EC-Hold incurred a net loss of more than R11 million for the six months to end-December, which joint-MD Amir Lubashevsky attributes to a difficult trading environment.
<B>Salient figures</B>
EC-Hold results for the six months to 31 December 2002,
Year-earlier figures in parentheses:
Revenue: R48.41m (R91.94m)
Operating income before depreciation: -R10.4m (R4.62m)
Net income before tax: -R11.33m (R4.39m)
Net income: -R11.61m (R3.09m)
Attributable income: -R11.72m (R3.09m)
HEPS: -11.3c (3c)
Current assets: R35.37m (R46.34m)
Cash resources: R4.85m (R14.72m)
Current liabilities: R20.41m (R21.99m)
NTAV per share: 0.1c (19.4c)
Cash generated from operations before working capital changes: -R10.4m (R4.62m)
Cash flow from operating activities: R7.86m (R3.05m)
EC-Hold specialises in information and network security systems and information management software and systems.
The interim results show how much the company is struggling as it waits to be integrated into the MGX fold, which cannot happen until a dispute between MGX and the Securities Regulation Panel (SRP) over the acquisition of EC-Hold is resolved.
The SRP has ordered MGX to raise its offer from 100c to 240c, but the previous MGX management refused to do so and vowed to fight the matter in court.
Turnaround specialist and new CEO Peter Flack has told shareholders that talks are under way to resolve the issue, but the matter has yet to be settled.
EC-Hold`s revenue for the period plunged from R91.94 million to R48.41 million. The R11.72 million net loss compares with a net profit of R3.09 million for the same period a year before.
The company`s net tangible asset value has plummeted to just 0.1c a share from 19.4c previously.
Lubashevsky says investments have been written down to their current estimated values and working capital has been adjusted to reflect the realisable carrying value for stock and the recoverability of the accounts receivable.
"Cash and cash equivalents increased through working capital changes, brought about by lower trading activities. This was offset by the repayment of certain non-current liabilities," he says.
He says talks relating to the disposal of CDP Africa business are progressing and a further announcement will be made once the deal is finalised.
"The group`s trading performance continues to deteriorate because of the continuing weakness in the IT sector," Lubashevsky says.
Related stories:
MGX forges ahead with restructuring
MGX mulls EC-Hold options
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