| Fri 23 Apr 2010, 9:27 | | CVN - ConvergeNet Holdings - Unaudited Interim Results For The Six Months |
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CVN
CVN
CVN - ConvergeNet Holdings - Unaudited Interim Results For The Six Months
Ended 28 February 2009
ConvergeNet Holdings Limited and its subsidiaries
(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 28 February 2009
Condensed group income statement for the six months ended 28 February 2010
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
28 Feb 28 Feb 31 Aug
R`000 2010 2009 2009
Revenue 432 492 551 919 1 025 266
Cost of sales (298 571) (422 127) (754 422)
Gross profit 133 921 129 792 270 844
Other income 2 026 2 885 4 349
Operating expenses (114 941) (86 008) (197 937)
Operating profit 21 006 46 669 77 256
Finance income 2 669 2 951 6 592
Dividends received - - 1 716
Share of profit of associates 942 1 175 1 043
Finance costs (1 440) (1 112) (3 528)
Profit before taxation 23 177 49 683 83 079
Taxation (3 710) (11 918) (20 435)
Profit for the period 19 467 37 765 62 644
Other comprehensive income - - -
Total comprehensive income 19 467 37 765 62 644
Attributable to:
Owners of the parent 13 703 23 179 41 443
Non-controlling interest 5 764 14 586 21 201
9 467 37 765 62 644
Shares in issue
Weighted average number of shares 895 611 179 815 218 619 825 692 929
Diluted weighted average number
of shares 903 365 941 821 518 619 842 111 976
Total number of shares in issue 915 115 941 865 631 298 905 415 155
Earnings per share
Basic earnings per ordinary share (cents) 1.53 2.84 5.02
Diluted earnings per ordinary share
(cents) 1.52 2.82 4.92
Calculation of headline earnings
Profit attributable to equity holders
of the parent 13 703 23 179 41 443
Loss /(Profit)on disposal of assets 88 (8) 51
Profit on disposal of assets
of associates - - (34)
Profit on disposal of subsidiaries and
associates (22) (2 090) (2 257)
Loss on disposal of associate - 116 -
Portion attributable to non-controlling
interests (26) 868 884
Headline earnings 13 743 22 065 40 087
Headline earnings per ordinary share
(cents) 1.53 2.71 4.85
Diluted headline earnings per
ordinary share (cents) 1.52 2.69 4.76
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
as at as at as at
28 Feb 28 Feb 31 Aug
R`000 2010 2009 2009
ASSETS
Non-current assets
Property, plant and equipment 28 708 26 030 27 760
Goodwill 247 687 267 781 247 651
Intangible assets 30 109 17 030 34 747
Investments in associates 4 595 2 069 3 653
Deferred tax 31 217 12 244 15 216
342 316 325 154 329 027
Current assets
Inventories 46 147 51 239 50 287
Loans to subsidiaries, associates and
other related parties 12 380 8 284 6 177
Other financial assets 33 369 19 525 32 891
Current tax receivable 5 279 1 093 1 600
Trade and other receivables 229 962 273 526 254 711
Cash and cash equivalents 49 106 85 014 103 717
376 243 438 681 449 383
TOTAL ASSETS 718 559 763 835 778 410
EQUITY AND LIABILITIES
Total equity
Equity attributable to owners of
the parent 444 178 414 626 424 436
Non-controlling interest 82 868 90 668 85 817
527 046 505 294 510 253
Liabilities
Non-current liabilities
Vendors for acquisition - 1 512 1 707
Other financial liabilities 7 104 7 181 7 140
Finance lease obligation 1 838 1 968 1 299
Operating lease liability - 26 -
Deferred tax 15 950 5 568 10 393
24 892 16 255 20 539
Current liabilities
Vendors for acquisition 3 693 17 381 4 815
Loans from subsidiaries, associates
and other related parties - 11 -
Other financial liabilities 3 038 5 566 5 104
Current tax payable 15 069 31 551 16 910
Finance lease obligation 307 634 1 196
Provisions 4 185 2 983 4 633
Trade and other payables 128 795 175 911 200 254
Bank overdraft 11 534 8 249 14 706
166 621 242 286 247 618
Total liabilities 191 513 258 541 268 157
TOTAL EQUITY AND LIABILITIES 718 559 763 835 778 410
Net asset value per share (cents) 48.5 47.9 46.9
Net tangible asset value per share (cents) 18.2 15.0 15.7
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
28 Feb 28 Feb 31 Aug
R`000 2010 2009 2009
Operating activities
Cash (used in)/generated from
operations (9 716) 14 876 110 319
Finance income 2 669 2 951 6 592
Dividends received - - 1 716
Finance costs (1 342) (986) (3 333)
Tax paid (19 674) (25 562) (53 826)
Net cash (used in)/generated from
operating activities (28 063) (8 721) 61 468
Net cash (used in)/generate from
investing activities (7 055) 4 489 (180 180)
Net cash (used in)/generated from
financing activities (16 321) (7 057) 119 152
Net (decrease)/increase in cash and
cash equivalents (51 439) (11 289) 440
Cash at the beginning of the year 89 011 88 054 88 571
Total cash at end of the period 37 572 76 765 89 011
Condensed Consolidated Statement of Changes in Equity
Total
Trans- attributable
Share actions to equity
capital Revalua- with holders Non-con-
and Retained tion minor- of the trolling Total
premium earnings reserve ities parent interest equity
R`000
Balance at 31 August 2008
244 104 29 668 131 (27 573) 246 330 64 600 310 930
Total comprehensive income for the period
- 23 179 - - 23 179 14 586 37 765
Issue of treasury shares in terms of forfeitable share plan
2 581 - - - 2 581 - 2 581
Expenses recognised directly in equity
(389) - - - (389) - (389)
Dividends to minorities
- - - - - (4 100) (4 100)
Transactions with minorities
- - - - - 328 328
Acquisition of businesses
142 925 - - - 142 925 15 254 158 179
Balance at 28 February 2009
389 221 52 847 131 (27 573) 414 626 90 668 505 294
Total comprehensive income for the period
- 18 264 - - 18 264 6 615 24 879
Issue of treasury shares in terms of forfeitable share plan
4 671 - - - 4 671 - 4 671
Shares forfeited in terms of forfeitable share plan
640 - - - 640 - 640
Own shares acquired by subsidiaries, held as treasury shares
(3 280) - - - (3 280) - (3 280)
Expenses recognised directly in equity
(556) - - - (556) - (556)
Revaluation of land and buildings
- - 6 - 6 14 20
Dividends to minorities
- - - - - (10 667) (10 667)
Transactions with minorities
18 733 - - (28 668) (9 935) (5 111) (15 046)
Acquisition of businesses
- - - - - 4 298 4 298
Balance at 31 August 2009
409 429 71 111 137 (56 241) 424 436 85 817 510 253
Total comprehensive income for the period
- 13 703 - - 13 703 5 764 19 467
Issue of treasury shares in terms of forfeitable share plan
4 672 - - - 4 672 - 4 672
Own shares acquired by subsidiaries, held as treasury shares
(3 090) - - - (3 090) - (3 090)
Expenses recognised directly in equity
(8) - - - (8) - (8)
Dividends to minorities
- - - - - (7 188) (7 188)
Transactions with minorities
- - - (385) (385) (1 525) (1 910)
Acquisition of businesses
4 850 - - - 4 850 - 4 850
Balance at 28 February 2010
415 853 84 814 137 (56 626) 444 178 82 868 527 046
Condensed Consolidated Segmental Analysis
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
28 Feb 28 Feb 31 Aug
R`000 2010 2009 2009
Revenue
Support services 45 486 58 281 151 492
Hardware and software products 141 402 140 990 221 813
Infrastructure technologies 210 992 317 683 577 113
Telecoms 25 681 26 552 53 147
Corporate and other 8 931 8 413 21 701
432 492 551 919 1 025 266
Operating profit
Support services 4 824 8 386 9 690
Hardware and software products 5 411 2 252 12 906
Infrastructure technologies 5 027 23 766 33 084
Telecoms 9 701 11 367 22 206
Corporate and other (3 957) 898 (630)
21 006 46 669 77 256
Commentary
1. Basis of preparation
These unaudited condensed consolidated financial results for the six months
ended 28 February 2010 are prepared in accordance with International Financial
Reporting Standards (IFRS), IAS 1 - Presentation of Financial Statements, IAS34
- Interim Financial Reporting, the Listings Requirements of the JSE and the
South African Companies Act, 1973 as amended.
2. Accounting policies
The unaudited results for the six months ended 28 February 2010 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 2009 except that during
the period under review, the group adopted the revised IAS 1 - Presentation of
Financial Statements.
Such adoption did not have any material effect on the financial performance or
position of the group.
3. Board of Directors
There has been no change to the board of directors during the six months ended
28 February 2010.
4. Operating results
Revenue decreased by 22% to R432 million compared to the corresponding period
primarily as a result of the delay in the award of some major contracts and the
prevailing challenging economic environment.
Despite the challenging economic environment, ConvergeNet managed to increase
its gross profit margin to 31% compared to the corresponding periods` 24%.
Operating profit decreased by 55% to R21 million compared to the corresponding
period. Corrective measures have been undertaken at some of the subsidiaries to
reduce operating expenditure and a restructuring process has been started at one
of the major subsidiaries, the results of which will be evident in the second
half of the year.
As a result of the decrease in revenue and operating profits, earnings per share
and headline earnings per share decreased by 46% compared to the corresponding
period.
Despite the decrease in earnings, the financial position of the group remains
strong with little interest-bearing debt and the net tangible asset value per
share increased by 21% to 18 cents per share.
5. Corporate activities
The amount of R4.850 million due to the original Chrystalpine Investmenets 9
(Pty) Ltd ("CK") vendors on 31 August 2009 as a result of CK achieving its
profit targets has been settled through the issue of 9 700 786 shares in
ConvergeNet at 50 cents per share, being the 30 day volume weighted average
price of the share as at 31 August 2009.
Sizwe Africa IT Group (Pty) Ltd, on 1 September 2009, acquired the remaining 30%
interest in ConvergeNet Networks (Pty) Ltd for a purchase consideration of
R1.888 million, which will be settled in cash.
6. Industry and group outlook
There continues to be substantial demand for the group`s products, solutions and
services. Whilst many opportunities were delayed as a result of the current
economic situation, these needs will be fulfilled in the short to medium term.
We expect the market conditions to improve next year and beyond.
The directors of ConvergeNet are satisfied that the fundamentals of the
businesses remain sound and the group will continue to cautiously invest in
previous identified strategic growth areas.
7. Dividend
The declaration of cash dividends will continue to be considered by the board in
conjunction with an evaluation of current and future funding requirements and
will be adjusted to levels considered appropriate at the time of declaration.
ConvergeNet`s continued commitment to optimal cash utilisation will mean that
cash generated by the operations will be used to fund growth. In line with the
current dividend policy, no dividend has been proposed for the period under
review.
8. Post-balance sheet events
There have been no significant events subsequent to the six months ended 28
February 2010 up until the date of this report that requires adjustments or
disclosure.
9. Conclusion
ConvergeNet thanks all our stakeholders. We are grateful for the continued
commitment and support of our customers, employees, suppliers and shareholders.
For and on behalf of the board
SLL Peteni PWJ Bouwer
Chairman Chief executive officer
Pretoria
23 April 2010
Corporate information:
www.convergenet.co.za
Directors: SLL Peteni *(Chairman), PWJ Bouwer (CEO), DF Bisschoff (CFO), D
Braine, G Edwards, B Kekana, NR Macdonald*, MJ Krastanov*, T Modise, MI Scott*,
S Swana*, DD Tabata*,H van Dyk. (*non-executive)
Company secretary and registered office: Arcay Client Support (Pty) Ltd, Arcay
House II, Number 3 Anerley Road, Parktown, 2193
Business address: Unit 5, Tijger Valley Office Park, Silver Lakes Road, Tijger
Valley, 0181
Postal address: PO Box 73174, Lynnwood Ridge, 0040
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg, 2001
Sponsor: Arcay Moela Sponsors (Pty) Ltd, Arcay House II, Number 3 Anerley Road,
Parktown, 2193
E-Mail: info@convergenet.co.za Mail: info@convergenet.co.za
Date: 23/04/2010 09:27:01 Produced by the JSE SENS Department.
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