Wrap Text
Reviewed condensed consolidated interim financial results for the six months ended 28 February 2013
Business Connexion Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1988/005282/06)
(Share code: BCX) (ISIN: ZAE000054631)
("A" Share code: BCA) (ISIN: ZAE000156154)
Income Tax number: 9200108711
("Business Connexion" or "the company" or "the group")
Reviewed condensed consolidated interim financial results
for the six months ended 28 February 2013
Key features
- Revenue increased by 8,0% to R2 907,3 million
- Operating profit increased by 10,9% to R145,1 million
- Operating expenses have decreased by 9,5%
- Normalised diluted headline earnings per share of 24,8 cents
Condensed consolidated statement of financial position
Reviewed Reviewed Audited
28 February 29 February 31 August
R million 2013 2012 2012
ASSETS
Non-current assets
Property, plant and equipment 480,4 439,7 442,0
Goodwill 662,8 552,9 566,9
Intangible assets 374,6 373,5 363,3
Long-term loans and receivables 30,5 32,4
Other investments 222,5 242,5 213,4
Deferred tax assets 45,0 55,7 60,2
1 815,8 1 664,3 1 678,2
Current assets
Inventories 221,4 214,9 197,9
Trade receivables 955,0 984,2 971,3
Other receivables 289,7 164,0 239,0
Prepayments 106,4 87,3 81,6
Taxation prepaid 1,3 3,3 3,6
Cash and cash equivalents 158,1 298,6 443,9
Assets held for sale 18,0
1 731,9 1 770,3 1 937,3
TOTAL ASSETS 3 547,7 3 434,6 3 615,5
EQUITY AND LIABILITIES
Shareholders' equity 2 112,2 2 018,0 2 105,7
Non-controlling interests 115,1 67,1 95,8
Total equity 2 227,3 2 085,1 2 201,5
Non-current liabilities
Interest bearing long-term liabilities 177,9 226,4 179,5
Post-retirement benefit obligations 10,6 8,1 10,6
Deferred tax liabilities 44,2 58,6 47,6
232,7 293,1 237,7
Current liabilities
Short-term liabilities 73,7 75,9 89,2
Trade payables 404,5 412,1 425,3
Other payables 596,0 550,0 647,6
Provisions 4,5 1,5 1,3
Taxation payable 9,0 16,9 12,9
1 087,7 1 056,4 1 176,3
TOTAL EQUITY AND LIABILITIES 3 547,7 3 434,6 3 615,5
Condensed consolidated statement of comprehensive income
Reviewed Reviewed Audited
six months six months twelve months
ended ended ended
28 February 29 February 31 August
R million 2013 2012 2012
Revenue 2 907,3 2 691,3 5 829,6
Cost of sales 2 031,3 1 753,2 3 996,1
Gross profit 876,0 938,1 1 833,5
Operating expenses 730,9 807,3 1 558,5
Operating profit 145,1 130,8 275,0
Share of losses from associates (1,0) (0,5)
Operating profit before
investment income 145,1 129,8 274,5
Investment income 14,4 18,3 34,7
Profit before finance costs 159,5 148,1 309,2
Finance costs 9,7 17,1 27,5
Profit before tax 149,8 131,0 281,7
Taxation 48,4 30,2 85,6
Profit for the period 101,4 100,8 196,1
Profit attributable to:
Equity holders 78,4 80,7 149,3
Non-controlling interests 23,0 20,1 46,8
101,4 100,8 196,1
Other comprehensive income:
Translation of foreign operations 1,3 0,1 5,9
Total comprehensive income
for the period 102,7 100,9 202,0
Total comprehensive income
attributable to:
Equity holders 79,7 80,8 155,2
Non-controlling interests 23,0 20,1 46,8
102,7 100,9 202,0
Basic earnings per share (cents) 19,6 20,3 37,5
Diluted earnings per share (cents) 19,5 20,1 37,2
Calculation of headline earnings
R million
Profit attributable to
equity holders 78,4 80,7 149,3
Profit on sale of business (4,6)
(Profit)/loss on sale of property,
plant and equipment (0,3) 0,7
(Reversal of impairment)/impairment
of investments (4,2) 6,0 4,6
Impairment of goodwill 2,4 2,4 4,9
Tax effect of headline earnings
adjustments 0,5
Headline earnings 76,6 88,8 155,4
Weighted average number of shares
in issue (000's) 400 446 398 347 398 550
Diluted weighted average number
of shares in issue (000's) 402 660 400 903 401 097
Headline earnings
per share (cents) 19,1 22,3 39,0
Diluted headline earnings
per share (cents) 19,0 22,1 38,8
Condensed consolidated statement of cash flows
Reviewed Reviewed Audited
six months six months twelve months
ended ended ended
28 February 29 February 31 August
R million 2013 2012 2012
Operating cash flows 250,0 265,2 520,8
Working capital changes (181,0) (152,3) (30,5)
Investment income 21,1 17,8 34,6
Finance costs (9,7) (3,4) (22,3)
Dividends paid (80,1) (215,2) (215,2)
Taxation (paid)/refund (43,9) 4,5 (101,4)
Cash (utilised in)/generated from
operating activities (43,6) (83,4) 186,0
Net cash flows utilised in
investing activities (222,8) (108,3) (203,5)
Net cash flows utilised in
financing activities (19,4) (28,0) (56,9)
Net changes in cash and
cash equivalents (285,8) (219,7) (74,4)
Cash and cash equivalents
at beginning of the period 443,9 518,3 518,3
Cash and cash equivalents
at end of the period 158,1 298,6 443,9
Condensed segmental analysis
Reviewed Reviewed Audited
six months six months twelve months
ended ended ended
28 February 29 February 31 August
R million 2013 2012 2012
Segment revenue
Services division 981,9 949,7 1 982,6
UCS division 560,1 503,4 1 093,2
Canoa division 514,9 344,0 860,5
Technology division 359,5 429,0 916,0
Innovation division 244,1 243,4 496,5
International division 239,8 213,9 467,2
Investment division 3,7 8,3 13,6
Corporate office 3,3 (0,4)
2 907,3 2 691,3 5 829,6
Segment operating profit
Services division 84,3 107,2 219,3
UCS division 47,0 49,0 116,9
Canoa division 56,9 42,0 106,5
Technology division 13,1 (7,7) 3,3
Innovation division 37,8 34,6 67,6
International division 5,7 5,3 11,7
Investment division (16,2) (14,3) (28,3)
Corporate office (83,5) (85,3) (222,0)
145,1 130,8 275,0
Other group salient information
Reviewed Reviewed Audited
28 February 29 February 31 August
2013 2012 2012
Number of shares in issue (000's) 404 972 404 972 404 972
Less: weighted shares held in share
purchase trust and a subsidiary
as treasury shares 4 307 6 424 5 125
Less: weighting of options exercised
during the period that would
have been treasury shares 219 201 1 297
400 446 398 347 398 550
Dilutive options 2 151 2 538 2 059
Options excercised during the period
that were dilutive for a portion
of the period 63 18 488
402 660 400 903 401 097
Number of options in issue (000's) 18 989 27 186 24 174
Key ratios and statistics
Net asset value per share (cents) 521,6 498,3 520,0
Tangible net asset value
per share (cents) 319,3 311,8 339,9
Operating margin (%) 5,0 4,9 4,7
Return on total equity (%) 7,5 8,0 7,1
Return on total assets (%)
(excluding cash and preference
share investments) 9,2 9,0 9,3
Current ratio 1,6 1,7 1,6
Average debtors days 54,1 59,0 54,6
Depreciation and amortisation 115,6 118,2 236,9
Cost of sales 49,0 53,9 105,9
Operating expenses 66,6 64,3 131,0
Contingent liabilities (R million)
Performance guarantees 72,2 52,3 91,8
Asset finance recourse deals 67,0 13,2 16,0
Other 36,2 14,8 34,9
Capital commitments (R million)
Capital 23,0 27,6 17,1
Operating lease 297,5 236,9 300,7
Basis of preparation and accounting policies
The condensed consolidated interim financial results for the six months ended 28 February 2013 have
been prepared in accordance with IAS 34: Interim Financial Reporting, the Listings Requirements of the
JSE Limited, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council,
as well as the Companies Act 2008.
The accounting policies applied are consistent with those applied for the year ended 31 August 2012.
The condensed consolidated interim financial results have been prepared on the historic cost
convention, except for certain financial instruments, which are stated at fair value, and is presented
in Rands rounded to the nearest million, which is Business Connexion's functional and presentation
currency.
Condensed consolidated statement of changes in equity
Foreign currency Share-based Non-
Share capital translation Retained payment Shareholders' controlling Total
R million and premium reserve earnings reserve equity interests equity
Balance at 31 August 2011 audited 1 129,2 (27,8) 975,4 67,8 2 144,6 48,5 2 193,1
Changes in equity for the six months ended 29 February 2012
Movement in treasury shares and related reserves held by
share purchase trust and a subsidiary (0,7) (0,7) (0,7)
Share-based payments 8,3 8,3 8,3
Non-controlling interest in dividends (1,3) (1,3)
Total comprehensive income for the period 0,1 80,7 80,8 20,1 100,9
Non-controlling interests' share of foreign currency translations reserve 0,2 0,2 (0,2)
Dividends paid (215,2) (215,2) (215,2)
Balance at 29 February 2012 reviewed 1 129,2 (27,7) 840,4 76,1 2 018,0 67,1 2 085,1
Changes in equity for the six months ended 31 August 2012
Movement in treasury shares and related reserves held by
share purchase trust and a subsidiary 7,4 7,4 7,4
Share-based payments 5,4 5,4 5,4
Total comprehensive income for the period 5,8 68,6 74,4 26,7 101,1
Non-controlling interests' share of foreign currency translations reserve 0,7 (0,2) 0,5 (0,5)
Sale of stake in business to management 2,5 2,5
Balance at 31 August 2012 audited 1 129,2 (21,2) 916,2 81,5 2 105,7 95,8 2 201,5
Changes in equity for the six months ended 28 February 2013
Movement in treasury shares and related reserves held by
share purchase trust and a subsidiary 2,1 2,1 2,1
Share-based payments 5,0 5,0 5,0
Non-controlling interest in dividends (3,9) (3,9)
Total comprehensive income for the period 1,3 78,4 79,7 23,0 102,7
Non-controlling interests' share of foreign currency translations reserve (0,2) (0,2) 0,2
Dividends paid (80,1) (80,1) (80,1)
Balance at 28 February 2013 reviewed 1 129,2 (19,9) 916,4 86,5 2 112,2 115,1 2 227,3
Reviewed Reviewed Audited
six months six months twelve months
ended ended ended
28 February 29 February 31 August
2013 2012 2012
Normal dividend per share (cents) 20,0 14,0 14,0
Special dividend per share (cents) 40,0 40,0
Commentary
"To enrich communities by making the impossible possible, through technology"
At Business Connexion we are passionate about making a difference in people's lives by
enriching communities whether it be business, consumer, citizen or geographic. Our key
priority is to go above and beyond what our clients' needs are and to offer them new
possibilities that they haven't yet imagined. Our potential reach and impact is endless.
The financial year had an exciting start and we are enormously proud to see the passion and
energy of our people and the progress we are making in achieving our strategic objectives.
The acquisition of Integr8 IT Proprietary Limited ("Integr8") became unconditional on
1 February 2013 and we are looking forward to the contribution of the Integr8 team.
The introduction of Cloud services to the SMME market, marks the beginning of a channel
partner strategy that is set to be increasingly important in the future Business Connexion.
The launch of Data Centre services in Nigeria in February 2013 was a major milestone in
expanding our business on the African continent.
Financial performance
The group generated diluted earnings per share ("EPS") of 19,5 cents for the six months
(2012: 20,1 cents) and diluted headline EPS for the year of 19,0 cents (2012: 22,1 cents).
On a normalised basis (excluding amortisation of intangibles, STC and the reversal of the
overprovision for capital gains tax in the previous financial year) diluted headline EPS would
be 24,8 cents (2012: 24,5 cents).
Return on equity came in at 7,5% (2012: 8,0%) on the back of improved profitability and
return on total assets was flat at 9,2% (2012: 9,0%). Tangible return on equity was 15,4%
(2012: 10,7%).
Revenue grew by 8,0% to R2 907,3 million for the six months, bolstered by good growth
from most divisions.
Gross profit margins decreased slightly to 30,1% from 31,5% for the year ended 31 August 2012,
primarily as a result of the mix of revenue between services and technology.
Operating expenses continue to be tightly managed and decreased by 9,5% to R730,9 million
for the period (2012: R807,3 million).
The group recorded a normalised operating profit margin of 5,7% (2012: 6,0%) adjusting for
the amortisation of the intangible assets created as a result of acquisitions of R25,3 million
for the six months (2012: R24,6 million).
The tax charge increased as a result of the reversal of an overprovision for capital gains tax
in the previous financial year of R30,3 million resulting from the sale of Destiny Electronic
Commerce Proprietary Limited, partially offset by STC on the dividend paid in January 2012
of R21,9 million, of which R16,2 million related to the special dividend.
The group continued to generate healthy cash flows with operating cash flows of R250,0 million.
Capital expenditure, which included a significant investment in the first half, dividends and a
deterioration in working capital were the main contributors to cash outflows.
Divisional performance
The Services division's revenue grew by 3,4% for the six months to R981,9 million, compared
to R949,7 million for the previous six months. The growth in revenue is a consequence of
the division's application development business which is developing innovative and fit for
purpose services and solutions for clients. The professional services business also showed
good growth particularly in the public sector.
Delays in the transitioning of a number of new contracts, which will contribute to revenue in
the second half, resulted in the division having to carry cost for a number of months without
corresponding revenue, impacting profitability for the six months.
The UCS division contributed R560,1 million to group revenue with an operating profit
of R47,0 million.
The Canoa division contributed R514,9 million in revenue and R56,9 million in operating
profit.
Both these divisions have once again exceeded expectations.
The Technology division continued to generate positive results and contributed R13,1 million
to operating profit for the period, this from a loss of R7,7 million for the comparative reporting
period.
The Innovation division's revenue was flat at R244,1 million but the division increased its
contribution to operating profit by 9,3%. All business units within the Innovation division
have performed according to expectations.
Revenue in the International division has seen growth of 12,1% to R239,8 million continuing
to demonstrate the exciting growth potential in Africa.
Corporate activity
As reported previously, Business Connexion entered into a sale, repurchase and subscription
agreement with Integr8 in terms of which it purchased 100% of the issued shared capital of
Integr8.
The consideration payable is up to R126,0 million in cash, settled through an initial payment
of R56,0 million and three potential earn-out payments of up to a maximum of R70,0 million
payable on 15 October 2013, 15 October 2014 and 15 October 2015.
Subsequent to 28 February 2013, Business Connexion and ATIO concluded a transaction
whereby ATIO's Netcampus Proprietary Limited ("Netcampus") will acquire Business
Connexion's Learning Solutions business unit in exchange for 50% plus 1 share in the share
capital of Netcampus. The merged businesses will create a more sustainable, future-oriented
learning platform using the latest software and hardware technology to support individual
and organisation learning for the group, ATIO and their respective clients.
Outlook
Business Connexion continues to benefit from its expanded client base and cross-selling
opportunities from its recent acquisitions. The group's African footprint is growing with the
launch of its Cloud services in Nigeria as well as a growing presence in all other African
countries.
Business Connexion's reputation and proven ability to deliver solutions that make a difference
in the lives of its clients and communities will continue to enable the group to take full
advantage of its market position.
Independent review by the Auditors
The condensed consolidated interim financial results for the six months ended 28 February 2013
have been reviewed by KPMG Inc. and their unmodified review report is available for
inspection at the registered office of the company.
Appreciation
The board extends its appreciation to all employees and management for their dedication and
valued efforts. It also thanks its clients, suppliers and shareholders for their continuing belief
in, and support of, Business Connexion.
For and on behalf of the board
AC Ruiters LB Mophatlane
Chairman Chief Executive Officer
Midrand
18 April 2013
Executive directors:
LB Mophatlane (Chief Executive Officer), V Olver (Deputy Chief Executive Officer)
LN Weitzman (Chief Financial Officer), JR Jenkins
Non-executive directors:
AC Ruiters (Chairman)*, NN Kekana, JM Poluta, J John*, M Lehobye*, D Sparrow
* Independant non-executive directors
Registered office:
Business Connexion Park North
789 16th Road, Randjespark, Midrand, 1685
Postal address:
Private Bag X48, Halfway House, 1685
Internet address:
http://www.bcx.co.za
Transfer office and transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
JSE Sponsor:
One Capital, 17 Fricker Road, Illovo, 2196
Responsibility for financial results preparation:
Mr Lawrence Weitzman CA(SA), the chief financial officer, is responsible for the condensed
consolidated interim financial results and has supervised the preparation thereof in conjunction
with the group financial manager Mr Jan van den Handel CA(SA).
For more information please visit our investor relations website at www.bcx.co.za
Issue date: 18 April 2013
Date: 18/04/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
