| Wed 27 Feb 2008, 7:05 | | GIJ - Gijima AST - Reviewed results for the six months ended 31 December 2007 |
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GIJ
GIJ
GIJ - Gijima AST - Reviewed results for the six months ended 31 December 2007
GIJIMA AST GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/021790/06
Share code: GIJ ISIN: ZAE000064606
REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
HIGHLIGHTS
* HEPS up 279%
* Revenue up 18%
* Major new contracts won
Condensed income statement
for the six months ended 31 December 2007
Reviewed Unaudited Audited
Notes 31 December 31 December 30 June
2007 2006 2007
(6 months) (6 months) (12 months)
R`000 R`000 R`000
Revenue 1 193 635 1 012 351 2 017 426
Other operating income 6 412 597 38 797
Income 1 200 047 1 012 948 2 056 223
Earnings before 83 595 45 429 120 138
interest, tax,
depreciation and
amortisation charges
(EBITDA)
Depreciation and (15 343) (13 503) (25 472)
amortisation charges
Operating profit 6 68 252 31 926 94 666
Financial income 5 361 6 571 12 580
Financial expenses (13 601) (14 126) (31 281)
Net finance cost 7 (8 240) (7 555) (18 701)
Profit before tax 60 012 24 371 75 965
Normal and deferred tax (17 527) (7 695) (17 209)
charge
Secondary Tax on 8 (414) (4 497) (4 497)
Companies (STC)
Income tax expense (17 941) (12 192) (21 706)
Profit after tax 42 071 12 179 54 259
Share of profit of - 2 292 2 350
associates
Profit for the period 42 071 14 471 56 609
Attributable to
Equity holders of the 42 071 11 604 53 742
parent
Minority interest - 2 867 2 867
42 071 14 471 56 609
Calculation of headline
earnings
Profit attributable to 42 071 11 604 53 742
equity holders of the
parent
Loss/(profit) on sale of 412 (428) (290)
businesses and
properties
Headline earnings 42 483 11 176 53 452
Basic earnings per 4,36 1,20 5,57
ordinary share (cent)
Diluted earnings per 4,25 1,20 5,57
ordinary share (cent)
Headline earnings per 4,40 1,16 5,54
ordinary share (cent)
Diluted headline 4,29 1,16 5,54
earnings per ordinary
share (cent)
Weighted average number 964 667 964 667 964 667
of shares (000`s)
Diluted number of shares 9 991 056 964 667 964 667
(000`s)
Number of shares in 964 667 964 667 964 667
issue (000`s)
Notes to the condensed income statement
1 Reporting entity
The condensed consolidated interim financial statements of GIJIMA AST GROUP
LIMITED ("the Company") as at and for the six months ended 31 December 2007
comprise the Company and its subsidiaries (together referred to as the "Group")
and the Group`s interests in associates and jointly controlled entities.
2 Statement of compliance
These condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim
Financial Reporting. They do not include all of the information required for
full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the year ended 30
June 2007.
3 Review by external auditors
KPMG Inc., the Company`s independent auditor, has reviewed the interim financial
statements contained in this interim report and has expressed an unmodified
conclusion on the interim financial statements. Their review report is available
for inspection at the Company`s registered office.
4 Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 30 June 2007.
5 Maiden dividend paid
A dividend of 1,5 cents per share was paid to shareholders on 26 November 2007
in respect of the 2007 financial year. The last date to trade to qualify for
this dividend was 16 November 2007.
Reviewed Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
(6 months) (6 months) (12 months)
6 Operating profit R`000 R`000 R`000
The following material items
have been included in the
calculation of operating
profit
Profit on sale of derivative 5 570 - 35 373
financial instrument and
investment
Exchange rate gains on 6 730 2 183 12 562
translation
(Loss)/profit on sale of (412) 428 290
businesses and property, plant
and equipment
Restructuring and integration - (25 638) (35 592)
costs
11 888 (23 027) 12 633
7 Net finance cost
Interest received 5 361 6 571 12 580
Fair value adjustments - - (1 390)
Interest paid (13 601) (14 126) (29 891)
(8 240) (7 555) (18 701)
8 STC
The STC charge has been determined net of available STC credits.
9 Diluted number of shares
The dilutive impact on the number of shares in issue at 31 December 2007
comprises the potential number of new shares to be issued by the Group to settle
its estimated future liabilities under the GijimaAst Share Linked Bonus Scheme.
In accordance with the rules of the scheme the Group also has the option to
purchase shares on the open market, in which case there will be no dilution.
10 Contingent liabilities
At 31 December 2007 the Group had contingent liabilities in respect of
registered performance bonds, bank lease and other guarantees to the value of
R3,3 million (June 2007: R2,5 million).
Condensed segmental analysis
for the six months ended 31 December 2007
Reviewed Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
(6 months) (6 months) (12 months)
R`000 R`000 R`000
Revenue
Software and Professional 364 932 305 760 623 759
Services
Industry Niche Solutions 169 604 164 716 314 456
Managed Infrastructure 659 099 541 875 1 079 211
Services
Consolidated revenue 1 193 635 1 012 351 2 017 426
Segment results
Software and Professional 17 465 6 359 30 845
Services
Industry Niche Solutions 13 694 1 753 3 723
Managed Infrastructure 47 653 35 528 80 346
Services
Corporate and other (10 560) (11 714) (20 248)
Consolidated operating profit 68 252 31 926 94 666
Condensed balance sheet
as at 31 December 2007
Reviewed Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
R`000 R`000 R`000
ASSETS
Non-current assets 293 475 339 278 317 846
Property, plant and equipment 54 030 54 033 61 495
Intangible assets 111 018 106 391 112 905
Derivative financial instrument - 12 076 -
Investment in associates - 2 472 -
Deferred tax asset 128 427 164 306 143 446
Current assets 793 837 630 722 693 666
Inventories 45 505 54 426 41 923
Short-term loans - 3 874 -
Trade and other receivables 612 448 394 226 473 577
Financial assets at fair value - 341 -
through profit and loss
Current tax asset 4 790 7 193 7 383
Cash and cash equivalents 131 094 170 662 170 783
Total assets 1 087 312 970 000 1 011 512
EQUITY AND LIABILITIES
Equity attributable to equity 283 154 230 924 264 154
holders of the parent
Non-current liabilities 304 663 307 327 305 652
Interest-bearing borrowings 261 800 257 357 263 124
Operating lease liability 23 120 22 729 23 080
Deferred tax liability 19 743 27 241 19 448
Current liabilities 499 495 431 749 441 706
Trade and other payables 477 480 364 028 396 502
Provisions 20 551 33 614 41 663
Bank overdrafts 857 1 410 337
Amounts due to vendors - 460 -
Current tax liability 607 32 237 3 204
Total equity and liabilities 1 087 312 970 000 1 011 512
Condensed cash flow statement
for the six months ended 31 December 2007
Reviewed Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
(6 months) (6 months) (12
months)
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations 49 223 22 595 86 757
before working capital changes
Working capital changes (56 364) (16 105) (30 598)
Net finance cost (8 240) (7 555) (16 160)
Dividend paid (14 470) - -
Normal tax paid (2 630) (23 483) (49 873)
Cash utilised in operating (32 481) (24 548) (9 874)
activities
Cash flows from investment
activities
Acquisition of minority - (80 503) (82 702)
interest
Acquisition of subsidiaries and - - (2 270)
businesses
Acquisition of remaining share - (4 285) -
of joint venture
Decrease in amounts due to - (920) (1 380)
vendors
Proceeds on sale of investment - - 4 365
Proceeds on sale of business - 580 580
Acquisition expenses - (1 721) -
Software acquired to maintain (1 166) (1 323) (8 881)
operations
Property, plant and equipment (5 238) (9 528) (25 997)
acquired to maintain
operations, net of proceeds of
disposals
Cash utilised in investment (6 404) (97 700) (116 285)
activities
Cash flows from financing
activities
Net (repayment of)/proceeds (1 324) 117 489 122 594
from long-term borrowings
Cash (utilised in)/generated (1 324) 117 489 122 594
from financing activities
Net decrease in cash and cash (40 209) (4 759) (3 565)
equivalents
Cash and cash equivalents at 170 446 174 011 174 011
the beginning ofthe period
Cash and cash equivalents at 130 237 169 252 170 446
the end of the period
Condensed statement of changes in equity
for the six months ended 31 December 2007
Non-
Distribut- distribut-
Share Share able able
R`000 capital premium reserves reserves
Balance at30 June 2006 964 646 525 (348 112) (35 106)
Currency translation (7 833)
differences
Decrease in distributable (38 579)
reserves from acquisition
Total income and expense (38 579) (7 833)
recognised directly in
equity
Profit for the period 11 604
Share-based payments 1 461
Balance at 31 December 2006 964 646 525 (373 626) (42 939)
Currency translation (9 682)
differences
Revaluation of land and 1 339
building (net of tax)
Decrease in distributable (477)
reserves from acquisition
Total income and expense (477) (8 343)
recognised directly in
equity
Profit for the period 42 138
Share-based payments (88)
Balance at 30 June 2007 964 646 525 (332 053) (51 282)
Currency translation (8 334)
differences
Dividend declared (14 470)
Total income and expense (14 470) (8 334)
recognised directly in
equity
Profit for the period 42 071
Share-based payments (267)
Balance at 31 December 2007 964 646 525 (304 719) (59 616)
Minority Total
R`000 Total interest equity
Balance at30 June 2006 264 271 40 779 305 050
Currency translation (7 833) (7 833)
differences
Decrease in distributable (38 579) (43 646) (82 225)
reserves from acquisition
Total income and expense (46 412) (43 646) (90 058)
recognised directly in
equity
Profit for the period 11 604 2 867 14 471
Share-based payments 1 461 1 461
Balance at 31 December 2006 230 924 - 230 924
Currency translation (9 682) (9 682)
differences
Revaluation of land and 1 339 1 339
building (net of tax)
Decrease in distributable (477) (477)
reserves from acquisition
Total income and expense (8 820) (8 820)
recognised directly in
equity
Profit for the period 42 138 42 138
Share-based payments (88) (88)
Balance at 30 June 2007 264 154 264 154
Currency translation (8 334) (8 334)
differences
Dividend declared (14 470) (14 470)
Total income and expense (22 804) (22 804)
recognised directly in
equity
Profit for the period 42 071 42 071
Share-based payments (267) (267)
Balance at 31 December 2007 283 154 - 283 154
OVERVIEW
Operating profit increased by 114% compared with the same period last year on
the back of an 18% increase in organic revenue. The ongoing focus on streamlined
and efficient delivery of services also contributed to increased operating
margins of 5,7% compared to 3,2% the previous period. Earnings per share
improved by 263% to 4,36 cents compared to the previous period`s 1,20 cents.
Against the backdrop of the highly competitive South African Information and
Communications Technology ("ICT") industry which is showing single digit growth,
our increased revenue provides evidence that we have positioned ourselves to be
a leader in both systems integration and outsourcing, where the Group offers
services to both the private and public sectors. During the period, we concluded
a number of contract renewals with long standing clients and also benefited from
strong deal flow, including Total (South Africa); Anglo Platinum; the Airports
Company of South Africa (ACSA) and SARS as well as the Department of Home
Affairs` substantial implementation of the "Who am I Online" project. As part of
a SAP-led consortium, we have also been awarded the first phase of the Human
Resources module of National Treasury`s Integrated Financial Management System
(IFMS) valued at more than R500 million. We now have well diversified revenue
streams as an ongoing service provider to the top companies in the commercial
sector, balanced by the large and complex implementations currently in progress
in the public sector.
OPERATIONAL REVIEW
The buoyant market, whilst presenting attractive revenue opportunities, is also
characterised by increased mobility of experienced people. We have been impacted
by this trend, but the progress we have made in the last three years has created
an attractive environment for talented individuals, contributing to our aim to
become the Employer of Choice in the ICT industry. We have defended our
capability by retaining key skills and attracting a number of highly sought
after technologists, while the demographic split of our workforce has become
more representative with 40% of staff being black (2006: 33%). We continue to
invest heavily in skills development as evidenced by our joint learnership
programme with SAP.
Our Managed Infrastructure Services division delivered growth of 22% in revenue
to R659 million. Despite ongoing competitive pressures, the division delivered a
34% increase in operating profit. Our unified communications businesses have
been performing well with growth in both data and voice products and services.
Our hosting and data centre services delivered a good performance with the
renewal of several long-term support contracts. This business continues to
leverage the mainframe investment made in 2007 to enhance value to clients.
Our Software and Professional Services division benefited from increased ICT
spending, including significant public sector contracts that have been secured.
Revenue increased by 19% to R365 million, with operating profit increasing from
R6 million to R17 million. Our Enterprise Resource Planning (ERP) services,
traditionally a strong performer, has maintained its growth track record. It won
a support contract for Anglo Platinum`s SAP environment as well as the highly
contested HR SAP solution for Government`s IFMS (in partnership with SAP), with
the roll out beginning in the second half of this financial year. The resource
contracting and placements business continues to ride the higher demand for
skills in the ICT environment.
Our Industry Niche Solutions division showed an excellent turnaround with
operating profit increasing from R2 million to R14 million, off a 3% revenue
growth base. The mining technical solutions business delivered a record
performance as investments to enhance its positioning paid off. With good demand
for its proprietary products in the international arena, the contribution of
offshore revenue is set to exceed local revenue in the short term. Our financial
services and retail solutions business is gaining ground in this highly
competitive market segment, with a promising pipeline of opportunities. The
manufacturing services business was successfully streamlined and its performance
showed significant improvement.
The historic cost benefits in the Corporate Support structure were further
entrenched with a resultant 10% reduction in costs compared to the same period
last year.
Cash generated from operations before working capital changes more than doubled
to R49 million compared to the same period last year. However, working capital
increased by R56 million, mainly as a result of a sharp increase in debtors
flowing from significant sales in December 2007. Subsequent to our reporting
date, the increased working capital level has largely been addressed. Our
liquidity remains strong with cash balances of R130 million.
PROSPECTS
During the past six months we concluded a number of substantial contracts which
will gain momentum in the second half of the financial year, which is also
traditionally more profitable.While continuing to pursue new opportunities, our
attention also focuses on superior execution of the projects recently awarded.
We are geared to accommodate additional revenue without substantial investments
or additional fixed costs and poised to benefit from economies of scale.
In line with our strategy we are continuously evaluating opportunities to
enhance our service proposition.
RW Gumede
Executive Chairman
PJ Bogoshi
Chief Executive Officer
CJH Ferreira
Chief Financial Officer
27 February 2008
Directors:
RW Gumede (Executive Chairman),
PJ Bogoshi (Chief Executive Officer)**
CJH Ferreira (Chief Financial Officer),
CP Potgieter (Chief Operating Officer),
Dr NJ Dlamini*, M MacDonald*,
JE Miller*, K Mpinga*, AFB Mthembu*,
JCL van der Walt*
* Non-executive
** Appointed 1 July 2007
Company Secretary:
JC Rademan
Registered Office:
47 Landmarks Avenue, Kosmosdal
Samrand, South Africa
(012) 675 5000
Transfer Secretaries
Link Market Services SA (Pty) Limited
(Registration number 2000/007239/07)
5th Floor, 11 Diagonal Street,
Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 27/02/2008 07:05:11 Produced by the JSE SENS Department.
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