Wrap Text
DCT - Datacentrix Holdings Limited - Audited results for the financial year
ended 29 February 2012
DATACENTRIX HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(REGISTRATION NUMBER: 1998/006413/06)
JSE SHARE CODE: DCT
ISIN: ZAE000016051
("Datacentrix" or "the group")
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2012
Key Financial Indicators
Revenue increased by 11.6% to R1.758 billion
Basic earnings per share ("EPS") increased by 0.7% to 46.4 cents
Headline earnings per share ("HEPS") increased by 1.3% to 46.9 cents
Cash on hand of R313.4 million, with no interest-bearing debt
Cash generated from operations of R79.1 million
Tangible net asset value per share increased by 11.5% from 205.4 to 229.0
cents
Net final dividend of 16.6 cents per share declared
Condensed Consolidated Statement of Comprehensive Income for the year ended 29
February 2012
Audited Audited
2012 2011
R`000 R`000
Revenue 1 757 762 1 575 739
Operating profit 123 447 124 438
Net interest received 11 964 12 794
Profit before taxation 135 411 137 232
Income taxation expense (44 567) (47 034)
Total comprehensive income attributable to 90 844 90 198
ordinary shareholders
Basic earnings per ordinary share (cents) 46.4 46.1
Diluted basic earnings per ordinary share (cents) 45.6 45.3
Declared net dividend per share (cents) 30.0 23.2
Earnings before interest, taxation, depreciation 145 227 150 091
and amortisation ("EBITDA")
Headline earnings per ordinary share (cents) 46.9 46.3
Diluted headline earnings per ordinary share 46.1 45.5
(cents)
Weighted average number of shares in issue* 195 798 195 798
(000`s)
Weighted average number of shares in issue for 199 016 199 190
the purpose of dilution* (000`s)
*adjusted for treasury shares
Reconciliation between comprehensive income
attributable to ordinary shareholders and
headline earnings
Earnings attributable to ordinary shareholders 90 844 90 198
Loss on sale of property and equipment 906 425
Headline earnings 91 750 90 623
Condensed Consolidated Statement of Financial Position as
at 29 February 2012
Audited Audited
2012 2011
R`000 R`000
ASSETS
Non-current assets 104 122 76 997
Property and equipment 38 845 37 536
Intangible assets 22 694 17 950
Investment in joint venture 1 022 -
Long-term receivables 284 -
Finance lease receivables - long-term 17 503 -
Deferred taxation assets 23 774 21 511
Current assets 653 211 585 444
Current taxation assets 4 025 154
Finance lease receivables - short-term 11 202 -
Inventories 34 764 10 877
Trade and other receivables 289 843 253 243
Cash and cash equivalents 313 377 321 170
TOTAL ASSETS 757 333 662 441
EQUITY AND LIABILITIES
Capital and reserves 471 053 420 027
Share capital 21 21
Share premium 37 522 37 544
Treasury shares (39 720) (38 799)
Equity-settled share scheme reserve 30 101 24 761
Retained earnings 443 129 396 500
Non-current liabilities 40 363 18 292
Deferred revenue - long-term 25 241 18 292
Finance lease payables - long-term 15 122 -
Current liabilities 245 917 224 122
Trade and other payables 184 530 177 773
Provisions 1 640 1 500
Deferred revenue - short-term 48 005 42 962
Finance lease payables - short-term 8 958 -
Lease smoothing liability 2 784 1 887
TOTAL EQUITY AND LIABILITIES 757 333 662 441
Net asset value (adjusted for treasury shares) per share 240.6 214.5
(cents)
Tangible net asset value (adjusted for treasury shares) 229.0 205.4
per share (cents)
Weighted average number of shares in issue (000`s) 195 798 195 798
Condensed Consolidated Statement of Changes in Equity for the year ended 29
February 2012
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 28 February 21 37 442 (38 200) 17 872 366 017 383 152
2010
Total comprehensive - - - - 90 198 90 198
income for the year
Treasury shares - - - (599) - - (599)
movement during the year
Share-based payment - - - 6 889 - 6 889
Dividend paid - - - - (59 715) (59 715)
Profit on sale of - 102 - - - 102
treasury shares
Balance at 28 February 21 37 544 (38 799) 24 761 396 500 420 027
2011
Total comprehensive - - - - 90 844 90 844
income for the year
Treasury shares - - - (921) - - (921)
movement during the year
Share-based payment - - - 5 340 - 5 340
Dividend paid - - - - (44 215) (44 215)
Loss on sale of treasury - (22) - - - (22)
shares
Balance at 29 February 21 37 522 (39 720) 30 101 443 129 471 053
2012
Condensed Consolidated Statement of Cash Flows for the year ended 29
February 2012
Audited Audited
2012 2011
R`000 R`000
Profit before taxation 135 411 137 232
Adjusted for non-cash items 14 285 20 467
Working capital changes (70 587) 5 418
- Inventories (23 887) 2 005
- Trade and other receivables (36 884) (32 806)
- Finance lease receivables (28 705) -
- Trade and other payables 18 889 36 219
Cash generated from operations 79 109 163 117
Net interest received 14 615 12 794
Dividend paid (44 215) (59 715)
Taxation paid (50 701) (55 307)
Net cash (outflow) inflow from operating activities (1 192) 60 889
Net cash outflow from investing activities (29 760) (23 956)
Net cash inflow (outflow) from financing activities 23 159 (599)
Net (decrease) increase in cash and cash equivalents (7 793) 36 334
Cash and cash equivalents at the beginning of the year 321 170 284 836
Cash and cash equivalents at the end of the year 313 377 321 170
Basis of Preparation
The audited condensed financial statements were prepared under the supervision
of Mrs Elizabeth Naidoo CA(SA), the Financial Director.
The audited condensed financial statements of the group are prepared as a
going concern on a historical cost basis except for certain financial
instruments, at amortised cost or fair value. The audited condensed 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 AC 500 standards as issued by the
Accounting Practices Board 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.
Auditors` Opinion and Subsequent Events
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 29 February 2012. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. These summarised provisional 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 their audit report is available for inspection at 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
auditors. Business Connexion was granted an Anton Piller order by the high
court against Datacentrix. The matter is still under investigation. There were
no other material subsequent events that required disclosure.
Nature of the Business
Datacentrix is a South African based black empowered company that supplies
high performing and secure Information Technology ("IT") solutions to the
country`s corporate and public sectors. It provides a comprehensive offering,
ranging from the core areas of infrastructure and business solutions, to
outsourcing and other related IT services, positioning it as a long-term
strategic partner of choice to clients.
Commentary
The directors of Datacentrix are pleased to announce its audited annual
financial results for the year ended 29 February 2012, reflecting the
company`s transformation from a largely single vendor, product and
transactional business to one that is a best of breed solutions and services-
led integrator.
The group showed organic revenue growth of 11.6 percent from R1.576 billion to
R1.758 billion, a creditable performance in light of the windfall earnings,
flowing from the once-off FIFA World Cup ("World Cup") event in the previous
financial year. Group revenue grew by 15 percent excluding World Cup income.
Government`s continued lack of IT expenditure has further impacted
performance.
Profit after tax ("PAT") showed a nominal increase at R90.844 million for the
period, due to a decline in EBITDA margins from 9.5 percent to 8.3 percent.
The group margin was affected by higher expenditure relating to additional
resource investment in new competencies. This includes investments in
technical skills resources in infrastructure security and networking
competencies, capital investment in IT infrastructure and a new Security
Operation Centre ("SOC"), one of only two of its kind in South Africa. The
organic growth strategy utilises the Statement of Comprehensive Income instead
of the Statement of Financial Position, impacting on short- to medium-term
performance.
The change in the cash conversion ratio is due to the transition in the
business model up the value chain. Closing cash balance was R313.4 million.
The group has no interest-bearing debt. Tangible net asset value per share
increased from 205.4 cents to 229.0 cents.
The Managed Print Services business unit has entered into printing solution
transactions where the hardware components forming part of the contract are
leased to the client. In most instances these assets have been financed by
Datacentrix based on back-to-back agreements between the supplier and the
client, which has resulted in the finance lease payables to suppliers and
finance lease receivables from clients being reflected on the statement of
financial position.
Segmental Analysis
Infrastructure Managed Services Business
Solutions
29 Feb 28 Feb 29 Feb 28 Feb 29 Feb 28 Feb
2012 2011 2012 2011 2012 2011
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 1 342 1 158 329 989 338 031 84 935 79 182
838 526
Operating profit 60 607 71 031 40 631 33 635 22 209 19 772
Net interest received - - (2 116) - - -
Profit before 60 607 38 515 22 209
taxation 71 031 33 635 19 772
Income tax expense (16 991) (10 (6 218)
(19 889) 784) (9 418) (5 536)
- normal and deferred
taxation (16 991) (19 889) (10 (9 418) (6 218) (5 536)
784)
- secondary taxation - - -
on companies - -
-
Comprehensive income 43 616 51 142 27 731 15 991
for the year 24 217 14 236
attributable to
ordinary shareholders
Corporate Total Group
29 Feb 28 Feb 29 Feb 28 Feb
2012 2011 2012 2011
R`000 R`000 R`000 R`000
Revenue - - 1 757 1 575 739
762
Operating profit - - 123 447 124 438
Net interest received 14 080 12 794 11 964 12 794
Profit before 14 080 135 411
taxation 12 794 137 232
Income tax expense (10 574) (12 191) (44 567) (47 034)
- normal and deferred
taxation (5 939) (5 930) (39 932) (40 773)
- secondary taxation (4 635) (6 261) (4 635) (6 261)
on companies
Comprehensive income 3 506 603 90 844
for the year 90 198
attributable to
ordinary shareholders
The prior year results as included in the above segmental analysis were
changed for a more accurate reflection of the revenue lines.
Operational Review
Changing market conditions necessitated the transformation of the business to
a solutions and services-led integrator. This strategy has led to the growth
of new and more sustainable revenue streams which have helped to preserve what
would otherwise have been a rapidly declining revenue base. The change in
strategy has assisted in compensating for the deterioration of revenue from
the group`s traditional lines of business.
The group is satisfied with the overall progress in the performance of its
divisions. The Infrastructure division contributed 48 percent to group PAT,
while the Managed Services and Business Solutions divisions added 31 percent
and 18 percent respectively. The contributions by the Managed Services and
Solutions divisions now account for half of group PAT. These divisions
produced pleasing effective margins of 12.3 percent and 26.1 percent
respectively.
Infrastructure
As part of the group`s transformation, the Infrastructure division has evolved
towards becoming a solutions provider within the infrastructure segment of the
market. It continues to be a leading provider of total, integrated IT
solutions and related services, from consulting, designing, provisioning,
deployment through to on-going support.
The PAT decline is occasioned by an increase in investment in technical
capabilities. The division is currently the largest and premier certified HP
partner in the local market and is seen as a sizeable HP player, not only in
South Africa, but also the Middle East, Mediterranean and Africa ("MEMA")
region. HP attested to this fact when Datacentrix was recently awarded seven
different accolades by the company.
The division is now among the top three IBM local business partners.
Investments were made in pre- and post-sales skills and the unit is currently
one of the highest skilled business partners from a services perspective.
The Infrastructure division has expanded its capability, becoming a strategic
partner to a number of new vendors. This is recognised by the awards bestowed
on the division, which includes attaining platinum level partner status with
Symantec, as well as Storage Management and High Availability specialisation
accreditations. The Storage Solutions business unit garnered five Symantec
awards. In addition, the newly established Security unit won four awards from
McAfee. The division was named as NetApp partner of the year, as well as
VMware`s highest revenue partner of the year and OEM reseller of the year. The
division houses some of the highest certified VMware skilled resources in the
country. Datacentrix was also gratified to receive the award for having one of
only two VMware Certified Design Expert ("VCDX") skills in Africa.
Within the Infrastructure division, the private sector continues to make good
inroads and gained a number of new blue chip clients over the past year. The
company`s refocused strategy has given impetus to the growth experienced in
this sector.
Public sector activity continues to be challenging and has had an adverse
effect on divisional profitability. The sector continues to underspend.
However, the group is of the view to maintain its investment in resources in
this arena in order to benefit optimally from IT spend as it may arise.
Managed Services
Datacentrix` Managed Services division had an expected performance decline in
the Managed Print Services ("MPS") business, following windfall revenues in
the previous year from the World Cup.
The Outsourcing business unit however, showed healthy double-digit growth for
the financial year. Services provided by the unit range from selective
outsourcing to total outsourcing. It is envisaged that further investments
will be made to enhance the unit`s capability, which will drive efficiencies
and have a positive impact on service delivery.
The Resourcing business also showed double digit growth for the year
contributing further to the groups` revenue diversification strategy. The unit
provides IT skills to the market, an offering that has been well accepted in
light of the severe skills shortage. In addition the unit is implementing a
skills development strategy in collaboration with its clients.
The Managed Services division has provided excellent levels of service over
the past year and boasts a number of nationally recognised clients. The
division is committed to delivering solutions that enable its clients to use
technology as a strategic asset in achieving business objectives, while at the
same time, reducing cost and risk. In support of this strategy, Datacentrix is
investing in technology, people and processes that will improve operational
efficiencies and reduce risk.
Business Solutions
The Business Solutions division grew divisional PAT by 12.3 percent, supported
by good performances in the Enterprise Content Management ("ECM") and the
Business Intelligence ("BI") sectors. The business unit has the largest
services capabilities in the market and is focused on enterprise content
management, Business Process Management ("BPM") and Information Lifecycle
Management ("ILM") spaces. The ECM business unit has strengthened its
position, successfully joining the OpenText Partner Programme for SAP
Competence, as well as becoming a SAP Special Expertise partner. This
agreement with OpenText, a global ECM leader, recognises Datacentrix` capacity
to deliver and support products of the OpenText ECM Suite for SAP Solutions
The BI business unit, whilst still small, has shown good results for the
period after a skills injection last year. In order to assist local businesses
in improving Microsoft SharePoint user adoption, this unit also recently
introduced a new service, providing on-demand video tutorial training for end
users, administrators and developers.
Prospects
Market consolidation will continue, attested to by the recent numerous
acquisitions by HP and IBM. Consolidation has been driven principally by one
or two listed companies.
BMI Research forecasts the South African ICT industry to reach around R75
billion over 2012. However, South African businesses are expected to remain
cautious when it comes to investments in technology, due to continued global
economic uncertainty. The local IT market five year compound annual growth
rate ("CAGR") is anticipated to remain within the high single- and low double-
digit range.
Datacentrix` transition to a services-led solutions provider is set to
continue over the next year. The group is already offering, and has been
recognised for its capability to deploy cloud infrastructure, recently winning
one of the larger e-mail cloud opportunities in the marketplace. As cloud
technology matures, the group will continue to make the necessary investment
in both "white label" cloud solutions and building its own cloud
infrastructure.
The IT landscape is highly competitive from a skills perspective due to
scarcity. Datacentrix has set up a learnership programme aimed at school
leavers and those with basic IT qualifications. The group is also seeking out
unemployed graduates, with the relevant qualifications to provide permanent
employment and to develop specialised skills.
Black Economic Empowerment
Datacentrix has been engaged in a process to improve its black ownership
component of the BEE score card. The group expects to confirm that it now
meets the 30% black ownership requirements of the draft ICT Charter. This
ownership is unencumbered, unrestricted and not locked-in, derived partly from
institutional ownership. The responsibility remains to secure long-term,
sustainable black ownership, in a manner which does not unduly dilute current
shareholders. The group now expects to qualify for a Level 3 status.
The Board
Troy Dyer resigned from the board in October 2011. The board thanks him for
his contribution. There are no other changes to the board.
Dividend
In respect of the current year, the directors declared a gross final dividend
of 19.53 cents, which is a departure from the normal two times headline
earnings per share cover. The final dividend has not been included as a
liability in these financial statements as it was declared subsequent to year
end. The proposed dividend for February 2012 is payable to all shareholders on
the Register of members on 18 May 2012. 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 19.53 cents per share;
- the dividend tax to be withheld by the Company amounts to 2.93 cents per
share;
- therefore the net dividend payable to shareholders who are not exempt from
dividends tax amounts to 16.6 cents per share, while the gross dividend
payable to shareholders who are exempt from dividends tax amounts to 19.53
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.
Therefore a total net annual dividend of 30.0 cents per share, which includes
the net interim dividend of 13.4 cents per share paid on 31 October 2011, has
been declared for the year.
Declaration date: Tuesday, 17 April 2012
Last day to trade: Friday, 11 May 2012
Shares trade ex-dividend: Monday, 14 May 2012
Record date: Friday, 18 May 2012
Payment date: Monday, 21 May 2012
Share certificates may not be dematerialised or rematerialised between Monday,
14 May 2012 and Friday, 18 May 2012, both days inclusive.
Annual General Meeting
It is expected that the annual report will be dispatched to shareholders no
later than 18 May 2012. Notice is hereby given that the AGM of the group will
be held at the Datacentrix` registered office on Friday, 15 June 2012 at
10:00.
For and on behalf of the Board:
Gary Morolo, Non-executive chairman
Ahmed Mahomed,Chief Executive Officer
16 April 2012
Gary Morolo (Non-executive Chairman), Ahmed Mahomed (CEO), Alwyn Martin*, Dudu
Nyamane*, Elizabeth Naidoo (FD), Joan Joffe*, Thenjiwe Chikane*
*independent, non-executive
Company Secretary: Ithemba Governance and Statutory Solutions (Proprietary)
Limited
Registered Office: Sage Corporate Park North, 238 Roan Crescent, Old Pretoria
Road, Midrand
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited,
70 Marshall Street, Johannesburg
Sponsor: Merchantec Capital, 2nd Floor, North Block, Hyde Park Office Tower,
Corner 6th Rd and Jan Smuts Ave
17 April 2012
Date: 17/04/2012 12:07:01 Supplied by www.sharenet.co.za
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