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SBG
SBG
SimekaBSG - Abridged audited consolidated financial results for the year ended
31 May 2006
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
("SimekaBSG")
Highlights
* Revenue up 247%
* EBITDA up 149%
* HEPS up 39%
* Significant increase in net cash flow from operations
* In excess of R22,0 million vendor liabilities repaid in cash
ABRIDGED AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MAY 2006
CONSOLIDATED INCOME STATEMENT
IFRS IFRS restated
Audited Year reviewed Year Audited Year
Ended 31 May Ended 31 May Ended 31 May
2006 2005 2005
R"000 R"000 R"000
Revenue 326 145 93 844 93 844
Earnings before interest,
taxation,
depreciation and
amortisation
("EBITDA") 41 418 16 624 16 624
Depreciation (4 864) (722) (722)
Interest on liabilities
due to vendors (1 743) (1 344) -
Interest received 2 011 229 229
Finance costs (2 018) (141) (141)
Income from associate
company 759 - -
Profit before taxation 35 563 14 646 15 990
Taxation (8 995) (4 569) (4 569)
Profit for period 26 568 10 077 11 421
Attributable to:
Equity holders of the company 25 010 9 485 10 829
Minority interest 1 558 592 592
Headline earnings
calculation:
Net profit attributable
to equity holders
of the company 25 010 9 485 10 829
Adjusted for:
Profit on sale of
property, plant
and equipment (15) (86) (86)
Headline earnings 24 995 9 399 10 743
Adjusted headline
earnings calculation:
Headline earnings 24 995 9 399 10 743
Adjusted for:
Interest on liabilities
due to vendors
(IAS 39) 1 743 1 344 -
Amortisation 561 - -
Adjusted headline earnings 27 299 10 743 10 743
Number of shares (`000)
- Weighted in issue 220 618 129 452 129 452
- Weighted in issue
and to be issued 276 854 150 664 150 664
Headline earnings per
share (cents)
- Weighted in issue 11.3 7.3 8.3
- Weighted in issue and
to be issued 9.0 6.2 7.1
Adjusted headline
earnings per share
(cents)
- Weighted in issue 12.4 8.3 8.3
- Weighted in issue and
to be issued 9.9 7.1 7.1
Earnings per share (cents)
- Weighted in issue 11.3 7.3 8.4
- Weighted in issue and
to be issued 9.0 6.3 7.2
CONSOLIDATED BALANCE SHEET
IFRS IFRS restated
As at As at As at
31 May 31 May 31 May
2006 2005 2005
R"000 R"000 R"000
ASSETS
Non-current assets 233 700 73 971 75 315
Property, plant and equipment 14 580 4 042 4 042
Goodwill 207 605 69 535 70 879
Intangible 4 387 - -
Investment in associate company 1 799 350 350
Deferred taxation 5 329 44 44
Current assets 99 262 39 394 39 394
Inventory 12 852 3 641 3 641
Trade and other receivables 69 593 24 380 24 380
Cash resources 16 817 11 373 11 373
Total assets 332 962 113 365 114 709
EQUITY AND LIABILITIES
Capital and reserves 198 929 49 759 51 103
Share capital 35 14 14
Share premium 138 178 16 345 16 345
Accumulated profit 31 952 6 942 8 286
Amounts due to vendors in shares 27 092 24 390 24 390
Minority interest 1 672 2 068 2 068
Non-current liabilities 39 121 19 607 19 607
Non interest-bearing liabilities due
to vendors 11 218 19 607 19 607
Interest-bearing liabilities 27 903 - -
Current liabilities 94 912 43 999 43 999
Non interest-bearing liabilities
due to vendors 16 380 20 590 20 590
Trade and other payables 67 826 16 828 16 828
Interest-bearing liabilities 3 052 - -
Taxation payable 7 323 3 643 3 643
Bank overdraft 331 1 376 1 376
Provisions - 1 562 1 562
Total equity and liabilities 332 962 113 365 114 709
Net asset value per share (cents) 57.02 36.32 36.32
Net tangible asset value
per share (cents) (2.99) (16.18) (16.18)
CONSOLIDATED CASH FLOW STATEMENT
IFRS IFRS restated
Audited Year Reviewed Year Audited Year
Ended 31 May Ended 31 May Ended 31 May
2006 2005 2005
R"000 R"000 R"000
Net cash flows from
operations 22 566 3 647 3 647
Net cash flows from
investing activities (58 305) (8 679) (8 679)
Net cash flows from
financing activities 40 954 9 807 9 807
Net (decrease)/increase in
Cash resources 5 215 4 775 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 1 274 9 016 9 016
Cash resources at end of
period 16 486 9 997 9 997
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
IFRS IFRS restated
Audited Year Audited Year Audited Year
Ended 31 May Ended 31 May Ended 31 May
2006 2005 2005
R"000 R"000 R"000
Opening equity 49 759 (1 285) (1 285)
Shares issued 122 600 15 501 15 501
Share issue expenses (746) (651) (651)
Acquisition of subsidiaries
and businesses 1 366 24 390 24 390
Minorities 940 2 319 2 319
Net profit for period 25 010 9 485 10 829
- Net profit as previously
reported - 10 829 10 829
- Interest on vendor liabilities (1 344)
Closing equity 198 929 49 759 51 103
Commitments:
Equipment and premises -
rental 3 553 2 406 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 financial year ended 31 May 2006 ("the year"). IFRS 1 - First time
adoption of International Financial Reporting Standards has been applied in
preparing the abridged audited consolidated financial results ("the results")
in accordance with IAS 34 - Financial Reporting. All assets and liabilities
were restated to fair values in accordance with the compliance criteria
required per IFRS 1. As at the financial year-end there were no changes to the
impairment valuation. The group no longer provides for amortisation of
goodwill and goodwill is now subject to an annual impairment test. The last
impairment test was done as at 30 November 2005 and therefore the next
impairment test will be done as at 30 November 2006. Comparative results for
the year ended 31 May 2005 have accordingly been restated as per IFRS
requirements.
Directors" statement
Whilst the directors believe the adjustments set out above are correct in
terms of current IFRS practice in South Africa, accounting statements and
reporting requirements are subject to ongoing revision and interpretation.
Audit opinion
The results have been audited by SimekaBSG"s auditors, PKF (Pta) Inc and their
unqualified audit opinion is available for inspection at the company"s
registered office. There has been no change to the group"s accounting policies
for the year under review.
Introduction
The directors of SimekaBSG proudly present the results for the year,
reflecting headline earnings and headline earnings per share ("HEPS") that
exceed the prior year by 39% and the forecast by 15% as per the trading update
issued on 13 June 2006. These results incorporate the merger with MICT
Solutions Group (Pty) Limited ("MICT") and Motoma Mithratech (Pty) Limited
("Mithratech"), for six months.
Following the merger, SimekaBSG has successfully undergone a restructuring and
implemented appropriate strategic, operational and executive integration. This
integration is an ongoing process which the directors believe must, and will
continue to be managed prudently and cautiously in order to be sustainable.
Group profile
SimekaBSG is a black-empowered business solutions group servicing multiple
industry sectors through the provision of information, communication and
technology ("ICT") business solutions. The group was formed in 2005 following
the merger of MICT and Xantium Technology Holdings Limited, shortly after the
latter had acquired Simeka Consulting (Pty) Limited.
SimekaBSG is differentiated by the ability to enhance commodity offerings
through deep technical skills and expertise. It is able to deliver unique
client solutions through its specialised offerings within each of its 12
operational brands and across multiple operations.
The group"s operating entities are currently structured within four
operational areas as follows:
- Consulting: using leading knowledge, expertise and best practice
methodologies to design solutions that will assist companies to align
their ICT investments to core business requirements;
- Applications/ Implementation: developing and implementing customer ICT
systems and solutions;
- Post Implementation: servicing and supporting customers" ICT
infrastructure to ensure optimal service levels; and
- Assembly and Manufacturing: manufacturing and producing in terms of
customer solutions including assembly of ICT electronic equipment and
hardware; manufacturing of scratch cards and smartcard fulfillment
services.
Each subsidiary is focused on attaining a market-leading status within its
niche area. The current structure is suited both to the development of core
expertise in focus areas as well as pro-active cross-collaboration within the
group to facilitate integrated service delivery.
Black Economic Empowerment ("BEE")
SimekaBSG is majority black-owned, with 90% of the group"s executive directors
being historically disadvantaged individuals (HDIs). Executive management is
currently made up of approximately 50% HDIs. The group"s BEE platform is a
strong competitive advantage and a key contributor to ongoing growth.
Notwithstanding that SimekaBSG currently exceeds ICT Charter requirements; the
group is committed to enhancing its credentials in respect of all aspects of
the ICT Charter, for instance corporate social responsibility and affirmative
procurement.
Financial results
Turnover increased to R326,1 million from R93,8 million for the previous year
ended 31 May 2005, while EBITDA grew by 149% to R41,4 million from R16,6
million.
Two of the group"s wholly owned subsidiaries, Xantium IT Services and Xantium
Professional Services, incurred pre-tax losses totalling approximately R8,3
million for the year, as a result of the costs associated with the
restructuring of these operations. The operational management of Xantium
Professional Services has since been moved under the management of Foster-
Melliar, and the losses have been curtailed. With regard to Xantium IT
Services, the previous business has been restructured and rationalised, the
overhead cost structure significantly reduced and management focused on
rebuilding this value-added reseller division under the branding of MICT Value
Added Reseller.
The group has a net current asset position at 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 strict credit vetting
policies, have boosted working capital management to enhance the group"s cash
position.
Vendor Commitments
A total of R131,6 million in vendor liabilities has been discharged during the
year, of which R22,7 million was paid from cash generated from operations and
the balance of R108,9 million by the issue of shares.
Dividend
In line with group policy, no dividend has been declared for the year. The
dividend policy will be reviewed at the upcoming annual general meeting of
SimekaBSG.
Prospects
The group is strategically positioned in market segments that are undergoing
rapid growth such as financial services and telecommunications. This should
enable SimekaBSG to realise significant organic growth, which has been
reflected to date in the strong renewal of material contracts
The group"s strengthened financial stability has positioned SimekaBSG to
complement this organic growth with strategic acquisitions that will fulfil
the objectives of geographical expansion into Africa and penetration of new
niche markets. A core expansion focus is to build on current capabilities of
document management solutions and information security solutions.
Appreciation
We recognise and appreciate the efforts of all members of the group,
directors, managers and staff that have been integral to the group"s success.
The past year has been both challenging and rewarding. As an organisation we
have moved from a fledgling Altx ICT listing (as Xantium Technology Holdings
Limited) to a significantly more mature organisation in SimekaBSG. Despite the
obstacles that accompany such a transition, our organisation has not only met,
but exceeded market expectations. If not for SimekaBSG"s people, this would
not have been possible.
Similarly we extend our gratitude to all our shareholders, business associates
and particularly our loyal customers for their support. We will continue
striving to exceed.
By order of the board
Mohammed Varachia Suren Singh
CEO CFO
25 July 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; M Schrader; 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: Noelene Beryl de Koker, 1st Floor, South Block, 6 Protea
Place, Sandton (PO Box 4307, Halfway House, Midrand, 1685)
Designated advisor: Java Capital (Proprietary) Limited
www.simekabsg.co.za
Date: 25/07/2006 09:00:41 AM Produced by the JSE SENS Department
