Comparex Holdings, SA`s leading information and communications technology group, has reported positive interim results for the period ending 30 November 2003. The group has also announced its plans to distribute R1.62 billion of surplus cash to shareholders.
Revenue for the period, excluding AC 133 adjustments, remained relatively unchanged from the previous period at R1.4 billion. The operating profit, excluding AC133 adjustments, reduced from R81.9 million to R58 million and the operating margin from 5.9% to 4.1%. Tight control of expenses limited further operating margin deterioration.
The group has, however, reported an increase in income from investments and has benefited from the reversal of previous impairments relating to the value of preference shares held in a member of NITAC (the National IT Acquisition Consortium). This resulted in earnings increasing from R103.7 million to R117.3 million.
Competitive pressures in the local market were offset to some degree by the company`s successful growth into Africa where revenue grew by 208% during the period. As the margins on some of the major African contracts had to be shared with local business partners, this diluted the group`s normal margins.
The group still maintains a strong balance sheet, notwithstanding the distribution of cash. Cash flow for the period was effectively neutral despite the necessity to fund its contracts in Africa.
Cash distribution to shareholders
Comparex Holdings has also announced an interim dividend of R1.62 billion (R5.50 per share) in anticipation of its intention to restructure the group. If the restructure is approved by shareholders, a further dividend will be considered following the voluntary liquidation of Comparex Holdings and certain non-essential entities.
The restructuring follows the conclusion of the recent SRP enquiry and the merger of subsidiary Comparex Africa with the black empowered company Business Connexion. Its scope includes the rationalisation of the group to include only those entities required for the future growth of the group; the delisting of Comparex Holdings and the listing of Comparex Africa Group and the unbundling of Comparex Africa Group to shareholders.
Commenting on the interim results, CEO Peter Watt says they reflect the group`s ability to compete effectively in difficult trading conditions, frequently at the expense of its competitors.
"The wisdom of our entry into Africa is already apparent. It has helped boost revenues in these tough business conditions, while careful adherence to cost controls has helped us mitigate some of the pressure on our operating margins. We have a solid base to build on as market conditions improve," he says.
Watt adds that the merger with Business Connexion has proceeded well at both the management and operational levels. "We have already gained business as a result of the deal, which was effective from January 2004, and we see this improving as we go forward."
Looking to the second six months, he says: "There are some encouraging signs of an upturn in the global IT market, which are likely to impact positively on us in Africa. That said, we still see local market conditions as remaining challenging, but we are well placed to maintain our current level of headline earnings."
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JSE-listed Comparex Holdings comprises principally of the business of Comparex Africa, the leading provider of ICT-based business solutions that make its clients more successful. Based on a strong client-centric approach, Comparex Africa delivers technology business solutions from the full range of competencies within its group that align its clients` strategic and operational business needs.
Comparex Africa`s client-centric structure stems from its Systems Integration Model that allows for flexibility and close client relationships. Offering business solutions that address all areas of its clients business, Comparex Africa services organisations within the corporate and large enterprise, government and parastatal markets as well as within the medium enterprise sector in all vertical markets. For more information, visit us at www.comparexafrica.co.za.
Business Connexion
Business Connexion aims to be the most skilled, experienced and innovative Microsoft Certified Solution Provider in Africa. We help customers maximise their return on investment in Microsoft technology designing, building and managing solutions which unleash business value.
Business Connexion creates and delivers IT solutions based on Microsoft technology. Its focus is to help organisations unlock efficiencies, future potential and profit through the innovative application of Microsoft technology and software; often achieving maximum leverage from existing technology investments.
From the outset, Business Connexion positioned itself as a truly South African IT company, and believes in Africa and the capacity of Africans to fashion their own solutions and build their own future, and hence is one of the founding companies of the Proudly South African campaign. www.bcx.co.za.