JSE-listed CS Holdings improved its operating margins and headline earnings significantly in the year to 30 June 2001, and CEO Annette van der Laan says most of the company`s growth was organic.
"The main drive this year was to improve our operating margins substantially," she says. "This we have done, with an improvement in the operating profit margin from 11.2% last year to 13% this year.
<B>Figures at a glance</B>
CS Holdings results for the year to 30 June 2001
Previous year`s figures in parentheses:
Revenue: R202.85m (R163.08m)
Gross profit: R70.76m (R57.66m)
Operating profit before depreciation: R31.23m (R22.34m)
Attributable profit: R17.1m (R16.63m)
HEPS: 16.65c (13.45c)
Fully diluted HEPS: 16.07c (R12.5c)
Cash inflow from operating activities: R24.49m (R14.84m)
Cash and equivalents: R13.46m (R11.37m)
Current assets: R93.17m (R66.87m)
Current liabilities: R51.44m (R33.18m)
NTAV per share: 37.31c (22.84c)
"We are also proud that we have improved significantly on our operating cash inflow." Operating cash inflow improved 65% to R24.5 million.
Van der Laan says organic growth accounted for 88% of the improvement in turnover, with the balance being the contribution from the IT-IQ acquisition, made during the period.
She says the group did face some pressures during the year, one of which led to an exceptional foreign exchange loss of R1.87 million on the income statement, knocking almost 1c off headline earnings per share.
The loss arose from a project in Zimbabwe, which was concluded and paid for in full. However, the group had difficulty in getting the money out of the country, and the delay resulted in the exceptional loss.
"We have discontinued all operations in Zimbabwe, and so we are not exposed to any future risks in Zimbabwe," she says.
Other pressures included lower productivity in February and March, related to the integration of the IT-IQ centres, the taking over of a large infrastructure associated with the ICL desktop break-fix business, and the consolidation of offices.
Annuity-based income increased to 56%, and Van der Laan says the aim is to boost this to more than 60% in the coming year.
She adds that the group is hoping to sign on an empowerment partner and make an announcement in that regard "quite soon".
Van der Laan says that while some investment analysts have been impatient with regard to the speed of the group`s growth, wanting it to move more rapidly from the small-cap sector, it has seen turnover increase almost tenfold since listing in September 1998.
"At the time of our listing, our headline earnings were just R10 million, and we had a staff complement of 270. Today we have more than 1 290 staff members.
"We have come a long way, and many other companies that listed with us are not even there anymore."
She attributes the group`s performance to managing growth successfully as well as a sound acquisition policy, in terms of which the main motivation for acquisitions is always strategic, the acquisition is investigated properly, always earnings enhancing, and that it is a good cultural fit.
The results do not take into account the recent acquisition of Getronics SA, which CS Holdings says will contribute significantly to the group in the coming years.
The Getronics name will remain in use for six months, after which it will trade under the CS IT Solutions name.
The CS Holdings share was up 2c at 116c on the JSE this morning.
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CSH buys Getronics SA for R43m
CS Holdings starts Indian tertiary training
CSH acquires ICL`s break-fix business
CS Holdings buys IT-IQ
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