| Mon 27 Aug 2007, 11:17 | | SBG - Simeka BSG - Abridged audited consolidated f |
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SBG
SBG
SBG - Simeka BSG - Abridged audited consolidated financial results for the year
ended 31 May 2007
SIMEKA BSG LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/012583/06)
JSE code: SBG & ISIN: ZAE000074878
("Simeka BSG/ the Group")
ABRIDGED AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MAY 2007
CONSOLIDATED INCOME STATEMENT
Highlights of organic growth
* Headline earnings up 82%
* Revenue up 37%
* EBITDA up 80%
* HEPS weighted number of shares in issue and to be issued up 33%
* Cash reserves increased from R16 million to R39 million
Audited Year Audited Year
ended 31 May ended 31 May
2007 2006
R`000 R`000
Revenue 446, 986 326 145
Earnings before interest,
taxation,
depreciation and
amortisation
("EBITDA") 73 081 40 622
Depreciation (6 399) (3 507)
Amortisation (681) (561)
Impairment of intangibles (1 143) -
Interest on liabilities
due to vendors (81) (1 743)
Investment income 1 169 2 011
Finance costs (7 260) (2 018)
Income from associate
company 621 759
Profit before taxation 59 307 35 563
Taxation (14 018) (8 995)
Profit for the year 45 289 26 568
Attributable to:
Equity holders of the company 44 774 25 010
Minority interest 515 1 558
Headline earnings 45 405 24 995
Adjusted headline earnings 46 775 27 299
Headline earnings calculation:
Profit attributable
to equity holders
of the company 44 774 25 010
Adjusted for:
Profit on sale of
property, plant
and equipment (79) (15)
Impairment of assets 710 -
Headline earnings 45 405 24 995
Adjusted headline
earnings calculation:
Headline earnings 45 405 24 995
Adjusted for:
Interest on liabilities
due to vendors
(IAS 39) 81 1 743
Amortisation 681 561
Operating leases - straight lining 608 -
Adjusted headline earnings 46 775 27 299
Number of shares (`000)
- Weighted in issue 359 147 220 618
- Weighted in issue
and to be issued 377 924 276 854
Headline earnings per
share (cents)
- Weighted in issue 12.6 11.3
- Weighted in issue and
to be issued 12.0 9.0
Adjusted headline
earnings per share
(cents)
- Weighted in issue 13.0 12.4
- Weighted in issue and
to be issued 12.4 9.9
Earnings per share (cents)
- Weighted in issue 12.5 11.3
- Weighted in issue and
to be issued 11.8 9.0
CONSOLIDATED BALANCE SHEET
Audited Audited
as at as at
31 May 31 May
2007 2006
R`000 R`000
ASSETS
Non-current assets 255 521 232 697
Property, plant and equipment 11 308 14 580
Goodwill 235 378 207 703
Intangible asset 1 136 4 387
Investment in associate company 1 380 1 801
Deferred taxation 6 319 4 226
Current assets 143 063 99 262
Inventory 15 491 12 852
Trade and other receivables 87 270 69 593
Cash resources 40 302 16 817
Total assets 398 584 331 959
EQUITY AND LIABILITIES
Capital and reserves 253 325 199 027
Share capital 39 35
Share premium 165 426 138 178
Accumulated profit 76 824 32 050
Amounts due to vendors in shares 9 225 27 092
Minority interest 1 811 1 672
Non-current liabilities 58 150 37 721
Non interest-bearing liabilities due
to vendors - 11 218
Interest-bearing liabilities 58 150 26 503
Current liabilities 87 109 95 211
Non interest-bearing liabilities
due to vendors 5 650 16 380
Trade and other payables 53 654 67 828
Interest-bearing liabilities 14 046 4 452
Taxation payable 10 177 6 220
Bank overdraft 1 608 331
Provisions 1 974 -
Total equity and liabilities 398 584 331 959
Net asset value per share (cents) 65.0 57.0
Net tangible asset value
per share (cents) 4.2 (3.0)
CONSOLIDATED CASH FLOW STATEMENT
Audited Year Audited Year
ended 31 May ended 31 May
2007 2006
R`000 R`000
Cash flows from operations
EBITDA 73 081 40 622
Interest received 999 2 011
Interest paid (7 340) (2 018)
Income statement movements (555) 340
Increase in inventory (2 639) (9 211)
Increase in trade and other
Receivables (16 639) (42 213)
(Decrease) /increase in trade and other
Payables (14 781) 49 439
Taxation paid (10 061) (7 677)
Net cash flows from
operations 22 064 31 293
Net cash flows from
investing activities (51 462) (25 850)
Net cash flows from
financing activities 51 606 1 046
Net increase in
cash resources 22 208 6 489
Cash resources at beginning
of year 16 486 9 997
Cash resources at end of
year 38 694 16 486
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Year Audited Year
ended 31 May ended 31 May
2007 2006
R`000 R`000
Capital and Reserves 199 027 49 759
Shares issued 27 251 122 600
Share issue expenses - (746)
Acquisition of subsidiaries
and businesses (17 867) (1 366)
Minorities interest 140 970
Net profit for period 44 774 25 010
- Net profit as previously
reported - -
- Interest on vendor liabilities
Capital and Reserves 253 325 199 027
Commitments:
Equipment and premises -
rental 7 231 3 553
Note:
Weighted number of shares in issue and to be issued includes shares for all
acquisitions weighted to warranted profits in accordance with the company`s
contractual commitment to issue such shares during the relevant accounting
period.
COMMENTS
Basis of preparation
The consolidated annual financial statements set out in this report have been
prepared in accordance and comply with the statements of International Financial
Reporting Standards and the 1973 Companies Act, and are based on appropriate
accounting policies, consistently applied with those in the prior year, which
are supported by reasonable and prudent judgements and estimates.
The annual impairment test on goodwill was performed by an independent valuer,
and based on the forecasted net profit after tax of the Group, there has been no
impairment of goodwill.
Audit opinion
These abridged consolidated annual financial results have been extracted from
the audited annual financial statements on which PKF (Pta) Inc. has issued an
unqualified audit report. This report is available for inspection at Simeka
BSG`s registered office.
Introduction
The directors of Simeka BSG are pleased to present the audited financial
statements for the year ended 31 May 2007 ("the year").
In line with the trading update published on 18 May 2007, Simeka BSG performed
ahead of expectations. Headline earnings increased 82% to R45,4 million
translating into headline earnings per share weighted in issue and to be issued
of 12,0 cents, up 33%. Strong organic growth was the key driver of the Group`s
excellent performance.
Group profile
Simeka BSG is a black-empowered group servicing multiple industry sectors by
providing information, communication and technology ("ICT") business solutions.
The Group is differentiated from competitors by its ability to enhance commodity
offerings with deep technical skills and expertise. It is able to offer bespoke
client solutions through the niche specialist offerings within its major brands
that can be combined across multiple operations.
The Group`s operating entities have been restructured during the year from four
to three clusters as follows:
Consulting & Applications: designs and develops strategies that align client`s
technology infrastructure and strategy to business requirements. This cluster
has contributed towards the majority of Group revenue and profit for the year
and was accordingly the primary focus during the year.
Technology Solutions & Support: the companies in this cluster harness the
synergies between their products and services and those of the wider Group -
focusing on the assembly of technology hardware and implementation, maintenance
and support for customers and original equipment manufacturers. The cluster has
a specialised information technology logistics function that underpins delivery.
Focus in the year ahead will remain on developing and growing the hardware
reseller capability in this cluster.
Secured Print & Payment Solutions (formerly Assembly & Manufacturing):
manufactures world class scratch card vouchers for telecommunications companies
and provides SIM and smartcard personalisation and secure printing solutions
using hologram technology, as well as labelling and bar-coding solutions. It is
also a reseller of specialised barcode printers used across a range of
industries including banking, medical, logistics and mining.
Each cluster is focused on achieving market leadership within its area of focus.
The current structure is suited both to the development of core expertise in
focus areas as well as pro-active cross-collaboration within the clusters and
Group to facilitate integrated service delivery.
Black Economic Empowerment ("BEE")
Simeka BSG is majority black-owned, with 90% of the Group`s executive directors
being black. Executive management is currently made up of approximately 50%
black members. The Group`s BEE platform offers the Group a strong competitive
advantage and is a key contributor towards ongoing growth.
Notwithstanding that Simeka BSG currently exceeds ICT Charter requirements, the
Group is committed to enhancing its credentials in respect of all aspects of the
ICT Charter, for instance corporate social responsibility and affirmative
procurement.
Financial results
Turnover increased to R447 million from R326 million for the previous year ended
31 May 2006, while EBITDA grew by 80% to R73 million from R40,6 million.
The Group was restored to a net current asset position at year-end. Net asset
value per share increased from 57,0 cents to 65,0 cents.
A successful issue of shares for cash, continued healthy cash flow generation
and the implementation of strict credit vetting policies, have boosted working
capital management to enhance the Group`s cash position. Cash balances at year-
end totalled R38,7 million.
Segmental reporting
The Consulting & Applications cluster contributes 53% of Group revenue, while
the Technology Solutions & Support cluster contributes 19% and the Secured Print
& Payment Solutions cluster contributes the balance of 28%.
Overview
Simeka BSG is making excellent progress in formalising relationships that
underpin the key elements of its strategy, namely with Oracle (ERP and BI),
expanding the services offerings in the Secured Print & Payment Solutions
cluster and achieving global expansion.
The investment during the year of approximately R6,0 million in the Group`s
Oracle development practice makes Simeka BSG one of the largest Oracle houses in
the country.
As announced on 20 August 2007, post year-end Simeka BSG has acquired 91,24% of
Premium Ideas (Proprietary) Limited ("Premium Ideas") for R135,2 million.
Premium Ideas is a specialist in packaging and personalising smart cards and
related business. Through the acquisition the Group has captured more of the
value chain and is able to offer a more integrated service to customers, with
the positive impact on profitability expected to be reflected in the May 2008
annual results and going forward.
Outlook
The Group`s growing profitability bodes well for future prospects, with 50% of
Group revenue being annuity-based.
Simeka BSG has a strong presence in the telecommunications and financial
services industries and has recently achieved solid contract wins in the energy
sector through niche applications provider and integrator Intergraph Systems
Southern Africa. However, notwithstanding its strong BEE profile and
credentials the Group has not yet capitalised on its full potential in the
public sector, which will be a key focus area in the current year.
Integration and rationalisation of the three clusters` underlying companies will
be a further key focus area for the current year, to ultimately result in three
legal entities as opposed to the current 12 companies. The next step will be to
harness the strength of each cluster, with specific concentration on
the hardware and secured print arenas. Short and long-term incentives are in
place to retain key skills in order to enable the Group to achieve this
objective.
Simeka BSG`s strengthened financial stability has positioned the Group to
complement this organic growth with strategic acquisitions that will fulfil the
objectives of geographical expansion into Africa and penetration of new niche
markets. Simeka BSG is already active in Mozambique and Kenya, and now Nigeria
through the recent acquisition of Premium Ideas, and is further considering
extending its footprint to the Middle East. The medium-term objective is to
establish a truly global presence.
Dividend
In line with the Group`s policy, no dividend has been declared for the year. The
dividend policy will be reviewed at the upcoming annual general meeting of
Simeka BSG.
Appreciation
We recognise and appreciate the efforts of all directors, managers and staff who
have been integral to the Group`s success.
Similarly we extend our gratitude to all our shareholders, business associates
and particularly to our loyal customers for their support. We will continue to
strive to exceed expectations.
By order of the board
Mohammed Varachia Suren Singh
CEO CFO
27 August 2007
Directors:
Dr P S Molefe (Chairman)*; M Varachia (CEO); S Singh (CFO); K Ramsingh (COO);
M Papiyana (Group Human Resources Director); A Evan (Chief Legal Officer); T
Botha*(Deputy Chairman);K B J Molefe* N Y Mhinga*(*non-executive)
Registered office: 1st Floor, South Block, 6 Protea Place, Sandton (PO Box
4307, Halfway House, Midrand, 1685)
Transfer secretaries: Ultra Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company secretary: Noelene Beryl de Koker, 1st Floor, South Block, 6 Protea
Place, Sandton (PO Box 4307, Halfway House, Midrand, 1685)
Designated advisor: Java Capital (Proprietary) Limited
www.SimekaBSG.co.za
Date: 27/08/2007 11:17:01 Produced by the JSE SENS Department.
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