| Mon 11 Feb 2002, 0:00 | | Cs Computer Services: Interim Results December 200 |
|
CS Holdings
Making Business sence of IT
CS Computer Services Holdings Limited
(Registration number 1996/015131/06)
Share code: CSH ISIN: ZAE000022034
Interim Results December 2001
Highlights
* Strategic acquisitions - Getronics SA & Argil Intellect
* Worldwide African Investments Holdings introduced as
a strategic black shareholder
* 61% growth in revenue
* Operating profit up 24%
* 39% growth in headline earnings
* Headline earnings per share up 21%
* Increased cash from operations
GROUP INCOME STATEMENT
Unaudited Change Audited
6 Months ended 2000 12 Months
31 Dec 31 Dec to 30 June
2001 2000 2001 2001
R'000 R'000 % R'000
Revenue 149 273 92 754 60,9 202 848
Cost of sales 99 412 60 351 64,7 132 084
Gross profit 49 861 32 403 53,9 70 764
Operating costs 29 905 17 357 72,3 38 195
Operating profit
before depreciation 19 956 15 046 32,6 32 569
Depreciation
and amortisation 5 005 2 952 6 173
Profit before
exceptional item 14 951 12 094 23,6 26 396
Exceptional item - - 1 873
Profit before interest 14 951 12 094 23,6 24 523
Net interest received 305 386 291
Profit before loss
on discontinued operation
and goodwill 15 256 12 480 22,2 24 814
Goodwill amortisation 4 882 - 7 073
Loss on discontinued
operation 2 611 - - 153
Profit from operations
before tax 7 763 12 480 17 588
Income tax 1 897 3 226 501
Net profit for the period 5 866 9 254 17 087
Minority interest 44 (31) 12
Attributable profit
for the period 5 822 9 285 17 099
Reconciliation of
headline earnings
Attributable profit for
the period 5 822 9 285 17 099
Adjusted for:
Goodwill amortisation 4 882 - 7 073
Loss on discontinued
operation 2 219 - 153
Headline earnings 12 923 9 285 24 325
Weighted average number
of shares in issue (000) 163 231 141 344 146 078
Fully diluted number
of shares (000) 174 663 152 247 151 388
Earnings per share (cents)
Basic 3,57 6,57 (45,7) 11,71
Fully diluted 3,33 6,10 (45,3) 11,29
Headline earnings
per share (cents)
Basic 7,92 6,57 20,5 16,65
Fully diluted 7,40 6,10 21,3 16,07
ABBREVIATED GROUP CASH FLOW STATEMENT
Unaudited Change Audited
6 Months ended 2000 12 Months
31 Dec 31 Dec to 30 June
2001 2000 2001 2001
R'000 R'000 % R'000
Cash inflow from
operating activities 14 454 8 183 76.6 24 493
Cash outflow from
investing activities (28 484) (14 096) (37 207)
Cash inflow from
financing activities 326 2 293 14 808
Net (decrease)/increase
in cash and
cash equivalents (13 704) (3 620) 2 094
Cash and cash equivalents
at the beginning of
the period 13 460 11 366 11 366
Cash and cash equivalents
at the end of the period (244) 7 746 13 460
Cash generated by
operations as percentage
of EBITDA (%) 78 64 75
GROUP BALANCE SHEET
Change
Unaudited 2000 Audited
31 Dec 31 Dec to 30 June
2001 2000 2001 2001
R'000 R'000 % R'000
ASSETS
Non-current assets 122 080 31 589 46 927
Fixed assets 26 276 16 960 15 516
Deferred tax asset 10 733 6 952 12 073
Intangible assets 80 980 5 405 14 439
Loans 2 680 545 3 479
Loan to
share incentive trust 1 411 1 727 1 420
Current assets 173 089 68 489 93 170
Trade receivables 109 514 41 246 54 902
Other receivables 9 377 5 219 1 916
Inventory 26 043 8 199 16 261
Work in progress 11 459 6 079 6 631
Cash and cash equivalents 16 696 7 746 13 460
TOTAL ASSETS 295 169 100 078 140 097
EQUITY AND LIABILITIES
Share capital and premium 68 245 12 496 28 853
Shares to be issued 40 912 14 290 7 790
Accumulated profits 48 385 34 749 42 563
Ordinary shareholders'
interest 157 542 61 535 79 206
Non-current liabilities 20 241 5 477 9 452
Interest bearing
borrowings 11 302 3 054 2 838
Amounts due to vendors 8 857 2 423 6 595
Minority interest 82 - 19
Current liabilities 117 386 33 066 51 439
Trade and other
liabilities 94 639 28 100 43 365
South African
Revenue Services 4 427 4 251 7 182
Short-term portion of
long-term liabilities 1 380 715 892
Bank overdraft 16 940 - -
TOTAL EQUITY
AND LIABILITIES 295 169 100 078 140 097
Number of shares
issued (000) 193 968 141 344 152 707
Net tangible asset value
per share (cents) 39,47 39,71 (0,6) 42,41
Net asset value
per share (cents) 81,22 43,54 86,6 51,87
STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
6 Months ended 12 Months
31 Dec 31 Dec 30 June
2001 2000 2001
R'000 R'000 R'000
Share Capital 1 940 1 413 1 527
Balance at the beginning of the period 1 527 1 397 1 397
New shares issued during the period 413 16 130
Share Premium 66 305 11 083 27 326
Balance at the beginning of the period 27 326 8 913 8 913
Premium of new shares issued
during the period 39 050 2 212 14 598
Goodwill previously written off
- reversed - - 4 000
Share issue expenses written off (71) (42) (185)
Shares to be issued for acquisitions 40 912 14 290 7 790
Balance at the beginning of the period 7 790 16 028 16 028
New shares to be issued 72 585 490 13 343
New shares issued during the period (39 463) (2 228) (14 728)
Reversal of shares to be issued - - (4 000)
Transfers - - (2 853)
Distributable Reserves 48 385 34 749 42 563
Balance at the beginning of the period 42 563 25 464 25 464
Net profit for the period 5 822 9 285 17 099
TOTAL EQUITY 157 542 61 535 79 206
Commentary
GROUP OVERVIEW
CS Holdings has become one of South Africa's leading information technology
companies in the delivery of integrated solutions. The Group's three
divisions focus on Systems Integration, Technology Infrastructure and
Education Solutions.
STRATEGIC REVIEW
The Group's key strategies for the last six months have proceeded as
planned:
* Empowerment: With the Argil acquisition the Group secured a prominent
black economic shareholder, namely Worldwide African Investment Holdings.
WAIH is committed to increase their current shareholding to 25% by June
2002.
* Premier IT infrastructure service provider: The acquisition of Getronics
SA, together with the strategic relationship established with Getronics NV,
has elevated CS IT Solutions to one of the top service providers in this
market segment.
* Integrated business solutions: The strategic focus of the group's business
development around a industry vertical/client model has improved market
penetration, as well as leveraging the cross selling abilities of the group.
This approach has already had a positive effect on securing large contracts,
particularly in the mining sector, where this business development focus was
initiated.
* Employer of choice: Continuing focus on career development and learnership
programmes for our staff has helped the Group to achieve our previously
disadvantaged individual growth rates and has assisted in reducing staff
turnover to well below the average for the IT sector.
PROSPECTS
The remaining half of the financial year has started very positively and the
Group's focus for this period will be to:
* complete the integration of Getronics and Argil and leverage off the
critical mass that these two acquisitions have brought to the Group;
* continue to gain market share as a systems integrator of choice, for our
strategic vertical target markets, especially in the mining, manufacturing,
telecommunications, financial and public sector markets. The new
relationship with WAIH, together with Argil's client base, has put the Group
in a very healthy position for further access into the Public and Parastatal
sectors; and
* entrench the Group as a market leader through its customer relationship
and key account management focused approach.
CS Holdings' strategy of positioning itself as the preferred IT partner to
its current and prospective client base represents the core of the Group's
strategic thrust. This strategy is facilitated by the Group's ability to
deliver integrated solutions that service a client's Applications, IT
Infrastructure and People Effectiveness requirements.
FINANCIAL PERFORMANCE
During the period under review CS Holdings has performed particularly well,
especially considering the adverse economic events both internationally and
locally. Revenue increased by 61% to R149 million and headline earnings
increased to R12.9 million, representing an increase of 39%.
Acquisitions
During this period the Group made two significant acquisitions in the form
of Getronics SA and Argil Intellect and with this invested approximately R85
million in expanding the Group's activities. Both these acquisitions are
performing well and have added significantly to the Group's critical mass
and service delivery.
Cash flow & working capital
Cash flow from operations improved significantly and now represents 78% of
EBITDA (earnings before interest, taxation, depreciation and amortisation),
up from 64% in the prior period. This is particularly satisfying considering
the substantial increase in working capital, resulting from the acquisitions
performed in the last quarter of 2001.
Operating margins
Operating margins decreased from 13% to 10% during the period under review
due to lower margins from start-up operations and the effect of the lower
margin contribution from newly acquired businesses. The lower margins are in
line with our forecasts for this period and should improve during the second
half of the financial year.
Loss on discontinued operations
The loss on discontinued operations of R2,6 million arose from the
discontinuance of the Process Control and Automation (PC&A) business unit.
This came as a result of the strategic decision to move away from PC&A and
into MES (Manufacturing Execution Systems), which involves more
sophisticated service orientated solutions.
ACCOUNTING POLICIES
The Company's accounting policies have been consistently applied and comply
with South African Statements of Generally Accepted Accounting Practice.
DIVIDENDS
The Company's current policy is not to pay dividends and all retained
earnings will be used to fund further growth and development.
For and on behalf of the Board
Annette van der Laan
Chief Executive Officer
Midrand
12 February 2002
Directors:
A van der Laan (Chief Executive Officer), T R T Bohlmann*, A Davenport*
(The Netherlands), P M Griffiths (Alt)*, J J Kunz, S H Muller*, J P Pech, N
Qangule (Alt)*, D L Vink, T Zuma* *Non-Executive
Company Secretary:
J G Goosen
