Farewell to CSH

By Iain Scott, ITWeb group consulting editor

Johannesburg, 23 Dec 2004

The termination of CS Holding`s (CSH`s) JSE listing next month ends the final leg of a 14-year journey.

The group was formed in August 1990 as the computer services division of auditing firm, but as the IT market took off, it was concluded that the business had to spin off to take advantage.

The result was a management buyout of the Gauteng business in April 1996, with the company being named CS Computer Services.

After carrying out several acquisitions and establishing a national footprint, CS Computer Services listed on the JSE`s Development Capital Market in September 1998, transferring later to the main board.

After several acquisitions, as well as organic growth, CSH grew its revenue from R27 million in its first year of listing to R503.3 million in the year to June 2004.

However, the group fell onto hard times this year, leading to the acquisition by Bytes Technology Group.

Troubles

The troubles began in February when allegations were made about the accounting treatment of the disposal of a business and subsequent reversal of the deal.

CEO Annette van der Laan resigned later that month, saying she was leaving in the interests of the company and as a result of the negative publicity around the issue.

This was despite an internal investigation clearing her of wrongdoing.

The subsequent fall in the CSH share price brought a queue of companies looking to buy the group, but after several decided not to make an offer, Bytes emerged as the preferred bidder.

Previous suitors included fellow listed companies Reunert, UCS Group and Enterprise Outsourcing Holdings.

The need for CSH to be acquired became clear at the end of September when the group released its results for the year to June.

A net loss of R164.54 million was recorded, along with a headline loss of 41.97c a share. Worse still, at the end of June CSH had a negative net asset value per share of 5.61c, as well as a negative net tangible asset value of 14.8c a share.

At the time, acting CEO Dave Vink, who resigned last week, said the group`s financial position meant it was now dependent on the support of its bankers, which would not be possible without the backing of a "white knight".

With shareholders owning almost 99% of CSH`s issued share capital having accepted the Bytes offer, CSH is being merged with Bytes and delisted on 20 January.

o An earlier version of this article suggested that CSH`s listing was being terminated in December 2004. The delisting is in fact scheduled for 20 January.