| Fri 10 Feb 2006, 9:00 | | Simeka BSG Limited - Unaudited Results For The Six |
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SBG
SBG
Simeka BSG Limited - Unaudited Results For The Six Months Ended 30 November 2005
SIMEKA: BSG LIMITED
(Formerly Xantium Technology Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2003/012583/06)
JSE code: SBG & ISIN: ZAE000074878
("Simeka BSG")
Highlights
* Revenue up 152%
* EBITDA up 11,6%
* Significant increase in net cash flow from operations
* On track to meet annual forecasts
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2005
CONSOLIDATED INCOME STATEMENT
IFRS IFRS restated IFRS
Six months to Six months to Year ended
30 November 30 November 31 May
2005 2004 2005
R"000 R"000 R"000
Revenue 97 705 38 785 93 844
Earnings before interest,
taxation,
depreciation and
amortisation
("EBITDA") 10 683 9 571 16 624
Depreciation (538) (303) (722)
Interest on liabilities
due to vendors (1 210) - -
Interest received 380 70 229
Finance costs (529) - (141)
Income from associate
company 658 - -
Profit before taxation 9 444 9 338 15 990
Taxation (2 856) (2 832) (4 569)
Profit for period 6 588 6 506 11 421
Attributable to:
Equity holders of the company 6 194 6 256 10 829
Minority interest 394 250 592
6 588 6 506 11 421
Headline earnings
calculation:
Net profit attributable
to equity holders
of the company 6 194 6 256 10 829
Adjusted for:
Profit on sale of
property, plant
and equipment - - (86)
Headline earnings 6 194 6 256 10 743
Adjusted headline
earnings calculation:
Headline earnings 6 194 6 256 10 743
Adjusted for:
Interest on liabilities
due to vendors
(IAS 39) 1 210 - -
Adjusted headline earnings 7 404 6 256 10 743
Number of shares (`000)
- Weighted in issue 139 527 129 616 129 452
- Weighted in issue
and to be issued 174 159 147 097 150 664
Headline earnings per
share (cents)
- Weighted in issue 4.4 4.8 8.3
- Weighted in issue
and to be issued 3.6 4.3 7.1
Adjusted headline
earnings per share
(cents)
- Weighted in issue 5.3 4.8 8.3
- Weighted in issue
and to be issued 4.3 4.3 7.1
Earnings per share (cents)
- Weighted in issue 4.4 4.8 8.4
- Weighted in issue
and to be issued 3.6 4.3 7.2
CONSOLIDATED BALANCE SHEET
IFRS IFRS restated IFRS
as at as at as at
30 November 30 November 31 May
2005 2004 2005
R"000 R"000 R"000
ASSETS
Non-current assets 75 309 10 408 75 315
Property, plant and equipment 3 826 2 783 4 042
Goodwill 68 480 6 573 70 879
Investment in associate company 1 008 - 350
Deferred taxation 1 995 1 052 44
Current assets 56 951 27 979 39 394
Inventory 3 958 2 396 3 641
Trade and other receivables 42 403 20 834 24 380
Cash resources 10 590 4 749 11 373
Total assets 132 260 38 387 114 709
EQUITY AND LIABILITIES
Capital and reserves 53 574 20 070 51 103
Share capital 14 14 14
Share premium 18 897 14 834 16 345
Accumulated profit 14 480 5 222 8 286
Amounts due to vendors in shares 17 721 - 24 390
Minority interest 2 462 - 2 068
Non-current liabilities 18 548 278 19 607
Non interest-bearing liabilities
due
to vendors 18 548 - 19 607
Interest-bearing liabilities - 278 -
Current liabilities 60 138 18 039 43 999
Non interest-bearing liabilities
due
to vendors 16 854 - 20 590
Trade and other payables 32 636 13 441 16 828
Interest-bearing liabilities - 33 -
Taxation payable 4 940 2 989 3 643
Bank overdraft 2 950 134 1 376
Provisions 2 758 1 442 1 562
Total equity and liabilities 132 260 38 387 114 709
Net asset value per share (cents) 35.48 14.87 36.32
Net tangible asset value
per share (cents) (12.06) 10.00 (16.18)
CONSOLIDATED CASH FLOW STATEMENT
IFRS IFRS restated IFRS
Six months to Six months to Year ended
30 November 30 November 31 May
2005 2004 2005
R"000 R"000 R"000
Net cash flows from
operations 5 475 290 3 647
Net cash flows from
investing activities (2 657) (4 002) (8 679)
Net cash flows from
financing activities (5 175) 12 120 9 807
Net (decrease)/increase in
cash
resources (2 357) 8 408 4 775
Cash resources at beginning
of period 9 997 (3 794) (3 794)
Cash and cash
equivalents relating
to acquisition of
subsidiaries
and businesses - - 9 016
Cash resources at end of
period 7 640 4 614 9 997
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
IFRS IFRS restated IFRS
Six months to Six months to Year ended
30 November 30 November 31 May
2005 2004 2005
R"000 R"000 R"000
Opening equity 51 103 (1 034) (1 034)
Shares issued 2 934 15 500 15 501
Share issue expenses (380) (652) (651)
Acquisition of subsidiaries
and businesses (6 671) - 24 390
Net profit for period 6 194 6 256 10 829
- Net profit as previously
reported 6 194 5 821 10 829
- Reversal of goodwill
amortisation
(IFRS 3) - 435 -
Minority interest 394 - 2 068
Closing equity 53 574 20 070 51 103
Commitments:
Equipment and premises -
rental 3 553 638 2 406
Note:
Weighted number of shares in issue and to be issued includes shares for all
acquisitions weighted to warranted profits in accordance with the company"s
contractual commitment to issue such shares during the relevant accounting
period.
COMMENTS
Basis of preparation
The group has adopted International Financial Reporting Standards ("IFRS") for
the year ending 31 May 2006. IFRS 1 - First time adoption of International
Financial Reporting Standards, has been applied in preparing the interim
financial statements in accordance with IAS 34 - Interim Financial Reporting.
IFRS 1 election
In applying IFRS, Simeka BSG has made the following notable election:
Business combinations: not to retrospectively apply the requirements of IFRS 3
for business combinations that occurred prior to 1 April 2004.
Directors" statement
Whilst the directors believe the adjustments are correct in terms of current
IFRS practice in South Africa, accounting statements and reporting
requirements are subject to ongoing revision and interpretation. Changes
arising therefrom could therefore take place prior to Simeka BSG"s financial
year ending 31 May 2006.
Introduction
The directors of Simeka BSG present the interim results for the six months
ended 30 November 2005 ("the period"). The interim results do not incorporate
the two major strategic transactions concluded post the period (see `Merger
and Acquisition" below), as a result of which Simeka BSG has undergone a
restructuring and implemented a successful process of integration at
operational and management levels.
Merger and Acquisition
As previously announced post the period on 11 January 2006, the Competition
Commission has unconditionally approved Simeka BSG"s merger with MICT
Solutions Group (Proprietary) Limited ("MICT") including the acquisition of
Motoma Mithratech (Proprietary) Limited ("Mithratech") and the acquisition of
the business of Simeka Management Consulting (Proprietary) Limited ("Simeka
MC") ("the transactions").
Simeka BSG has consequently evolved as an ICT business solutions group
operating in the financial services, mining, telecoms, ICT and public sectors.
The group is differentiated by its management consultancy capability that
enhances its technology implementation services.
Name change
As previously announced on 15 December 2005, the change of name from Xantium
Technology Holdings Limited to Simeka BSG Limited was approved by shareholders
at a general meeting held on that day and came into effect on 9 January 2006.
Group profile
Simeka BSG"s management consulting and ICT advisory capabilities devise
business strategies covering process optimisation, technical development,
change management and efficiency improvement. These services enhance Simeka
BSG"s technology offering which ranges from design through implementation to
support and maintenance in conjunction with branded hardware and software
vendors and point-to-point logistics providers.
The group"s varied skills base translates into distinctive niche expertise,
for instance in the field of secure card technology solutions including smart
cards and telecoms recharge scratch cards.
The Simeka BSG group structure has been rationalised following the merger to
discontinue loss-making entities and refocus operations. The three business
pillars on which the group was built initially - Business Consulting Services,
Technology Services and Integrated Card Solutions - have been re-aligned into
four focus areas:
* Consulting;
* Applications and implementation solutions;
* Post-implementation solutions; and
* Assembly and manufacturing.
Each subsidiary is a vertical niche business unit within its focus area. As a
result, within the group framework of accountability, the individual business
units now operate to a greater extent as autonomous entities responsible for
generating growth and achieving budgets. In addition, the structure encourages
natural cross-leveraging of skills and customer bases to offer customers
complete seamless solutions.
Board of directors
The successful integration of new management ahead of schedule has accelerated
anticipated changes to the board. Therefore as announced on 30 January 2006,
James Murray has stepped down as joint CEO of Simeka BSG and remains an
executive director focusing on business support and expansion into Africa.
Former executive director Bobbley Molefe has assumed a non-executive position
on the board.
Simeka BSG"s board of directors now comprises Dr Popo Molefe, former North-
West Premier, who remains non-executive Chairman, CEO Mohammed Varachia, CFO
Suren Singh, COO Kamal Ramsingh, Group Human Resources Director Madoda
Papiyana, executive director James Murray and non-executive directors Tozamile
Botha, Barry Fraser, Bobbley Molefe and Robinson Ramaite.
Black Economic Empowerment ("BEE")
Simeka BSG"s position as a black-owned and controlled group, which was
cemented by the conclusion of the transactions, continues to benefit the group
in light of affirmative procurement practices. The group"s BEE platform is a
strong competitive advantage and a key contributor to ongoing growth.
Consequent to the transactions, Simeka BSG is majority black-owned while 90%
of the executive directors are HDIs. Executive management is currently made up
of approximately 50% HDIs.
Notwithstanding the fulfilment of ICT Charter requirements, Simeka BSG will
strive to continually enhance its BEE credentials.
Financial results
Turnover increased to R97,7 million from R38,7 million for the comparative
period, while EBITDA grew by 11,6% to R10,7 million from R9,5 million. In
accordance with IAS39, an imputed interest cost of R1,2 million has been
charged against income, resulting in a decrease in headline earnings and
headline earnings per share.
Xantium IT Services and Xantium Professional Services incurred pre-tax losses
totalling approximately R7 million for the period, due to slow
debtor recovery and as a result of the costs associated with the restructuring
of the group. These divisions have since been discontinued and the losses
curtailed.
The net current liability reflected on the balance sheet is due primarily to
outstanding vendor liabilities and the group is expected to be restored to a
net current asset position by year-end. A successful issue of shares for cash
in December 2005, continued healthy cash flow generation, the conclusion of the
transactions and the implementation of MICT"s strict credit vetting policies
have boosted working capital management and will enhance the group"s cash
position.
Dividend
In line with group policy, no interim dividend has been declared for the
period.
Prospects
With the integration of the transactions successfully started post the period,
Simeka BSG will continue to focus on bedding down the companies in the
group and consolidating operations and processes. The benefit of inclusion
in the group for the first time of MICT, Mithratech and Simeka MC will be
realised in the six months ahead.
Simeka BSG"s strong fundamentals form a solid platform for future growth. The
group"s established businesses generate sustainable revenue streams driven to
a large extent by long-term contracts. In addition the group"s business model
is well-aligned with emerging ICT market trends, which positions it
for growth.
Accordingly the directors are confident that Simeka BSG should achieve its
forecast revenue of R315,2 million, attributable earnings of R25,5 million and
headline earnings per share of 8,6 cents for the 2006 financial year as set out
in the revised listing particulars dated 23 November 2005.
Appreciation
We extend our heartfelt thanks to Simeka BSG"s staff whose passion and
dedication through a challenging phase of change, growth and integration have
been inspirational. A special thank you also to Simeka BSG"s advisors,
business partners and stakeholders for their invaluable tenacity and to our
customers for their ongoing loyal support.
By order of the board
Dr Popo Molefe Mohammed Varachia James H Murray
Chairman CEO Executive Director
9 February 2006
Warning: The listing of the ordinary shares in the company is on AltX.
Shareholders are advised of the risks of investing in a company listed on
AltX. Shareholders are advised that the JSE Limited ("JSE") does not guarantee
the viability or the success of a company listed on AltX. In terms of the JSE
Listings Requirements, a designated advisor has to be retained by the company.
The designated advisor is required to, inter alia, attend all board meetings
held by the company to ensure that all JSE Listings Requirements and
applicable regulations are complied with, approve the financial director of
the company and guide the company in a competent, professional and impartial
manner. If the company fails to retain the designated advisor it must make
arrangements to appoint a new designated advisor within 10 business days,
failing which the company faces suspension of trading of its securities. If a
designated advisor is not appointed within 30 days of its suspension, the
company faces the termination of its listing without an offer to minority
shareholders.
Directors:
Dr P S Molefe (Chairman)*; M Varachia (CEO); S Singh (CFO); K Ramsingh (COO);
M Papiyana (Group Human Resources Director); J H Murray; T Botha*; B H
Fraser*; K B J Molefe*; R Ramaite* (*non-executive)
Registered office: 1st Floor, South Block, 6 Protea Place, Sandton (PO Box
4307, Halfway House, Midrand, 1685)
Transfer secretaries: Ultra Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company secretary: Morestat Corporate Services, Suite 103, 202 Effelen Street,
Sunnyside, Pretoria, 0002 (PO Box 1750, Pretoria, 0001)
Designated advisor: Java Capital (Proprietary) Limited
www.simekabsg.co.za
Date: 10/02/2006 09:00:12 AM Produced by the JSE SENS Department
