, other than for the
amended presentation of commissions in the adjusted comparative figures as
referred to above.
Going Concern
The continuation of EC-Hold is dependent on the continued support of its
shareholders, and in particular the subordination and letter of support provided
by MGX, as set out above.
Dividends
No dividend has been declared or is anticipated.
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 advised that discussions are continuing between MGX and
Eurevest, which may result in a cash offer or MGX loan note offer to certain
minority shareholders, a change of control and/or a delisting. There can be no
certainty that these discussions will be concluded. Accordingly, EC-Hold
shareholders are advised to continue to exercise caution when dealing in their
shares until a further announcement is made.
Changes To The Board
The board had less than the four members required in terms of the Company"s
Articles of Association for certain periods in 2002 and 2003. This was rectified
with the appointment on 21 November 2003 of Linda Wengrowe and Rory Shirley to
the board. Goolam Mamdoo has been appointed as non-executive director to the EC-
Hold board of directors and Norman Webster has been appointed acting non-
executive chairman of EC-Hold with effect from 17 February 2004. Pursuant to the
sale of Exsol on 1 January 2004, Norman Webster no longer holds an executive
position within the Company. Linda Wengrowe has resigned as a non-executive
director of EC-Hold with effect from 17 February 2004.
Contingent Liability And Legal Liability
A contingent liability that is unlikely to exceed US$100 000 (approximately
R650 000) exists for the indemnification of guarantees provided by MGX on behalf
of the EC-Hold Group. A legal claim has been instituted against the Company in
this regard for an amount of R1,9 million. In the opinion of the directors the
chance of this claim being successful is remote.
Prospects
Current prospects for the continuation of the EC-Hold Group are uncertain.
Norman Webster Roy Midlane
Acting Chairman Acting CFO
31 March 2004
Directors:
N J Webster*, S R Midlane,
G Mamdoo*, R D Shirley*
* Non-executive Director
Sponsor
Brait Sponsors (Pty) Ltd.
Date: 31/03/2004 05:09:16 PM Produced by the JSE SENS Department
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