| Wed 24 Jan 2007, 9:00 | | SBG - Simeka BSG - Reviewed consolidated financial |
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SBG
SBG
SBG - Simeka BSG - Reviewed consolidated financial results for the six months
ended 30 November 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
("Simeka BSG")
Highlights
* Revenue up 120%
* EBITDA up 228%
* Headline earnings up 254%
* Strong organic growth - no acquisitions
* Strong pipeline for continued organic growth
REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER
2006
CONSOLIDATED INCOME STATEMENT
IFRS IFRS Audited
Six months to Six months to Year ended
30 November 30 November 31 May
2006 2005 2006
R`000 R`000 R`000
Revenue 215 177 97 705 326 145
Earnings before interest, taxation,
depreciation and amortisation
("EBITDA") 35 058 10 683 40 622
Depreciation (3 474) (538) (3 507)
Amortisation ( 606) - (561)
Interest on liabilities
due to vendors (65) (1 210) (1 743)
Interest received 361 380 2 011
Finance costs ( 2 044) (529) (2 018)
Income from associate
Company 336 658 759
Profit before taxation 29 566 9 444 35 563
Taxation (7 264) (2 856) (8 995)
Profit for period 22 302 6 588 26 568
Attributable to:
Equity holders of the company 21 903 6 194 25 010
Minority interest 399 394 1 558
Headline earnings calculation:
Net profit attributable
to equity holders
of the company 21 903 6 194 25 010
Adjusted for:
Profit on sale of
property, plant
and equipment - - (15)
Headline earnings 21 903 6 194 24 995
Adjusted headline
earnings reconciliation:
Headline earnings 21 903 6 194 24 995
Adjusted for:
Interest on liabilities
due to vendors
(IAS 39) 65 1 210 1 743
Amortisation 606 - 561
Adjusted headline earnings 22 574 7 404 27 299
Number of shares (`000)
- Weighted in issue 354 217 139 527 220 618
- Weighted in issue
and to be issued 360 675 174 159 276 854
Headline earnings per
share (cents)
- Weighted in issue 6.2 4.4 11.3
- Weighted in issue and
to be issued 6.1 3.6 9.0
Adjusted headline
earnings per share
(cents)
- Weighted in issue 6.4 5.3 12.4
- Weighted in issue and
to be issued 6.3 4.3 9.9
Earnings per share (cents)
- Weighted in issue 6.2 4.4 11.3
- Weighted in issue and
to be issued 6.1 3.6 9.0
CONSOLIDATED BALANCE SHEET
IFRS IFRS Audited
Six months toSix months to Year
ended
30 November 30 November 31 May
2006 2005 2006
R`000 R`000 R`000
ASSETS
Non-current assets 231 437 75 309 232 697
Property, plant and equipment 11 340 3 826 14 580
Goodwill 210 059 68 480 207 703
Intangible assets 3 781 - 4 387
Investment in associate company 2 137 1 008 1 801
Deferred taxation 4 120 1 995 4 226
Current assets 167 938 56 951 99 262
Inventory 15 944 3 958 12 852
Trade and other receivables 121 105 42 403 69 593
Cash resources 30 889 10 590 16 817
Total assets 399 375 132 260 331 959
EQUITY AND LIABILITIES
Capital and reserves 213 450 53 574 199 027
Share capital 36 14 35
Share premium 144 771 18 897 138 178
Accumulated profit 53 953 14 480 32 050
Amounts due to vendors in shares 12 619 17 721 27 092
Minority interest 2 071 2 462 1 672
Non-current liabilities 62 361 18 548 37 721
Non interest-bearing liabilities due
to vendors - - 11 218
Interest-bearing liabilities 62 361 18 548 26 503
Current liabilities 123 564 60 138 95 212
Non interest-bearing liabilities
due to vendors 5 098 16 854 16 380
Trade and other payables 92 569 32 636 67 828
Interest-bearing liabilities 10 390 - 4 452
Taxation paid 12 289 4 940 6 220
Bank overdraft 3 218 2 950 331
Provisions - 2 758 -
Total equity and liabilities 399 375 132 260 331 959
Net asset value per share (cents) 59.09 35.48 57.02
Net tangible asset value
per share (cents) 0.37 (12.06) (2.99)
CONSOLIDATED CASH FLOW STATEMENT
IFRS IFRS Audited
Six months to Six months to Year ended
30 November 30 November 31 May
2006 2005 2006
R`000 R`000 R`000
EBITDA 35 058 10 683 40 622
Interest received 361 380 2 011
Interest paid (2 109) (1 739) (3 761)
Increase in inventory (3 092) (317) (9 211)
Increase in debtors (51 512) (18 023) (42 213)
Increase in creditors 24 741 14 246 49 439
Tax payable (1 090) 245 (14 321)
Net cash flows from
operations 2 357 5 475 22 566
Net cash flows from
investing activities (569) (2 657)
(58 305)
Net cash flows from
financing activities 9 397 (5 175) 40 954
Net (decrease)/increase in
cash resources 11 185 (2 357) 5 215
Cash resources at beginning
of period 16 486 9 997 9 997
Cash and cash
equivalents relating
to acquisition of
subsidiaries
and businesses - - 1 274
Cash resources at end of
period 27 671 7 640 16 486
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
IFRS IFRS Audited
Six months to Six months to ear ended
30 November 30 November 31 May
2006 2005 2006
R`000 R`000 R`000
Opening equity 199 027 51 103 49 759
Shares issued 6 594 2 934 122 600
Share issue expenses - (380) (746)
Acquisition of subsidiaries
and businesses - (6 671) (1 366)
Minorities 399 394 970
Reduction in shares due to vendor (14 473) - -
Net profit for period 21 903 6 194 25 010
- Net profit as previously
reported - - 6 194 -
Closing equity 213 450 53 574 199 027
Commitments:
Equipment and premises -
rental 4 590 3 553 3 553
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 adopted International Financial Reporting Standards ("IFRS") for
the previous financial year ended 31 May 2006 ("the previous year") and IFRS
has accordingly been consistently applied for the six month period ended 30
November 2006 ("the period").
Audit Review
The results for the period have been reviewed by Simeka BSG`s auditors, PKF
(Pta) Inc. The review report is available for inspection at the company`s
registered office. There has been no change to the group`s accounting
policies for the period from the annual financial results for the previous
year. There has been a change in the accounting estimate whereby goodwill
will now be tested for impairment at each year-end. A high level review has
been conducted which indicated no need to impair goodwill for the current
period under review.
Introduction
The directors of Simeka BSG proudly present the interim results for the
period, reflecting headline earnings of R21,9 million and headline earnings
per share ("HEPS") of 6,1 cents. Simeka BSG has successfully undergone a
restructuring and implemented the initial strategic, operational and
executive integration. This will remain an ongoing process for the remainder
of the financial year, and will continue to be managed prudently and
cautiously with a strong focus on organic growth in order to ensure
sustainable success.
The group has successfully capitalised on its strategic positioning in high-
growth markets to drive organic growth. A focus on key customer accounts has
seen Simeka BSG cement its leadership status in the provision of solutions to
the telecommunications industry and actively penetrate the financial
services, energy and public sectors. Greater levels of annuity revenue have
been secured as the group continues to market its integrated business
offerings. A substantial cash investment has been made into the group`s
existing Oracle implementation capability, making Simeka BSG one of the
country`s largest Oracle partners. This combined with the group`s BEE status
positions the group to benefit from expected large scale public sector
projects.
Group profile
Simeka BSG is a majority black-empowered business solutions group servicing
multiple industry sectors through the provision of information, communication
and technology ("ICT") business solutions. Following the integration process
the group`s operating entities are now aligned within three key areas:
Consulting & Applications
Technology Solutions & Support
Assembly & Manufacturing
Each entity is focused on attaining market-leading status within its area of
operation. The current structure is suited both to the development of core
expertise in focus areas as well as collaboration within the group to
facilitate delivery of integrated, comprehensive services and solutions.
Black Economic Empowerment ("BEE")
Simeka BSG 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.
Simeka BSG is further, currently in the process of rolling out the employee
share incentive scheme. This will be a key factor in improving broad-based
empowerment as well as incentivising and retaining key staff.
The directors are confident that the strong BEE profile will enable the group
to further exploit the considerable opportunities within government,
parastals and local authorities going forward.
Financial results
Turnover increased to R215,1 million from R97,7 million for the previous
comparative period while EBITDA grew by 228%. The net asset value per share
has increased by 67% from the comparative period.
In accordance with IAS 39 an imputed interest charge plus amortisation
amounting to R670,000 has been charged against income, impacting on headline
earnings. Notwithstanding this adjustment, headline earnings and headline
earnings per share have increased by 254% and 69% respectively. Also charged
to the income statement is a non-recurring restructuring cost of R330,000.
For the period net margin of 10,4% was realised, improving on the 8,2%
achieved at year-end. Inventory increased by R3,1 million during November
2006 due to customer requirements in the Assembly & Manufacturing area and in
anticipation of increased demand during December and January.
As a result of more hands-on working capital management, albeit that a number
of tighter controls are still to be implemented, the group`s short-term
liquidity has improved by 31,0% from year-end with cash resources increasing
by 68% for the same period.
At least R24,0 million of trade debtors was collected within the first 8 days
subsequent to the period under review.
Xantium IT Services and Xantium Professional Services incurred a pre-tax loss
of R8,3 million for the previous year. To minimise the long-term effect on
shareholders, management has made a deliberate decision to curtail business
operations in the value added reseller division. Although this had a negative
impact on revenue for the period, the stabilising of this division positions
Simeka BSG well for the relaunch of its corporate and online procurement
initiatives, the benefit of which will be realised in the next financial
year.
Vendor Commitments
A total of R32,6 million in vendor liabilities has been discharged during the
period, paid from cash generated from operations and institutional debt
raised.
Prospects
Simeka BSG has benefited from focused market development initiatives in key
growth segments of the economy (telecommunications, energy, financial
services and public sector). In the first 6 months of the current financial
year, Simeka BSG has been awarded key annuity-income contracts totalling in
excess of R650,0 million, the majority of which will be realised during the
next 18 to 24 months. Contracts have been recorded at:
Telkom SA
Vodacom
Hewlett-Packard
ESKOM
PBMR (Pebble Bed Modular Reactor)
Sasol
South African Revenue Services
State IT Agency
Gauteng and Limpopo Provinces
In addition, strategic alliances have been formed and/or initiated with:
Gestetner SA - to address Document Managed Solutions as outlined in the
group`s previous results announcement; and
Oracle SA and Computer Associates - to further differentiate the group`s
existing Information Security Solutions.
Simeka BSG has also successfully established a presence in Mozambique and
continues providing services and solutions in 22 countries in Africa. In
addition the group`s international partner network has aggressively expanded
to include key organisations in Dubai and India. The executives believe that
these developments will prove to be key building blocks supporting Simeka
BSG`s strategy of establishing leadership in select market segments.
The group`s strengthened financial foundation and established credibility as
a sustainable long-term player have positioned Simeka BSG to complement its
organic growth with strategic acquisitions that will fulfil the objectives of
geographical expansion into Africa and penetration of new niche markets. The
focus on services integration will continue as products and services are
easily combined to differentiate Simeka BSG from its competitors.
The group is on track to exceed its forecast headline earnings per share for
the financial year ended 31 May 2007.
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.
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 expectations and maintain our positive growth
trend.
By order of the board
Mohammed Varachia Suren Singh
CEO CFO
24 January 2007
Directors:
Dr P S Molefe (Chairman)*; M Varachia (CEO); S Singh (CFO); K Ramsingh (COO);
M Papiyana (Group Human Resources Officer); A Evan (Chief Legal Officer)
T Botha*; K B J Molefe*; N Y Mhinga* (*non-executive)
Registered office: 2nd Floor, Simeka House, 902 Kikuyu Road, Sunninghill,
Sandton (PO Box 4307, Halfway House, Midrand, 1685)
Transfer secretaries: Link Market Services (Proprietary) Limited (formerly
Ultra Registrars (proprietary) Limited), 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Company secretary: Noelene Beryl de Koker, 2nd Floor, Simeka House, 902
Kikuyu Road, Sunninghill, Sandton (PO Box 4307, Halfway House, Midrand, 1685)
Designated advisor: Java Capital (Proprietary) Limited
www.simekabsg.co.za
Date: 24/01/2007 09:00:02 Produced by the JSE SENS Department.
