CCL
Compu-Clearing - Reviewed results for the six months ended 31 December 2005
Compu-Clearing Outsourcing Limited
Incorporated in the Republic of South Africa
Registration number 1998/015541/06
Share code: CCL & ISIN: ZAE000016564
("Compu-Clearing", "the Company" or "the Group")
Reviewed results for the six months ended 31 December 2005
- Operating profit up 19%
- Headline earnings per share up 41%
- Attributable earnings up 40%
- Net asset value per share up 10%
BALANCE SHEET
IFRS IFRS % Inc./ IFRS
31/12/2005 restated (decr.) restated
ReviewedY 31/12/2004 30/06/2005
R"000 R"000 R"000
ASSETS
Non current assets 13,578 13,504 13,959
Property, plant and 13,194 13,432 13,629
equipment
Deferred taxation 384 72 330
asset
Current assets 26,135 21,836 25,536
Inventory 64 18 16
Trade and other 5,977 6,162 6,369
receivables
Taxation receivable 509 2,952 1,974
Investments 5,204 3,962 4,583
Cash and cash 14,381 8,742 12,594
equivalents
Total assets 39,713 35,340 39,495
EQUITY AND LIABILITIES
Shareholders" funds 35,295 31,930 35,396
Share capital and 10,747 10,468 10,598
premium
Distributable 24,548 21,462 24,798
reserves
Non-current liabilities 1,598 1,560 1,552
Post retirement 1,416 1,539 1,476
medical obligations
Deferred taxation 182 21 76
liability
Current liabilities 2,820 1,850 2,547
Trade and other 2,570 1,850 2,540
payables
Taxation payable 250 - 7
Total equity and 39,713 35,340 39,495
liabilities
Net asset value per 91.6 83.2 10 92.0
share
centsY
INCOME STATEMENT
IFRS IFRS % Inc. IFRS
6 months restated 6 / restated
ended 31 months (decr.) year ended
December ended 31 30 June
2005 December 2005
ReviewedY 2004
ReviewedY
ReviewedY
R"000 R"000 R"000
Rental and other 19,355 18,522 37,563
revenue
Operating costs 14,542 14,490 29,618
- Distribution 9,667 9,543 21,880
- Administration 4,793 4,542 6,796
- Other 82 405 942
Operating profit 4,813 4,032 19 7,945
Branch closure costs - - (281)
4,813 4,032 7,664
Net financing income 853 733 1,699
- Financial income 1,061 733 1,741
- Financial expenses (208) - (42)
Profit before taxation 5,666 4,765 19 9,363
Taxation-company 1,654 1,379 2,720
Taxation- STC 480 857 857
(secondary tax on
companies)
Attributable earnings 3,532 2,529 40 5,786
Actual number of shares 38,511 38,380 38,461
in issue
"000Y
Weighted average number 38,494 38,249 38,296
of shares in issue
"000Y
Diluted weighted 40,681 39,827 39,845
average number of
shares in issue
"000Y
Earnings per share 9.2 6.6 15.1
centsY 39
Headline earnings per 9.3 6.6 15.3
share
centsY 41
Diluted earnings per 8.7 6.3 14.5
share
centsY 38
Ordinary dividend per 8.0 8.0 - 8.0
share
centsY
Special dividend per - 10.0 10.0
share
centsY
Reconciliation of headline earnings
Attributable earnings 3,532 2,529 5,786
Adjusted for :
Loss / (profit) on 50 (20) 97
disposal of property,
plant and equipment
Taxation effect (15) 6 (28)
Headline earnings 3,567 2,515 5,855
Segment Report
IFRS IFRS % Inc./ IFRS
6 months restated 6 (decr.) restated
ended 31 months year ended
December ended 31 30 June
2005 December 2005
ReviewedY 2004
ReviewedY
ReviewedY
Local sources
Software rental income 13,665 13,156 4 26,212
Hardware rental income 4,535 4,748 (4) 8,885
Other 1,129 582 94 2,378
Total revenue from 19,329 18,486 5 37,475
local sources
Operating profit from 5,089 4,702 8 8,333
local sources
Operating margin from 26% 25% 22%
local sources
International sources
Software rental income 26 36 88
Operating loss from (276) (670) (388)
international sources
Total revenue 19,355 18,522 37,563
Total operating profit 4,813 4,032 7,945
Operating margin from 25% 22% 21%
all sources
RECONCILIATION BETWEEN IFRS AND SA GAAP
IFRS IFRS IFRS
restated restated transition
year 6 months date 1
ended 30 ended 31 July 2004
June December
2005 2004
R"000 R"000 R"000
IFRS EQUITY IMPACT
Equity as previously 34,225 30,720 34,638
reported - SA GAAP
IFRS adoption 1,171 1,210 1,125
IFRS2 share-based payment 418 339 259
reserve
IFRS2 share-based payment (418) (339) (259)
expense
IAS 16 Restatement of
useful lives, residual
values and components of
property, plant and
equipment
1,071 1,143 1,016
IAS16 Deemed cost 579 585 591
adjustment to fixed
property
Deferred taxation effect of (479) (518) (482)
above adjustments
Equity restated - IFRS 35,396 31,930 35,763
IFRS INCOME STATEMENT
IMPACT
Net income as previously 5,899 2,524
reported - SA GAAP
IFRS adoption (113) 5
IFRS2 share-based payment (159) (80)
expense
IAS 16 Restatement of 43 121
accumulated depreciation to
reflect the useful lives of
property, plant and
equipment
Deferred taxation effect of 3 (36)
above adjustments
Net income restated - IFRS 5,786 2,529
STATEMENT OF CHANGES IN EQUITY
IFRS IFRS IFRS
6 months restated 6 restated
ended months Year ended
31/12/2005 ended 30/6/2005
ReviewedY 31/12/2004
ReviewedY
ReviewedY
R"000 R"000 R"000
Opening balance 35,396 35,763 35,763
Share Capital 1 3 3
Share premium 148 417 547
Attributable earnings 3,532 2,529 5,786
Dividend paid (3,847) (6,862) (6,862)
Share-based payment 65 80 159
reserve
Balance at 31 December 35,295 31,930 35,396
2005
CASH FLOW STATEMENT
IFRS IFRS IFRS
6 months restated restated
ended 6 months Year ended
31/12/2005 ended 30/6/2005
ReviewedY 31/12/2004
ReviewedY
ReviewedY
R"000 R"000 R"000
Operating profit 4,813 4,032 7,945
Non cash items 1,302 1,508 3,349
Cash generated by trading 6,115 5,540 11,294
operations
Decrease in post retirement (60) (52) (115)
medical obligations
Branch closure costs - - (281)
Decrease / (increase) in 374 (1,540) (1,055)
working capital
Cash generated by operations 6,429 3,948 9,843
Taxation paid (374) (6,237) (6,797)
Dividend paid (3,847) (6,862) (6,862)
Net financing income 853 733 1,699
Cash flow from operating 3,061 (8,418) (2,117)
activities
Cash flow from investing (1,423) (5,189) (7,768)
activities
Cash flow from financing 149 420 550
activities
Increase in cash and cash 1,787 (13,187) (9,335)
equivalents
Cash and cash equivalents at
the beginning of the period
12,594 21,929 21,929
Cash and cash equivalents at 14,381 8,742 12,594
the end of the period
COMMENTARY
It is with great pleasure that we present our results for the six month period
ended 31 December 2005. Growth in headline earnings per share of 41% has been
achieved through increased revenues, improved cost control and a reduction in
the STC charge. The introduction of our business partner programme and the
closure of our branches, towards the end of the previous financial year, have
been catalysts in this regard and we will continue to use this strategy in our
attempts to establish a broader geographical presence. Ignoring the once-off
impact of the reduced STC charge, growth in headline earnings is still a very
pleasing 26%, which bodes well for the future. Cash levels remain excellent,
despite dividend and STC payments in the first six months.
I am excited by the prospects for the second half, during which operating
performance traditionally exceeds the first six months. A new Order Planning
Entry system is scheduled for release and has been enthusiastically received by
those clients we have previewed to. The launching of strategic relationships
with two niche banks, will extend the group"s range of services and broaden our
revenue base.
Adoption of International Financial Reporting Standards ("IFRS")
The Group has for the first time, adopted IFRS in the preparation of these
interim results. Figures for the comparative period and for the year ended 30
June 2005 have been restated to reflect the financial position and results had
IFRS been adopted at the beginning of the previous financial year, 1 July 2004.
The adoption of IFRS has resulted in a 0,3 cent increase in earnings per share
to 9,2 cents and a 0,3 cents increase in headline earnings per share to 9,3
cents, for the six months ended 31 December 2005.
Basis of preparation
The interim results have been prepared in accordance with IFRS and IAS 34 -
Interim Financial Reporting. The financial results for the 6 months ended 31
December 2004 and for the year ended 30 June 2005, were previously prepared in
terms of South African Statements of Generally Accepted Accounting Practice (SA
GAAP).
The adoption of IFRS has resulted in changes in certain accounting policies,
which have been applied in the preparation of these interim results. Results for
the comparative period and the year ended 30 June 2005 have been restated to
reflect these changes. In terms of IAS1, investments in property instruments,
previously included in cash and cash equivalents, are now disclosed separately,
because of the difference in risk profile applicable to these investments.
Transitional arrangements
The Group"s annual financial statements for the year ending 30 June 2006 will be
the first set of annual financial statements that comply with IFRS. The Group
has applied IFRS 1 (First time adoption of International Financial Reporting
Standards) in preparing these abridged financial statements.
Elections applicable 1 July 2004:
Share based payment transaction exemptions
The Group has elected to apply the share based payment exemption, which requires
that equity instruments granted under equity-settled rewards, are measured at
the fair value of the equity instruments granted. In terms of this exemption,
share options granted before 7 November 2002, or granted thereafter but vested
before 1 January 2005 can be exempted from the principle of fair value
measurement in terms of IFRS2.
The following new accounting policies were applied for IFRS reporting:
Share based payments
The Group grants share options to employees, in terms of the Compu-Clearing
Share Incentive Scheme. The options are subject to service vesting conditions
and the Group recognises the fair value of the options granted as an employee
benefit expense, with a corresponding increase to the share-based payment
reserve in equity.
The expense is adjusted at the end of each period to reflect actual and
anticipated levels of vesting.
Adjustments implemented with effect from 1 July 2004:
IFRS2 - Share based payments
The Group grants share options to employees, in terms of the Compu-Clearing
Share Incentive Scheme. In accordance with IFRS2, the Group now recognises as an
expense, the fair value of share options granted, with a corresponding increase
in the share-based payments reserve.
IAS 16 - Property, plant and equipment
The cost of the Group"s fixed property has been adjusted to recognise the deemed
cost of the property at 1 July 2004, the date of first time adoption of IFRS.
The estimated useful lives of the Group"s plant and equipment have been
reassessed as necessary.
IAS 17 - Leases
IAS 17 requires both operating lease income and operating lease expenses to be
recognised on a straight line basis over the period of the lease.
The group does not enter into any lease agreements with external parties and
consequently, the application of IAS 17 has not resulted in any adjustments to
the Group"s figures.
REVIEW REPORT
The Group"s auditors KPMG Inc, have reviewed the financial information for the
six months ended 31 December 2005. Their report is available for inspection at
the registered office of the Company.
DIVIDEND
Compu-Clearing has a policy of paying a single dividend at year end. As a
result, the company has not declared an interim dividend.
For and on behalf of the board
A Garber (Chairman)
J du Preez (Chief Executive)
Johannesburg
24 February 2006
Directors: A.Garber, J.du Preez, A.Katz*, M.Lutrin*, D. Rosevear*,
Dr.T.M.Mogale*, M.Steele*, A. Webb*, C.P. Efthymiades, M. Acosta-Alarcon *(Non-
executive)
Registered office:
7 Drome Road
Lyndhurst, 2106
PO Box 890856
Lyndhurst, 2106
Transfer secretaries:
Computershare Investor Services 2004 Limited
Ground Floor
70 Marshall Street
Johannesburg, 2001
Auditors:
KPMG Inc.
Sponsor:
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 24/02/2006 01:54:47 PM Produced by the JSE SENS Department
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