Comparex pulls through difficult period

IT solutions integrator Comparex Holdings increased headline earnings per share 112% in the six months to November 2001, despite tough conditions in the IT industry.

Revenue for the period dropped almost 3%, although trading profit was up more than 66% on the same period a year earlier.

Exceptional losses of R40.1 million, compared with previous exceptional profits of R284.4 million, resulted in a 41.5% decline in pre-tax profit.

CEO Rian du Plessis says the exceptional items reported in the first six months of the 2001 financial year related mainly to the profit on sale of the group`s Dimension Data shares.

The exceptional items reported for the latest six months relate mainly to the profits of R32 million on the sale of proprietary technology by Digital Healthcare Solutions, an associate in Africa, on the sale of part of the group`s shareholding in Exxept, a subsidiary in Europe, and a further part of the group`s shareholding in Mosaic Holdings.

"This was offset by an increase in the provision for the retrenchment of approximately 120 of our staff in Germany by R49 million and impairments of R14 million in investments."

"When we published our year-end results five months ago, we predicted tough trading conditions. This indeed transpired," says CEO Rian du Plessis. "We are, nonetheless, pleased with these interim results and in particular the market share we have gained in our services and storage business groupings."

He says that during the period, which was characterised by a global economic slowdown, the African operations performed better than expected, despite reporting a 5% drop in trading profit.

"Europe reported a decline in trading profit of R37.8 million to R7.2 million which is disappointing in absolute terms but considered acceptable when compared to the results achieved by its European peer group.

"The major contributors to the increase in headline earnings were exchange gains of some R216 million and a R68 million decline in depreciation charged."

The balance sheet shows that the group has maintained its cash levels at R3.5 billion.

The group continued to buy back its shares, spending about R327 million.

After the end of the six months it bought the 50% plus a share of the ordinary shares in Comparex Africa from empowerment consortium NITAC for R379 million in cash and 30 million shares, making Comparex Africa a wholly owned subsidiary.

Du Plessis says the remainder of the group`s free cash is mainly for growing the European businesses by acquisition.

He adds that the weak global economic environment and weakness in capital expenditure are expected to continue into the second half of the financial year, particularly in Europe.

The African operations are targeting to the same level of profitability as during the 2001 financial year and the European operations are targeting to remain profitable.

However, he says the group is confident of reporting growth in headline earnings for the year to 31 May 2002.