| Mon 3 Sep 2001, 0:00 | | Cs Holdings: Audited Financial Results For The Yea |
|
CS HOLDINGS Making sense of IT
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
Share code CSH ISIN number ZAE 000022034
Audited financial results for the year ended 30 June 2001
Cash generated up 65,1 %
Operating profit up 44,6 %
Fully diluted HEPS up 28,6 %
Operating profit margin up 16,2 %
Revenue up 24,4 %
Group income statements
12 months ended
30 June Change
2000
2001 2000 to 2001
R'000 R'000 %
Revenue 202 848 163 078 24,4
Cost of sales 132 084 105 416
Gross profit 70 764 57 662
Operating costs 39 534 35 326
Operating profit before depreciation 31 230 22 336 39,8
Depreciation 4 834 4 076
Profit before exceptional item 26 396 18 260 44,6
Exceptional item 1 873 -
Profit before interest 24 523 18 260 34,3
Net interest received 291 986
Profit before loss on discontinued
operation and goodwill 24 814 19 246 28,9
Goodwill amortisation 7 073 -
Loss on discontinued operation - Canada 153 1 670
Profit from operations 17 588 17 576
Income tax 501 974
Net profit for year 17 087 16 602
Minority interest 12 29
Attributable profit for year 17 099 16 631
Reconciliation of headline earnings:
Attributable profit for year 17 099 16 631
Adjusted for:
Goodwill amortisation 7 073 -
Loss on discontinued operation 153 1 670
Headline earnings 24 325 18 301
Weighted average number of shares
in issue ('000) 146 078 136 088
Fully diluted number of shares ('000) 151 388 146 416
Earnings per share (cents)
Basic 11,71 12,22 (4,2)
Fully diluted 11,29 11,36 (0,6)
Headline earnings per share (cents)
Basic 16,65 13,45 23,8
Fully diluted 16,07 12,50 28,6
Group Balance sheets
30 June Change
2000
2001 2000 to 2001
R'000 R'000 %
ASSETS
Non-current assets 46 927 24 474
Fixed assets 15 516 9 616
Deferred tax assets 12 073 8 552
Intangible assets 14 439 3 850
Loans 3 479 719
Loan to share incentive trust 1 420 1 737
Current assets 93 170 66 868
Trade receivables 54 902 45 304
Other receivables 1 916 1 792
Inventory 16 261 5 678
Work in progress 6 631 1 392
Cash and cash equivalent 13 460 12 702
TOTAL ASSETS 140 097 91 342
EQUITY AND LIABILITIES
Share capital and premium 28 853 10 310
Accumulated profits 42 563 25 464
Ordinary shareholders' interest 71 416 35 774
Non-current liabilities 17 242 22 385
Interest-bearing borrowings 2 838 761
Amount due to vendors 14 385 21 593
Minority interest 19 31
Current liabilities 51 439 33 183
Trade and other liabilities 43 365 28 269
South African Revenue Services 7 182 3 220
Short-term portion of
long-term liabilities 892 358
Bank overdraft - 1 336
TOTAL EQUITY AND LIABILITIES 140 097 91 342
Number of shares issued ('000) 152 707 139 754
Net tangible asset value
per share (cents) 37,31 22,84 63,3
STATEMENT OF CHANGE IN EQUITY
12 months ended
30 June Change
2000
2001 2000 to 2001
R'000 R'000 %
Share capital 1 527 1 397
Balance at beginning of year 1 397 1 257
New shares issued during year 130 140
Share premium 27 326 8 913
Balance at the beginning of the year 8 913 16 054
Premium of the new shares issued
during the year 14 598 15 364
Goodwill previous written-off
- reversed 4 000 -
Share issue expenses written-off (185) (94)
Change in accounting policy - 1 890
Goodwill and trade names written-off - (24 301)
Distributed reserves 42 563 25 464
Balance at beginning of year 25 464 8 833
Net profit for year 17 099 16 631
TOTAL EQUITY 71 416 35 774
Abbreviated Group cash flow statements
12 months ended
30 June Change
2000
2001 2000 to 2001
R'000 R'000 %
Cash inflow from operating activities 24 493 14 839 65,1
Cash outflow from investing activities (37 207) (24 680)
Cash inflow from financing activities 14 808 3 976
Net increase/(decrease) in
cash equivalents 2 094 (5 865)
Cash and cash equivalents at
beginning of year 11 366 17 231
Cash and cash equivalents at
end of year 13 460 11 366
COMMENTARY
The directors of CS Holdings are pleased to present our Group's annual
financial results for the year ended 30 June 2001. Notwithstanding a year
that has proven to be one of the most challenging and difficult for many
local and global IT and technology players, CS Holdings has produced solid
financial results.
We believe our ability to prosper in a demanding IT market is as a result of
turning challenges into opportunities and focusing on our business strategy
and objectives.
Strategic review
CS Holdings reached important objectives during the past financial year. We
have:
* expanded our service range into e-business, business intelligence, e-
learning, networking and ASP (Application Service Provision);
* made significant gains in market share as a systems integrator in the
outsourcing arena;
* successfully integrated our acquisitions into the CS Holdings culture and
business model;
* gained outstanding, highly skilled and experienced leadership and staff;
* substantially improved our cash generation.
Financial performance
Operating profit margins have improved from 11% in the previous year to 13%
during this year. Our turnover for the year increased by 24%, whilst our net
operating profits increased by 45% as a result of the higher margins
achieved. Headline earnings per share ("HEPS") and fully diluted HEPS rose
by 24% and 29%, respectively.
Exceptional item
The Group discontinued operations in Zimbabwe due to political and business
risks. This resulted in a forex loss of R1,873 million (R1,311 million after
tax) for the Group. The once-off effect of this exceptional item had a
negative impact of 0,90 and 0,86 cent on the HEPS and fully diluted HEPS,
respectively.
Effective tax rate
The utilisation of tax losses within the Group allowed for the low effective
tax rate. The benefit of such tax losses has not yet been fully exploited.
This accounting treatment is in line with those applied in the previous year
and in line with AC 102 and AC 131.
Acquisitions
Vendor payments for the year amounted to R22 million which included payments
for past acquisitions and a R12,5 million issue of shares for cash, for the
acquisition of IT-IQ People Development.
Cash flow
Cash generated from operations, as a percentage of EBITDA, improved from 61%
in 2000 to 75% in 2001.
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 respects
with those applied in the previous financial year, except for the adoption
of AC 129 where goodwill on acquisitions occurring after 1 July 2000 is
reported in the balance sheet as an intangible asset and is amortised using
the straight-line method over its estimated useful life. Goodwill on
acquisitions that occurred before 1 July 2000 was charged in full to share
premium; such goodwill has not been retro-actively capitalised and
amortised.
Subsequent event - acquisition of Getronics SA
CS Holdings purchased 100% of the shares of, and shareholders' claims
against, Getronics South Africa (Pty) Ltd, a subsidiary of Netherlands-
based, multi-national ICT solutions provider Getronics NV ("Getronics"). A
full announcement was released in the financial press on 20 August 2001 and
further details on the acquisition can be viewed on www.cs.co.za.
Auditors' report
An unqualified audit report was issued on the financial position of the
Group at 30 June 2001 and the results of its operations and cash flow for
the year then ended.
Exciting new developments for the year ahead
* The new financial year started off with strong momentum and a high level
of activity, with CS Holdings entering into the agreement to acquire
Getronics SA. This transaction will assist the Group in achieving many of
the strategic goals which we have set for the new year:
* CS Holdings will gain access to the world-wide infrastructure,
experience and knowledge of Getronics in the outsourcing arena, as a
strategic partner.
* The acquisition will more than double the Group's turnover.
* This strengthens CS Holdings' position as one of the top outsourcing
players in the South African market.
* We will be able to leverage the international client base of Getronics
in South Africa and into Africa.
* We have furthered our position as one of the premier IT infrastructure
service providers in South Africa.
* We are poised to provide fully integrated business solutions through a
single point of responsibility.
* We are committed to empowerment and are in the process of identifying the
most suitable empowerment partner which will assist us in gaining further
entry to the governmental, parastatal and public sectors.
* We are continuing to establish CS Holdings as the IT employer of choice in
South Africa.
On behalf of the Board of Directors
Annette van der Laan Johan Goosen
Chief Executive Officer Group Financial Director
4 September 2001
Midrand
This financial report can also be viewed at www.cs.co.za.
CS Computer Services Holdings Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
Share code CSH ISIN number ZAE 000022034
Company secretary and registered office
J G Goosen, CS Holdings Office Park, 241 Third Road, Halfway Gardens,
Midrand
Transfer secretaries
Computershare Services Limited, 2nd Floor, Edura, 41 Fox Street,
Johannesburg, 2001
Board of directors
A van der Laan (Chief Executive Officer)
T R T Bohlmann*
J G Goosen
P M Griffiths (Alternate*)
J J Kunz
A W Matthysen
S M M ller*
S E Potgieter
D L Vink
*Non-executive
