| Wed 27 Aug 2008, 7:05 | | GIJ - Gijima AST Group Limited - Audited Results For The Year Ended 30 June 2008 |
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GIJ
GIJ
GIJ - Gijima AST Group Limited - Audited Results For The Year Ended 30 June 2008
And Proposed Cash Dividend
GIJIMA AST GROUP LIMITED
Incorporated in the Republic of South Africa)
Registration number 1998/021790/06)
Share code: GIJ
ISIN: ZAE000064606
("Gijima Ast Group" or "the company")
Audited results for the year ended 30 June 2008 and proposed cash dividend
Highlights
Revenue up by 25% to R2,5 billion
EBITDA up by 70% to R204 million
Operating profit up by 81% to R171 million
Headline earnings per share up by 111% to 11,7 cents
Dividend per share up by 133% to 3,5 cents
SEE PRESS FOR GRAPH
Profile and Group Structure
GijimaAst is a leading South African company which operates in the information
and communication technology ("ICT") services industry. Organised into two
operating divisions, our 3 657 strong workforce has extensive capacity,
offering end-to-end infrastructure management and professional services:
professional services, focusing on software solutions and system
integration, leveraged by a pool of skilled consultants, our proprietary
industry solutions and effective methodologies and practices; and
managed services, providing outsource services leveraged by technology
infrastructure and unified communication services.
Our long-standing investments in our specialist industry focus areas the
public sector, mining, manufacturing, financial services and retail gives us
an in-depth understanding of operating environments in these sectors, enabling
us to add value to our clients.
Strategy
Our strategy to maximise shareholder value is underpinned by four pillars
profitable growth, market leadership, service excellence and being employer of
choice in the ICT sector. During the year, this strategy gained traction as
reflected in our profitable growth rate which saw earnings grow significantly.
Based on the need to offer our customers a comprehensive value proposition,
while taking cognisance of their buying behaviour and emerging trends, we
realigned our operations during 2008 to unlock further efficiencies and
economies of scale in our business.
SEE PRESS FOR GRAPH
Financial Commentary
Our 25% increase in revenue to R2 515 million (2007: R2 017 million) was driven
by the 26% growth reported by Managed Services and 22% by Professional
Services. The Application Products business unit more than doubled its revenue
for the year, whilst the Networks and Enterprise Resource Planning ("ERP")
business units also delivered excellent performance and GMSI continued to grow
strongly in the international market.
Earnings before interest, tax, depreciation and amortisation ("EBITDA")
improved by 70% and operating profit by 81%. The strong increase in revenue
enabled us to benefit from economies of scale, as reflected by staff and
operating cost increases being contained to 22%. Application Products,
Networks, ERP and GMSI performed at an outstanding level, all with operating
profit increases in the order of 100% and above. Performance by the
Availability Services and Microsoft business units was disappointing and steps
have been taken to reverse this trend. The further weakening of the Rand during
the year resulted in a significant foreign exchange translation gain of
R48 million (2007: R13 million), mainly from our foreign operations.
Reflecting the higher levels of activity, cash generated from operations before
working capital changes increased by 93% to R167 million (2007: R87 million).
However, free cash was tempered by an increase of R196 million in debtors,
reflecting the sharp increase in turnover and tougher debt collection
environment. Nevertheless, liquidity remains healthy and the financial
structure sound.
Change of Director`s Duties
Our Executive Chairman, Robert Gumede, has fulfilled an executive role for the
last three years since the merger of Gijima (a company that he founded ten
years ago) and AST and has been instrumental in cementing the merger
successfully and in driving our new business initiative. Given his view that
the company is now placed on a sound platform to deliver future value under the
able leadership of Jonas Bogoshi and his executive team, Mr Gumede has decided
to relinquish his executive duties, whilst remaining Non-Executive Chairman,
in order to focus in his entrepreneurial company, Guma Group from 1 November
2008. He will remain invested in GijimaAst through his Guma Group`s 37%
shareholding and will continue to offer his services to the company.
Withdrawal of cautionary announcement
During the year, the Board contemplated a potential corporate transaction.
However, negotiations were terminated and the cautionary announcement
withdrawn, when it was clear that key stakeholders from both sides were unable
to reach agreement on the business model which would have ensued going forward.
Proposed cash dividend
In view of the good earnings performance and our sound liquidity position the
Board has proposed a cash dividend of 3,5 cents per share, up 133% on last
year`s maiden dividend of 1,5 cents per share and more in line with market
dividend cover norms. The dividend is payable to shareholders recorded in the
books of the company at the close of business on Friday, 21 November 2008. The
proposed dividends are to be confirmed at the annual general meeting to be held
on Thursday, 6 November 2008. An announcement confirming the payment of the
proposed dividends will be made on SENS on Thursday, 6 November 2008 and in the
press on Friday, 7 November 2008.
The salient dates are as follows:
Last date to trade cum dividend Friday,14 November 2008
Securities start trading ex dividend Monday,17 November 2008
Record date Friday,21 November 2008
Payment date Monday,24 November 2008
The dividend is declared in the currency of the Republic of South Africa.
Share certificates may not be dematerialised or rematerialised between Monday,
17 November 2008 and Friday, 21 November 2008, both dates inclusive.
Prospects
The ICT industry remains buoyant despite the generally subdued domestic
economy. Opportunities in the sector include the Government`s infrastructure
investment programme, driven by the demand for improved service delivery, as
well as the pursuit of increased efficiencies across the private sector.
Our brand has gained recognition in all our chosen areas of focus, as
demonstrated by the strong deal flow during 2008. This has created a solid base
for profitable growth, positioning us to meet our revenue growth targets which
will enable us to further diversify our revenue profile, both in terms of
industry and client profile.
Given this deal flow, we continue to focus on strengthening our project
delivery capability. Our strategic partnership models and learnership
programmes with leading educational institutions continue to provide us with the
required technical skills to deliver on these projects.
We remain committed to delivering tangible progress on our strategic themes of
profitable growth, service excellence, market leadership and becoming the
employer of choice in the ICT industry during 2009.
RW Gumede PJ Bogoshi CJH Ferreira
Executive Chairman Chief Executive Officer Chief Financial Officer
27 August 2008
Abridged consolidated income statement
for the year ended 30 June 2008
Audited Audited
30 June 2008 30 June 2007
Notes R`000 R`000
Revenue 2 514 741 2 017 426
Other operating income 12 500 38 797
Income 2 527 241 2 056 223
Earnings before interest, tax,
depreciation
and amortisation charges (EBITDA) 203 818 120 138
Depreciation and amortisation
charges (32 548) (25 472)
Operating profit 4 171 270 94 666
Financial income 14 354 12 580
Financial expense (26 909) (31 281)
Net financial expense 5 (12 555) (18 701)
Profit before tax 158 715 75 965
Income tax expense (46 510) (21 706)
Profit after tax 112 205 54 259
Share of profit of associates 2 350
Profit for the year 112 205 56 609
Attributable to
Equity holders of the parent 112 205 53 742
Minority interest 2 867
112 205 56 609
Calculation of headline earnings
Profit attributable to equity
holders of the parent 112 205 53 742
Loss/(profit) on sale of businesses
and property,
plant and equipment 652 (290)
Headline earnings 112 857 53 452
Basic earnings per ordinary share
(cents) 11,63 5,57
Diluted earnings per ordinary share
(cents) 11,36 5,57
Headline earnings per ordinary
share (cents) 11,70 5,54
Diluted headline earnings per
ordinary share (cents) 11,43 5,54
Weighted average number of shares
(000`s) 964 667 964 667
Diluted number of shares (000`s) 987 670 964 667
Number of shares in issue (000`s) 964 667 964 667
Notes to the abridged consolidated income statement
1 Reporting entity
These abridged GIJIMA AST GROUP LIMITED ("the Group") financial results for
the year ended 30 June 2008 constitute a summary of the Group`s audited
financial statements. They have been prepared in accordance with International
Financial Reporting Standards, including IAS 34, and the South African Companies
Act 1973, as amended.
KPMG Inc.`s unmodified auditors` reports included in the annual financial
statements and on the summarised financial statements contained in this
abridged report are available for inspection at the company`s registered
office.
2 Significant accounting policies
The accounting policies applied by the Group in these abridged 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.
3 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.
Audited Audited
30 June 2008 30 June 2007
R`000 R`000
4 Operating profit
The following material items have been
included in the calculation of operating profit
Profit on sale of derivative financial
instrument and investment 5 500 35 373
Exchange rate gains on translation 47 811 12 562
(Loss)/profit on sale of businesses and
property, plant and equipment (652) 290
Restructuring and integration costs (35 592)
52 659 12 633
5 Net financial expense
Interest income 14 354 12 580
Fair value adjustments (1 390)
Interest expense (26 909) (29 891)
(12 555) (18 701)
6 Diluted number of shares
The dilutive impact on the number of shares in issue at 30 June 2008 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.
7 Contingent liabilities
At 30 June 2008 the Group had contingent liabilities in respect of registered
performance bonds, bank lease and other guarantees to the value of R3 million
(June 2007: R2,5 million).
Abridged consolidated cash flow statement
for the year ended 30 June 2008
Audited Audited
30 June 2008 30 June 2007
R`000 R`000
Cash flows from operating activities
Cash generated from operations before
working capital changes 167 304 86 757
Working capital changes (92 297) (30 598)
Net financial expense (12 820) (16 160)
Dividend paid (14 470)
Tax paid (4 364) (49 873)
Cash generated from/(used in)
operating activities 43 353 (9 874)
Cash flows from investing activities
Acquisition of minorities (82 702)
Acquisition of subsidiaries and businesses (2 270)
Decrease in amounts due to vendor (1 380)
Proceeds on sale of investments/business 4 945
Purchase of software to maintain operations (16 734) (8 881)
Purchase of property, plant and equipment
to maintain operations, net of proceeds
of disposals (23 227) (25 997)
Cash used in investing activities (39 961) (116 285)
Cash flows from financing activities
Net (repayments of)/proceeds from
long-term borrowings (2 656) 122 594
Cash (used in)/generated from financing
activities (2 656) 122 594
Net increase/(decrease) in cash and cash
equivalents 736 (3 565)
Cash and cash equivalents at the beginning
of the year 170 446 174 011
Cash and cash equivalents at the
end of the year 171 182 170 446
Abridged consolidated balance sheet
as at 30 June 2008
Audited Audited
30 June 2008 30 June 2007
R`000 R`000
ASSETS
Non-current assets 284 553 317 846
Property, plant and equipment 58 829 61 495
Intangible assets 122 331 112 905
Deferred tax asset 103 393 143 446
Current assets 893 607 693 666
Inventories 43 650 41 923
Trade and other receivables 674 633 473 577
Current tax asset 1 870 7 383
Cash and cash equivalents 173 454 170 783
Total assets 1 178 160 1 011 512
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent 319 533 264 154
Non-current liabilities 297 507 305 652
Interest-bearing borrowings 260 467 263 124
Operating lease liability 22 725 23 080
Deferred tax liability 14 315 19 448
Current liabilities 561 120 441 706
Trade and other payables 502 553 396 502
Provisions 51 378 41 663
Bank overdrafts 2 272 337
Current tax liability 4 917 3 204
Total equity and liabilities 1 178 160 1 011 512
Abridged consolidated segmental analysis
for the year ended 30 June 2008
Audited Audited
30 June 2008 30 June 2007
R`000 R`000
Revenue
Professional Services 1 080 968 882 993
Managed Services 1 433 773 1 134 433
Consolidated revenue 2 514 741 2 017 426
Segment results
Professional Services 58 474 32 217
Managed Services 83 811 70 064
Corporate and other (18 826) (20 177)
Exchange rate gains on translation 47 811 12 562
Consolidated operating profit 171 270 94 666
Abridged consolidated statement of changes in equity
for the year ended 30 June 2008
Non-
Distribut- distribut-
Share Share able able
R`000 capital premium reserves reserves
Group
Balance at
1 July 2006 964 646 525 (348 112) (35 106)
Share-based
payment transactions 1 373
Currency
translation
differences (17 515)
Revaluation of
land and
buildings
(net of tax) 1 339
Acquisition
of minorities (39 056)
Total income
and expense
recognised
directly
in equity (37 683) (16 176)
Profit for the period 53 742
Balance at
30 June 2007 964 646 525 (332 053) (51 282)
Share-based
payment
transactions 1 009
Currency
translation
differences (43 365)
Dividend paid (14 470)
Total income
and expense
recognised
directly
in equity (13 461) (43 365)
Profit for the period 112 205
Balance at
30 June 2008 964 646 525 (233 309) (94 647)
Minority Total
R`000 Total interest equity
Group
Balance at
1 July 2006 264 271 40 779 305 050
Share-based
payment
transactions 1 373 1 373
Currency
translation
differences (17 515) (17 515)
Revaluation of
land and
buildings
(net of tax) 1 339 1 339
Acquisition
of minorities (39 056) (43 646) (82 702)
Total income
and expense
recognised
directly
in equity (53 859) (43 646) (97 505)
Profit for the period 53 742 2 867 56 609
Balance at
30 June 2007 264 154 264 154
Share-based
payment
transactions 1 009 1 009
Currency
translation
differences (43 365) (43 365)
Dividend paid (14 470) (14 470)
Total income
and expense
recognised
directly
in equity (56 826) (56 826)
Profit for the period 112 205 112 205
Balance at
30 June 2008 319 533 319 533
Directors:
RW Gumede (Executive Chairman), PJ Bogoshi (Chief Executive Officer)
CJH Ferreira (Chief Financial Officer), Dr NJ Dlamini*, M Macdonald*,
JE Miller*, LBR Mthembu*+, AFB Mthembu*, JCL van der Walt*
* Non-executive
+ Appointed 12 August 2008
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)
www.gijima.com
Centurion
27 August 2008
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 27/08/2008 07:05:01 Produced by the JSE SENS Department.
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