|
CS Computer Services Holdings Limited - Accounting Treatment Of The EDD
Transaction In The 2003 And 2002 Interim Results And The 2003 Annual Results
CS Computer Services Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
Share code: CSH
ISIN: ZAE000022034
(`CSH` or `the company`)
ACCOUNTING TREATMENT OF THE EDD TRANSACTION IN THE 2003 AND 2002 INTERIM RESULTS
AND THE 2003 ANNUAL RESULTS
The Listings Division of the JSE Securities Exchange South Africa (`JSE`) has
requested this announcement, after receiving advice from the GAAP Monitoring
Panel (`GMP`) who reviewed the accounting treatment of the EDD transaction in
the 2003 and 2002 interim results and the 2003 annual results.
The company`s Board of Directors (`the Board`) announce that further to their
report back on their investigation into the EDD transaction on 24 February 2004,
the JSE Listings Division and the GMP found that:
1. The 2002 interim results were deficient in that:
a. The EDD transaction was material and should have been disclosed separately.
b. The proceeds of the EDD transaction were overstated by R1 775 199 due to
the fact that the company did not apply AC133 to the proceeds receivable. The
company has fully complied with AC133 in the audited 2003 annual results
c. In addition to 1(b) above, the non application of AC133 resulted in the
profit being overstated by R295 000; and
d. The disclosure around the change in tax estimate was insufficient. The
company applied a reduced tax rate in its interim results as unrecognized
deferred tax assets were taken into account in determining the average annual
tax rate. The total unrecognized deferred tax assets amounted to R28.3 million
of which R3.8 million was taken into account in determining the average annual
tax rate.
2. The audited 2003 annual results were deficient in that the disclosure of
the cancellation of the EDD transaction was insufficient. At the time, the
directors and the external auditors of the company believed that such disclosure
was sufficient. However, the Board now acknowledges that this disclosure could
have been improved upon.
3. The 2003 interim results were deficient in that:
a. Save for the restatement required in terms of GAAP for the change in
accounting policy in respect of the reclassification of backup equipment and
maintenance stock, there was no basis in GAAP to restate the 2002 interim
results for the cancellation of the EDD transaction;
b As a result of 3(a) above, certain of the commentary in the 2003 results,
which makes reference to changes between 2003 and 2002 is incorrect;
c. The explanation that there was a R3 651 000 adjustment for the `write-off
of certain assets` was incorrect. This was, in fact, the correction of an error
in the asset value and the 2002 interim results should not have been restated
for this item; and
d. The disclosure around the change in tax estimate was insufficient. The
company applied a reduced tax rate in its interim results for the same reason as
explained in point 1 (d) above.
Section 9 of the Listings Requirements
Save for the disclosure of the EDD transaction as described above, CSH has fully
complied with section 9 of the JSE Listing Requirements and will continue to do
so.
Details of the EDD transaction are set out below:
Disposal consideration: R18.4 million (including VAT).
Vendor - Faltalia Investments Inc.
Settlement of consideration
* R3.4 million within 14 days of signature of the agreement
* 5 equal quarterly payments commencing 30 June 03
Effective date: 1 December 2002
Description of the business: EDD is an e-mail delivery application programme
that enables clients to convert transaction documents from a print stream to an
electronic format that can be encrypted and mailed to their customers.
Rationale for the transaction: CSH purchased the EDD software business as a
separate transaction from their acquisition of the business of Idion Solutions
(Pty) Ltd with the view to selling their right, title and interest in the
software together with the income streams generated from the business. At all
times, CSH was to remain responsible for the ongoing development, maintenance
and support of the software.
Special conditions: Warranty that the estimated monthly revenue generated from
the EDD software business as contained in a schedule to the agreement is
substantially correct.
The unaudited pro forma financial effects of the sale of EDD are based on the
published audited financial results of CSH for the year ended 30 June 2002. The
pro forma financial effects are provided for illustrative purposes only in order
to show the effect of the sale of EDD.
The pro forma financial effects in the `after` column are based on the
assumptions that:
- in respect of the effect on net asset value and net tangible asset value per
share, the sale had been implemented on 30 June 2002; and
- in respect of the effect on earnings and headline earnings per share, the sale
was effected on 1 July 2001.
Before After % change Notes
Earnings per share (cents) (Basic) 10.96 15.95 45.59 1
Headline earnings per share (cents) 20.75 25.75 24.07 1
(Basic)
Net asset value per share (cents) 78.46 83.01 5.80 2
Net tangible asset value per share 38.68 43.23 11.77 2
(cents)
Actual number of shares in issue (000) 208 245 208 245
Weighted average number of shares in 189 753 189 753
issue (000)
Notes:
1. The effect on the earnings per share and headline earnings per share is
based on the weighted average number of shares in issue during the year.
2. The effect on the net asset value and net tangible asset value per share is
based on the actual number of shares in issue at 30 June 2002.
3. A tax rate of 30% was applied to the EDD transaction.
The Board is publishing this announcement at the request of the JSE and believes
that this now concludes the investigation into the accounting treatment of the
EDD transaction.
Johannesburg
13 July 2004
Sponsor:
Barnard Jacobs Mellet Corporate Finance
(Pty) Limited
Date: 14/07/2004 11:07:31 AM Produced by the JSE SENS Department
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
