Wrap Text
Short Form – Reviewed Preliminary Condensed Consoldiated Results for the yeear ended 30 June 2023
COGNITION HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1997/010640/06)
Share code: CGN ISIN: ZAE000197042
(“Cognition” or “the Group” or “the Company”)
SHORT FORM – REVIEWED PRELIMINARY CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2023
Financial Position:
30 June 2023 30 June 2022
Change R'000 R'000
Total assets 6.2% 266 274 250 745
Cash and cash equivalents 88.5% 214 645 113 896
Equity 22.9% 238 525 194 053
Total liabilities -51.1% 27 750 56 963
Financial Performance for the period:
30 June 2023 30 June 2022*
R'000 R'000
Continuing Operations
Revenue -13.6% 79 205 91 684
Gross profit -8.2% 58 558 63 775
Profit / (loss) from continuing operations 195.0% 9 664 (10 176)
Profit / (loss) from discontinued operations 267.3% 59 103 (35 317)
Net asset value and earnings per share:
Net asset value per share 41.5% 103.37 cents 73.06 cents
Basic earnings / (loss) per share 236.8% 30.31 cents (22.15) cents
Basic earnings / (loss) per share from
continuing operations 187% 3.94 cents (4.53) cents
Headline earnings per share 579.4% 3.15 cents 0.46 cents
Headline earnings / (loss) per share from
continuing operations 6 808% 3.98 cents (0.06) cents
*Restated for discontinued operations
OPERATIONAL PERFORMANCE
Financially the most significant event was concluding the disposal of the Group’s majority interest in Private
Property which is classified and reported on by the Group as discontinued operations. The disposal resulted in a
direct profit of R66.7 million before tax and improved the cash holdings of the Group significantly. The remaining
business units of the Group are reported as continuing operations and consist of Research and Insights, Campaign and
Data Management Services and Channel Incentives. In last year’s report we reported that management focus will be to
embark on several initiatives to strengthen the core of the Company and drive revenue and profit growth. The
initiatives identified were, “a clear focus on increasing technological capacity, improved solutions for customers to
drive revenue growth, right-sizing of the business and simplification of internal systems and processes and ongoing
monitoring and control of costs within the business.” The Group was successfully able to right-size and unlock
significant value this year by reducing its staff complement, combining key functions and processes and leveraging of
infrastructure internally and through its largest shareholder. This has all led to a reduction in operating cost which
is expected to continue.
Research and Insights – Customised research and insights partner, focusing on product pricing, B2B and consumer
research, market sizing and advertising monitoring. Challenging economic circumstances have led to subdued sales
within this division, albeit fortunately mitigated by an enhanced gross profit margin resulting in a slight
improvement in revenue this year, up from R23.5 million to R23.8 million. The diverse strategic and bespoke research
and analytics solutions are an essential part of the business and necessary for future growth. Management continues to
monitor costs; look at opportunities to automate and improve efficiencies whilst keeping the value of delivering
exceptional insights to our customers top of mind.
Campaign and Data Management Service - Collaborates with brands and agencies that want to connect, engage with, and
understand their customers’ behaviour, using relevant market technology. This business unit navigates through an
evolving landscape increasingly shaped by major social media platforms such as Facebook, X, Instagram, TikTok and
Snapchat. As a result, our service portfolio is transitioning away from traditional bearer services such as USSD and
SMS, therefore focusing more on campaign design and integration services with platforms which ultimately are changing
the cost of the services we offer with a 13% improvement in Gross Profit margin when compared to the previous year.
The past year witnessed a 3.1% decline in the number of campaigns we hosted and additionally we had a reduction in
average campaign value of 8.6%, which when combined resulted in a decline in revenue. Encouragingly, the enhanced
Gross Profit margin has effectively balanced the scales, enabling the business unit to sustain a Gross Profit that
mirrors the prior year’s performance.
Channel Incentives - Channel Incentives enables brands to reward resellers and sales agents that market and sell its
products to end consumers. In addition, the Channel Incentives platform simplifies the claiming of incentives and
assists with the product training process, leading to increased sales and product knowledge. Over the past two years
the business unit has been severely impacted by restrictions placed on its operations by the cellular retailers. These
restrictions culminated in the last remaining cellular franchise retailer restricting the use of the Channel Incentive
platform in October 2022. Responding to these restrictions, the business unit focused on rationalising its operating
structure and offering innovative payment solutions for incentives that are simpler, faster and more cost effective
than those of its competitors. The net result is that even though there has been a significant decrease in its
traditional offering of more than 55% in the past year, the new service offerings are slowly regaining market share
reducing the impact of the decline to only 39% when compared to the prior year.
FINANCIAL PERFORMANCE
Revenue from continuing operations declined from R91.7 million down to R79.2 million, a 13.6% decline with Gross
Profit reducing by 8.2% from R63.7 million to R58.6 million. As indicated above this is mostly due to the decline in
Channel Incentives. Due to the right-sizing and significant operating cost reductions, staff costs declined by 7% from
R43 million to R40 million and operating cost reduced by 32.7% from R20.3 million to R13.7 million. Earnings Before
Interest, Taxation, Depreciation and Amortisation (EBITDA) increased from R470k to R4.8 million for continuing
operations. In addition, the Group did not need to impair intangible assets or goodwill in the period under review and
did not incur any losses on the sale of subsidiaries as it did in the previous year. It further benefited from
prevailing high interest rates which, with its substantial cash balance has resulted in significant income from
interest, resulting in the Group being able to report Profit before Tax from continuing operations of R14.7 million as
compared to a loss of R11.8 million in the previous period. With the profit on the sale of Private Property the Group
reported Profit from discontinued operations for the year of R59.1 million as compared to a loss in the previous
period of R35.3 million. Consequently, the Group was able to report a Total Comprehensive Income for the year of R68.7
million compared to a prior year loss of R45.5 million. Earnings per share, from continuing operations was 3.94 cents
as compared to a loss of 4.53 cents for the previous year, with Headline Earnings per share, from continuing
operations up to 3.98 cents as compared to a loss of 0.06 cents for the previous year.
The Group continues to maintain a prudent approach regarding the use and allocation of its resources and continues to
maintain a healthy financial position with very limited long-term debt and a healthy cash balance. Due to the sale of
Private Property the Statement of Financial Position changed significantly with the Group’s Trade and Other
Receivables decreasing 25.8% from R40.9 million down to R30.3 million and current liabilities reducing from R55.3
million to R27.7 million. Goodwill caried by the Group in the past mostly related to Private Property which has now
reduced significantly from R55.6 million to R1.8million. The Group’s cash resources increased from R113.9 million in
the previous financial year to R214.6 million, an increase of 88.5% which was predominantly as a result of the sale of
Private Property. The Group generated R7.5 million net cash from operating activities in the past year down from R14.4
million in the prior year which however included a full year of Private Property. The Net Asset Value per share of the
Group is 103.37 cents as compared to 73.06 cents in the previous year and the Net Tangible Asset Value per share
increased from 41.25 cents to 102.11 cents per share.
PROSPECTS
The Group has achieved noteworthy strides this year in aligning its business structure and processes with its product
lineup and strategic direction. A collaborative effort with its controlling shareholder, Caxton & CTP Limited
Publishers and Printers (“Caxton”) has been initiated to pinpoint and capitalise on prospects within Caxton and its
clientele. This concerted approach signifies Cognitions’ commitment to exploiting untapped
potential during these difficult economic times. The Board is also working closely with Caxton to identify the most
effective way of returning value to shareholders.
The content of this short form announcement is the responsibility of the directors. Shareholders are advised that this
short form announcement represents a summary of the information contained in the full long form announcement which is
available at:
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/CGN/YE23.pdf
and also published on the Company’s website at:
http://www.cognitionholdings.co.za/pages/display/annual_results
Copies of the full announcement may also be requested at the Company’s registered office or the office of the sponsor,
AcaciaCap Advisors, at no charge, during office hours. Any investment decision should be based on the full
announcement released on SENS and published on the Company’s website.
The Group’s auditor, BDO South Africa Inc. has reviewed the preliminary condensed consolidated results for the year
ended 30 June 2023 and expressed an unmodified review conclusion thereon.
For and on behalf of the Board
Paul Jenkins Rob Fedder Pieter Scholtz
Chairman Chief Executive Officer Financial Director
Johannesburg
4 September 2023
Business and Registered Office:
Caxton House, 4th Floor, Address 368 Jan Smuts Avenue, Craighall, 2196
PO Box 3386, Pinegowrie, 2123
Telephone +27-11-293-0000
Directors: Paul Jenkins#* - Chairman, Rob Fedder – CEO, Pieter Scholtz - Financial Director,
Miles Crisp#*, Dennis Lupambo#*, Steve Naudé#*, Amasi Mwela#, Servaas de Kock#
# Non-executive * Independent
Company Secretary: Felicia van der Merwe CA(SA)
Auditor: BDO South Africa Incorporated
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Sponsor: AcaciaCap Advisors Proprietary Limited
Date: 04-09-2023 04:15:00
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