Wrap Text
Reviewed Provisional Condensed Consolidated Results For The Year Ended 31 March 2018 And Dividend Declaration
CSG HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/011359/06)
JSE code: CSG
ISIN: ZAE000184438
(“CSG” or "the Company" or "the Group")
Reviewed provisional condensed consolidated results
for the year ended 31 March 2018 and dividend declaration
Highlights
- Revenue increased by 22% to R2,13 billion
- Profit after tax increased by 27% to R116,17 million
- Operating profit increased by 30% to R166,36 million
- Dividends declared maintained at 5 cents per share
- Headline earnings per share increased by 13% to 21,85 cents per share
- EBITDA increased by 29% to R186,96 million
Financial performance
CSG is a contract services group offering a wide range of services, including
facility management, security and risk solutions, and staffing solutions in
Southern Africa, to an array of mostly blue-chip clients. From 1 April 2017
CSG broadened its strategy and restated its divisions, creating security
services as a free-standing third division in line with the reporting structure.
CSG's mission remains to become a leading strategic outsourced partner of choice
for facility management, security and risk solutions, and staffing solutions in
Southern Africa. The Company continued to consolidate and increase the basket of
services offered to clients in these divisions for the year ended 31 March 2018.
The strategic focus has been on expanding into service delivery businesses that
are more technology based, with a higher barrier to entry than the existing
services but remaining not too capital intensive. All the recent security
acquisitions within the Group are in alignment with CSG's strategy to expand the
Company's divisions.
During the year ended 31 March 2018, CSG made another material security
acquisition, namely Revert Risk Management Solutions Proprietary Limited
("Revert") for R100 million. The purchase was announced on 30 March 2017 and
became effective 1 May 2017. Following the successful conclusion of the Revert
transaction, which added substance to our specialised security and risk
services, CSG introduced security services as a free-standing third division
and restated its reporting segments accordingly from 1 April 2017.
CSG also acquired the issued share capital of Golden Dividend 401 Proprietary
Limited ("Industroserve"), a cleaning company, and Siyaya Hygiene and Cleaning
Skills Institute Proprietary Limited ("Siyaya"), a training company, with effect
from 1 May 2017 and 1 June 2017 respectively (note 8). In addition, two smaller
bolt-on acquisitions were made during the year. In September 2017, the alarm and
monitoring business of Cortac Proprietary Limited in Sandton, Gauteng was
purchased and on 1 January 2018 the monitoring, armed response and guarding
business of Intercity Alarms and Security Systems Proprietary Limited
(trading as Incity) was acquired.
The CSG Holdings Group realised a 22% increase in revenue, 30% higher operating
profit and a 13% rise in headline earnings for the twelve months ended
31 March 2018. EBITDA increased by 29% to R186,96 million. These improvements
were achieved through both organic and acquisitive growth, as the additional
earnings from the recent security and cleaning acquisitions were included for
a full year in the results for the year under review.
Both earnings per share and headline earnings per share increased by 13%
compared to the year ended 31 March 2017. This increase was due to both organic
growth and new acquisitions, but diluted by the additional shares issued, in
respect of the Ukweza acquisition (note 5).
Divisional review
Facility Management Division
Revenue rose by 13% to R756,74 million contributing R69,22 million (representing
37%) to the operating profit of the Group. The increase is due to organic growth
and the Industroserve acquisition.
Security and Risk Solutions Division
Revenue of R425,98 million improved by 78% compared to the same period last year
and contributed R43,12 million (representing 23%) to the operating profit of the
Group. The increase is as a result of the recent security acquisitions and is
evidence of the successful strategy to introduce security services as our third
division.
Staffing Solutions Division
Revenue increased by 14% to R951,87 million contributing R74,87 million
(representing 40%) to the operating profit of the Group, due to greater
stability in the temporary employment industry as well as diversification
towards other services.
Outlook
The current business environment and trading conditions are expected to remain
challenging with only a small number of new infrastructure developments expected
in the near future. CSG's diversification strategy has been successful and the
Group is well positioned for future growth with a strong foundation of diverse
services covering various industries. We anticipate that overall organic growth
is still possible from this solid base and current economic conditions provide
opportunities for further lucrative earnings from accretive acquisitions at very
attractive multiples. CSG expects the growth experienced during the 2018
financial year to continue in 2019.
Notice of final cash dividend
The Board of directors has approved a gross final cash dividend of 5 cents per
share on the ordinary shares from profits accrued during the year ended
31 March 2018. The dividend has been declared from income reserves.
The dividend will be subject to a dividend withholding tax of 20% for all
shareholders who are not exempt from or do not qualify for a reduced rate of
withholding tax. The net dividend payable to shareholders subject to withholding
tax at a rate of 20% amounts to 4 cents per share. The issued share capital at
the declaration date is 515 150 084 ordinary shares. The Company's tax reference
number is 9159246165.
The salient dates are as follows:
- Date of declaration Thursday, 31 May 2018
- Last day for trading to qualify and participate in the final dividend
(and change of address or dividend instructions) Tuesday, 3 July 2018
- Trading ex-dividend commences Wednesday, 4 July 2018
- Record date Friday, 6 July 2018
- Dividend payment date Monday, 9 July 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 4 July 2018 and Friday, 6 July 2018, both days inclusive.
Provisional condensed consolidated statement of profit and loss and
other comprehensive income
Reviewed Audited
31 March 31 March
2018 2017
Notes R'000 R'000
Revenue 2 134 598 1 746 629
Cost of sales (1 660 087) (1 375 205)
Gross profit 474 511 371 423
Net operating expenses (308 153) (243 908)
Operating profit 166 358 127 516
Profit on sale of property,
plant and equipment (85) 240
Remeasurement of contingent
consideration relating to
business acquisition 4 808 355
Investment income 5 962 6 920
Finance cost (21 102) (11 358)
Profit before taxation 151 941 123 672
Taxation (35 770) (32 230)
Profit for the period 116 171 91 442
Other comprehensive income 1 289 (9 059)
Total comprehensive income 117 460 82 383
Profit for the period attributable to:
Owners of the parent 111 545 86 787
Non-controlling interest 4 626 4 655
116 171 91 442
Total comprehensive income attributable to:
Owners of the parent 112 834 77 728
Non-controlling interest 4 626 4 655
117 460 82 383
Weighted average shares in
issue ('000) 510 858 448 136
Diluted weighted average
shares in issue ('000) 511 514 449 789
Earnings per share
Basic earnings per share
(cents) 21,83 19,37
Diluted earnings per share
(cents) 21,81 19,30
Dividend per share (cents) 5,00 5,00
Headline earnings reconciliation
Attributable earnings 111 545 86 787
Loss/(profit) on sale of property, plant and
equipment 85 (240)
Impairment on property,
plant and equipment - 410
Taxation (24) 67
Headline earnings 111 606 87 024
Headline earnings per share
Basic headline earnings per
share (cents) 21,85 19,42
Diluted headline earnings
per share (cents) 21,82 19,35
Provisional condensed consolidated statement of financial position
Restated*
Reviewed audited
31 March 31 March
2018 2017
Notes R'000 R'000
Assets
Non-current assets 596 017 446 414
Property, plant and
equipment 82 780 55 094
Intangible assets 8 126 234 83 902
Goodwill 8 342 772 260 799
Deferred taxation 5 515 6 601
Other financial assets 38 716 40 018
Current assets 421 265 398 024
Inventories 12 298 8 608
Current income tax
receivable 4 370 3 149
Current portion of other
financial assets 8 889 5 520
Trade and other receivables 342 174 327 647
Bank and call deposits 53 534 53 100
Total assets 1 017 282 844 438
Equity and liabilities
Capital and reserves 641 457 528 082
Stated capital 5.1 311 770 284 658
Treasury shares 5.2 (824) (1 247)
Share-based payment reserve 53 102
Retained earnings 327 197 242 125
Foreign currency translation
reserve (12 531) (13 821)
Non-controlling interest 15 792 16 265
Non-current liabilities 149 204 83 723
Interest-bearing liabilities 122 186 65 143
Deferred taxation 27 018 18 580
Current liabilities 226 621 232 633
Current portion of interest-
bearing liabilities 54 032 26 700
Current portion of loans
from related parties - 8
Bank overdrafts and invoice
discounting 12 386 31 208
Trade and other payables 155 309 170 417
Trade payables and accruals 144 457 143 421
Current portion of
contingent consideration 10 852 26 996
Current income tax payable 4 894 4 300
Total equity and liabilities 1 017 282 844 438
Shares in issue ('000) 515 150 497 416
Net asset value per share
(cents) 121,50 102,9
Net tangible asset value per
share (cents) 33,2 33,6
* Figures have been restated as allowed by IFRS 3 Business Combinations
(refer note 8.2).
Provisional condensed consolidated statement of cash flows
Reviewed Audited
31 March 31 March
2018 2017
Notes R'000 R'000
Cash flow from operations 139 759 58 901
Cash generated by operations 186 525 101 636
Investment income 4 030 3 639
Finance cost (18 533) (9 307)
Taxation paid (32 263) (37 067)
Cash flow from investing
activities (169 743) (106 264)
Net investment in property,
plant and equipment (49 497) (28 615)
Net investment in intangible
assets 238 (28)
Business combination
transaction costs - (410)
Acquisition of subsidiaries 8 (120 484) (77 211)
Cash flow from financing
activities 49 240 24 905
Dividends paid (31 171) (21 186)
Net purchase of treasury
shares 5.1 422 431
Cash purchase consideration made
relating to Ukweza acquisition - (2 951)
Issue of ordinary shares 5.2 1 102 83 356
Movement in interest-bearing liabilities
and other financial assets 78 887 (34 745)
Increase in cash resources 19 256 (22 458)
Cash resources at beginning
of period 21 892 44 350
Cash resources at end of
period 41 148 21 892
Cash resources 41 148 21 892
Bank and call deposits 53 534 53 100
Bank overdraft and invoice
discounting (12 386) (31 208)
Provisional condensed consolidated statement of changes in equity
Total
attributable Non-
to equity con-
holders of trolling Total
the parent interest equity
Notes R'000 R'000 R'000
Equity at 1 April 2016
(Audited) 345 109 884 345 993
Total comprehensive income
for the period 77 728 4 655 82 383
Dividend paid (20 916) (270) (21 186)
Sale of shares to non-
controlling interest 13 399 10 996 24 395
Share-based payment reserve 102 - 102
Treasury shares 431 - 431
Ordinary shares issued 95 964 - 95 964
Equity at 31 March 2017
(Audited) 511 817 16 264 528 082
Total comprehensive income
for the period 112 834 4 626 117 460
Dividend paid (25 692) (5 479) (31 171)
Acquisition of shares from
non-controlling interest 7 (880) 380 (500)
Share-based payment reserve 53 - 53
Treasury shares 5.1 422 - 422
Ordinary shares issued 5.2 27 112 - 27 112
Equity at 31 March 2018
(Reviewed) 625 665 15 792 641 457
Segment reporting
Restated*
Reviewed audited
31 March 31 March
2018 2017
R'000 R'000
Revenue
Facility management 756 743 672 443
Security and risk solutions 425 982 239 626
Staffing solutions 951 873 834 560
Total Group 2 134 598 1 746 629
Operating profit 166 358 127 516
Facility management 69 216 50 884
Security and risk solutions 43 123 26 442
Staffing solutions 74 869 70 591
Head office (20 850) (20 401)
Profit before taxation 151 941 123 672
Facility management 75 398 50 368
Security and risk solutions 35 488 25 331
Staffing solutions 71 310 68 726
Head office (30 255) (20 753)
* Refer note 3.
Notes to the provisional condensed consolidated financial results
1. Nature of operations
CSG is a holding company incorporated and domiciled in South Africa. The main
business is to provide facility management which includes contract catering,
cleaning and food services, security and risk solutions, as well as outsourced
personnel services, including recruitment and specialised staffing solutions,
to a range of clients.
2. Basis of preparation
The condensed consolidated financial statements are prepared in accordance with
the requirements of the JSE Limited Listings Requirements for provisional
reports and the requirements of the Companies Act of South Africa. The Listings
Requirements require provisional reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards ("IFRS") and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to
also, as a minimum, contain the information required by IAS 34 Interim Financial
Reporting. The accounting policies applied in the preparation of the condensed
consolidated financial statements are in terms of IFRS and are consistent with
those applied in the previous consolidated annual financial statements.
The results have been prepared in accordance with the accounting policies of
the Company that are in terms of IFRS and that are consistent with the
accounting policies of the previous annual financial statements. These results
were prepared under the supervision of the Group Chief Financial Officer,
Mr WE Scott CA(SA).
3. Segment reporting
From 1 April 2017, we broadened our strategy and restructured our divisions and
as a result created the Security division as a free-standing third division.
The result is that the segment report provided has been restated for the
previous period to show comparable results.
4. Contingent consideration
Estimated contingent consideration amounts payable have been included in the
purchase prices of business combinations (see note 8). These amounts have been
reassessed between acquisition date and the reporting date and adjustments
accounted for as a fair value adjustment in the statement of profit and loss and
other comprehensive income. Calculations were based on year to date actual
results with an estimation of profits for the remaining period based on the
latest available information. The amounts included on the statement of financial
position are accordingly carried at fair value within the Level 3 fair value
hierarchy. The outstanding contingent consideration relating to the Hi-Tech
White River acquisition was settled through a cash payment of R4 million, with
the remaining R2,5 million to be settled via CSG shares.
5. Ordinary shares
5.1 Treasury shares
Treasury shares relate to the purchase of shares by the CSG Share Incentive
Trust ("Trust") to fulfil its obligation in terms of share option schemes.
5.2 Ordinary shares issued
On 15 June 2017, 16 421 519 shares were issued to the previous non-controlling
interest in Ukweza as part of an agreement.
During July 2017, an additional 1 312 502 shares were issued to predetermined
participants resulting from an exercise of options pursuant to a specific issue
of options by CSG.
6. Capital commitments and contingencies
The Group had no significant outstanding capital commitments or contingencies
as at 31 March 2018.
7. Acquisition of 30% interest in 7Arrows Security Proprietary Limited
(previously known as Security Operations Group Proprietary Limited)
On 1 May 2017, CSG purchased the 30% non-controlling shareholding of 7Arrows
Security. The purchase has not resulted in a change of control and as such
the full 30% of net asset value has been accounted for against retained
earnings.
8. Business combinations
8.1 White River Hi-Tech Security Services Proprietary Limited
On 1 November 2015, the Group acquired 100% of the issued ordinary share capital
of White River Hi-Tech Security Services Proprietary Limited ("Hi-Tech White
River"), thereby obtaining control. Hi-Tech White River is incorporated in
South Africa and is a well-known armed response company in the White River and
Hazyview area. The company is included in the Security and Risk Solutions
division.
The purchase consideration was payable based on the financial performance of
Hi-Tech White River for the 12-month period immediately following the first
12 months after acquisition date. Based on the projected profits for the
performance guarantee period, an accrual was raised.
In 2018, the final purchase consideration for Hi-Tech White River was calculated
as R6,5 million. Of this, R4 million was settled in cash before year-end. The
remainder will be settled in CSG shares in the new financial year. This
difference between the accrual and the final purchase price was accounted for
as a remeasurement in the statement of profit and loss and other comprehensive
income.
8.2 Stallion Reaction
On 1 March 2017, the Group, via its subsidiary Invictus Risk Proprietary Limited,
acquired the armed response and monitoring division of Stallion Reaction
Proprietary Limited ("Stallion") as a going concern. This includes individual
and commercial clients, specific assets and employees, and the armed response
and monitoring service provided by Stallion on an outsourced basis on behalf of
two other security companies. The contract specifically excludes the domestic
guarding and CCTV monitoring divisions of Stallion. The acquisition was made to
further increase the Group's security offering and to expand the basket of
services offered. Stallion is incorporated in South Africa. The company is
included in the Security and Risk Solutions division.
The effective date was 1 March 2017 and the purchase consideration was paid in
cash.
During the current year this acquisition was sold to 7Arrows Security
Proprietary Limited as a common control transaction.
The acquisition of Stallion on 1 March 2017 qualified as a business combination
under IFRS 3 Business Combinations. Provisional figures as at 31 March 2017 were
determined based on all information available at the acquisition date
("provisional accounting"). This provisional accounting was adjusted for new
information obtained within the timeframe of 12 months after acquisition date.
These adjustments to the fair values determined in the provisional purchase
price allocation are not treated as movements in the current financial year,
but as an adjustment to the comparative figures as at 31 March 2017. The effect
relates only to a reclassification between assets and liabilities and does not
affect the comparative statement of profit and loss and other comprehensive
income.
Recognised amounts of identifiable net assets
Restated Provisional
at 1 March 2017 R'000 R'000
Non-current assets 1 134 1 134
Property, plant and equipment 505 505
Deferred tax asset 629 629
Current liabilities (3 718) (3 718)
Trade and other payables (3 718) (3 718)
Identifiable net assets (2 584) (2 584)
Intangible assets identified 5 171 -
Deferred tax liability on the above
intangible assets (1 448) -
Goodwill on acquisition 45 143 48 866
Purchase consideration 46 282 46 282
8.3 Revert Risk Management Solutions Proprietary Limited
On 30 March 2017, CSG announced that it has concluded a sale of shares
agreement with RTT Group Proprietary Limited, in terms of which it purchases
from the seller 100% of the issued share capital of Revert and certain moveable
assets for R100 million. Revert conducts the business of risk and security
management solutions.
The effective date was 1 May 2017 and the transaction was settled in cash with
the vendor which was funded through a five-year medium-term loan with Nedbank.
The company was acquired to align with CSG’s strategy to diversify the Company's
divisions, both organically and through acquisitions. The acquisition resulted
in CSG becoming a national, well-recognised security and risk service provider.
Revert added substance to CSG's specialised security and risk services and
supported CSG's strategy to introduce security services as a third division
from 1 April 2017.
The transaction was accounted for in terms of IFRS 3 Business Combinations.
Recognised amounts of identifiable net assets
at 1 May 2017 R'000
Non-current assets 3 819
Property, plant and equipment 2 100
Deferred tax asset 1 719
Current assets 24 957
Trade and other receivables 20 517
Current tax receivable 566
Inventories 635
Bank and cash 3 239
Current liabilities (11 322)
Trade and other payables (11 322)
Identifiable net assets 17 455
Intangible assets identified 43 527
Deferred tax liability on the above intangible assets (10 180)
Goodwill on acquisition 49 199
Purchase consideration 100 000
Cash flow information
Bank balance acquired 3 239
Since the acquisition date, Revert has contributed R161,68 million to Group
revenue and R8,00 million to Group profit. If the acquisition had occurred on
1 April 2017, the Group revenue would have been R2,31 billion and Group profit
for the period would have been R124,90 million.
The company was acquired for the brand name, to gain access to its customer
list, diversification and to expand the basket of services in CSG's Risk and
Security division. Both the brand name and current customer list have been
identified as intangible assets. The remaining excess on the purchase price
relates to synergies and has therefore been accounted for as goodwill.
8.4 Golden Dividend 402 Proprietary Limited T/A Industroserve
CSG acquired 100% of the issued shares in Golden Dividend 402 Proprietary
Limited, trading as Industroserve, a cleaning company, with effect from
1 May 2017 for a maximum amount of R22,5 million. An initial amount of
R7,5 million was paid in cash, while the balance will be paid partly through a
further cash payment and the issue of CSG shares after the 12-month earn-out
period has been reached.
The company was acquired to expand the current footprint and to boost the
commercial cleaning component of the facility management division by gaining
access to its customer list.
The transaction was accounted for in terms of IFRS 3 Business Combinations.
Recognised amounts of identifiable net assets
at 1 May 2017 R'000
Non-current assets 3 957
Property, plant and equipment 3 533
Deferred tax asset 424
Current assets 3 700
Trade and other receivables 2 718
Bank and cash 982
Non-current liabilities (2 576)
Finance lease liabilities (2 576)
Current liabilities (4 446)
Other financial liabilities (221)
Trade and other payables (4 225)
Identifiable net assets 635
Intangible assets identified 1 167
Deferred tax liability on the above intangible assets (327)
Goodwill on acquisition 16 691
Purchase consideration* 18 166
Cash flow information
Bank balance acquired 982
* Based on the projected profits for the performance guarantee period an accrual
for the contingent consideration has been taken into account in calculating
goodwill on date of acquisition. This is based on a Level 3 in the fair value
hierarchy.
In 2018, an adjustment was made to the contingent consideration based on
information currently available. The difference between the accrual and the
final purchase price was accounted for as a separate line item on the statement
of profit and loss and other comprehensive income.
Since the acquisition date, Industroserve has contributed R55,21 million to
Group revenue and R3,41 million to Group profit. If the acquisition had occurred
on 1 April 2017, the Group revenue would have been R2,19 billion and Group
profit for the period would have been R119,89 million.
8.5 CSG Skills Institute Proprietary Limited (previously known as Siyaya Skills
Institute)
CSG acquired 100% of the issued shares in Siyaya Hygiene and Cleaning Skills
Institute Proprietary Limited, a training company, together with the
shareholder's loan account held by the previous shareholder with effect from
1 June 2017 for a maximum amount of R5,25 million. An initial amount of
R3 million was paid in cash, while the balance will be settled in cash after
the 12-month earn-out period.
The company was acquired for the brand name, to gain access to its customer
list, to expand the basket of services in its staffing solutions division and
to provide synergies in the Group by offering training and consulting services.
The transaction was accounted for in terms of IFRS 3 Business Combinations.
Recognised amounts of identifiable net assets
at 1 June 2017 R'000
Non-current assets 2 076
Property, plant and equipment 33
Deferred tax 2 042
Current assets 1 924
Trade and other receivables 1 744
Bank and cash 181
Current liabilities (1 177)
Other financial liabilities (200)
Trade and other payables (977)
Identifiable net assets 2 823
Intangible assets identified 1 800
Deferred tax liability on the above intangible assets -
Goodwill on acquisition -
Purchase consideration* 4 623
Cash flow information
Bank balance acquired 181
* Based on the projected profits for the performance guarantee period an
accrual for the contingent consideration has been taken into account in
calculating goodwill on date of acquisition. This is based on a Level 3 in
the fair value hierarchy.
In 2018, an adjustment was made to the contingent consideration based on
information currently available. The difference between the accrual and the
final purchase price was accounted for as a separate line item on the statement
of profit and loss and other comprehensive income.
Since the acquisition date, CSG Skills Institute has contributed R17,51 million
to Group revenue and R5,27 million to Group profit. If the acquisition had
occurred on 1 April 2017, the Group revenue would have been R2,16 billion and
Group profit for the period would have been R122,49 million.
8.6 Cortac Proprietary Limited
CSG, through wholly owned subsidiary 7Arrows Security, purchased certain of
the monitoring, armed response and guarding contracts of Cortac Proprietary
Limited ("Cortac"). The contracts were acquired to expand the current
geographical footprint in the Security division.
The effective date was 1 September 2017 and the purchase consideration was
paid in cash.
The transaction was accounted for in terms of IFRS 3 Business Combinations.
Recognised amounts of identifiable net assets
at 1 September 2017 R'000
Non-current assets 232
Deferred tax 232
Current liabilities (829)
Trade and other payables (829)
Identifiable net assets (597)
Intangible assets identified 329
Deferred tax liability on the above intangible assets (92)
Goodwill on acquisition 3 774
Purchase consideration* 3 415
Cash flow information
Bank balance acquired -
* Based on the projected profits for the performance guarantee period an
accrual for the contingent consideration has been taken into account in
calculating goodwill on date of acquisition. This is based on a Level 3
in the fair value hierarchy.
Since the acquisition date, Cortac has contributed R6,15 million to Group
revenue and R439 998 million to Group profit. If the acquisition had occurred
on 1 April 2017, the Group revenue would have been R2,15 billion and Group
profit for the period would have been R116,92 million.
8.7 Intercity Alarms and Security Systems Proprietary Limited
On 27 September 2017, CSG signed an agreement with Intercity Alarms and
Security Systems Proprietary Limited, trading as Incity, in terms of which
it purchases the monitoring, armed response and guarding business of Incity
for a maximum amount of R11,08 million. An initial amount of R6 million was
paid in cash and the balance will be paid in tranches throughout the earn-out
period. The effective date is 1 January 2018.
Due to the fact that the release of the provisional results is so close to the
effective date, it is not possible to make the full IFRS 3 disclosures. As the
initial accounting is still incomplete, the full excess over purchase price has
provisionally been allocated to goodwill.
The transaction will be accounted for in terms of IFRS 3 Business Combinations
and a full purchase price allocation will be performed within 12 months as
allowed by this standard.
The information provided below is based on provisional results of the entity
as at 1 January 2018.
Recognised amounts of identifiable net assets
at 1 January 2018 R'000
Non-current assets 225
Deferred tax 225
Current liabilities (803)
Trade and other payables (803)
Identifiable net assets (578)
Goodwill on acquisition 11 658
Purchase consideration* 11 080
Cash flow information
Bank balance acquired -
* Based on the projected profits for the performance guarantee period an
accrual for the contingent consideration has been taken into account in
calculating goodwill on date of acquisition. This is based on a Level 3 in
the fair value hierarchy.
9. Events after the reporting period
The directors are not aware of any material events, other than events noted
below, which occurred after the reporting date and up to the date of this
report.
9.1 SOS Protec Sure CC
On 22 May 2018, CSG signed an agreement with SOS Protec Sure CC, in terms of
which it agrees with 7Arrows Security Proprietary Limited to sell to each other
a portion of their respective businesses at a price earnings multiple of
18 times the revenue attributable to the contracts.
The effective date is 1 May 2018.
10. Changes in directors
Mr NG Thiart stepped down as an executive director of the Company with effect
from 31 December 2017 due to medical reasons. Godfried remains a material
shareholder of CSG and will remain available to the Company as a consultant
post 31 December 2017.
11. Going concern
The financial information has been prepared on a going-concern basis.
12. Review opinion
The provisional financial results have been reviewed by the Company's auditors,
Grant Thornton, who have expressed an unmodified review conclusion on the
results. A copy of their review report is available for inspection at the
Company's registered office.
The auditor's report does not necessarily report on all the information
contained in this announcement/financial results. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the
auditors' engagement, they should retain a copy of the auditor's report
together with the accompanying financial information from the issuer's
registered address.
For and on behalf of the Board
BT Ngcuka PJJ Dry
(Chairman) (Chief Executive)
31 May 2018
Directors
BT Ngcuka* (Chairman); PJJ Dry (CEO); JG Nieuwoudt (COO); WE Scott (CFO);
NG Thiart (resigned 31 December 2017); NN Sonjani*#; R Kisten *#; AF Volkwyn*;
M Mokoka*#
(* non-executive) (# independent)
Secretary and registered office
MN Hattingh, 6 Topaz Street, Lyttelton Manor, Centurion 0157
Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein
(PO Box 4844, Johannesburg 2001)
Sponsor
PSG Capital
www.csgholdings.co.za
Date: 31/05/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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