| Tue 20 Feb 2001, 0:00 | | Cs Holdings Interim Results For The Six Months End |
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CS HOLDINGS
Making sense of it
CS COMPUTER SERVICES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/015131/06
Interim Results for the six months ended 31 December 2000
Six months of solid performance!
GROUP INCOME STATEMENT
Unaudited Unaudited Audited Change
six months six months 12 months 1999
ended ended ended to
31 December 31 December 30 June 2000
2000 1999 2000
R000 R000 R000 %
Revenue 92 754 70 732 163 078 31,1
Cost of sales 60 351 45 339 105 416
Gross profit 32 403 25 393 57 662
Operating costs 18 027 16 153 35 326
Operating profit before
depreciation 14 376 9 240 22 336
Depreciation 2 282 1 692 4 076
Profit before finance costs 12 094 7 548 18 260 60,2
Net interest received 386 799 986
Profit before abnormal item 12 480 8 347 19 246
Loss on sale of subsidiary - 396 1 670
Profit from operations 12 480 7 951 17 576
Income tax expense 3 226 1 249 974
Net profit for the year 9 254 6 702 16 602
Minority interest (31) 19 (29)
Attributable profit for
the period 9 285 6 683 16 631 38,9
Weighted average number of
shares in issue ('000) 141 344 126 332 136 088
Fully diluted number of
shares ('000) 152 247 140 105 146 416
Headline earnings per
share (cents) 6,57 5,58 13,45 17,7
Basic earnings per share
(cents) 6,57 5,29 12,22 24,2
Fully diluted earnings per
share (cents) 6,10 4,77 11,36 27,9
GROUP BALANCE SHEET
Unaudited Unaudited
ended ended Audited
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
ASSETS
Non-current assets 31 589 22 697 24 474
Fixed assets 16 960 10 963 9 616
Deferred tax asset 6 952 4 287 8 552
Intangible assets 5 405 4 467 3 850
Loans 545 1 240 719
Loan to share incentive trust 1 727 1 740 1 737
Current assets 68 489 46 019 66 868
Trade and other receivables 46 465 26 850 47 096
Inventory and work in progress 14 278 6 667 7 070
Cash and cash equivalents 7 746 12 502 12 702
TOTAL ASSETS 100 078 68 716 91 342
EQUITY AND LIABILITIES
Share capital and premium 12 496 7 352 10 310
Accumulated profits 34 749 15 516 25 464
Ordinary shareholders' interest 47 245 22 868 35 774
Non-current liabilities 19 767 27 037 22 385
Interest-bearing borrowings 3 054 284 761
Amounts due to vendors 16 713 26 674 21 593
Minority interest - 79 31
Current liabilities 33 066 18 811 33 183
Trade and other liabilities 28 100 15 601 28 269
South African Revenue Services 4 251 919 3 220
Short-term portion of long-term
liabilities 715 253 358
Bank overdraft - 2 038 1 336
TOTAL EQUITY AND LIABILITIES 100 078 68 716 91 342
Number of shares issued ('000) 141 344 126 543 139 754
Net asset value per share (cents) 33,43 18,07 25,60
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
Share capital
Balance at the beginning of
the year 1 397 1 257 1 257
New shares issued during
the period 16 8 140
1 413 1 265 1 397
Share premium
Balance at the beginning of the year 8 913 16 054 16 054
Premium of new shares issued
during the period 2 212 1 048 15 364
Share issue expenses written off (42) (3) (94)
Change in accounting policy - 5 999 1 890
Goodwill and trade names written off - (17 011) (24 301)
11 083 6 087 8 913
Distributable reserves
Balance at the beginning of the year 25 464 8 833 8 833
Net profit for the period 9 285 6 683 16 631
34 749 15 516 25 464
Non-distributable reserves
Balance at the beginning of the year - 114 114
Currency translation differences
written off - (114) (114)
- - -
TOTAL EQUITY 47 245 22 868 35 774
ABBREVIATED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
Cash inflow from operating
activities 8 183 4 868 14 839
Cash outflow from investing
activities (14 096) (11 918) (24 680)
Cash inflow from financing
activities 2 293 283 3 976
Net decrease in cash and cash
equivalents (3 620) (6 767) (5 865)
Cash and cash equivalents at
beginning of period 11 366 17 231 17 231
Cash and cash equivalents at the
end of period 7 746 10 464 11 366
Commentary
The directors of CS Holdings are pleased to present our Group's interim
financial results for the six months ended 31 December 2000. In line with our
strategic objectives and annual projections, we are proud to announce another
set of solid financial results.
During the period under review, we capitalised on the strong base we have
established with the successful integration of our recent strategic
acquisitions. We are actively focussing on unlocking the synergies of our core
service lines in line with our strategic positioning; aimed at making us the
leading and preferred IT outsourcing partner for our target markets.
Operations and future strategy
Outsourcing and IT partnering model
Over the past six months, we have prepared and developed unique outsourcing and
partnership models with our clients. These outsourcing relationships entail the
delivery of IT services from top to bottom and across the full supply chain
spectrum. This includes the automation of all processes from the factory
environment, migrated into production management systems and integrated into
sophisticated financial and ERP back office systems. All of these are linked to
the business strategy, mapped and connected to full IT functionality and
supported by the technology platforms and the people in the organisation
responsible for optimising these systems.
Focus on organic growth
We believe that our strategic focus for the following year will form the
backbone of our organic growth and will ensure that we gain market share in our
marketplace. We are strongly committed to this objective and during 2001 we
will make concerted efforts and dedicate our key management to this strategic
drive and initiative for the Group. Our target is set to gain a minimum of
three large key accounts for the Group over the next six to 12 months. This
should significantly impact the annuity revenue base and accelerate the organic
growth for our company.
New headquarters
On 30 September 2000 we moved into our new headquarters of +-7000 m2 in
Midrand. In terms of our lease agreement, the complex was customised and
designed to meet our current and future requirements.
The consolidation of the different business units under one roof immediately
impacted positively as communication and cross marketing opportunities started
to be leveraged.
The location and accessibility of the building, next to one of the busiest
highways in the country, added significant exposure and marketing benefits to
the CS Holdings brand.
Financial performance
Results for period in line with annual projections
Traditionally, our first six months contribute between 35% to 40% of our
turnover and profit before tax for the full financial year. Operating profit
margins have improved strongly from 11% in the previous year to 13% during this
reporting period. Coming from a low taxation base in the previous year, our
effective tax rate for this year is expected to be at 26% and should reflect an
increase of more than 160% in our tax charge for the year.
Our turnover for the period increased by 31% compared to the previous
comparative period, while our net operating profits increased by 60% as a
result of the higher margins achieved. Due to the higher taxation charge,
attributable profit rose by 38%.
Capital investments and cash flow
R7,5 million was invested towards new infrastructure in Pretoria and Midrand as
capital investments, inclusive of new furniture and equipment on the premises.
We also paid over R3 million to vendors for acquisitions.
Cash generated from operations, as a percentage of profit before net interest
received, improved from 54% in 1999 to 64% in 2000. Management continuously
strives to improve this percentage.
Dividends
Current policy is not to pay dividends. All retained earnings will be used to
fund further growth and development. This policy will be reviewed from time to
time by the directors.
Financial policies
The financial statements are prepared on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice.
The accounting policies of the Group are consistent in all material aspects
with those applied in the previous financial year.
Subsequent event - issue of shares for cash
The company has successfully issued shares for cash raising R12,5 million after
the financial reporting period. The company will use the net proceeds to
finance the acquisition of IT-IQ People Development, one of the largest IT
education companies in South Africa. This acquisition will ensure that the
company is in a dominant position in IT training in South Africa. A full
announcement was released through SENS on 29 January 2001.
On behalf of the board of directors
Annette van der Laan Midrand
Chief Executive Officer 19 February 2001
The interim report will be mailed to shareholders in the near future and the
full text of the interim report can be viewed at www.cs.co.za, and at our
virtual press office at www.itweb.co.za, and at our webpages at
www.profile.co.za.
Company Secretary and Registered Office
JG Goosen, CS Holdings Office Park, 241 Third Road, Halfway Gardens, Midrand
1685.
Transfer Secretaries
Computershare Services Limited, 2nd Floor, Edura, 41 Fox Street, Johannesburg
2001.
Board of Directors
A van der Laan (Chief Executive Officer) JG Goosen, PM Griffiths (Alternate)*,
JJ Kunz, AW Matthysen, SH MYller*, SE Potgieter, DL Vink.
* Non-executive
CS HOLDINGS CONTINUES SOLID GROWTH WITH 39% BOOST IN PROFITS
JSE Securities Exchange-listed IT group CS Holdings has turned in another solid
financial performance with its 2001 interim results, reporting attributable
profits of R9,285 million on revenue of R92,75 million for the six months ended
31 December, 2000. This represents increases of 38,9% and 31,1% over the
comparable period in the 2000 financial year.
The group has reported headline earnings per share of 6,57 cents, a 17,7%
increase over the 5,58 cents for the six months ended 31 December 1999.
"We are very pleased at the group's performance over the last six months," says
CS Holdings CEO Annette van der Laan. "We have sustained our performance since
listing in 1998, and our strategies are beginning to yield significant
benefits."
These benefits are most evident in the group's increase in operating margins:
up from 11% in 1999 to 13% in this reporting period; an increase in net
operating profits of 60%, from R7,5 million to R12 million; a boost from 54% to
64% in cash generated from operations as a percentage of profit; and a lift in
annuity-based revenue, from 52% to 55%.
"It is important to note that these results were produced entirely
organically," says Van der Laan. "We have integrated all the acquisitions made
during our first two years of listing, and they are all contributing towards
the group's growth and continued performance."
These acquisitions have given the group critical mass in its areas of
operation, and allowed it to become the unquestioned market leader in IT
training, a leading contender in the IT outsourcing services market, and a
growing force in the process automation and e-business fields.
"We are now positioned to secure the very largest national contracts," comments
Van der Laan. "This is particularly valid given the fact that so many troubled
IT companies have lost market share over the last challenging year."
In this period, CS Holdings moved to a new head office in Midrand and relocated
its Pretoria office. This necessitated capital investment of R7,5 million; a
further R3 million was paid to vendors for prior acquisitions.
"Our new head office has already yielded tangible benefits," reports Van der
Laan. "Consolidating all business units under one roof has had a positive
impact, while our office's visibility on South Africa's business highway has
created great brand equity."
CS Holdings' strategy as it has unfolded in this reporting period has been one
centred on outsourcing and partnering with its clients. This entails the
delivery of holistic IT services across the supply chain, from factory shop
floor to ERP (enterprise resource planning) back-office systems and the
enablement of the people responsible for optimising these systems.
CS Holdings' effective tax rate is up significantly for this period, coming off
a low base to 26%, which should result in an increase of more than 160% in the
tax charge for the full year.
Subsequent to the six-month period the group issued shares for R12,5 million in
cash to finance the acquisition of IT-IQ People Development, one of the
country's largest IT education groups. This acquisition was successfully
concluded and announced in February: it further strengthens CS Holdings'
leadership in the IT training market.
In line with current group policy, no dividends will be paid and profits will
be reinvested in order to fund the aggressive growth of the group.
Contact
Annette van der Laan, CS Holdings 082 551 0136 avdlaan@CS.co.za
Frank Heydenrych, FHC, (011) 608 1228 frank@fhc.co.za
