JSE-listed CS Holdings, which almost doubled its revenue by 99% in its latest financial year, has set its sights on achieving about R1.3 billion turnover by 2005 through organic growth.
CEO Annette van der Laan says organic revenue growth increased to 39%. Headline earnings per share of 21.74c, up 32.1%, were better than consensus forecasts of about 20.3c.
<B>Salient figures</B>
CS Holdings results for the year to 30 June 2002
Previous year`s figures in parentheses, move in square brackets:
Revenue: R403.16m (R202.85m) [+98.8%]
Operating profit before depreciation: R54.69m (R32.28m) [+69.4%]
Profit before exceptional items: R44.16m (R26.1m) [+69.2%]
Profit before tax: R19.53m (R17.3m) [+12.9%]
Attributable profit: R22.65m (R16.81m) [+34.8%]
HEPS: 21.74c (16.45c) [+32.1%]
Cash inflow from operating activities: R50.44m (R24.49m) [+105.9%]
Current assets: R170.74m (R173.09m)
Cash and equivalents: R31.21m (R16.7m)
Current liabilities: R121.81m (R125.02m)
NTAV per share: 39.43c (37.61c)
NAV per share: 79.86c (79.36c)
Van der Laan says the company has performed well, with its success during challenging times the result of clear long-term strategy and tight fiscal controls.
Cash generated from operations as a percentage of earnings before interest, depreciation and amortisation rose from 75% to 123%, which Van der Laan says is the result of a concerted effort to manage the debtors` book and improve working capital ratios in businesses acquired during the year.
"CS Holdings has yet to have an easy year. Since our birth, each year has had its own challenges. This year has been the most exciting in terms of where we are positioned for the future."
She says the results have silenced sceptics who were doubtful that the group could integrate two large acquisitions (Getronics SA and Argil/Ernst & Young Consulting) smoothly.
CS IT Solutions performed particularly well. The division turned the Getronics business around and integrated its operations, resulting in a 52% contribution to total revenue and 49% to operating profit.
CS Systems Integration`s share of revenue and operating profit were 31% and 38% respectively, while CS Education Solutions contributed 17% and 13% respectively.
Van der Laan says the education arm is becoming a smaller part of the overall business, although it will always retain its strategic importance. Margin pressure led the group to re-examine the division`s structure, resulting in a decision to realign and streamline it. Four branches were closed during the year.
She says the next phase of the group`s development will focus on organic rather than acquisitive growth. CS Holdings has developed significant skills and experience in several vertical market sectors and the future focus will be strongly directed towards increasing market share in each of those industries.
A new executive business development structure has been established in the six key vertical target markets: mining and metals, manufacturing, public sector, financial and insurance, retail and IT services.
CS Holdings is budgeting for further strong profit growth in the next financial year.
"CS Holdings has emerged as one of the big players in the market and will continue to compete head-on with other first-tier IT players in the South African market.
"Although we believe our share price does not reflect the true value of the company, it has been exceptionally stable over the past two years compared to our competitors. Furthermore, a recent BMI-TechKnowledge survey confirmed that CS Holdings has gained considerable market share, especially at the high end of the market.
"This confirms that our strategy is working, and we will continue to focus aggressively on gaining ground on our competitors."
The CS Holdings share was trading at 90c by late this morning, up 7c or 8.4% from yesterday`s close.
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