|
BCX
BCX
BCX - Business Connexion Group - Reviewed group results for the 12 months ended
31 May 2009
BUSINESS CONNEXION GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1988/005282/06)
(Share code: BCX ISIN: ZAE000054631)
("Business Connexion" or "the company" or "the group")
REVIEWED GROUP RESULTS FOR THE 12 MONTHS ENDED 31 MAY 2009
Key features
Revenue growth of 7,9% to R4,4 billion
Significant progress on revitalisation programme
Normalised operating profit growth of 15,9%
Earnings per share of 31,1 cents down by 30,9%
Tangible net asset value per share of 484,7 cents
Condensed consolidated statement of financial position
Reviewed Audited
31 May 31 May
R million 2009 2008
ASSETS
Non-current assets
Property, plant and equipment 373,3 373,5
Goodwill 145,7 154,1
Other intangible assets 91,2 103,7
Investments in associates 11,9
Other long-term investments 205,1 205,5
Deferred tax assets 51,5 50,6
878,7 887,4
Current assets
Inventories 146,1 110,2
Trade receivables 833,5 840,2
Other receivables 124,5 118,9
Prepayments 77,7 63,8
Bank balances and cash 348,2 524,3
Assets held for sale 31,9
1 530,0 1 689,3
TOTAL ASSETS 2 408,7 2 576,7
EQUITY AND LIABILITIES
Shareholders` equity 1 311,4 1 421,8
Minority interests 110,6 105,0
Total equity 1 422,0 1 526,8
Non-current liabilities
Long-term liabilities 27,7 23,0
Interest free long-term liabilities 84,1
Post retirement obligations and provisions 10,1 10,0
Deferred tax liabilities 3,1 0,8
40,9 117,9
Current liabilities
Short-term liabilities (1) 89,7 22,5
(1)The Gadlex (Pty) Ltd loan subordination
agreement expires on 31 August 2009. As a
result of the change in the financial year
end, this loan is regarded as a short term
liability.
Trade payables 326,3 349,6
Other payables 499,0 491,9
Provisions 2,2 2,0
Tax 28,6 51,3
Liabilities held for sale 14,7
945,8 932,0
TOTAL EQUITY AND LIABILITIES 2 408,7 2 576,7
Condensed consolidated statement of comprehensive income
Reviewed Audited
Twelve months Year
% Change ended ended
31 May 31 May
2009 2008
R million Restated
Revenue 8 4 444,4 4 118,5
Cost of sales 8 3 259,5 3 030,5
Gross profit 9 1 184,9 1 088,0
Operating expenses 16 1 070,0 924,0
Operating profit (30) 114,9 164,0
Investment income (11) 52,5 58,7
Profit before finance costs (25) 167,4 222,7
Finance costs (17) 8,1 9,8
Profit before tax (25) 159,3 212,9
Tax (12) 74,3 84,8
Profit for the period (34) 85,0 128,1
Profit attributable to:
Equity holders (30) 80,1 114,7
Minority interests (63) 4,9 13,4
(34) 85,0 128,1
Other comprehensive income:
Translation of foreign (>100) 8,4 (8,0)
operations
Total comprehensive income (22) 93,4 120,1
for the period
Total comprehensive income
attributable to:
Equity holders (20) 86,8 108,5
Minority interests (43) 6,6 11,6
(22) 93,4 120,1
Basic earnings per share (31) 31,1 45,0
(cents)
Diluted earnings per share (31) 30,7 44,2
(cents)
Calculation of headline
earnings (R million)
Profit attributable to equity 80,1 114,7
holders
Reversal of impairment of (4,0) (5,6)
loans and investments
Impairment of goodwill 8,5
(Profit)/loss on sale of (21,3) 2,3
property, plant and equipment
Fair value adjustment of 3,5
investment property
Tax effect of headline 3,0
earnings adjustments
Minority effect of headline 2,8
earnings adjustments
Headline earnings (40) 69,1 114,9
Weighted average number of 257 188 254 806
shares in issue (000`s)
Diluted weighted average 260 563 259 577
number of shares in issue
(000`s)
Headline earnings per share (40) 26,9 45,1
(cents)
Diluted headline earnings per (40) 26,5 44,3
share (cents)
Condensed consolidated cash flow statement
Reviewed Audited
Twelve months Year
ended ended
31 May 31 May
R million 2009 2008
Operating cash flows 246,6 261,0
Working capital changes (55,8) 79,5
Net investment income 22,8 46,8
Dividends paid (200,7) (38,1)
Tax paid (94,1) (33,5)
Cash (utilised in)/generated from (81,2) 315,7
operating activities
Net cash flow utilised in investing (66,6) (349,9)
activities
Net cash flow utilised in financing (28,3) (27,3)
activities
Net changes in cash and cash (176,1) (61,5)
equivalents
Cash and cash equivalents at beginning 524,3 585,8
of the period
Cash and cash equivalents at end of the 348,2 524,3
period
Consolidated segmental analysis
Reviewed Audited
Twelve months Year
ended ended
31 May 31 May
2009 2008
R million Restated
BUSINESS SEGMENTS ANALYSIS
Segment revenue
Services Group 2 154,1 2 025,2
Technology Group 1 919,4 1 742,3
International Group 370,9 351,0
4 444,4 4 118,5
Segment operating profit
Services Group 157,5 127,6
Technology Group (3,7) 23,9
International Group (38,9) 12,5
114,9 164,0
Other group salient information
Reviewed Audited
31 May 31 May
2009 2008
Number of shares in issue (000`s) 262 637 262 637
Less: shares held in share purchase 5 037 5 832
trust and fellow subsidiary as treasury
shares
Less: weighting of options exercised 412 1 999
during the period that would have been
treasury shares
257 188 254 806
Dilutive options 3 283 4 099
Options exercised during the period 92 672
that were dilutive for a portion of the
period
260 563 259 577
Number of options in issue (000`s) 7 834 9 647
Key ratios and statistics
Net asset value per share (cents) 541,4 581,3
Tangible net asset value per share 484,7 520,8
(cents)
Operating margin (%) 2,6 4,0
Return on total equity (%) 4,9 7,5
Return on total assets (%) 2,9 4,5
Current ratio 1,6 1,8
Average debtors` days 62,2 63,5
Depreciation and amortisation (Rm) 122,5 104,6
R million
Contingent liabilities
Performance guarantees 80,4 85,4
Asset finance recourse deals 12,8 18,1
Other 2,1 2,3
Capital commitments
Capital expenditure 64,6 25,0
Operating lease 274,2 337,1
Condensed consolidated statement of changes in equity
Share Foreign
capital and currency trans- Retained
R million premium lation reserve earnings
Balance at 31 May 2007 - 321,9 1,5 1 010,4
audited
Changes in equity for
the year ended 31 May
2008
Treasury shares and 0,1 5,2
related reserves held by
a subsidiary and share
purchase trusts
Share-based payments
Minority interest on
dividends received from
subsidiaries
Minority interest
reduction due to sale of
shares
Total comprehensive (6,2) 114,7
income for the year
Dividends paid (38,1)
Balance at 31 May 2008 - 322,0 (4,7) 1 092,2
audited
Changes in equity for
the twelve months ended
31 May 2009
Treasury shares and 2,4
related reserves held by
a subsidiary and share
purchase trusts
Share-based payments
Minority interest on
dividends received from
subsidiaries
Total comprehensive 6,7 80,1
income for the period
Dividends paid (200,7)
Balance at 31 May 2009 - 322,0 2,0 974,0
reviewed
Share-based
payment Shareholders` Minority Total
R million reserve equity interests equity
Balance at 31 May 9,9 1 343,7 116,4 1 460,1
2007 - audited
Changes in equity
for the year
ended 31 May 2008
Treasury shares 5,3 5,3
and related
reserves held by
a subsidiary and
share purchase
trusts
Share-based 2,4 2,4 2,4
payments
Minority (1,0) (1,0)
interest on
dividends
received from
subsidiaries
Minority (22,0) (22,0)
interest
reduction due to
sale of shares
Total 108,5 11,6 120,1
comprehensive
income for the
year
Dividends paid (38,1) (38,1)
Balance at 31 May 12,3 1 421,8 105,0 1 526,8
2008 - audited
Changes in equity
for the twelve
months ended 31
May 2009
Treasury shares 2,4 2,4
and related
reserves held by
a subsidiary and
share purchase
trusts
Share-based 1,1 1,1 1,1
payments
Minority (1,0) (1,0)
interest on
dividends
received from
subsidiaries
Total 86,8 6,6 93,4
comprehensive
income for the
period
Dividends paid (200,7) (200,7)
Balance at 31 May 13,4 1 311,4 110,6 1 422,0
2009 - reviewed
Reviewed Audited
Twelve months Yearended
ended
31 May 31 May
2009 2008
Normal dividend per 18,0 15,0
share (cents)
Special dividend per 60,0
share (cents)
The group results are prepared in accordance with IAS 34, Interim Financial
Reporting, the Listings Requirements of the JSE Limited and the South African
Companies Act (Act 61 of 1973) as amended. The format of the financial
statements presented has been revised to bring it in line with the revisions to
IAS 1, Presentation of Financial Statements. The accounting policies used in the
preparation of these financial statements are consistent with those used in the
annual financial statements for the year ended 31 May 2008. The group elected to
early adopt IFRS 8, Operating Segments which requires that the segments shown,
are those that management use internally to make operating decisions. The
standard is effective for annual periods beginning on or after 1 January 2009,
with early adoption permitted. The business segments analysis has therefore been
restated for the year ended 31 May 2008.
The results to 31 May 2008 have been restated for the allocation of depreciation
and amortisation to cost of sales and operating expenses, which is consistent
with the results presented for 31 May 2009.
Commentary
Change in financial year end
As previously communicated to shareholders, Business Connexion`s financial year
end was changed from 31 May to 31 August. This second interim announcement is
for the 12 months ended 31 May 2009. Audited results for the 15 months to 31
August 2009 will be announced on SENS on or about 25 November 2009.
Economic environment
While the South African economy was shielded from the initial impact of the
global financial crisis and the subsequent global economic recession, it has not
been immune. The South African economy is expected to show negative GDP growth
this year with the downturn impacting all sectors to varying degrees. Despite
the current financial crisis, public sector authorities have been responsive in
attempting to counter the downturn and the group has benefited from increased IT
spend in this sector.
Revitalisation programme
The revitalisation programme was initiated in February 2008 to centralise,
consolidate, standardise and optimise non-core and certain business functions.
The restructuring phase of the programme is due for completion by the end of
August 2009.
Costs incurred for the period related to the revitalisation programme amount to
R46,1 million. It is expected that a further R48,4 million of costs will be
incurred by 31 August 2009. While the net savings during the current period have
been small, the group anticipates that the programme will generate annualised
future savings of approximately R100 million(2).
Financial and operating performance
Business Connexion reported revenue growth of 7,9% to R4 444,4 million (2008: R4
118,5 million) for the 12 months ended 31 May 2009 (`the period`).
The impact of the economic downturn became more evident in the second half of
the period with revenue growing by 5,7% compared to the 10,3% growth for the
first six months as reported in November 2008.
Revenue in the Services Group slowed in the second half, as project spend in the
retail and banking sectors declined, although full period revenue growth was
6,4%. The Services Group remains the largest contributor to the group`s revenue
at 48,5% (2008: 49,2%).
Revenue in the Technology Group showed growth in both the first and second half
of the period, increasing by 10,2% on the back of public sector contracts,
however at tighter margins. The Technology Group contributed 43,2% (2008: 42,3%)
to the group`s revenue.
The International Group`s revenue increased by 5,7%, with the investment in the
Nigerian business delivering a good result in the period. However, margins
decreased as a result of the economic slowdown with customers becoming
increasingly price sensitive. Furthermore, these results include unrealised
foreign exchange losses of R19,1 million.
The group`s gross margin for the period at 26,8% was higher than the prior year
at 26,4% but remains under pressure. The pressure on margins is due to the mix
of business currently being written and the effect of the economic conditions
with customers being extremely price sensitive.
The group recorded an operating profit of R114,9 million for the period,
compared to R164,0 million for 2008, a decrease of 30,0%. This was largely due
to the spend on the revitalisation programme and foreign exchange movements
impacting the International Group, partially offset by the profit on sale of
property. Excluding these factors, comparable normalised operating profit grew
by 15,9%, as set out in the table below.
Normalised results
31 May 31 May
R million 2009 2008
Operating profit 114,9 164,0
Operating margin (%) 2,6 4,0
Revitalisation programme 46,1 12,8
Profit on sale of property - Faerie Glen (21,5)
Premises rental - Faerie Glen 4,5
Amortisation - fair value of contracts 4,3
Unrealised exchange losses/(profit) - 7,8 (16,0)
Debtors/creditors
Unrealised exchange losses - International 19,1
Group
Fair value adjustment of inventory 0,9 (16,9)
Comparable normalised operating profit 171,8 148,2
Comparable normalised operating margin (%) 3,9 3,6
Comparable normalised earnings per share 49,1 41,5
(cents)
Comparable normalised headline earnings per 50,6 41,5
share (cents)
The group`s headline earnings per share decreased by 40,4% to 26,9 cents (2008:
45,1 cents) for the period. Earnings per share decreased by 30,9% to 31,1 cents
(2008: 45,0 cents). Headline earnings and earnings have been impacted by the
factors noted above and the STC on the special dividend of 60,0 cents paid
during the first half of the year of R15,8 million.
Prospects
The revitalisation programme resulted in a full review of the business and
identified issues such as inefficiencies and poor accountability. The outcome of
the programme has placed Business Connexion ahead of the curve with respect to
cost containment, appropriate to the current economic climate. Further benefits
include elimination of inefficiencies and duplication, clarity of roles and
responsibilities and identification of enhanced revenue opportunities.
Revenue growth is expected to remain under pressure and the group will focus on
new opportunities as well as continued service excellence to all customers.
Thank you to our shareholders for their continued support. Management will
continue to look for other efficiencies over and above those identified by the
revitalisation programme to achieve the goal of an 8%(2) operating margin for
the 2011 financial year. Furthermore, with phase 1 of the group`s revitalisation
programme nearing completion, the board is shifting its attention to simplifying
the group and optimising the group`s capital structure.
The group`s board is committed to declaring a dividend for the 15 month period
in August 2009.
(2) In accordance with standard practice, it is noted that this information has
not been reviewed or reported on by the group`s auditors.
Independent review by the auditors
The condensed consolidated statement of financial position at 31 May 2009 and
the related condensed consolidated statement of comprehensive income, condensed
consolidated statement of changes in equity and condensed consolidated cash flow
statement for the 12 months then ended were reviewed by KPMG Inc. The individual
auditor assigned to perform the review is Mr LP Fourie. Their unmodified review
report is available for inspection at the registered office of the company.
For and on behalf of the board
AC Ruiters LB Mophatlane
Chairman Chief Executive Officer
Midrand
18 August 2009
Executive directors:
LB Mophatlane (Chief Executive Officer)V Olver (Chief Financial Officer)#
#V Olver was appointed effective 1 August 2009
MW Schoeman resigned effective 1 August 2009
Non-executive directors:
AC Ruiters (Chairman)*, JF Buchanan*, NN KekanaFL Sekha*JM Poluta*## and SV
Zilwa*##
##Were appointed effective 2 April 2009
PA Watt resigned effective 22 October 2008
* Independent non-executive directors
Registered office:
Business Connexion Park North
789 16th Road, Randjespark, Midrand, 1685
Postal address:
Private Bag X48, Halfway House, 1685
Internet address:
http://www.bcx.co.za
Transfer office and transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
1 Merchant Place
Cnr Fredman Drive and Rivonia Road, Sandton, 2196
For more information please visit our investor relations website at:
www.bcx.co.za
Date: 18/08/2009 08:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
