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CVN
CVN
CVN - Convergenet Holdings Limited - Unaudited interim results for the six
months ended 29 February 2008
CONVERGENET HOLDINGS LIMITED
(Formerly Vestor Investments Limited)
Incorporated in the Republic of South Africa)
(Registration number 1998/015580/06)
Share code: CVN ISIN: ZAE000102067
("ConvergeNet" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED
29 FEBRUARY 2008
Condensed group income
statement
for the 6 months ended 29
February 2008
Unaudited Audited
6 months Unaudite year
ended 29 d 6 ended 31
February months Aug 2007
2008 ended 28
February
2007
R`000 R`000 R`000
Revenue 425,615 - 170,196
Operating profit/(loss) 56,171 (39) 21,027
Investment revenue 1,235 - 1,472
Share of profit of 245 - 142
associates
Finance costs (390) - (61)
Profit (loss) before 57,261 (39) 22,580
taxation
Taxation (17,038) - (6,595)
Profit (loss) for the year 40,223 (39) 15,985
Attributable to:
Equity holders of the parent 18,724 (39) 6,149
Minority Interests 21,499 - 9,836
40,223 (39) 15,985
Earnings per share
Basic and diluted earnings 2.80 (0.05) 2.37
per ordinary share (cents)
Headline earnings per 2.80 (0.05) 2.46
ordinary share (cents)
Calculation of headline
earnings
Profit attributable to 18,724 (39) 6,149
equity holders of the parent
(Profit)/Loss on disposal of (4) - 2
assets
Goodwill adjustment and - - 461
impairment
Portion of goodwill - - (226)
adjustment attributable to
minorities
Headline earnings 18,720 (39) 6,386
Weighted average number of 667,857,629 83,936,3 259,469,8
shares 10 63
Diluted weighted average 667,857,629 83,936,3 259,469,8
number of shares 10 63
Total number of shares 695,971,039 83,936,3 595,812,7
10 86
Condensed group balance
sheet
Unaudited 6 Audited
months ended Unaudite year
29 February d 6 ended 31
2008 months Aug 2007
ended 28
February
2007
R`000 R`000 R`000
ASSETS
Non-Current Assets
Property, plant and 15,583 - 9,694
equipment
Goodwill 170,388 - 90,849
Intangible assets 16 - 16
Investments in associates 387 - 142
Deferred tax 4,238 - 2,513
190,612 - 103,214
Current Assets
Inventories 18,479 - 8,911
Loans to group companies 434 - 346
Other financial assets 11,051 4 1,122
Current tax receivable 126 - 255
Trade and other receivables 211,527 - 113,096
Cash and cash equivalents 68,239 1,286 55,253
309,856 1,290 178,983
TOTAL ASSETS 500,468 1,290 282,197
EQUITY AND LIABILITIES
Total equity
Share capital 215,552 18,883 129,088
Accumulated profit/(loss) 6,627 (18,285) (12,097)
Equity attributable to 222,179 598 116,991
equity holders of parent
Minority interest 53,102 - 32,936
275,281 598 149,927
Liabilities
Non-Current liabilities
Loans from group companies - 11,595 11,595
Other financial liabilities 3,298 - 1,448
Finance lease obligation 2,325 - 1,706
Operating lease liability 14 - 62
Deferred tax 1,543 - 35
7,180 - 14,846
Current liabilities
Loans from group companies 3,665 - -
Other financial liabilities 599 - 1,460
Current tax payable 30,566 682 20,791
Finance lease obligation 497 - 689
Trade and other payables 182,658 10 93,769
Bank overdraft 22 - 715
218,007 692 117,424
Total Liabilities 225,187 692 132,270
TOTAL EQUITY AND 500,468 1,290 282,197
LIABILITIES
Condensed group cash flow
statement
for the 6 months ended 29
February 2009
Unaudited Unaudited Audited
6 months 6 months year
ended 29 ended 28 ended
February February 31 Aug
2008 2007 2007
R`000 R`000 R`000
Operating activities
Cash from (used in) 35,375 (39)
operating activities (4,241)
Interest income 1,235 - 1,472
Finance costs (390) - (61)
Tax paid (10,758) -
(6,922)
Goodwill adjustment and - - (461)
impairment
Net cash from (used in) 25,462 (39)
operating activities (10,213
)
Net cash (used in) from (9,164) (173) 59,307
investing activities
Net cash (used in) from (2,619) - 3,946
financing activities
Net increase (decrease) in 13,679 (212) 53,040
cash and cash equivalents
Cash at the beginning of 54,538 1,498 1,498
the year
Total cash at end of the 68,217 1,286 54,538
year
Condensed group statement of changes
in equity
for the 6 months ended 29 February
2008
Shar Share Total Accumula Total Minori Total
e premiu share ted attribu ty equity
capi m capita profit/( table intere
tal l loss) to st
equity
holders
of the
parent
R`00 R`000 R`000 R`000 R`000 R`000 R`000
0
Balance at 31 85 18,958 19,043 797 - 797
August 2006 (18,246)
Loss for the - (39) (39) - (39)
period
Expenses (160) (160) - (160) - (160)
recognised
directly in
equity
Balance at 28 85 18,798 18,883 598 - 598
February 2007 (18,285)
Profit for - - 6,188 6,188 9,836 16,024
the period
Expenses (920) (920) - (920) - (920)
recognised
directly in
equity
Issue of 4 2,364 2,368 - 2,368 - 2,368
shares for
cash
Dividends to - - - - -
minorities (1,580 (1,580
) )
Business 507 108,25 108,75 - 108,757 24,680 133,43
combinations 0 7 7
Balance at 31 596 128,49 129,08 116,991 32,936 149,92
August 2007 2 8 (12,097) 7
Profit for - 18,724 18,724 21,499 40,223
the period
Dividends to - - - (650) (650)
minorities
Business 100 86,364 86,464 - 86,464 (683) 85,781
combinations
Balance at 29 696 214,85 215,55 6,627 222,179 53,102 275,28
February 2008 6 2 1
Condensed group segmental
analysis
for the 6 months ended 29
February 2008
Unaudited Audited
Unaudited 6 months year
6 months ended 28 ended 31
ended 29 February Aug 2007
February 2007
2008
R`000 R`000 R`000
Revenue
Services and support 64,138 - 27,769
Hardware and software 98,296 - 52,986
Cabling and 248,518 - 89,252
infrastructure
Communications 8,087 - -
Other 6,576 - 189
425,615 - 170,196
Operating profit
Services and support 5,482 - 1,736
Hardware and software 3,594 - 4,194
Cabling and 39,403 - 18,578
infrastructure
Communications 3,347 - -
Other 4,345 (39) (3,481)
56,171 (39) 21,027
Commentary
1. Basis of presentation
These condensed consolidated financial results for the six months ended 29
February 2008 are prepared in accordance with IAS34, Interim Financial
Reporting, the Listing Requirements of the JSE Limited, and the South African
Companies Act, 1973 as amended.
2. Accounting policies
The unaudited results for the six months ended 29 February 2008 have been
prepared in accordance with the Group`s accounting policies which comply with
IFRS and are consistent with those applied in preparation of the group`s audited
annual financial statements for the year ended 31 August 2007, with the
exception of the adoption of IFRS7, Financial Instruments: Disclosures.
3. Audit report
The consolidated financial results for the six months ended 29 February 2008, as
well as this set of summarised financial information have not been audited by
our auditors, and thus no audit report has been issued.
4. Operating results
The interim results reflect the Group`s first set of interim results for a full
period since the various acquisitions were approved by shareholders in the prior
financial year. A comparison to the prior six month period is not meaningful as
the group did not trade for the six month period. Similarly a comparison to the
prior year`s results is not meaningful as this represents results which
effectively represents a 3 month period.
The Group experienced a strong demand for its products and offerings and it has
achieved growth in both market and customer share during the period under
review. The Sizwe Africa IT Group, Structured Connectivity Solutions and Telesto
Communications have in particular performed ahead of expectations for the
period.
According to the profit forecast, as published in the circular to shareholders
dated 3 August 2007, the fully diluted earnings and headline earnings per share
were estimated to be 4.23 cents per share for the year ending 31 August 2008. On
assumption that forecast earnings accrued on a pro rata basis, the actual fully
diluted earnings and headline earnings per share for the 6 months were 32%
better than 50% of the profit forecast.
5. Acquisitions and issue of shares
ConvergeNet has acquired 74% of Future Cell (Proprietary) Limited ("Future
Cell") for a purchase consideration of R68 376 000 which has been settled
through the issue of 78 593 103 shares in ConvergeNet at 87 cents per share.
Future Cell operates in the pre-paid cellular market.
ConvergeNet also acquired 51% of X-DSL Networking Solutions (Proprietary)
Limited ("X-DSL") for a purchase consideration of R5 000 000, which was settled
by the issue of 5 747 126 shares at 87 cents per share. X-DSL provides
networking solutions to SMME`s.
In addition to the acquisition of above subsidiaries, ConvergeNet has acquired
an additional 19 % interest in Structured Connectivity Solutions (Pty) Ltd for a
consideration of R13,3 million, which was settled through the issue of
15,818,024 ordinary shares in ConvergeNet Holdings Limited.
6. Change in Directors
During the period under review Mr M D van Rooyen resigned as a non-executive
director and Ms M J Krastanov was appointed as an independent non-executive
director.
7. Prospects
The group continues to experience strong demand for its offerings in spite of
the current economic situation. Therefore the outlook for growth remains
positive.
8. Dividend
No dividend has been proposed for the period under review.
9. Comparative figures
Certain comparative figures in the cash flow statement have been reclassified in
order to treat the issuing of shares for business acquisitions as a non cash
flow item. This has resulted in a reclassification between `Net cash from
financing activities` and `Net cash from investing activities`.
10 Post-balance sheet events
There have been no significant events subsequent to period-end up until the date
of this report that requires adjustment or disclosure.
SL Petini PWJ Bouwer
Chairman Chief Executive Officer
Johannesburg
17 April 2008
Sponsor
Arcay Moela Sponsors (Proprietary) Limited
Date: 18/04/2008 09:18:49 Produced by the JSE SENS Department.
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