| Thu 12 Nov 2009, 8:00 | | BCX - Business Connexion Group Limited - Audited Summarised Group Results For |
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BCX
BCX
BCX - Business Connexion Group Limited - Audited Summarised Group Results For
The 15 Months Ended 31 August 2009 And Cash Dividend Declaration
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")
AUDITED SUMMARISED GROUP RESULTS FOR THE 15 MONTHS ENDED 31 AUGUST 2009 AND CASH
DIVIDEND DECLARATION
Key features
Continued revenue growth
Anticipated revitalisation programme annualised savings of approximately R100
million
Gross profit marginally higher at 26,6%
Diluted earnings per share of 41,0 cents
Cash dividend of 18 cents per share
Summarised consolidated statement of financial position
Audited Audited
31 August 31 May
R million 2009 2008
ASSETS
Non-current assets
Property, plant and equipment 361,2 373,5
Goodwill 145,6 154,1
Other intangible assets 90,2 103,7
Investments in associates 14,9
Other long-term investments 205,7 205,5
Deferred tax assets 45,6 50,6
863,2 887,4
Current assets
Inventories 189,6 110,2
Trade receivables 686,3 840,2
Other receivables 166,7 118,9
Prepayments 87,3 63,8
Taxation prepaid 11,5
Cash and cash equivalents 333,4 524,3
Assets held for sale 31,9
1 474,8 1 689,3
TOTAL ASSETS 2 338,0 2 576,7
EQUITY AND LIABILITIES
Shareholders` equity 1 316,3 1 421,8
Minority interests 102,1 105,0
Total equity 1 418,4 1 526,8
Non-current liabilities
Long-term liabilities 26,4 23,0
Interest free long-term liabilities 84,1
Post retirement obligations and provisions 11,5 10,0
Deferred tax liabilities 3,5 0,8
41,4 117,9
Current liabilities
Short-term liabilities 1 76,7 22,5
Trade payables 231,2 349,6
Other payables 564,8 491,9
Provisions 5,5 2,0
Taxation 51,3
Liabilities held for sale 14,7
878,2 932,0
TOTAL EQUITY AND LIABILITIES 2 338,0 2 576,7
1 The Gadlex (Pty) Limited loan subordination agreement expires on 31 August
2010 and is therefore regarded as a short-term liability.
Summarised consolidated statement of comprehensive income
Audited Audited
15 12
months months
ended ended
31 August 31 May
2009 2008
R million Restated
Revenue 5 496,1 4 118,5
Cost of sales 4 036,7 3 030,5
Gross profit 1 459,4 1 088,0
Operating expenses 1 326,8 924,0
Operating profit 132,6 164,0
Investment income 59,9 58,7
Profit before finance costs 192,5 222,7
Finance costs 7,5 9,8
Profit before taxation 185,0 212,9
Taxation 80,3 84,8
Profit for the period 104,7 128,1
Profit attributable to:
Equity holders 106,9 114,7
Minority interests (2,2) 13,4
104,7 128,1
Other comprehensive income:
Translation of foreign operations (14,3) (8,0)
Total comprehensive income
for the period 90,4 120,1
Total comprehensive income
attributable to:
Equity holders 91,5 108,5
Minority interests (1,1) 11,6
90,4 120,1
Basic earnings per share (cents) 41,6 45,0
Diluted earnings per share (cents) 41,0 44,2
Calculation of headline
earnings (R million)
Profit attributable to equity holders 106,9 114,7
Reversal of impairment of loans and investments (4,0) (5,6)
Impairment of goodwill 8,6
(Profit)/loss on sale of property, plant and equipment (21,1) 2,3
Fair value adjustment of investment property (1,9) 3,5
Tax effect of headline earnings adjustments 5,2
Minority effect of headline earnings adjustments 2,7
Headline earnings 96,4 114,9
Weighted average number of shares in issue (000`s) 257 300 254 806
Diluted weighted average number
of shares in issue (000`s) 261 082 259 577
Headline earnings per share (cents) 37,5 45,1
Diluted headline earnings per share (cents) 36,9 44,3
Summarised consolidated cash flow statement
Audited Audited
15 12
months months
ended ended
31 August 31 May
R million 2009 2008
Operating cash flows 248,1 261,0
Working capital changes (29,2) 79,5
Net investment income 36,9 46,8
Dividends paid (200,7) (38,1)
Taxation paid (135,5) (33,5)
Cash (utilised in)/generated from
operating activities (80,4) 315,7
Net cash flow utilised in investing activities (75,3) (349,9)
Net cash flow utilised in financing activities (35,2) (27,3)
Net changes in cash and cash equivalents (190,9) (61,5)
Cash and cash equivalents at beginning of the period 524,3 585,8
Cash and cash equivalents at end of the period 333,4 524,3
Summarised segmental analysis
Audited Audited
15 12
months months
ended ended
31 August 31 May
2009 2008
R million Restated
BUSINES SSEGMENT ANALYSIS
Segment revenue
Services Group 2 671,1 2 025,2
Technology Group 2 298,1 1 742,3
International Group 526,9 351,0
5 496,1 4 118,5
Segment operating profit
Services Group 169,2 127,6
Technology Group (27,1) 23,9
International Group (9,5) 12,5
132,6 164,0
Other group salient information
Audited Audited
31 August 31 May
R million 2009 2008
Number of shares in issue (000`s) 262 637 262 637
Less: shares held in share purchase
trust and fellow subsidiary as treasury shares 2 370 5 832
Less: weighting of options exercised
during the period that would have
been treasury shares 2 967 1 999
257 300 254 806
Dilutive options 1 140 4 099
Options exercised during the period
that were dilutive for a portion of the period 2 642 672
261 082 259 577
Number of options in issue (000`s) 28 994 9 647
Key ratios and statistics
Net asset value per share (cents) 540,1 581,3
Tangible net asset value per share (cents) 483,6 520,8
Operating margin (%) 2,4 4,0
Return on total equity (%) 6,8 7,5
Current ratio 1,7 1,8
Average debtors` days 57,3 63,5
Depreciation and amortisation 149,9 104,6
Cost of sales 99,1 70,1
Operating expenses 50,8 34,5
R million
Contingent liabilities
Performance guarantees 70,6 85,4
Asset finance recourse deals 11,4 18,1
Other 6,1 2,3
Capital commitments
Capital 64,6 25,0
Operating lease 281,4 337,1
The consolidated financial statements are prepared in terms of the recognition
and measurement principles of International Financial Reporting Standards (IFRS)
and the presentation and disclosure requirements of IAS 34: Interim Financial
Reporting, the Listing 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 of 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 August 2009.
Summarised consolidated statement of changes in equity
Share Foreign
capital and currency trans-
R million premium lation reserve
Balance at 31 May 2007 - audited 321,9 1,5
Changes in equity for the 12 months
ended 31 May 2008
Movement in treasury shares and related
reserves held by a subsidiary and share
purchase trusts 0,1
Share-based payments
Minority interest on dividends received
from subsidiaries
Minority interest reduction due to sale of shares
Total comprehensive income for the year (6,2)
Dividends paid
Balance at 31 May 2008 - audited 322,0 (4,7)
Changes in equity for the 15 months
ended 31 August 2009
Movement in treasury shares and related
reserves held by share purchase trusts
Share-based payments
Minority interest on dividends received
from subsidiaries
Total comprehensive income for the period (15,4)
Dividends paid
Balance at 31 August 2009 - audited 322,0 (20,1)
Share-based
Retained payment
R million earnings reserve
Balance at 31 May 2007 - audited 1 010,4 9,9
Changes in equity for the 12 months
ended 31 May 2008
Movement in treasury shares and related
reserves held by a subsidiary and share
purchase trusts 5,2
Share-based payments 2,4
Minority interest on dividends received
from subsidiaries
Minority interest reduction due to sale of shares
Total comprehensive income for the year 114,7
Dividends paid (38,1)
Balance at 31 May 2008 - audited 1 092,2 12,3
Changes in equity for the 15 months
ended 31 August 2009
Movement in treasury shares and related
reserves held by share purchase trusts 1,3
Share-based payments 2,4
Minority interest on dividends received
from subsidiaries
Total comprehensive income for the period 106,9
Dividends paid (200,7)
Balance at 31 August 2009 - audited 999,7 14,7
Audited Audited
15 months ended 12 months ended
31 August 31 May
2009 2008
Normal dividend paid per share (cents) 18,0 15,0
Special dividend paid per share (cents) 60,0
Shareholders` Minority Total
R million equity interests equity
Balance at 31 May 2007 - audited 1 343,7 116,4 1 460,1
Changes in equity for the 12 months
ended 31 May 2008
Movement in treasury shares and related
reserves held by a subsidiary and share
purchase trusts 5,3 5,3
Share-based payments 2,4 2,4
Minority interest on dividends
received from subsidiaries (1,0) (1,0)
Minority interest reduction due
to sale of shares (22,0) (22,0)
Total comprehensive income for
the year 108,5 11,6 120,1
Dividends paid (38,1) (38,1)
Balance at 31 May 20 08 - audited 1 421,8 105,0 1 526,8
Changes in equity for the 15 months
ended 31 August 2009
Movement in treasury shares and
related reserves held by share purchase
trusts 1,3 1,3
Share-based payments 2,4 2,4
Minority interest on dividends
received from subsidiaries (1,8) (1,8)
Total comprehensive income for
the period 91,5 (1,1) 90,4
Dividends paid (200,7) (200,7)
Balance at 31 August 2009 - audited 1 316,3 102,1 1 418,4
Commentary
As anticipated the revitalisation programme, which commenced in February 2008,
has since had a positive influence on the business and its performance. The
normalised operating profit margin and resultant normalised headline earnings
per share reflect the disciplined cost management and improved trading during
the last seven months.
The restructuring and head count reduction activities have been completed and
the revitalisation programme is starting to deliver the planned savings. The
programme is expected to deliver annualised savings of approximately R100
million. Most savings have originated from support functions, with the group
continuing to focus on service delivery.
Change in financial year end
As previously communicated to shareholders, the group`s financial year end was
changed from 31 May to 31 August. These results reflect the performance for the
15 months to 31 August 2009 ("the period").
Financial and operating performance
The 15 months to August 2009 was the first financial trading period impacted by
the challenges emanating from the global economic crisis and the resulting
impact on the South African economy. Despite the challenging economic
environment the group showed robust revenue growth for the period.
The group`s gross profit for the period at 26,6% was marginally higher than the
2008 year at 26,4%.
The group achieved an operating profit of R132,6 million for the 15 months (May
2008:R164,0 million). This decrease was largely due to revitalisation costs of
R98,3 million incurred during the period, partially offset by the profit on sale
of the Faerie Glen property.
Normalised operating profit was R217,1 million for the 15 months (May 2008:
R148,5 million). Normalised operating profit margins increased from 3,6%
for the year to May 2008 to 4,0% for the period as set out in the table
below.
Normalised results
15 months 12 months
ended ended
31 August 31 May
R million 2009 2008
Operating profit 132,6 164,0
Operating profit margin (%) 2,4 4,0
Revitalisation programme 98,3 12,8
Premises rental - Faerie Glen Offices 5,5
(Profit)/loss on sale of property, plant and
equipment and fair value adjustment
on investment property (23,5) 0,3
Amortisation - fair value contracts 4,3
Unrealised exchange losses/(gains)
on trade receivables and payables 3,7 (16,0)
Fair value adjustment of inventory 0,5 (16,9)
Normalised operating profit 217,1 148,5
Normalised operating profit margin (%) 4,0 3,6
Normalised earnings per share (cents) 66,0 41,5
Normalised headline earnings per share (cents) 67,8 41,5
The Services Group remains the largest contributor to the group`s revenue at
48,6% (2008: 49,2%). The group`s relationships with its premier clients,
combined with excellent support from the service delivery engines have resulted
in performance exceeding expectations. During the period four large outsourcing
deals were awarded to the group.
The Technology Group had a good year, considering the tough economic
environment and contributed 41,8% (2008: 42,3%) to the group`s revenue. The
reduction in technology spend from private sector clients was largely off set
by spend in the public sector.
The International Group experienced a difficult year. Despite only being in
operation for one year, the Nigerian business has generated good revenue and
will likely be in a profitable position in the next financial year. The
prospects for the international business remain positive as the businesses are
well positioned in most of the geographies they operate in.
The group generated diluted earnings per share (EPS) of 41,0 cents for the
period (May 2008: 44,2 cents). Diluted headline earnings per share for the
period were 36,9 cents (May 2008: 44,3 cents). Working capital management
remains a key area of focus. The group`s investment in working capital
decreased largely as a result of the R200,7 million cash dividend payment.
Prospects
The group is now shifting its attention to optimising its capital structure and
some exciting new partnerships and developments in the new Innovation Group, all
of which will assist in the growth of revenue and operating profit margins.
Although the group foresees that the market conditions will remain tough
during the coming year, its focus is to continue to grow revenue streams in
the existing customer base and to grow market share in the mid-tier corporate
sector and public sectors. In addition the group has, and continues to develop,
its own intellectual property consisting of unique business solutions. The
group will use this intellectual property to further develop and enhance its
annuity based revenue streams.
Appreciation
The board extends its appreciation to management and staff for their dedication
and valued efforts, especially in this turbulent year of our restructuring. It
also thanks its customers, suppliers and shareholders for their continuing
belief in and support of Business Connexion.
Notice of the annual general meeting
Shareholders are advised that the annual general meeting will be held at the
Fundi Auditorium, Business Connexion Park North, 789 Sixteenth Road,
Randjespark, Midrand at 11:00 on 14 January 2010.
Auditor`s report
The financial results have been audited by KPMG Inc. and their unmodified
auditor`s report is available for inspection at the registered office of the
company.
Dividend declaration
Notice is hereby given that a normal cash dividend of 18 cents per
ordinary share (2008: 18 cents) has been declared, payable to shareholders
for the period ended 31 August 2009. In accordance with the provisions
of Strate, the electronic settlement and custody system used by JSE Limited,
the relevant dates for the dividends are as follows:
Event date
Last day to trade (cum dividend) Friday, 8 January 2010
Shares commence trading (ex dividend) Monday, 11 January 2010
Record date (date shareholders recorded in books) Friday,15 January 2010
Payment date Monday,18 January 2010
Share certificates may not be dematerialised or rematerialised between Monday,
11 January 2010, and Friday, 15 January 2010, both days inclusive.
On Monday, 18 January 2010, the dividends will be electronically transferred to
the bank accounts of all certificated shareholders where this facility is
available. Where electronic funds transfer is either not available or not
elected by the shareholder, cheques dated Monday, 18 January 2010, will be
posted on that date.
Holders of dematerialised shares will have their accounts credited at their
participant or broker on Monday, 18 January 2010.
The above dates and times are subject to change. Any changes will be published
on the Securities Exchange News Service (SENS) and in the press.
For and on behalf of the board
AC Ruiters L B Mophatlane
Chairman Chief Executive Officer
Midrand
11 November 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 Kekana, FL Sekha*
JM Poluta*## and SV Zilwa*###
## Was appointed effective 2 April 2009
### Was appointed effective 2 April 2009 and resigned effective 14 October 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
JSE 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: 12/11/2009 08:00:01 Produced by the JSE SENS Department.
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