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(Incorporated in the Republic of South Africa)
(Registration number 1994/002506/06)
Share code: CPX ISIN: ZAE000016812
The reviewed group results for the six months ended 30 November 2002
Continuing operations
- HEPS up 28,8%
- Revenue up 7,3%
Cash positive
Group Balance Sheet
30 November 31 May
Reviewed Unaudited Audited
2002 2001 2001 2002 2002
R million Continuing/ Con- Statu- Con- Statu-
Statutory tinuing tory tinuing tory
ASSETS
Non-current assets
Fixtures, equipment
and vehicles 75,8 97,5 185,2 73,5 153,2
Capitalised leased
assets 188,4 199,2 199,2 191,3 191,3
Rental assets 0,2 0,1 87,9 0,1 71,3
Long-term loans,
investments and
associates 56,1 441,0 464,1 452,0 460,4
Deferred taxation assets 8,2 3,7 276,3 9,5 10,6
328,7 741,5 1 212,7 726,4 886,8
Current assets
Inventories 73,0 119,7 349,0 91,1 220,5
Trade accounts
receivable 490,1 524,2 1 127,9 497,5 698,3
Other accounts
receivable 303,7 134,8 228,5 101,7 251,3
Cash and bank
balances 1 796,0 2 504,2 3 512,8 1 772,8 2 587,1
2 662,8 3 282,9 5 218,2 2 463,1 3 757,2
TOTAL ASSETS 2 991,5 4 024,4 6 430,9 3 189,5 4 644,0
EQUITY AND LIABILITIES
Ordinary shareholders`
funds 2 062,1 2 421,5 3 313,6 1 836,2 2 094,6
Minority interests 4,2 155,2 158,0 3,7 3,7
2 066,3 2 576,7 3 471,6 1 839,9 2 098,3
Non-current interest
bearing liabilities 242,4 250,3 250,3 247,0 247,0
Non-current interest
free liabilities 15,7 380,0 380,0 393,7 393,7
Post-retirement
obligations 187,5 181,8
Deferred taxation
liabilities 1,7 1,4 2,5 1,9 1,9
259,8 631,7 820,3 642,6 824,4
Current liabilities
Bank overdrafts and
short-term borrowings 32,1 28,9 28,9 35,9 36,3
Other short-term
liabilities 633,3 787,1 2 110,1 671,1 1 685,0
665,4 816,0 2 139,0 707,0 1 721,3
TOTAL EQUITY AND
LIABILITIES 2 991,5 4 024,4 6 430,9 3 189,5 4 644,0
Group Statement of Changes in Equity
Share Non-
capital distribut- Foreign Distribut-
and able exchange able
R million premium reserves reserve reserves Total
Balance at
31 May 2002 184,8 51,8 (52,9) 1 910,9 2 094,6
Foreign exchange
gains arising
on consolidation (0,3) (0,3)
Attributable loss
per the income
statement (84,3) (84,3)
Transfer in respect
of deferred
taxation 15,4 15,4
Sale of Comparex Europe (19,4) 56,1 36,7
Balance at
30 November 2002 184,8 47,8 2,9 1 826,6 2 062,1
Details of Exceptional Items
Continuing Statutory
Year Year
Six months ended ended Six months ended ended
30 November 31 May 30 November 31 May
2002 2001 2002 2002 2001 2002
R million Reviewed Unaudited Audited Reviewed Unaudited Audited
(Loss)/Profit on
sale of investments (0,4) (13,9) 8,8 (68,9) 32,4 31,7
Impairment of assets
and investments (19,3) 7,7 (38,3) (44,2) (14,0) (38,3)
Restructuring costs 0,6 (6,6) (7,4) (5,4) (58,5) (121,4)
Release of provisions 7,0 1,2 15,3
Impairment of
European assets (125,6)
Impairment of
goodwill relating
to Comparex Africa (350,6) (350,6)
(19,1) (12,8) (380,5) (117,3) (40,1) (588,9)
Other Group Salient Information
30 November 31 May
2002 2001 2002
Number of shares in issue (000`s) 294 545 331 153 331 153
Less shares cancelled 12 072 36 608
Current shares in issue 294 545 319 081 294 545
Less shares held by the subsidiary 31 908 33 115 31 908
262 637 285 966 262 637
Uncovered options 75 490 12 674
Fully diluted number of shares (000`s) 262 637 361 456 275 311
Net asset value per share (cents) 786,7 1 214,0 798,9
Fully diluted net asset value
per share (cents) 786,7 960,4 762,1
Debt-equity ratio (%) 13,3 8,0 13,5
Contingent liabilities (Rm)
Guarantees issued to third parties 6,6 9,9
Other 6,4
Commitments (Rm)
Capital 1,8
Unutilised forward exchange contracts 59,4 45,9 62,1
Lease commitments 307,7 314,9 598,9
Group Income Statement
Continuing Statutory
Year Year
Six months ended ended Six months ended ended
30 November 31 May 30 November 31 May
2002 2001 2002 2002 2001 2002
R million Reviewed Unaudited Audited Reviewed Unaudited Audited
Revenue 1 397,7 1 302,5 2 703,6 2 463,7 2 590,9 5 406,8
Cost of sales 976,0 899,5 1 838,8 1 729,4 1 741,0 3 580,9
Margin 421,7 403,0 864,8 734,3 849,9 1 825,9
Expenses 313,9 303,4 643,6 744,7 719,0 1 670,9
Earnings/(Loss)
before interest,
taxation and
depreciation 107,8 99,6 221,2 (10,4) 130,9 155,0
Depreciation 25,7 34,0 63,4 73,4 97,8 204,8
Operating profit/(loss) 82,1 65,6 157,8 (83,8) 33,1 (49,8)
Net investment income 82,3 104,7 183,2 91,2 122,3 212,6
Foreign exchange
(losses)/gains (1,5) 7,9 (0,6) 67,5 216,2 197,5
Associate company
earnings
before taxation 4,3 4,1 5,6 4,3 4,1 1,9
Earnings before
exceptional items 167,2 182,3 346,0 79,2 375,7 362,2
Exceptional losses (19,1) (12,8) (380,5) (117,3) (40,1) (588,9)
Earnings/(Loss)
before taxation 148,1 169,5 (34,5) (38,1) 335,6 (226,7)
Taxation 43,5 36,3 91,5 45,3 8,2 273,9
Earnings/(Loss)
after taxation 104,6 133,2 (126,0) (83,4) 327,4
(500,6)
Minority interests 0,9 31,1 26,2 0,9 31,1 26,2
Earnings/(Loss)
attributable to
shareholders* 103,7 102,1 (152,2) (84,3) 296,3
(526,8)
Adjusting items for
headline earnings:
Impairment of assets 19,3 (7,7) 38,3 44,2 14,0 38,3
Impairment of assets
as a result of
management buy out
of European operations 125,6
Goodwill impairment 350,6 350,6
Loss/(Profit) on sale
of investments and
discontinued operations 0,4 13,9 (8,8) 68,9 (32,4)
(31,7)
Reversal of prior
period overprovision
for restructuring (7,0) (1,2)
(15,3)
Headline earnings/(loss)+ 123,4 108,3 220,9 27,6 277,9
(59,3)
Application of
circular 7/2002
Impairment of assets (19,3) 7,7 (38,3) (44,2) (14,0)
(38,3)
Reversal of prior
period overprovision
for restructuring 7,0 1,2 15,3
Revised headline
earnings/(loss)? 104,1 116,0 189,6 (15,4) 263,9
(82,3)
Weighted average number
of shares
in issue (000`s) 262 637 296 436 295 311 262 637 296 436 295
311
Fully diluted
weighted number
of shares
in issue (000`s) 262 637 371 927 307 985 262 637 371 927 307
985
Earnings/(Loss) per
share (cents)* 39,5 34,4 (51,6) (32,1) 100,0
(178,4)
Headline earnings/
(loss) per share (cents)+ 47,0 36,5 74,8 10,5 93,7 (20,1)
Revised headline
earnings/(loss)
per share (cents)? 39,6 39,1 64,2 (5,9) 89,0 (27,9)
Group Cash Flow Statement
Continuing Statutory
Year Year
Six months ended ended Six months ended ended
30 November 31 May 30 November 31 May
2002 2001 2002 2002 2001 2002
R million Reviewed Unaudited Audited Reviewed Unaudited Audited
Cash generated from/
(utilised in)
operations 11,3 (56,2) 45,3 (338,0) (60,4)
(65,0)
Foreign exchange
(losses)/gains (1,5) 7,9 (0,6) 67,5 216,2 197,5
Net investment income 82,3 104,7 183,2 91,2 122,3 212,6
Dividends paid (0,2) (0,5)
(0,2)
Taxation paid (31,5) (47,4) (98,7) (40,8) (69,4)
(114,8)
Net cash flow from
operating activities 60,6 9,0 129,0 (220,6) 208,7 230,1
Cash flows from
investing activities
Proceeds/(Invested)
from disposal of
investments 4,8 0,9 (688,4) (495,7) 7,2
(731,8)
Net movement in fixtures,
equipment and
vehicles, rental and
leased assets (25,0) (34,3) (39,4) (64,5) (68,3)
(139,3)
Net cash flow from
investing activities (20,2) (33,4) (727,8) (560,2) (61,1)
(871,1)
Cash flows from
financing activities
Shares repurchased (326,6) (516,9) (326,6)
(516,9)
Movement in long-term
loans and advances (13,4) (22,4) 3,9 (6,1) (42,8) 3,0
Net cash flow from
financing activities (13,4) (349,0) (513,0) (6,1) (369,4) (513,9)
Net changes in cash
and cash equivalents 27,0 (373,4) (1 111,8) (786,9) (221,8) (1
154,9)
Cash at beginning
of year 1 736,9 2 848,7 2 848,7 2 550,8 3 705,7 3 705,7
Cash at end of year 1 763,9 2 475,3 1 736,9 1 763,9 3 483,9 2 550,8
Group Segmental Analysis
Continuing Statutory
Year Year
Six months ended ended Six months ended ended
30 November 31 May 30 November 31 May
2002 2001 2002 2002 2001 2002
R million Reviewed Unaudited Audited Reviewed Unaudited Audited
REVENUE
AFRICA (principally
South Africa) 1 338,9 1 254,2 2 566,0 1 338,9 1 255,6 2 566,0
EUROPE 27,4 13,1 62,8 1 093,4 1 300,1 2 766,0
UNITED STATES
OF AMERICA 31,4 35,2 74,8 31,4 35,2 74,8
1 397,7 1 302,5 2 703,6 2 463,7 2 590,9 5 406,8
operating PROFIT/(LOSS)
AFRICA (principally
South Africa) 87,1 74,1 164,1 87,1 81,6 164,1
EUROPE 0,9 0,9 (128,8) 7,2
(157,0)
UNITED STATES OF AMERICA (0,4) 0,2 1,3 (0,4) 0,2 1,3
CENTRAL FUNCTIONS (4,6) (9,6) (8,5) (41,7) (55,9)
(58,2)
82,1 65,6 157,8 (83,8) 33,1
(49,8)
Business Groupings: Revenue
Services 884,0 810,0 1 765,0 1 012,6 992,4 2 125,9
Storage 54,9 77,2 100,1 656,9 913,4 1 828,7
Servers 152,3 163,2 322,1 487,7 431,4 933,8
Networks 216,6 178,9 447,8 216,6 178,9 449,5
Application Software
Providers and
Proprietary Software 89,9 73,2 68,6 89,9 74,8 68,9
1 397,7 1 302,5 2 703,6 2 463,7 2 590,9 5 406,8
COMMENTS
The six months under review have been significant with reference to the
composition of the Comparex Holdings group. The changes were such that the board
deemed it necessary to obtain shareholders` approval for the sale of Comparex
Europe to the management of the operations. This approval was received at a
shareholders` meeting held on 29 October 2002. Effective 1 November 2002 the
European operations were excluded from the group results. The group received
payment of the purchase price of Euro 12,7 million on 6 December 2002.
In view of the sale of Comparex Europe, a "continuing business" income statement
and cash flow have been presented to reflect the performance during the period.
Discontinued Operations
The results of Europe are included in the statutory results for five months of
the reporting period. Market conditions in Europe continued to be extremely
difficult with the result that revenue reduced to R1,07 billion with an
operating loss of R165,9 million. A loss before exceptional items of R88,0
million was recorded. The revised headline loss was R119,5 million for the
period.
Continuing Operations
There were no significant changes in the operations of the continuing businesses
in the period under review, other than the reduction of the shareholding in
Perago to 25% following the sale of 24,9% to a black empowerment partner.
It is pleasing to note that the continuing businesses increased their operating
profit by 25,2% to R82,1 million in spite of difficult trading conditions in the
Information, Communication and Technology sector. Revenue increased by 7,3% to
R1,4 billion of which services and annuity business activities represent in
excess of 70%. The operating margin for the six months increased to 5,9%
compared to the previous financial year`s margin of 5,0%. Headline earnings per
share increased by 28,8% to 47 cents, however when calculated in terms of the
new SAICA, increased to 39,6 cents from 39,1 cents. Investment income reduced
due to cash being utilised in the second half of the previous year in the share
buy back programme and the purchase of the remaining 50% plus 1 share in
Comparex Africa, hence the reduction in minorities. The exceptional losses
primarily represent the impairment of the value of the preference shares held in
a member of Nitac, the underlying investment being Comparex and Dimension Data
shares.
The group continues to report a strong balance sheet with cash resources of R1,8
billion. Working capital management receives constant focus and cash flow was
positive.
Taxation issues
As mentioned in previous reports, the South African Revenue Services ("SARS")
disallowed a trademark deduction by a subsidiary company ("The Persetel
Trademark") in the sum of R26,1 million in the 1995 year of assessment. The
subsidiary has lodged an appeal to the Special Court against the disallowance of
the objection and is currently waiting for a date for the hearing of the appeal.
The subsidiary has also objected to the disallowance of a trademark deduction
claimed for a similar amount with regard to the same trademark, in respect of
the 1996 and 1997 years of assessment. To date, there has been no response to
this objection from SARS. SARS has queried the deduction made in the 1998 and
1999 tax returns but has yet to reassess these tax years. Taking into account
the opinion expressed by Senior Counsel, the directors remain of the view that
the deduction will ultimately be allowed in respect of the three years of
assessment mentioned above.
In addition, during 2002, SARS queried a deduction in respect of a trademark
arising from the merger of Persetel and Q Data in October 1997 and claimed in
the 1998 tax return. As at the date of this report SARS has not disallowed these
deductions and the directors are of the view that they will be allowed as
claimed.
The subsidiary company involved has claimed deductions in respect of the
trademarks totaling R683,7 million resulting in a reduction of tax of R215,2
million to May 2002.
DIRECTORATE
As a consequence of the sale of Comparex Europe, Messrs WA du Plessis, JR Cohen,
S Carlin and KRM Evans resigned from the board with effect from 2 December 2002.
On 27 January 2003 PA Watt was confirmed as Chief Executive Officer. RS
Berkowitz has been appointed as non-executive chairman. DM Nurek has been
appointed as non-executive deputy chairman. JF Buchanan has been appointed as a
non-executive director, and will chair the audit committee. AC Farthing has been
appointed as the financial director.
BLACK ECONOMIC EMPOWERMENT (BEE) INITIATIVE
Due to the disposal of the European operations, Comparex Holdings comprises
principally the business of Comparex Africa. The introduction of BEE partners
into Comparex is a priority of both the board and senior management. We are
pursuing our objectives in this regard in consultation with external advisors.
Shareholders will be kept updated on progress made with regard to this
initiative.
PROSPECTS
The strategic focus of the group is aimed at increasing revenue in the managed
services/annuity income sector. In the reporting period, the group announced a
number of successes in this regard despite the lower level of activity in the
sector. As yet there are no indications of a significant and sustained upturn in
IT spending, but the board is confident that the group as it is now constituted
will continue on its satisfactory growth path and results for the second half
are expected to exceed those of the first half.
The payment of a special dividend is being considered by the board, in the
context of the future strategic direction of the group with particular reference
to the BEE initiative.
SRP INVESTIGATION
The hearing in respect of the Securities Regulation Panel investigation
concerning an alleged affected transaction is due to take place on 20 February
2003.
On behalf of the board
RS Berkowitz PA Watt AC Farthing
Chairman Chief Executive Officer Financial Director
Midrand, 4 February 2003
These group results are prepared in accordance with South African Statements of
Generally Accepted Accounting Practice applicable to Interim Financial
Reporting. The accounting policies used in the preparation of these financial
statements are consistent with those used in the annual financial statements for
the year ended 31 May 2002.
The above continuing and statutory results have been reviewed by the group`s
auditors Messrs Deloitte & Touche and PricewaterhouseCoopers Inc and a copy of
their unqualified review report is available for inspection at the company`s
registered offices.
Directors: RS Berkowitz (Chairman), DM Nurek (Deputy Chairman),
PA Watt (Chief Executive Officer), JF Buchanan, AC Farthing,
L Lambrechts, WJC Mitchell, FJ van der Merwe
Registered office: PQ Park, 789 16th Road, Randjespark, Midrand 1685,
(Private Bag X48, Halfway House 1685)
Internet address: http://www.comparexgroup.com
Transfer secretaries: Computershare Investor Services Limited
9th Floor, 70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Date: 06/02/2003 07:01:00 AM Produced by the JSE SENS Department
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