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Simeka reports third growth year

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Simeka has reported its third straight year of growth with headline earnings above 20%.

For the year ended 31 May 2008, the group increased revenue 34% to R597,4 -million, while headline earnings increased 46% to R66,2-million.
According to a statement from Simeka, strong long-term contracts from a wide customer base and diversified services offering enabled it to withstand the difficult market conditions.
The group has aligned itself into two key divisions" technology and business support services.
The group made a number of acquisitions and investment during the year.
In light of global focus on mobile applications and the continued growth expected in the telecoms sector , the group invested in Adcheck.
Adchek provides custom-developed mobile applications which enables a company's sales force to access and synchronise realtime data through cell phones.
The transaction was a strategic investment by Simeka to penetrate the field of mobile solutions, a high-growth profitable niche area.
On 1 April 2008, Simeka acquired 50% of the shares and claims on loan account against Adcheck. The cost of the acquisition was R5-million up to a maximum of R45-million over a period of three years
ITQ, a wholly owned subsidiary of Simeka, and Mindkey, a bespoke outsource development company, have entered into a joint venture terms of which the parties transferred contracts into a new company called ITQ Business Solutions.
Simeka has a 50,01% shareholding in ITQ BS through ITQ, and Mindkey the remaining 49,99%. The transaction was effective 1 December 2007.
On 1 June 2007, Simeka acquired 100% of the shares and voting rights in  Premium Ideas and its underlying foreign operation in Nigeria. The cost of  acquisition amounted to R144-million,.
During the year Simeka established a Microsoft division. In line with strategy to invest further into growing its Microsoft competencies, the group acquired 52% of Mint with effect from 1 December 2007 for a consideration of R5,140-million which was payable in cash. Simeka has the  option to purchase up to 80% of the shares in Mint.
On 14 December 2007, Simeka made the decision not to renew the in-warranty bench contract with Hewlett Packard in view of the poor performance  of the division of I-CSS and the consistent margin pressures. The ICSS bench division has subsequently discontinued trading.
Simeka concluded a sale of business agreement for the sale of Spec Systems for a consideration of R13,6-million with effect from 1 December 2007. This  resulted in a loss on sale of business and impairment of goodwill totaling R7,4-million being realised for the year ended 31 May 2008.
On 9 May 2008 Simeka made an offer to SUHL shareholders for the acquisition of 100% of the issued share capital of SUHL for a purchase consideration of up to 150-million Simeka shares. The offer was accepted by 94,3% of the SUHL shareholders and accordingly Simeka invoked the provisions of section 440k of the Companies Act.
On 2 June 2008 Simeka gave notice to all the who had not accepted the offer and on that date effectively acquired 100% of SUHL issued shares by issuing 150-million Simeka shares to SUHL shareholders in the ratio of 1:2.1 in full and final settlement of the purchase price.                                                                 
SUHL management have committed to a profit warranty  of R30-million attributable to equity holders for the period ended 31 May 2009, failing which Simeka will be entitled to claw-back up to 60-million Simeka shares.
The group, including SUHL and Adcheck, has secured contracts in hand over the next four to five years of more than R2-billion.
Public sector remains a growth area for the group in future.