MGX beset by turmoil

By Iain Scott for MGX Holdings
Johannesburg, 27 Nov 2002

MGX has reconstituted its board and initiated a strategy review. CE Chris Hills has taken extended leave and director Aletha Ling has resigned. The group has also issued a profit warning.

FRM Strategies principal Peter Flack has been appointed executive chairman and interim CE to head a strategic review of the business. FRM Strategies has been retained as an advisor to MGX.

Other board appointments are Brait group CE Antony Ball and Roy Midlane, MGX`s recently appointed financial director designate.

The group issued a statement saying that Hills took extended leave on health grounds. A source said Ling, MGX`s business development and strategy director, is planning to spend two years sailing.

Patrick Landey, who acted as chairman after Ronnie Price left the post earlier in the year, says the FRM and board appointments were designed to resolve a number of issues.

These include the future strategic direction of MGX, its high debt levels and the continuing uncertainty around the acquisition of EC-Hold.

Flack says FRM will immediately begin a business review of MGX, after which a strategy and action plan will be developed.

Although the process is expected to take three months, a progress report and trading update are likely to be issued before the end of January.

The group also warned that the results for the six months to end-December will be significantly worse than those of the same period last year.

"This is attributable to a difficult trading environment, operational disruption caused by the aborted sale of MGX`s wholly owned subsidiary Software Futures to Paracon Holdings, once-off restructuring and retrenchment expenses, and increased financing costs due to higher debt and interest rate levels," it says.

However, the company expects to be profitable for the full financial year.

By late afternoon the MGX share had lost 40c or 13.8% to 250c.