| Thu 13 Sep 2001, 0:00 | | Global Technology - Interim Results For The 12 Mon |
|
Restructuring Announcement
GLOBAL TECHNOLOGY LIMITED
Incorporated in the Republic of South Africa
Registration number 1996/009809/06
Share code GLT
ISIN code ZAE 000016820
GLOBAL TECHNOLOGY ACHIEVES SOLID RESULTS
* Revenue up 41%
* HEPS up 40%
* Headline earnings up 116%
COMMENTARY
Introduction
Global Technology is the leading provider of software solutions to the
banking, insurance and financial communities across Africa and Australia.
The Group continues to achieve international growth and increased global
market penetration. In addition, Global Technology's African presence has
been strengthened and expanded through the establishment of an office in
Abidjan, Ivory Coast, which will enable further the sales and support of
Global Technology's banking products throughout West Africa.
Change of year end
Global Technology has changed its financial year end to 31 December, and
modified its accounting policies, to facilitate the aggregation of Temenos'
audited results with its annual results. Therefore the results now reported
are for the 12 month interim period to 30 June 2001. These changes have had
no significant effect on the reporting of headline earnings per share (HEPS)
and HEPS growth from one year to the next.
Results
During the twelve months under review, Global Technology's revenue increased
by 41% from R258 million to R364 million. The Group achieved solid headline
earnings of R47 million, an increase of 116% (and 107% on the previous
accounting basis), on the same period last year. HEPS has increased by 40%
to 12,3 cents.
Global Technology is very well positioned in its target markets. It is
financially strong and able to substantially grow its earnings. The Group's
strong performance over the past 12 months, combined with the excellent
results achieved by Temenos, has boosted earnings growth. However, a
somewhat more difficult economic environment has resulted in overall growth
being marginally lower than originally anticipated.
The Group's dollar-denominated revenue comprises 84% of its earnings.
Significant events
In June 2001, Temenos listed on the Swiss Stock Exchange. Global
Technology's strategic 15% investment in Temenos is currently valued at
approximately R550 million.
Global Technology sold its first Banking Enterprise Resource Planning (ERP)
solution to Botswana Building Society, the longest standing Globus user in
southern Africa, and Global Technology's first Globus client, during the
period under review.
In a deal reinforcing one of the Group's strategies to be a major provider
of services to the African financial community, Global Technology recently
secured a R20 million contract for the supply of its locally-developed
Credit Asset Event Management System (CAEMS) solution to Stanbic Africa, a
subsidiary of Standard Bank.
Prospects
Prospects for the remainder of the year are very promising. The Group has a
strong sales pipeline for the six months ahead, and an additional R55
million in contracted revenue provides good visibility.
It is envisaged that Global Technology's long-standing partnership with
Temenos, coupled with its track record for successful Globus and other
product implementations in the northern hemisphere, will promote
opportunities to maintain a high level of dollar-denominated revenue in the
six months to year end.
Interim dividend
In line with Global Technology's conservative dividend policy, the directors
have agreed that no interim dividend will be declared.
Change in accounting policies
The principal accounting policies are set out in the Group's 2000 annual
report, and have been consistently applied throughout the period under
review, except for the following:
1 Revenue recognition
The policy governing the recognition of software sales was brought in line
with that of Temenos, whose revenue recognition policy is similar to US GAAP
(Generally Accepted Accounting Practices). In terms of this policy, the
software revenue is recognised over the implementation period of the
project. Previously, software revenue was recognised on the delivery date of
the software.
The accounting policy for the recognition of maintenance revenue was also
changed. The Group now accounts for this revenue over the period of the
maintenance contract. Previously, maintenance revenue was recognised as
amounts fell due for payment.
2 Development cost
Development costs are capitalised in terms of AC 129 and are amortised over
a period of three years. Previously, these amounts were expensed as
incurred.
The Group's accounting policies remain consistent with SA GAAP and
International Accounting Standards (IAS).
Restructuring announcement
To make the underlying values of Glotec's operations and its 15% stake in
Swiss-listed Temenos AG more apparent, the Board has decided, subject to the
necessary approvals, to restructure the Group into two separately listed
entities. The first will house Glotec's operations and the second, the
Temenos investment.
By order of the Board
Peter Springett
(Chairman)
Ray Leonard
(Chief Executive Officer)
14 September 2001
Registered office
Arcay House II Number Three Anerley Road
Parktown 2193 PO Box 62397 Marshalltown 2107
Transfer secretaries
Computershare Services Limited
2nd Floor Edura House
41 Fox Street Johannesburg 2001
Directors
PA Springett* ** Chairman
R Leonard Chief Executive Officer
KDD de Villiers* JM Hughes** G Koukis * ***
DC McWilliam PJ Moffett G Leonard A Mhlongo*
M Tshivhase* *Non-executive **British ***Greek
Company secretary
Arcay Client Support (Pty) Ltd
Registration number 1998/025284/07
CONSOLIDATED INCOME STATEMENT
12 months 12 months
ended ended
30 June 30 June
2001 2000 %
R000 Unaudited Audited move
Revenue 364 018 257 969 41%
Operating profit 40 165 36 664 10%
Depreciation - assets and development
cost (5 770) (4 081)
Operating profit before interest
and tax 34 395 32 583
Net interest paid (474) (399)
Net profit before taxation 33 921 32 184
Taxation (6 104) (7 609)
Profit after taxation 27 817 24 575
Minority interest (1 982) (2 755)
Net profit before associates 25 835 21 820 18%
Income from associates 21 300 -
Headline earnings 47 135 21 820 116%
Exceptional items - Note 2 68 695 5 692
Goodwill amortisation (12 964) -
Profit attributable to ordinary
shareholders 102 866 27 512
Dividend paid - preference shares (813) -
Retained profit 102 053 27 512
Net operating profit - % 9,4 12,6
Number of shares in issue (thousands) 400 425 248 441
Weighted average number of
shares in issue (thousands) 383 316 246 638
Headline earnings per ordinary
share (cents) 12,3 8,8
Earnings per ordinary share (cents) 26,8 11,2
Dividends per ordinary share (cents) - -
Reconciliation of headline earnings
per share
Earnings per share 26,8 11,2 139%
adjusted for:
Exceptional items (17,9) (2,3)
Adjustment for goodwill amortisation 3,4 -
Headline earnings per share 12,3 8,8 40%
SUMMARISED CONSOLIDATED BALANCE SHEET
Assets
Equipment 10 609 11 053
Goodwill and development cost
Capitalized 181 834 11 968
Loans receivable 16 439 25 107
Investments in associates - Note 3 122 954 16 543
Investments - listed 725 -
Investments - unlisted 266 554
Total current assets 170 324 117 834
Accounts receivable 67 429 57 638
Accrued revenue 74 427 36 294
Deferred expenses 9 741 8 920
Cash and cash equivalents 18 727 14 982
Total assets 503 151 183 059
Equity and liabilities
Ordinary shareholders' interest 337 603 63 597
Minority interest 12 473 1 925
Deferred taxation 1 157 -
Long-term liabilities 25 558 12 633
Current liabilities 126 360 104 904
Accounts payable 34 810 30 192
Accrued expenses 48 984 45 147
Deferred revenue 22 346 17 840
Taxation owing 3 870 5 300
Bank overdraft 16 350 6 425
Total liabilities 503 151 183 059
Net tangible asset value per
ordinary share (cents)
- Temenos at book value 38,9 20,8
- Temenos at market value 196,3
ABRIDGED CASH FLOW STATEMENT
Cash generated from operations
before working capital changes 44 904 42 045
Working capital changes (29 847) (6 686)
Net finance cost (474) (399)
Taxation paid (8 015) (8 287)
Cash flow from operating activities 6568 26 673
Cash flow from investing activities (12 745) (34 452)
Cash flow from financing activities 9 922 6 637
Net (decrease)/increase in cash and
cash equivalents 3 745 (1 142)
Cash and cash equivalents at
beginning of period 14 982 16 124
Cash and cash equivalents at end
of period 18 727 14 982
Notes
1 Change in accounting policy
Adjusted for new revenue
recognition policy (19 858) (10 141)
Development cost capitalized 12 152 4 386
Development cost amortised (1 462) -
Adjustments to operating profit (9 168) (5 755)
2 Exceptional items
Net surplus on the sale/dilution
of investments and loans 77 943 11 954
Write off of trademarks and
restructuring cost - (6 262)
Exceptional item from associate (9 248)
68 695 5 692
3 Investment in associates
Equity 121 949 3 963
Loans to associates 1 005 12 580
122 954 16 543
With Temenos at market value 753 369
4 Other
There were no contingent liabilities or material capital commitments
existing at the end of the period.
