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Preliminary audited results for the year ended 28 February 2014, final dividend declaration and notice of AGM
DATACENTRIX HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/006413/06)
Share code: DCT
ISIN: ZAE000016051
(“Datacentrix” or “the Group” or “the Company”)
PRELIMINARY AUDITED CONDENSED CONSOLIDATED RESULTS FOR THE FINANCIAL YEAR ENDED 28
FEBRUARY 2014, FINAL DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
Key financial indicators
- Revenue increased by 19% to R2.3 billion
- EBITDA increased by 21% to R152.4 million
- Headline earnings per share increased by 15% to 45.6 cents
- Cash generated from operations of R142.6 million
- Cash on hand of R203 million, with no interest-bearing debt related to operations
- Net asset value per share increased by 9% from 251.1 to 274.7 cents
Condensed Consolidated Statement of Comprehensive Income for the year ended 28 February 2014
Audited Audited
2014 2013
R’000 R’000
Revenue 2 279 512 1 919 487
Operating profit 125 290 106 163
Net interest received 1 174 6 356
Profit before taxation 126 464 112 519
Taxation (37 539) (35 199)
Total comprehensive income attributable to ordinary shareholders 88 925 77 320
Basic earnings per ordinary share (cents) 45.4 39.5
Diluted basic earnings per ordinary share (cents) 45.2 39.0
Total declared dividend per share (cents) 20.49 19.7
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) 152 398 126 341
Headline earnings per ordinary share (cents) 45.6 39.6
Diluted headline earnings per ordinary share (cents) 45.4 39.1
Weighted average number of shares in issue* (000s) 195 798 195 798
Weighted average number of shares in issue for the purpose of dilution* (000s) 196 804 198 024
*adjusted for treasury shares
Reconciliation between earnings attributable to ordinary shareholders and headline
earnings
Earnings attributable to ordinary shareholders 88 925 77 320
Loss on sale of property and equipment 374 142
Headline earnings 89 299 77 462
Condensed Consolidated Statement of Financial Position as at 28 February 2014
Audited Audited
2014 2013
R’000 R’000
ASSETS
Non-current assets 206 109 190 216
Property and equipment 69 006 66 682
Intangible assets – business combination 91 516 56 927
Intangible assets – software 9 646 10 277
Investment in joint venture 914 744
Finance lease receivables – long-term 7 191 30 266
Deferred taxation assets 27 836 25 320
Current assets 756 190 707 815
Current taxation assets 11 844 -
Finance lease receivables – short-term 19 271 24 661
Inventories 44 408 36 500
Trade and other receivables 478 130 372 893
Cash and cash equivalents 202 537 273 761
TOTAL ASSETS 962 299 898 031
EQUITY AND LIABILITIES
Capital and reserves 537 943 491 630
Share capital 21 21
Share premium 36 079 35 962
Treasury shares (42 766) (42 335)
Equity-settled share scheme reserve 43 161 37 801
Retained earnings 501 448 460 181
Non-current liabilities 39 125 47 800
Deferred revenue – long-term 13 175 18 126
Loan payable – long-term 18 793 -
Finance lease payables – long-term 7 157 29 674
Current liabilities 385 231 358 601
Trade and other payables 306 872 237 420
Deferred revenue – short-term 53 284 43 775
Finance lease payables – short-term 18 565 22 591
Current tax liabilities 112 6 028
Loans payable – short-term 3 517 45 750
Lease smoothing liability 2 881 3 037
TOTAL EQUITY AND LIABILITIES 962 299 898 031
Net asset value (adjusted for treasury shares) per share (cents) 274.7 251.1
Tangible net asset value (adjusted for treasury shares) per share (cents) 223.1 216.8
Weighted average number of shares in issue (000s) 195 798 195 798
Condensed Consolidated Statement of Changes in Equity for the year ended 28 February 2014
Equity
settled
share
Share Share Treasury scheme Retained
capital premium shares reserve earnings Total
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 29 February 2012 21 37 522 (39 720) 30 101 443 129 471 053
Total comprehensive income for the year - - - - 77 320 77 320
Treasury shares – movement during the
year - (1 560) (2 615) - - (4 175)
Share-based payment - - - 7 700 - 7 700
Dividend paid - - - - (60 268) (60 268)
Balance at 28 February 2013 21 35 962 (42 335) 37 801 460 181 491 630
Total comprehensive income for the year - - - - 88 925 88 925
Treasury shares – movement during the
year - 117 (431) - - (314)
Share-based payment - - - 5 360 - 5 360
Dividend paid - - - - (47 658) (47 658)
Balance at 28 February 2014 21 36 079 (42 766) 43 161 501 448 537 943
Condensed Consolidated Statement of Cash Flows for the year ended 28 February 2014
Audited Audited
2014 2013
R’000 R’000
Profit before taxation 126 464 112 519
Adjusted for non-cash items 28 076 11 765
Working capital changes (11 913) (67 737)
- Inventories (7 261) (1 736)
- Trade and other receivables (100 886) (75 402)
- Finance lease receivables 28 465 (26 222)
- Trade and other payables 67 769 35 623
Cash generated from operations 142 627 56 547
Net interest received 4 727 10 653
Dividend paid (47 658) (60 268)
Taxation paid (60 414) (28 406)
Net cash inflow/(outflow) from operating activities 39 282 (21 474)
Net cash outflow from investing activities (60 092) (89 462)
Net cash (outflow)/inflow from financing activities (50 414) 71 320
Net decrease in cash and cash equivalents (71 224) (39 616)
Cash and cash equivalents at the beginning of the year 273 761 313 377
Cash and cash equivalents at the end of the year 202 537 273 761
Basis of preparation
The audited condensed consolidated financial statements for the year ended 28 February 2014 were prepared under the supervision
of Mrs Elizabeth Naidoo CA (SA), the Group Financial Director.
This preliminary report is extracted from audited information, but is not itself audited. The board of directors of Datacentrix (“the
Board”) take full responsibility for the preparation of this preliminary report and that the financial information has been correctly
extracted from the underlying annual financial statements.
The audited condensed financial statements of the Group are prepared as a going concern on a historical cost basis except for
certain financial instruments, which are stated at fair value as applicable. The audited condensed consolidated annual financial
statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (“IFRS”), 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 and the information
as required by IAS 34: Interim Financial Reporting, the Listings Requirements of JSE Limited, and the Companies Act of South Africa
(Act 71 of 2008), as amended. The principal accounting policies, which comply with IFRS, have been consistently applied in all
material respects in the current and comparative years. All new interpretations and standards were assessed and adopted with no
material impact. The accounting policies applied in the condensed financial statements are the same as those applied in the Group’s
financial statements.
Auditor’s opinion and subsequent events
The auditor, SizweNtsalubaGobodo Inc., has issued its opinion on the Group’s financial statements for the year ended 28 February
2014. The audit was conducted in accordance with International Standards on Auditing. SizweNtsalubaGobodo has issued an
unmodified audit opinion. These condensed consolidated financial statements have been derived from the Group financial statements
and are consistent in all material respects with the Group financial statements. A copy of the audit 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. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s
engagement they should obtain a copy of the audit report together with the accompanying financial information from the Company’s
registered office. Any reference to future financial performance included in this announcement has not been reviewed or reported on
by the Company’s auditor. Other than mentioned in this report, there were no material subsequent events that required disclosure.
The business of Datacentrix
Datacentrix is an integrated ICT systems provider to corporate and public sector organisations in South Africa. The Group’s
comprehensive portfolio, proven execution capability and value-driven strategy underpin its position as one of the leading local ICT
players. The Group consists of three operational divisions: Managed Services, Business Solutions and Technology (previously
Infrastructure division).
Overview
Datacentrix seeks to focus on enhancing shareholder value by optimising and enhancing the performance of its existing business
portfolio and expanding those selected capabilities that offer the greatest potential for sustainable growth. The Group has largely
completed the implementation of its organic growth strategy having built the competencies required to become an effective player in
the systems integrator and solutions provider space. The Group will complement this strategy with focused acquisitions, which will
require cash resources.
The Board is pleased to announce the results for the financial year ended 28 February 2014. The Group is in a robust position, with
strong operations and a sound balance sheet. The Group achieved healthy revenue growth of 19%, within the context of a
challenging trading environment. This was supported by strong growth in the Managed Services and Technology areas of the
business.
Group revenue of R2.3 billion was achieved for the year. EBITDA grew by 21% to R152.4 million, with EBITDA margin of 6.7%.
Earnings after tax increased from R77.3 million to R88.9 million and headline earnings per share (“HEPS”) grew by 15% from 39.6
cents to 45.6 cents.
The Group maintained sound financial and operational disciplines, with cash generated from operating activities amounting to R142.6
million, reflecting a closing cash balance of R203 million. Cash was utilised in the reporting period for settling the consideration of
acquisitions (R57.8 million), returned to shareholders (R47.7 million) and tax obligations (R60.4 million). Capital expenditure has
resulted in higher depreciation and amortisation charges of 38%.
In the current year, the contractual terms of leases entered into with finance houses have been amended resulting in these
transactions now being classified as operating leases, instead of the finance lease agreements entered into previously. These are
contracts which fall into the managed document and print solutions unit and relate to customer transactions.
Operational review
Group performance was categorised by strong earnings growth in Managed Services as well as solutions sales in the Technology
division of the business. The continued focus on intelligent, higher value solutions is contributing positively to Group performance,
with areas such as managed services, security, datacentre and storage solutions in particular, gaining momentum in the market.
With the investment in new capabilities largely completed, the growth of employee-related costs normalised. Other operational
expenditure was reviewed to drive cost efficiencies, resulting in total costs being well managed.
The Managed Services division contributed 49%, Technology 37% and Business Solutions 11% of Group profit before tax (“PBT”).
Segmental analysis
Business
Managed Services Technology Solutions Corporate Total Group
28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 518 222 414 690 1 596 935 1 375 218 164 355 129 579 - - 2 279 512 1 919 487
EBITDA 80 695 55 169 56 322 47 747 15 381 23 425 - - 152 398 126 341
Operating
65 766 44 314 46 923 39 074 13 975 23 161 (1 374) (386) 125 290 106 163
profit
Net interest
(paid)/received (3 349) (3 884) - - - - 4 523 10 240 1 174 6 356
Profit before
62 417 40 430 46 923 39 074 13 975 23 161 3 149 9 854 126 464 112 519
taxation
Taxation (18 538) (11 320) (13 935) (12 113) (4 150) (6 486) (916) (5 280) (37 539) (35 199)
Total
comprehen-
sive income 43 879 29 110 32 988 26 961 9 825 16 675 2 233 4 574 88 925 77 320
Managed Services
Revenue in the Managed Services division grew by 25%, with healthy contributions from the outsourcing, managed print and
document solutions businesses, and eNetworks. Aided by the acquisition of eNetworks (as announced on SENS on 27 August 2013),
EBITDA grew by 46% in the division, with a healthy operating margin of 12.7%, contributing 49% to Group PBT. Operating margins
improved significantly, notwithstanding a 38% increase in depreciation charges as a result of investments in supporting infrastructure.
The Managed Services division offers end-to-end managed services, always-available monitoring and support, and innovative cloud
services. The Group is also well positioned to take advantage of cloud opportunities with the launch of its flexible cloud computing
offering. In March 2014, the organisation introduced an Infrastructure as a Service (IaaS) solution, adding a new dimension to its
existing cloud services.
The division’s portfolio further encompasses: service aggregation; always-on service desk; managed systems; managed networks;
managed entry point; network and system monitoring and control; managed hosting; colocation; managed print and document
solutions; security operations centre (SOC); electronic fraud management and managed talent solutions.
Technology
The Technology division contributed 37% to Group PBT, with year-on-year revenue growth of 16%. We have seen a positive
contribution from organic growth investment areas, such as security, datacentre solutions and networking.
The division was renamed to more accurately reflect its transformation to a solutions business. Competencies housed within the
Technology division include: unified communications; networking and datacentre capability; – including the ability to deploy cloud
solutions; complex storage solutions; server platform solutions; end user computing, including a customisable procurement portal;
and security solutions.
Datacentrix is supported by top-level vendor accreditations with best of breed vendors and has managed to secure and retain some
of the scarcest and capable skills in the market; which investments are starting to yield returns. The organisation is a significant
player in HP’s Europe, Middle East and Africa partner programme. The division garnered no less than 10 of the 12 top awards at the
HP partner event held in November 2013.
Furthermore, Datacentrix was named Africa’s first “Diamond” level partner by Riverbed Technology in recognition of our outstanding
track record of sales success, as well as our technical and support capabilities.
Business Solutions
Revenue in the Business Solutions division increased by 27%, while EBITDA decreased by 34% due to the challenges experienced
with a specific client, as highlighted in our August 2013 interim results announcement. The issues experienced in the first half of the
year in the Enterprise Information Management (“EIM”) Gauteng operations were successfully addressed, resulting in 81% of the
division’s R15.3 million EBITDA being generated in the second half.
The Business Solutions division enables organisations to take advantage of the information that is constantly being created and
stored in their ICT infrastructures. There are three key solution focus areas, namely: EIM; business intelligence (“BI) and analytics;
and enterprise resource planning (“ERP”).
The EIM business is one of the leading EIM solutions providers in the country. Datacentrix is the only Platinum Partner for OpenText
in South Africa and is also a Global Alliance partner. The Group has, in particular, enhanced its management capability, skills and
expertise in the Gauteng region.
Prospects
Datacentrix is a well-positioned services and solutions-led organisation that is successfully competing in its selected areas of
competence. The Group believes that this positioning will fortify its reputation as one of the leading ICT players within the local
market. As with the rest of the market, the organisation will have to contend with the external challenges presented by an uncertain
economic environment and tightening IT budgets in the coming year.
The Group portfolio has been significantly expanded with growth potential in all areas. Datacentrix will continue to pursue suitable
acquisition opportunities to create critical mass in selected areas and to further expand the portfolio.
The launch of its cloud services offering, while negatively impacting profitability in the short-term, will serve the Group well in terms of
capitalising on future cloud opportunities.
Corporate activity
The Competition Commission approved the Pinnacle Holdings Limited acquisition of Datacentrix shares in November 2013. As at the
date of this report, its shareholding in Datacentrix, net of treasury shares, stands at 34.9%.
Changes to the Board
The following changes to the Board occurred during the period under review:
- Ms Thenjiwe Chikane resigned as an independent non-executive director with effect from 19 August 2013.
- Mr Gary Morolo resigned as director and non-executive chairman of the Board with effect from 8 November 2013.
- Messrs Peter Backwell, lead independent non-executive director and interim chairman, and Antony Ball, independent non-
executive director, resigned with effect from 15 November 2013.
- Messrs Arnold Fourie and Takalani Tshivhase were appointed as non-executive directors with effect from 15 November 2013. Mr
Tshivhase subsequently stepped down from the Board with effect from 27 March 2014.
- Ms Nolitha Fakude was appointed as an independent non-executive director and chairperson of the Board with effect from 1
March 2014.
Black economic empowerment
Datacentrix holds a Level 2 (AAA) B-BBEE Contributor status, with 125% procurement recognition.
Dividend
The Board has revised its dividend policy to three times headline earnings cover to align the policy to the Group’s acquisitive growth
strategy. This has been applied to the second half of the year.
The Board declared a gross cash dividend of 8.17 cents per share for the year ended 28 February 2014, bringing the total dividend
for the year to 20.49 cents per share. The proposed dividend for the year ended 28 February 2014 is payable to all shareholders on
the Register of Members on 16 May 2014. In terms of the dividends tax, effective 1 April 2012, the following additional information is
disclosed:
- the local dividend tax rate is 15%;
- the dividends will be payable from income reserves;
- no STC credits have been utilised. Accordingly, the dividend to utilise in determining the dividends tax is 8.17 cents per share;
- the dividend tax to be withheld by the Company amounts to 1.2255 cents per share;
- therefore the net dividend payable to shareholders who are not exempt from dividends tax amounts to 6.9445 cents per share,
while the gross dividend payable to shareholders who are exempt from dividends tax amounts to 8.17 cents per share;
- the issued share capital of the Company at the declaration date comprises of 205 265 683 ordinary shares; and
- the Company’s income tax reference number is 9739/002/71/6.
Declaration date: Tuesday, 15 April 2014
Last day to trade: Friday, 9 May 2014
Shares trade ex-dividend: Monday, 12 May 2014
Record date: Friday, 16 May 2014
Payment date: Monday, 19 May 2014
Share certificates may not be dematerialised or rematerialised between Monday, 12 May 2014 and Friday, 16 May 2014, both days
inclusive.
Notice of Annual General Meeting
It is expected that the 2014 Integrated Annual Report will be dispatched to shareholders no later than 30 May 2014. Notice is hereby
given that the Annual General Meeting of the Group will be held at the Company’s registered office, Corporate Landing, Corporate
Park North, 238 Roan Crescent, 1685, Old Pretoria Road, Midrand, at 10:00 on Friday, 27 June 2014.
The Board has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act, the record date for the
purposes of determining which shareholders of the Company are entitled to participate in and vote at the Annual General Meeting is
Friday, 20 June 2014. Accordingly, the last day to trade in the Company’s shares in order to be recorded in the Register to be entitled
to vote will be Thursday, 12 June 2014.
For and on behalf of the Board:
Nolitha Fakude Ahmed Mahomed
Chairman Chief Executive Officer
15 April 2014
Nolitha Fakude* (Chairman), Ahmed Mahomed (Chief Executive Officer), Alwyn Martin*, Arnold Fourie# , Dudu Nyamane*, Elizabeth
Naidoo (Group Financial Director), (*independent, non-executive) (#non-executive)
Company secretary: iThemba Governance and Statutory Solutions Proprietary Limited
Registered office: Corporate Park North, 238 Roan Crescent, Old Pretoria Road, Midrand
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg
Sponsor: Merchantec Capital
Date: 15/04/2014 09:07:00 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.
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