| Wed 30 Jan 2002, 0:00 | | Comparex Holdings Limited - Unaudited Group Result |
|
30 November 2001
SHARE CODE: CPX
ISIN CODE: ZAE000016812
Comparex Holdings Limited
Highlights
* Acquisition of balance of Comparex Africa
* Free cash resources of R3 billion
UNAUDITED GROUP RESULTS for the six months ended 30 November 2001
GROUP BALANCE SHEET
30 November 31 May
(R millions) 2001 2000 2001
ASSETS
Non-current assets
Properties, furniture and fittings,
equipment and vehicles 185,2 162,3 166,7
Capitalised leased assets 199,2 190,1 202,1
Rental assets 87,9 125,9 74,6
Investments 84,1 133,3 103,3
Long-term deposit -
interest free 380,0 380,0 380,0
Deferred taxation asset 276,3 147,5 176,0
1 212,7 1 139,1 1 102,7
Current assets
Inventories 349,0 222,5 259,2
Trade accounts receivable 1 127,9 1 113,9 1 041,2
Other short-term assets 228,5 290,7 168,5
Cash and bank balances 3 512,8 3 721,3 3 741,1
5 218,2 5 348,4 5 210,0
TOTAL ASSETS 6 430,9 6 487,5 6 312,7
EQUITY AND LIABILITIES
Total shareholders' funds 3 313,6 3 700,0 3 365,4
Minority interest 158,0 121,8 126,3
3 471,6 3 821,8 3 491,7
Non-current interest bearing
liabilities 250,3 245,1 252,3
Non-current interest free liability 380,0 380,0 380,0
Pension obligations 187,5 141,0 134,3
Deferred taxation liability 2,5 1,3
820,3 766,1 767,9
Current liabilities
Bank overdrafts and short-term
liabilities 28,9 34,1 35,4
Other short-term liabilities 2 110,1 1 865,5 2 017,7
2 139,0 1 899,6 2 053,1
TOTAL EQUITY AND LIABILITIES 6 430,9 6 487,5 6 312,7
GROUP INCOME STATEMENT
Six months ended Year ended
30 November Change 31 May
(R millions) 2001 2000 % 2001
Revenue 2 590,9 2 668,1 (2,9) 5 389,8
Cost of sales 1 741,0 1 662,6 4,7 3 362,6
Gross profit 849,9 1 005,5 (15,5) 2 027,2
Expenses 502,8 689,5 (27,1) 1 467,0
- Administrative expenses 719,0 721,6 (0,4) 1 513,9
- Foreign exchange gains (216,2) (32,1) (46,9)
Profit before interest,
taxation and depreciation 347,1 316,0 9,8 560,2
Depreciation 97,8 166,0 (41,1) 306,3
Trading profit 249,3 150,0 66,2 253,9
Investment income 145,5 163,1 (10,8) 231,8
Share of associated companies'
profits/(losses) 4,1 0,1 (0,3)
Profit before interest paid 398,9 313,2 27,4 485,4
Finance charges 23,2 24,3 (4,5) 52,0
Profit before exceptional
items and taxation 375,7 288,9 30,0 433,4
Exceptional (losses)/profits (40,1) 284,8 (114,1) (6,5)
Profit before taxation 335,6 573,7 (41,5) 426,9
Taxation 8,2 27,2 (69,9) 45,3
Profit after taxation 327,4 546,5 (40,1) 381,6
Minorities 31,1 28,4 9,5 36,3
Earnings attributable to
shareholders 296,3 518,1 (42,8) 345,3
Adjusting items for headline
earnings:
Impairment/(Revaluation) of
investments 14,0 (66,4) 65,2
Profit on sale of
investments (32,4) (314,6) (114,6)
Attributable to outside
shareholders (13,8)
Headline earnings 277,9 137,1 102,7 282,1
Additional income
attributable to share
options and minority 35,0 32,4 50,3
Fully diluted headline
earnings 312,9 169,5 332,4
Earnings per share (cents) 100,0 156,5 (36,1) 105,2
Fully diluted earnings per
share (cents) 89,1 134,6 (33,8) 96,7
Headline earnings per
share (cents) 93,7 41,4 126,3 85,9
Fully diluted headline earnings
per share (cents) 84,1 39,7 111,8 84,6
Weighted number of shares
in issue (000's) 296 436 331 153 (10,5) 328 228
Fully diluted weighted
number of shares in
issue (000's) 371 927 408 956 (9,1) 409 231
GROUP STATEMENT OF CHANGES IN EQUITY
Non-
Share distribut- Foreign Distribut-
capital able exchange able
(R millions) and premium reserves reserve reserves Total
Balance at 31 May 2000 864,6 215,0 (12,2) 2 096,8 3 164,2
Attributable earnings
per income statement 345,3 345,3
Foreign exchange gain
arising on consolidation 18,8 18,8
Transfer between reserves 3,0 (3,0)
Costs of shares
repurchased (162,9) (162,9)
Balance at 31 May 2001 701,7 218,0 6,6 2 439,1 3 365,4
Attributable earnings
per income statement 296,3 296,3
Foreign exchange loss
arising on consolidation (21,5) (21,5)
Costs of shares
repurchased (326,6) (326,6)
Balance at 30
November 2001 375,1 218,0 (14,9) 2 735,4 3 313,6
GROUP CASH FLOW STATEMENT
Year
Six months ended ended
30 November 31 May
(R millions) 2001 2000 2001
Cash from trading operations
Trading profit 249,3 150,0 253,9
Items not affecting flow of funds 116,7 191,8 56,7
Working capital changes (210,2) (260,9) 120,0
Cash generated from operations 155,8 80,9 430,6
Net finance and investment income 122,3 72,6 179,8
Taxation paid (69,4) 9,4 (20,9)
Net cash flow from operating
activities 208,7 162,9 589,5
Cash flow from investing activities
Properties, fixtures, equipment
and vehicles expansion (46,9) (36,5) (89,2)
Properties, fixtures, equipment
and vehicles replaced (28,7) (11,5) (80,3)
Invested in rental assets (25,5) (32,9) (75,0)
Proceeds on disposal of investments 7,2 1 317,3 2 013,1
Proceeds on sale of fixed and
rental assets 32,8 18,7 29,1
Net cash (invested)/recovered (61,1) 1 255,1 1 797,7
Cash from financing activities
Redemption of share capital (326,6) (162,9)
Net movement in long-term assets
and liabilities (42,8) 13,0 100,5
Net cash flow from investing
activities (369,4) 13,0 (62,4)
Net changes in cash and cash
equivalents (221,8) 1 431,0 2 324,8
Cash and cash equivalents at
beginning of year 3 705,7 1 380,9 1 380,9
Cash and cash equivalents at
end of period 3 483,9 2 811,9 3 705,7
Financial assets 886,0
Closing position 3 483,9 3 697,9 3 705,7
GROUP SEGMENTAL ANALYSIS
Year
Six months ended ended
30 November 31 May
(R millions) 2001 2000 2001
Revenue
Africa (principally South Africa) 1 236,3 1 276,6 2 482,4
Europe 1 300,1 1 229,0 2 671,3
Other 35,2 37,2 62,6
Discontinued 19,3 125,3 173,5
2 590,9 2 668,1 5 389,8
Trading profit
Africa (principally South Africa) 81,6 86,3 190,5
Europe 7,2 45,0 91,8
Other 0,2 (3,5) (7,8)
Central functions 160,3 22,2 (20,6)
249,3 150,0 253,9
Net asset value
Africa (principally South Africa) 288,6 268,4 175,8
Europe 100,1 380,8 (116,3)
Other 4,9 1,8 6,8
Central functions 3 078,0 3 170,8 3 425,4
3 471,6 3 821,8 3 491,7
Business grouping revenue
Services 992,4 910,6 1 859,2
Storage 913,4 895,4 1 825,0
Servers 431,4 466,9 1 010,5
Networks 178,9 240,8 446,4
Application Software Providers and
Proprietary Software 55,5 29,1 75,2
Discontinued 19,3 125,3 173,5
2 590,9 2 668,1 5 389,8
OTHER GROUP SALIENT INFORMATION
30 November 31 May
2001 2000 2001
Balance sheet ratios
Number of shares in issue (000's) 331 152,8 331 152,8 331 152,8
Less shares cancelled 12 071,7
Current share in issue 319 081,1 331 152,8 331 152,8
Less shares held by a subsidiary 33 115,3 15 305,5
285 965,8 331 152,8 315 847,3
Outstanding options 75 490,7 77 803,2 82 311,9
Fully diluted number of
shares (000's) 361 456,5 408 956,0 398 159,2
Net asset value per share (cents) 1 214,0 1 154,1 1 105,5
Fully diluted net asset value
per share (cents) 960,4 934,5 877,0
Debt-equity ratio (%) 8,0 7,3 8,2
Commitments (R millions)
- Capital 8,9
- Unutilised forward exchange
contracts 45,9 31,8 82,1
- Lease commitments 314,9 201,8 413,9
Accounting policies
These consolidated condensed interim financial statements are prepared in
accordance with South African Statements of Generally Accepted Accounting
Practice. The accounting policies used in the preparation of the interim
financial statements are consistent with those used in the annual financial
statements for the year ended 31 May 2001.
These interim financial statements were not audited, nor were the
comparative for the six months to 30 November 2000. The comparative figures
for 31 May 2001 were subject to audit.
Comparex Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/002506/06)
Registered office
Comparex Park North, 789 16th Road, Randjespark, Midrand 1685
(Private Bag X48, Halfway House 1685)
Transfer secretaries
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
Internet address
http://www.comparexgroup.com
Directors
RKJ Chambers (Chairman), WA du Plessis (CEO)*, DC Arnold,
S Carlin*, WAM Clewlow, JR Cohen*, DH Erasmus, KRM Evans*,
DW Henwood, HO Hetz (German), WJC Mitchell, DP Sullivan* and
PA Watt*
*Executive directors
COMMENTS
OPERATIONAL
It is particularly pleasing to report an increase in fully diluted headline
earnings per share of 112% amid extremely challenging trading conditions.
As predicted at the time of publication of the Group's results for the year
ended 31 May 2001, trading conditions in the IT industry have been extremely
tough. Against this background, the Group's African operations, despite
reporting a 5% decline in trading profit, performed better than expected.
The Group's European operations reported a decline in trading profit to R7
million which is disappointing, but considered acceptable when compared to
the results achieved by its European peers. The major contributions to the
Group's increase in headline earnings were foreign exchange gains of R216
million and a R68 million reduction in depreciation charged. The foreign
exchange gain is attributed to a 35% decline in the value of the Rand
against the Euro during the period and the reduced depreciation is mainly
attributed to the normalisation of the depreciation in relation to the cost
of the Group's rental assets.
Revenue from the Group's continuing operations increased marginally. Whilst
the European operations reported a decline in revenues expressed in local
currencies, the Group is considered to have gained in overall market share,
particularly in its Services and Storage business groupings.
Interest received has reduced by 10% partly as a result of lower average
interest rates and partly because of the application of cash in the Group's
share buy back programme.
The exceptional items reported in the first six months of the 2001 financial
year related mainly to the profit on sale of the Group's Dimension Data
shares during that period. The exceptional items reported in the period
under review relate mainly to the Group's profits of R32 million
attributable to the sale of proprietary technology by Digital Healthcare
Solutions, an associate in Africa, on the sale of part of the Group's
shareholding in Exxept, a subsidiary in Europe, and a further part of the
Group's shareholding in Mosaic Holdings. This was offset by an increase in
the provision for the retrenchment of approximately 120 of our staff in
Germany by R49 million and impairments of R14 million in investments.
The tax rate of the Group remains low. Deductions claimed in respect of
certain trademarks have been disallowed and are the subject of an appeal to
the Special Tax Court. As reported previously and on the advice of Senior
Counsel, the directors continue to be confident of the success of the
deductions claimed, but have decided not to raise a deferred tax asset until
the matter is resolved.
All the above factors have contributed to the increase in headline earnings
of 103%. As a result of the Group's successful share buy back programme, the
increase in reported headline earnings per share of 126% is higher than the
increase in headline earnings.
The Group's balance sheet remains extremely strong with free cash resources
of approximately R3 billion. The Group continues to be cash flow positive
with cash generated from operations of R156 million.
The Group's litigation with Compusource has been resolved in line with
expectations.
STRATEGIC
The main focus of the Group remains that of an integrator of business
solutions using best-of-breed hardware and software. During the period under
review, the European solution offering was materially enhanced by the
extension to the Group's European operations of the successful IBM business
partnership agreement which was originally concluded in South Africa.
On 19 December 2001 it was announced that the Group had agreed to acquire
50% + 1 of the ordinary shares in Comparex Africa from Nitac, resulting in
it becoming a wholly owned subsidiary. The total consideration for this
acquisition will amount to approximately R703 million, comprising R379
million in cash and the balance by the delivery of 30 million Comparex
shares. The Comparex shares to be delivered in terms of this acquisition
will be sourced from the Group's treasury stock. The effective date of this
transaction will be 8 February 2002 and the effect of this transaction has
accordingly not been accounted for in the fully diluted earnings per share
computations. The Group remains fully committed to empowerment of previously
disadvantaged individuals and transformation of its South African
operations.
To enhance the Group's visibility and to grow the awareness of the Comparex
name in the market place, PQ Africa changed its name to Comparex Africa.
The Group also continued to close and/or dispose of non-core businesses and
interests in proprietary technology companies and application software
providers.
DIVIDENDS AND/OR RETURN OF CAPITAL
During the period under review, the Group continued to repurchase its shares
in terms of the authority granted and expended some R327 million in this
regard.
The board has reconfirmed the prioritisation of the cash resources mainly
for use in growing its European operations by acquisition.
Due consideration has been given both to returning to a policy of paying
dividends annually or to the declaration of a special dividend and the board
has concluded that, at the present share price levels and taking into
account Secondary Tax on Companies, the best way to return value to
shareholders is to continue with the Group's share buy back programme.
The Group will accordingly continue with the programme of buying back its
own shares under the existing authority.
PROSPECTS
The weak global economic environment and the concomitant weakness in capital
expenditure continue to materially impact information technology
expenditure. This is expected to continue into the second half of the
financial year, particularly in Europe.
The Group's African operations are targeting to achieve the same level of
profitability as during the 2001 financial year, whilst the European
operations are targeting to remain profitable. The Group is, however,
confident of reporting growth in headline earnings for the financial year to
31 May 2002.
On behalf of the board
RKJ Chambers
Non-executive Chairman
WA du Plessis
Chief Executive Officer
KRM Evans
Group Financial Director
Midrand
29 January 2002
