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GIJ
GIJ
GIJ - GijimaAst - Unaudited interim results and cash dividend declaration for
the six months ended 31 December 2009
GIJIMA AST GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/021790/06
Share code: GIJ
ISIN: ZAE000064606
("GijimaAst" or "the Company" or "the Group")
UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION FOR THE SIX MONTHS
ENDED 31 DECEMBER 2009
Highlights
* Headline earnings per share up 106% (33% normalised)
* EBITDA up 62% (22% normalised)
* EBITDA margin up to 10,9%
* Revenue down 3,6%
* Net cash balances up 85% to R623 million
* Maiden interim dividend
OVERVIEW
GijimaAst is a leading South African Group which operates in the Information
and Communication Technology (ICT) services sector. Organised in two
operational Strategic Business Units, namely Managed Services and Professional
Services, we offer end to end infrastructure management and professional
services. The Group provides solutions primarily for the public, financial
services, manufacturing and mining sectors.
The results for the six months to 31 December 2009 have given GijimaAst a very
good start to the 2010 financial year.
The 33% (normalised) increase in headline earnings and headline earnings per
share (after elimination of the exchange rate translation loss on
consolidation of intercompany loan accounts reported in the six months to 31
December 2008) was achieved against a 3,6% decrease in revenue because of a
further
improvement in margins. The fact that we have been able to improve profits
significantly on slightly lower revenue in the current uncertain market
conditions attests to the resilience of our business model and the success of
the measures we have taken to reduce costs while continually focusing our
operations to meet client needs in the rapidly changing IT world.
These results mark another successful period in implementing the Group`s
strategy of maximising shareholder value by focusing on Profitable Growth,
Market Leadership, Service Excellence and being an Employer of Choice in the
ICT industry. We also continued implementing our plan to mitigate against the
uncertainties of the economic downturn. The focus of this plan was to contain
expenditure, maximise cash holdings and tightly manage working capital. This
resulted in the net cash holdings of the Group increasing by R287 million to
R623 million over the last 12 months.
GijimaAst is demonstrating its ability to produce sustained and sustainable
growth across successive business cycles.
This reporting period represents the sixth consecutive period of six-monthly
normalised EBITDA growth. As GijimaAst traditionally performs better in the
second half of the financial year, and we have already achieved 77% of the
headline earnings recorded in the 2009 financial year, we are optimistic about
the prospects for the full financial year.
GijimaAst is now a focused ICT services group, with a predominant and growing
proportion of its earnings coming from designing and implementing services
that
meet client needs in Southern Africa and mining industry clients across all
continents. Services contracts provide multi-year income and constitute more
than half of our business. We are also a well balanced business, with 53% of
our revenue coming from the private sector and 47% from the public sector,
which reflects the composition of the ICT industry in South Africa.
GijimaAst has so far weathered the economic downturn very well, partly because
much of our revenue is contractually guaranteed multi-year or annuity income.
There have been no large-scale retrenchments and no client losses at GijimaAst
during this reporting period; on the contrary, we are recruiting additional
high-level skills following the signing of appreciable new business.
OPERATIONAL REVIEW
Financial Commentary
The 3,6% decline in revenue for the six months is only partly due to market
conditions and the impact of the local and international recession. It also
reflects a strategic choice to concentrate on higher-margin operations such as
services, which now constitute 85% of our revenue compared to 80% for the
comparative period ended 31 December 2008. The sale of products, including
hardware, is not a core part of the GijimaAst business, but supports our
services divisions.
During the past six months GijimaAst has on a number of occasions avoided
taking on new low-margin business, and this policy will continue.
The result has been another satisfactory improvement in EBITDA margins (before
exchange gains and losses on translation of inter-group loan accounts in
previous reporting periods) to 10,9%, from 8,6% in the first six months of the
2009 financial year and 9,4% at year end on 30 June 2009.
The concentration on higher-margin business also contributed to the increases
in reported EBITDA (62%), operating profit (68%), profit after tax (106%),
headline earnings (106%) and headline earnings per share (106%).
Another contributing factor to GijimaAst`s increased profits is the fact that
profits are no longer impacted by exchange rate gains or losses on translation
of inter-group loan accounts denominated in foreign currencies. These
translation differences are, from 1 July 2009, recorded within the Company`s
equity, in line with International Accounting Standard 21: The Effects of
Changes in Foreign Exchange Rates. This treatment follows management`s
assessment and classification of the underlying inter-group loan accounts as
part of GijimaAst`s net investment in the relevant non-trading foreign
operations. If these foreign exchange translation differences are eliminated
in
the comparative reporting period, then GijimaAst`s headline earnings for the
first six months of this financial year improved by 33% compared to the six
months to 31 December 2008.
Cash generated from operations before working capital changes increased by 85%
to R174 million as a result of a further improvement in the operating
performance of the business.
Despite the healthy growth in cash generated from operations the Group
persisted with its policy to preserve cash during an uncertain period of
continued tightening of credit markets, and the R100 million raised against
its
debtors securitisation programme in December 2008 was extended for another six
months to June 2010. The Group`s current ratio remained at a very satisfactory
1.67 times compared to 1.55 times at 30 June 2009.
The strong operating performance, supported by a continued focus on working
capital management, contributed to a 29% increase in net cash balances from
June 2009 despite a 43% increase in dividends paid to shareholders.
Interim dividend declaration
In view of the good earnings performance and our sound liquidity position, the
Board has declared a maiden interim cash dividend of 2,5 cents per share. The
interim dividend is payable to shareholders recorded in the books of the
Company at the close of business on Friday, 19 March 2010.
The salient dates are as follows:
2010
Last date to trade cum dividend Friday, 12 March
Securities start trading ex dividend Monday, 15 March
Record date Friday, 19 March
Payment date Tuesday, 23 March
The dividend is declared in the currency of the Republic of South Africa.
Share certificates may not be dematerialised or rematerialised between Monday,
15 March 2010 and Friday, 19 March 2010, both dates inclusive.
Divisional Update
The Group`s principal revenue earner, the Professional Services division,
increased profit by 34% from the comparative reporting period to R87 million
on
revenue 5% lower at R732 million. The division incorporates our Systems
Integration, Mine Technical Systems (GMSI), ERP, Secure Identity Management
Solutions and Human Capital Management business units. It focuses on business
processes of the financial services, retail, mining, manufacturing and public
sectors.
The Managed Services division`s profit of R55 million was 6% down on revenue
that was 2% lower at R708 million.
The division is a leading provider of outsourced IT services through
Distributed Computing Services, which provides desktop support and associated
services; Unified Communications, which provides integrated data, voice and
video solutions and Hosting Services, which provides server and application
hosting at GijimaAst`s data centres. As the markets for its products have not
fully recovered, the division focused on increasing profits through cost
rationalisation, increased use of remote support and improved margins on new
sales deals. Efforts continue to develop new and innovative services.
The result of the economic downturn became evident during the first six months
of the financial year. South Africa always lags behind the major economies and
many of the industries still have a cautious approach to spending capital.
GMSI`s exposure to the mining industry, which was severely affected in the
previous financial year, showed a very good recovery in the first six months
of
this financial year, which made this unit one of the top performers during the
period under review. Manufacturing and financial services have not showed
signs
of a recovery yet. The public sector remained resilient as Government
continues
to invest in ICT solutions to improve service delivery to its citizens.
Industry Initiatives
In the mining industry GMSI is pursuing an aggressive strategy to provide an
integration platform for mine resource planning. In this highly competitive
international Mine Technical Systems market, the aggressive execution of the
revolutionary mineRP (mine Resource Planning) strategy has clearly
differentiated GMSI. Launched in 2009 the rapidly evolving mineRP product
suite
blends the flexibility of the GMSI International products and the robustness
and enterprise strength of their South African products into an ERP-like
product that is a generation ahead of its time. The growing market demand and
acceptance for mineRP around the world is testament that this product is a
leader in this space.
Projects that can reduce cost, and improve efficiencies and effectiveness,
remain in high demand in the private sector.
Good skills are becoming more readily available due to the lower demand for
resources in the economic downturn.
GijimaAst`s e-Government strategy aims to make government work better. We
focus on designing and implementing solutions that enable efficient and
effective service delivery to the citizen. Understanding that government is
pressed to improve service delivery on all fronts, we have picked on a few
critical solutions that will have a high impact and gain momentum towards a
full e-Government solution. Our solutions in security and control within the
border management domain are expected to contribute to the successful securing
of our borders. In conjunction with partners we have developed open road
tolling systems to bolster the management of the heavily congested highways
infrastructure. We are also leading the implementation of a solution to
modernise the deeds and land management processes.
PROSPECTS
GijimaAst is well positioned to take advantage of changes in the ICT industry
and to offer innovative solutions to clients, in South Africa and
internationally, based on new technology and the increasing availability of
broadband connections.
The continued and accelerating globalisation of GijimaAst`s clients over the
past 10 years has led the Group to develop strong strategies to remain
relevant
to this client base wherever they conduct their business operations.
As a services organisation, our Vision Possible transformation remains focused
on the development of strong client relationships. The dynamic nature of our
clients evolving needs is the driving force shaping our value propositions,
actions and initiatives as we continue to build long-term relationships with
our clients.
Against this background we are continuously evaluating the relevance of our
offerings, engagement models and value propositions. Key initiatives that we
launched with our clients are focused on modernisation of our existing service
offerings and the introduction of new ones predicated on innovative business
models with improved cost-benefit ratios.
Complimentary to our competences are our alliances and partnerships which are
focused on pre-tested packaged solution sets designed to address
industry-driven change with price points below equivalent discreet component
solutions.
Given our skills base, our history of innovative solutions and the factors
referred to above, GijimaAst is on track to achieve its goal of becoming the
leading ICT services company in South Africa.
RW Gumede PJ Bogoshi CJH Ferreira
Non-executive Chairman Chief Executive Officer Chief Financial
Officer
23 February 2010
Condensed consolidated income statement
for the period ended 31 December 2009
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
Notes R`000 R`000 R`000
Revenue 1 440 099 1 494 334 3 014 340
Other operating income 416 1 170 1 241
Income 1 440 515 1 495 504 3 015 581
Earnings before
interest, tax,
depreciation
and amortisation
charges (EBITDA) 156 702 96 479 232 600
Depreciation and
amortisation charges (21 772) (16 317) (36 151)
Operating profit 4 134 930 80 162 196 449
Financial income 11 337 5 326 14 005
Financial expenses (19 035) (14 763) (35 513)
Net financial expense (7 698) (9 437) (21 508)
Profit before tax 127 232 70 725 174 941
Income tax expense (41 431) (29 048) (64 163)
Profit for the period 85 801 41 677 110 778
Total profit
attributable to
owners of the parent 85 801 41 677 110 778
Calculation of
headline earnings
Profit attributable
to owners of the
parent 85 801 41 677 110 778
Loss on sale of
businesses and
property,
plant and equipment 304 89 359
Headline earnings 86 105 41 766 111 137
Basic earnings per
ordinary share
(cents) 8,80 4,27 11,39
Diluted earnings per
ordinary share
(cents) 8,80 4,26 11,39
Headline earnings per
ordinary share
(cents) 8,83 4,28 11,42
Diluted headline
earnings
per ordinary share
(cents) 8,83 4,27 11,42
Weighted average
number of shares
(000`s) 974 732 974 979 972 782
Diluted number of
shares (000`s) 974 732 978 227 972 782
Number of shares in
issue (000`s) 973 827 981 459 974 742
Condensed consolidated statement of comprehensive income
for the period ended 31 December 2009
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
R`000 R`000 R`000
Profit for the period 85 801 41 677 110 778
Other comprehensive income
Currency translation differences (3 944) 25 094 34 129
Revaluation of property, plant
and equipment - - 2 181
Income tax on other
comprehensive income (1 585) - 299
Total comprehensive income for
the period 80 272 66 771 147 387
Total comprehensive income
attributable to
owners of the parent 80 272 66 771 147 387
Notes to the condensed consolidated interim financial statements
1. Reporting entity
These condensed consolidated GIJIMA AST GROUP LIMITED ("the Group") financial
results for the period ended 31 December 2009 constitute a summary, prepared
in
accordance with the JSE Listings Requirements; the South African Companies Act
(Act 61 of 1973) as amended; the recognition and measurement requirements of
International Financial Reporting Standards (IFRS); and the presentation and
disclosure requirements of International Accounting Standard 34 (IAS 34), of
the Group`s unaudited consolidated interim financial statements.
These condensed consolidated interim financial statements 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 2009.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 18 February 2010.
2. Significant accounting policies
Except as described below, the accounting policies applied by the Group in
these condensed consolidated interim 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 2009.
Determination and presentation of operating segments:
IFRS 8: Operating Segments is adopted as of 1 July 2009. The Group currently
and previously presented operating segments based on information that is
internally provided to the CEO, who is the Group`s chief operating
decision-maker. There is therefore no change in comparative figures.
Segment results reported to the CEO include items directly attributable to a
segment as well as those items that can be allocated on a reasonable basis.
Unallocated items comprise mainly other corporate expenses, exchange rate
gains
or losses on translation and net financial expense.
Net investment in foreign operations:
The current accounting policy was expanded to incorporate the effects of IAS
21.15 (The Effects of Changes in Foreign Exchange Rates). More information is
provided in the financial commentary.
Presentation of financial statements:
The Group applied the revised IAS 1: Presentation of Financial Statements,
which became effective for reporting periods starting 1 January 2009.
Comparative information has been re-presented so that it is also in conformity
with the revised standard. There is no impact on earnings per share.
3. Dividend paid
A cash dividend from income reserves of 5 cents per share was paid to
shareholders on 30 November 2009 in respect of the 2009 financial year. The
last date to trade to qualify for this dividend was 20 November 2009.
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
R`000 R`000 R`000
4. Operating profit
The following material items
have been included in the calculation
of operating profit:
Exchange rate gains/(losses) on
translation 3 861 (32 127) (50 653)
Loss on sale of businesses and
property, plant and equipment (304) (89) (359)
3 557 (32 216) (51 012)
5. Contingent liabilities
At 31 December 2009 the Group had contingent liabilities in respect of
registered performance bonds, bank lease and other guarantees to the value of
R7,6 million (June 2009: R10,0 million).
Condensed consolidated cash flow statement
for the period ended 31 December 2009
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations
before working capital changes 173 771 93 840 234 795
Working capital changes 37 788 64 530 127 817
Net financial expense (7 270) (8 791) (21 849)
Dividend paid (49 073) (34 351) (34 351)
Tax paid (3 147) (11 415) (11 610)
Net cash generated from
operating activities 152 069 103 813 294 802
Cash flows from investing
activities
Purchase of software (1 971) (85) (21 227)
Purchase of property, plant and
equipment (10 570) (37 489) (57 582)
Net cash used in investing
activities (12 541) (37 574) (78 809)
Cash flows from financing
activities
Repayment of short-term
borrowings (100 520) (1 387) (2 758)
Own shares acquired (824) - -
Share issue expenses - (26) (26)
Proceeds from short-term
borrowings 100 000 100 000 100 000
Net cash (used in)/generated
from financing activities (1 344) 98 587 97 216
Net increase in cash and cash
equivalents 138 184 164 826 313 209
Cash and cash equivalents at
the beginning of the period 484 391 171 182 171 182
Cash and cash equivalents at
the end of the period 622 575 336 008 484 391
Condensed consolidated balance sheet
as at 31 December 2009
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
R`000 R`000 R`000
ASSETS
Non-current assets 273 929 296 711 306 045
Property, plant and equipment 87 387 84 346 91 976
Intangible assets 128 718 117 982 133 664
Deferred tax assets 57 824 94 383 80 405
Current assets 1 235 019 956 241 1 216 808
Inventories 45 764 74 641 36 581
Trade and other receivables 562 601 541 397 691 823
Current tax assets 1 475 2 659 2 838
Cash and cash equivalents 625 179 337 544 485 566
Total assets 1 508 948 1 252 952 1 522 853
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent 459 539 351 927 427 687
Non-current liabilities 311 750 403 890 311 778
Interest-bearing liabilities 257 189 359 080 257 709
Operating lease liability 26 985 23 154 25 353
Deferred tax liabilities 27 576 21 656 28 716
Current liabilities 737 659 497 135 783 388
Trade and other payables 589 943 466 147 646 309
Short-term borrowings 100 000 - 100 000
Provisions 8 451 22 464 14 723
Bank overdrafts 2 604 1 536 1 175
Current tax liabilities 36 661 6 988 21 181
Total equity and liabilities 1 508 948 1 252 952 1 522 853
Condensed consolidated segmental analysis
for the period ended 31 December 2009
Unaudited Unaudited Audited
31 December 31 December 30 June
2009 2008 2009
(6 months) (6 months) (12 months)
R`000 R`000 R`000
Revenue
Professional Services 731 951 769 159 1 540 222
Managed Services 708 148 725 175 1 474 118
Consolidated revenue 1 440 099 1 494 334 3 014 340
Segment results
Professional Services 86 752 64 542 160 978
Managed Services 54 959 58 609 111 495
Unallocated expenses (14 479) (52 426) (97 532)
Other corporate expenses (10 642) (10 862) (25 371)
Exchange rate gains/(losses) on
translation 3 861 (32 127) (50 653)
Net financial expense (7 698) (9 437) (21 508)
Consolidated profit before tax 127 232 70 725 174 941
Condensed consolidated statement of changes in equity
for the period ended 31 December 2009
Distribu-
Share Share table
R`000 capital premium reserves
Group
Balance at 1 July 2008 964 646 525 (233 309)
Profit for the period 41 677
Other comprehensive income
Currency translation differences
Total comprehensive income
for the period 41 677
Transactions with owners,
recorded directly in equity
Dividend paid (34 351)
Share issue 17 13 515 (13 532)
Share issue expenses (26)
Total transactions with owners 17 13 489 (47 883)
Balance at 31 December 2008 981 660 014 (239 515)
Profit for the period 69 101
Other comprehensive income
Currency translation differences
Revaluation of land and
buildings (net of tax)
Total comprehensive income
for the period 69 101
Transactions with owners,
recorded directly in equity
Share-based payment
transactions 556
Own shares acquired (7) (5 405)
Total transactions with owners (7) (5 405) 556
Balance at 30 June 2009 974 654 609 (169 858)
Profit for the period 85 801
Other comprehensive income
Currency translation
differences
Total comprehensive income
for the period 85 801
Transactions with owners,
recorded directly in equity
Share-based payment
transactions 1 477
Dividend paid (49 073)
Own shares acquired (1) (823)
Total transactions with owners (1) (823) (47 596)
Balance at 31 December 2009 973 653 786 (131 653)
Non-
distribu-
table Total
R`000 reserves equity
Group
Balance at 1 July 2008 (94 647) 319 533
Profit for the period 41 677
Other comprehensive income
Currency translation differences 25 094 25 094
Total comprehensive income
for the period 25 094 66 771
Transactions with owners,
recorded directly in equity
Dividend paid (34 351)
Share issue -
Share issue expenses (26)
Total transactions with owners - (34 377)
Balance at 31 December 2008 (69 553) 351 927
Profit for the period 69 101
Other comprehensive income
Currency translation differences 9 465 9 465
Revaluation of land and
buildings (net of tax) 2 050 2 050
Total comprehensive income
for the period 11 515 80 616
Transactions with owners,
recorded directly in equity
Share-based payment
transactions 556
Own shares acquired (5 412)
Total transactions with owners - (4 856)
Balance at 30 June 2009 (58 038) 427 687
Profit for the period 85 801
Other comprehensive income
Currency translation
differences (5 529) (5 529)
Total comprehensive income
for the period (5 529) 80 272
Transactions with owners,
recorded directly in equity
Share-based payment
transactions 1 477
Dividend paid (49 073)
Own shares acquired (824)
Total transactions with owners - (48 420)
Balance at 31 December 2009 (63 567) 459 539
Directors
RW Gumede* (Non-executive Chairman)
PJ Bogoshi (Chief Executive Officer)
CJH Ferreira (Chief Financial Officer)
NJ Dlamini*
M Macdonald*
JE Miller*
LBR Mthembu*
AFB Mthembu*
JCL van der Walt*
*Non-executive
Company Secretary
HM Smith
+Appointed 14 October 2009
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
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)
For more information about GijimaAst please visit
www.gijima.com
Date: 23/02/2010 07:05:16 Produced by the JSE SENS Department.
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