Wrap Text
Group audited results for the year ended 30 June 2012
DigiCore Holdings Limited
Co. Reg. No: 1998/012601/06
JSE code: DGC ISIN: ZAE000016945
("DigiCore" or "the company" or "the group")
GROUP AUDITED RESULTS
FOR THE YEAR ENDED 30 JUNE 2012
R844 MILLION
REVENUE
R107 MILLION
EBITDA
78 013
SYSTEMS SHIPPED
COMMENTARY
The board presents its results for the financial year ended 30 June 2012. DigiCore has continued to grow revenue with a pleasing increase
of 19% for the year to R844 million during tough economic times.
This increased revenue has unfortunately been eroded by higher overhead costs, resulting in an 18% decline in EBITDA to R107 million.
The growth differential between revenue and profitability is mainly due to further Minorplanet integration costs in the UK and an additional
investment in resources and working capital associated with the Discovery Insure operational roll-out.
DigiCore has progressed with its strategy of converting to a service and subscription revenue stream model to maximise future revenue
and profitability. This strategy has, however, negatively impacted short to medium-term working capital requirements.
The UK has returned a disappointing financial result for the year. Additional management changes have been made. The integration of
Minorplanet into the group's operations continued in the review period, with additional operational and restructuring costs incurred from
the legacy business. A significant investment was made to create operational capacity to access insurance telematics markets in the UK.
We have continued our substantial investment in maintaining our technology leadership through our in-house R&D department, with new
products being released over the past and coming year.
Financial overview
Group revenue increased by 19% to R844 million (2011: R712million) over the reporting period. Continued growth in annuity bond revenue
was supported by an additional 78 013 systems shipped in the period. The South African market distribution entities increased revenue
by 11% for the year, while international distribution entities increased revenue by 42% to R281 million (2011: R198 million). The increase in
international revenue was supported by the first-time consolidation of Ctrack (Pty) Limited (Australia) from 1 July 2011.
On the back of a pleasing 19% increase in revenue, gross profit has increased by 22% to R592.6 million (2011: R484.4 million). Gross profit
margins for the group improved to 70% (2011: 68%).
EBITDA prior to the adjustment for more prudent working capital management policies has increased to R143.2 million for the year.
The net impact of this once-off adjustment has caused EBITDA to contract to R106.9 million (refer to note 3).
Except for exceptional items, operating expenses for the year were well managed within the budget approved at the beginning of the
year. Increased fixed overheads were driven by a higher headcount and further investment in the operational roll out of the insurance
telematics solution. The increase in the fixed overhead structure is largely supported by the increased annuity revenue stream. Annuity
revenue has now achieved a sustainable level of approximately 50% of group revenue.
Managing working capital remains a top management priority. During the year, management assessed the local and international
macroeconomic environment. To mitigate any risks derived from these economic drivers, all policies relating to management of accounts
receivable and inventories were reviewed. A more prudent working capital management policy has been developed and is being
introduced. This process culminated in an acceleration of the values provided for obsolete stock and potential bad debts at year-end,
impacting the current performance of the group. A net amount of R36.2 million (pre-tax) has been provided for in this regard.
Net cash generated from operating activities was R61.3 million (2011: R64.9 million). Net cash used in investing activities of R126 million
was largely driven by investments in property, plant and equipment of R14.3 million and in rental stock of R73.5 million.
Depreciation and amortisation charges for the current year have increased by 31% against the prior year, largely due to the increase
in the rental asset base and continued amortisation of intangible assets in the UK. During the year, an investment of R73.5 million (2011:
R57.7million) was made in rental stock. Depreciation relating to rental stock for the period was R33.4 million (2011: R27.2million).
Total comprehensive income for the year has decreased by 30% to R43.7 million (2011: R62 million).
Earnings per share and headline earnings per share of 12.7 cents are reported against 22.4 cents per share for the comparative period.
Operational overview
Engineering
Over the last year, the group's engineering divisions in South Africa, UK and Australia have delivered a range of highly scalable and
extremely cost-effective new telematics devices to cater for our global customer requirements. The Ctrack Software Suite has been
reengineered into customisable modules, enhancing our customers' ability to tailor products for various telemetry needs. These new
modules are a progression towards our Ctrack cloud-base' solutions for all our online software solutions, reducing the physical service and
databank footprint and allowing for considerable cost savings and increased service delivery. The Ctrack smartphone-based platform,
Ctrack Mobi, has developed further into a feature-rich mobile web-based service, instead of a downloadable application, resulting in
easier customer convergence and platform flexibility combined with less maintenance from a software engineering perspective. Ctrack
Engineering's partnership with Mega Fortris Malaysia to develop ISIS, a radio frequency identification (RFID) monitoring system that allows
customers to plan, load, reconcile, track contents during journey to delivery and issue proof of delivery to customers. RFID tags are
reusable and returned to starting points for future journeys. The solution is ideal for the cash-in-transit industry, palletised cargo and other
high-value goods.
Operational highlights
South Africa
June 2011 saw the launch of the Discovery Insure/Ctrack partnership after a rigorous examination of all key telematics suppliers' product
offerings and technical abilities over the prior two years. Ctrack is the exclusive partner of telematics products for Discovery's short-term
insurance company, Discovery Insure. The product used is a Ctrack registered device from DigiCore, branded as DQ-track by Discovery,
with the telematics services also provided by Ctrack. Over the year, the Discovery Insure partnership resulted in over 20 000 Ctrack
insurance telematics units being installed.
So far, these units have recorded over 170 million kilometres of detailed second-by-second driver behaviour data which is used every
day to incentivise safer driving on South African roads through the Discovery Vitality DriveTM rewards programme an innovative initiative
aimed at rewarding customers who demonstrate safe driving habits.
Ctrack's fleet management solutions were strongly supported in the mining and oil sector by BHP Billiton, Rio Tinto, BP and Xstrata, and
continue to show good growth in logistics, utilities and security fleets in South Africa. The FleetConnect software and integrated fare-
collection systems continue to gain traction with implementations in the new year.
Ctrack Fleet recorded a strong performance and has significantly broadened its area of focus to provide services to customers in the
public sector as well. It received a government tender to install 6 000 units for Ekurhuleni Metropolitan Municipality in Gauteng. In the same
period, the company also installed an additional 2 300 vehicle tracking units on South African Police Service (SAPS) vehicles. This enabled
SAPS to further reduce operating costs and improve service delivery by leveraging a holistic system to meet its fleet management needs.
Ctrack acquired a 50.1% stake of MotorOne, a company specialising in automotive accessories for the after-market requirements of
vehicle owners. This acquisition is in line with the company's strategy of improving the penetration level of its products and solutions into
the motor dealership segment.
Europe and UK
Ctrack's European operation recorded reasonable sales performance during the year, despite recessionary conditions in many European
economies. A new management team was appointed and the region has worked hard to achieve efficiencies, which have included
rationalising its back office. The acquisition of the Minorplanet business and switch to a pure subscription-based model, as well as a
change in leadership across the European businesses, introduced a new way of doing business. The company changed its processes,
centralised buying and became more efficient with its working capital. The consolidated and holistic view of the European region, which
now includes the UK, has also provided focus and a more appropriate regional strategy for the Ctrack business. The Network Rail contract
in the UK has been successfully implemented and a further three-year contract finalised.
Africa
Key focus areas in the African market are the mining and oil industries and contracts have been closed with Rio Tinto in Guinea and
Mozambique. A narrowed focus on mining companies such as Fleur and Anglo American gives us another market in which to grow the
business. In the vehicle tracking market, there has been significant growth in both unit sales and profitability during the review period.
Australia and New Zealand
Towards the end of the year, Ctrack officially launched the Ctrack-branded suite of products into the Australian market. The Ctrack
Insurance telematics products are very well positioned to make inroads into consumer markets focusing on the young driver programme.
A strong focus on servicing government business and excellent relationships with large telecommunication providers gives Ctrack
Australia exciting growth potential.
Excellent progress continues on the Transport Certification Australia electronic work diary project, partnering with Telstra and the federal
government, on a new road tax project.
Following the acquisition of the Minorplanet business in 2010 and consolidating its market position, this operation has returned to
profitability by renewing a significant portion of existing customers and winning new business.
Asia and Middle East
Regional headquarters were moved in early 2012 to Malaysia. What started out as a small base in the region has reorganised itself in
the past year by centralising its operation to ensure it is well positioned to take advantage of the fast-growing and expansive Asian and
Middle East economies. Ctrack Engineering's partnership with Mega Fortris Malaysia to develop ISIS a unique solution fully integrating
fleet, cargo and asset monitoring has resulted in establishing a new company in which Ctrack has a 30% equity holding.
Latin and Central America
The Ctrack Latin America operation is now in its second year with distribution points in Mexico, Chili, Peru and Colombia. Ctrack partners
with and operates through Tecnocom, a US$500 million global IT company. The relationship is an excellent source of both ongoing and
new business for Ctrack. The relationship with Technicom is a sales and service model with 100% of income-based on a subscription
service model. Ctrack LATAM has focused exclusively on fleet management in Latin America, leveraging relationships with blue-chip
companies such as BHP Billiton, SABMiller, TnT, Nestlé and Amex.
Industry comments
DigiCore is progressing with the shift from selling tracking devices towards a service-and-subscription revenue model supported by value-
added solutions. A new division, Strategic and Special Projects, has been formed as part of the group's recent restructuring. This division
is tasked to identify and define innovative applications and future telematic trends. Insurance telematics is just one example of this
approach, with our success in this field reflected in DigiCore's insurance telematics solutions being duplicated in other countries. Working
on a number of other telematics initiatives outside the traditional vehicle and fleet management areas is a key part of DigiCore's strategy
to be a leader in reshaping the telematics industry.
Outlook
The board is cautiously optimistic of an improved trading performance in the year ahead. With management and structural changes
now complete, and a new product set released, the group is well positioned to capitalise on opportunities in the fleet, mining, government
and insurance telematics industries. This will be achieved through partnerships and long-standing relationships with loyal customers, both
locally and internationally, increasing the number of systems sold and growing annuity revenue streams.
For and behalf of the board
NH Vlok (Chairman) BC Esterhuyzen (Chief Executive Officer)
27 September 2012
DIVIDEND DECLARATION
No final dividend will be declared or paid to shareholders. The board agreed to retain cash for future growth (2011: 3 cents per share).
An interim dividend of 3 cents per share was paid in May 2012 (2011: 3 cents).
CORPORATE GOVERNANCE
The board of directors aspires to conduct the group's business with responsibility, accountability, fairness and transparency and strives to
be a good corporate citizen.
The directors agree with the spirit and principles of corporate governance set out in the King Report on Governance in South Africa (2009)
(King III). The board is committed to applying appropriate corporate governance policies and practices in each company in the group.
The JSE Limited mandates certain disclosure requirements on corporate governance and DigiCore complies in all material aspects to
the regulations and codes of the exchange.
SUSTAINABILITY
Sustainability forms the cornerstone of our values and is part of our board's mandate. The group understands that its business is part of
the greater environment in which we live, so our actions are shaped by national and international trends in sustainable development.
DigiCore is a long-term business and this determines our actions as the group strives to be a responsible corporate citizen and respect
the society and environment in which we operate.
The focus of the group going forward is to balance financial growth with our focus on people, especially staff satisfaction, while ensuring
we remain committed to equal opportunity employment and stakeholder satisfaction. This underpins our approach to attracting,
retaining and developing our people. It guides our actions in the contribution we make to preserving our environment. It drives our
continued cost-effective growth.
In support of the vision and strategy on sustainability, the group has adopted the Global Reporting Initiative framework and a report
has been prepared in accordance with GRI G3.1 guidelines. With the release of the integrated annual report 2011 in October 2011,
DigiCore obtained external assurance and the application level C+ report is available. Please refer to the website for further information
on sustainability in the group.
CORPORATE PROFILE
DigiCore is a JSE-listed group specialising in fleet management and vehicle tracking for a global client base. With more than 25 years'
experience, DigiCore is recognised as a world-leading provider of advanced machine-to-machine communication and telematics
solutions that add value to its global base of customers with mobile assets and workforces.
DigiCore's end-to-end research, design, development, manufacturing, sales and support of customised solutions for customers
are serviced by a global network of staff and team members in more than 50 countries through the Ctrack brand. The company's
technology and electronic division designs and develops a robust range of asset management and monitoring systems using GPS
satellite positioning, GSM cellular communication systems and other advanced communication and sensory technologies. The result is
innovative and advanced machine-to-machine communication that provides Ctrack customers with 24/7 information and monitoring of
their mobile assets to help them achieve operational efficiencies and cost reduction targets.
Operations span six continents, with over 1 200 employees and more than 650 000 systems sold.
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2012
30 June 12 30 June 11
R'000 R'000
Notes (Audited) (Audited)
Assets
Non-current assets 541 519 417 021
Property, plant and equipment 203 730 158 265
Goodwill 220 584 156 234
Intangible assets 79 487 53 626
Investments in associates 7 110 4 525
Other financial assets 1 250 19 901
Deferred tax 29 358 24 470
Current assets 365 136 365 916
Inventories 95 763 93 859
Current tax receivable 2 426 2 046
Trade and other receivables 225 628 216 919
Cash and cash equivalents 41 319 53 092
Assets held for sale 2 28 606
Total Assets 935 261 782 937
Equity and liabilities
Equity attributable to equity holders of parent 643 988 613 982
Share capital and premium 166 324 166 215
Foreign currency translation reserve (524) (14 194)
Share-based payment reserve 9 989 7 288
Retained income 468 199 454 673
Non-controlling interest (14 524) 17 322
Non-current liabilities 33 040 35 130
Interest-bearing financial liabilities 22 995 26 324
Finance lease obligation 7 810 6 731
Deferred tax 2 235 2 075
Current liabilities 176 209 116 503
Current portion of interest-bearing financial liabilities 10 183 6 560
Current tax payable 16 222 12 214
Finance lease obligation 7 111 4 923
Trade and other payables 66 279 81 412
Provisions 6 244 10 871
Bank overdrafts 70 170 523
Liabilities held for sale 2 96 548
Total Equity and liabilities 935 261 782 937
Net asset value per share (cents) 260,0 247,9
Net tangible asset value per share (cents) 138,9 163,1
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2012
Year ended Year ended
30 June 12 30 June 11
R'000 R'000
Notes Growth % (Audited) (Audited)
Revenue 19 844 379 712 248
Earnings before interest, impairments, taxation, depreciation,
amortisation and capital items 3 (18) 106 932 129 966
Depreciation and amortization 31 (61 133) (46 661)
Capital Items 4 (229) 610
Operating profit (46) 45 570 83 915
Investment revenue 100 85
Income from equity accounted investments 2 259 436
Finance costs (6 033) (6 283)
Profit before taxation (46) 41 896 78 153
Taxation (50) (11 886) (23 733)
Profit after tax (45) 30 010 54 420
Other comprehensive income:
Exchange differences on translating foreign operations 13 670 7 550
Total comprehensive income for the year (30) 43 680 61 970
Profit attributable to:
Equity holders of the parent (43) 28 122 49 454
Noncontrolling interest 1 888 4 966
(45) 30 010 54 420
Total comprehensive income for the year attributable to:
Equity holders of the parent 41 792 57 004
Noncontrolling interest 1 888 4 966
43 680 61 970
Earnings per share (cents) (43) 12,7 22,4
Diluted earnings per share (cents) (43) 12,7 22,4
Headline earnings per share (cents) (43) 12,7 22,2
Diluted headline earnings per share (cents) (43) 12,7 22,2
Interim dividend per share (cents) 3,0 3,0
Final dividend per share (cents) 3,0
Total dividend per share (cents) 3,0 6,0
Number of ordinary shares in issue ('000) 247 669 247 669
Weighted number of shares in issue to be used in the
calculation of basic and diluted earnings per share ('000) 220 756 220 756
Reconciliation of headline earnings:
Basic and diluted earnings 28 122 49 454
Adjusted for:
Loss/(Profit) on sale of fixed assets 129 (749)
Impairment of intangible assets 139
Impairment loss on remeasurement of assets and liabilities held for sale 100
Gain on bargain purchase of Dedical (Proprietary) Limited (567)
27 784 48 844
Tax effect on adjustments (36) 210
Non-controlling interest in adjustments 228
Basic and diluted headline earnings 27 976 49 054
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2012
Year ended Year ended
30 June 12 30 June 11
R'000 R'000
(Audited) (Audited)
Share capital and premium
Share capital and premium at the beginning of the year 166 215 82 585
Issue of shares 83 630
Share options exercised 109
Share capital and premium at the end of the year 166 324 166 215
Reserves
Foreign currency translation reserve
Balance at the beginning of the year (14 194) (21 744)
Translation differences for the year 13 670 7 550
Balance at the end of the year (524) (14 194)
Equity-settled share-based payment reserve
Balance at the beginning of the year 7 288 4 484
Share options cancelled (974)
Share-based payment cost for the year 3 675 2 804
Balance at the end of the year 9 989 7 288
Reserves at the end of the year 9 465 (6 906)
Retained income
Retained income at the beginning of the year 454 673 420 065
Profit for the year 28 122 49 454
Share options cancelled 974
Dividends paid (15 570) (14 846)
Retained income at the end of the year 468 199 454 673
Non-controlling interest
Balance at the beginning of the year 17 322 12 356
Profit for the year 1 888 4 966
Business combinations (33 635)
Acquisition of 47% in IFCS (Proprietary) Limited from outside shareholders (99)
Balance at the end of the year (14 524) 17 322
ABRIDGED SEGMENTAL ANALYSIS
for the year ended 30 June 2012
Year Ended Year Ended
30 June 12 30 June 11
R'000 R'000
(Audited) (Audited)
Revenue
South African distribution 579 426 523 397
External revenue 539 627 480 049
Internal segment revenue 39 799 43 348
Foreign distribution 281 480 198 040
External revenue 250 018 198 040
Internal segment revenue 31 462
Product development and manufacturing 194 434 206 157
External revenue 44 915 26 770
Internal segment revenue 149 519 179 387
Group services 27 957 20 109
External revenue 9 819 7 389
Internal segment revenue 18 138 12 720
1 083 297 947 703
Inter segmental revenue (238 918) (235 455)
Total revenue 844 379 712 248
Operating profit/(loss)
South African distribution 60 338 58 812
Foreign distribution (15 394) 3 008
Product development and manufacturing 15 198 14 661
Group services (14 572) 7 434
45 570 83 915
Investment revenue 100 85
Income from equity accounted investments 2 259 436
Finance costs (6 033) (6 283)
Profit before taxation 41 896 78 153
Segment assets
South African distribution 285 513 287 701
Foreign distribution 150 832 135 771
Product development and manufacturing 110 375 161 814
Group services 452 348 246 808
999 068 832 094
Eliminations (63 807) (49 157)
Total assets 935 261 782 937
Segment liabilities
South Africa distribution (152 106) (50 845)
Foreign distribution (79 127) (33 994)
Product development and manufacturing (24 905) (25 864)
Group Services (113 466) (90 087)
(369 604) (200 790)
Eliminations 63 807 49 157
Total Liabilities (305 797) (151 633)
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2012
Year ended Year ended
30 June 12 30 June 11
R'000 R'000
(Audited) (Audited)
Cash flows from operating activities 61 336 64 853
Cash generated from operations 95 255 109 713
Net finance cost (5 933) (6 198)
Dividends Paid (15 570) (14 846)
Tax paid (12 416) (23 816)
Cash flows from investing activities (125 781) (95 794)
Cash flows from financing activities (16 975) 71 192
Total cash and cash equivalents movement for the year (81 420) 40 251
Cash and cash equivalents at the beginning of the year 52 569 12 318
Total cash and cash equivalents at end of the year (28 851) 52 569
NOTES TO THE ABRIDGED GROUP
FINANCIAL STATEMENTS
1. Basis of preparation and presentation of financial statements
The consolidated financial statements, from which these abridged financial statements, set out in this report have been derived and
prepared in accordance, and comply with International Financial Reporting Standards, as well as the AC500 standards as issued by the
Accounting Practices Board or its successor, the requirements of IAS 34: Interim Financial Reporting, the JSE Limited Listings Requirements,
and the requirements of the Companies Act, 2008.
The financial statements are based on appropriate accounting policies, consistently applied with those used in the audited financial
statements for the year ended 30 June 2011, which are supported by reasonable and prudent judgments and estimates.
These abridged consolidated results have been extracted from the financial statements. The financial statements have been audited
by our auditors PKF (Gauteng) Inc in accordance with section 29(1)(e) of the Companies Act 2008, which has performed its audit in
accordance with international standards of auditing.
PKF has issued an unqualified audit opinion on the group's financial statements, a copy of which is available for inspection at DigiCore's
registered office.
Any reference to future financial performance included in this announcement has not been reviewed or reported on by the group's
auditors.
The financial statements were compiled under the supervision of Mr AJ Voogt CA(SA), the group Chief Financial Officer and
Mr V Venkatkumar CA(SA), the group Financial Manager.
2. Assets and liabilities held for sale
Worldmark SA (Proprietary) Limited is presented as a disposal group held for sale, following the commitment of the group's management,
on 30 June 2012, to a plan to sell the 50.1%-held subsidiary to a large automotive synergy group and enter into a dealer channel
relationship with a national footprint. Negotiations to sell the subsidiary have started and a sale is expected by 30 June 2013.
An impairment loss of R100 000 on the remeasurement of the disposal group to the lower of its carrying amount and its fair value less cost
to sell has been recognised in profit or loss. Worldmark SA forms part of the SA distribution segment.
At 30 June 2012, the following assets and liabilities relating to Worldmark SA were classified as held for sale:
R'000
Assets classified as held for sale
Property, plant and equipment 5 355
Inventories 9 392
Trade and other receivables 13 517
Cash and cash equivalents 342
28 606
Liabilities classified as held for sale
Other financial liabilities 81 995
Finance lease obligation 1 148
Trade and other payables 13 405
96 548
No cumulative income or expense has been recognised in other comprehensive income relating to Worldmark SA.
3. Earnings before interest, depreciation, amortisation, and capital items (EBITDA)
30 June 2012 30 June 2011
R'000 R'000
EBITDA before working capital adjustments 143 152 142 127
Working capital adjustments:
Trade receivables (28 428) (9 970)
Inventories (7 792) (2 191)
EBITDA 106 932 129 966
4. Capital items
Capital items consist of the following:
30 June 2012 30 June 2011
R'000 R'000
(Loss)/Profit on sale of property, plant
and equipment (129) 749
Impairment of intangible assets (139)
Impairment loss on remeasurement of assets and
liabilities held for sale (100)
(229) 610
5. Business combinations
Ctrack (Proprietary) Limited (formerly Vehicle Management Systems (Proprietary) Limited) (Incorporated in Australia)
On 1 July 2011, the group acquired a further 39.9% of the voting equity interest of Ctrack (Proprietary) Limited which resulted in the
group obtaining control over Ctrack. This was in addition to an existing interest of 25.1% obtained on 1 August 2010. Ctrack's results were
accounted for using the equity method until 30 June 2011. The fair value purchase consideration was set at R8 234 000 and paid in cash.
Ctrack is principally involved in the fleet management industry in the Australian and New Zealand markets. As a result of the acquisition,
the group expects to be the leading provider of fleet management products and services in those markets. It is also expecting to reduce
costs through economies of scale.
Goodwill of R7 543 000 arising from the acquisition consists largely of the synergies and economies of scale expected from combining
the operations of the entities.
Fair value of assets acquired and liabilities assumed
R'000
Property, plant and equipment 799
Deferred tax 691
Inventories 1 987
Trade and other receivables 7 427
Cash and cash equivalents 2 050
Other financial liabilities (5 179)
Current tax payable (121)
Trade and other payables (6 214)
Total identifiable net assets 1 440
Non-controlling interest (505)
Goodwill 7 543
8 478
Acquisition date fair value of consideration paid
Cash 8 234
Fair value of investment on 30 June 2011 244
8 478
Non-controlling interest is measured at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.
Revenue of R58 609 053 and profits of R7 185 795 of Ctrack (Proprietary) Limited have been included in the group's results since the date
of acquisition.
Worldmark SA (Proprietary) Limited (trading as MotorOne)
On 1 February 2012 the group acquired 50.1% of the voting equity interest of Worldmark SA (Proprietary) Limited which resulted in the
group obtaining control over Worldmark. The fair value purchase consideration was set at R5 930 000 and paid in cash. Worldmark SA
is principally involved in the vehicle parts and accessories industry in South Africa. As a result of the acquisition, the group expects to
increase its presence in the industry. It is also expecting to reduce costs through economies of scale.
Goodwill of R41 131 422 arising from the acquisition consists largely of the synergies and economies of scale expected from combining
the operations of the entities.
Fair value of assets acquired and liabilities assumed
R'000
Property, plant and equipment 4094
Prepayments 2 798
Inventories 3 229
Trade and other receivables 10 284
Cash and cash equivalents 1 123
Other financial liabilities (84 025)
Trade and other payables (7 765)
Total identifiable net assets (70 262)
Non-controlling interest 35 061
Goodwill 41 131
5 930
Acquisition date fair value of consideration paid
Cash 5 930
Non-controlling interest is measured at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.
Revenue of R26 831 000 and profits of R2 420 000 of Worldmark SA (Proprietary) Limited have been included in the group's results since
the date of acquisition. If the acquisition occurred on 1 July 2011, management estimates that Worldmark SA would have contributed
revenue of R58 609 000 and a loss after taxation of R196 000. In determining these amounts, management has assumed that fair value
adjustments, determined provisionally, arising on the date of acquisition would have been the same if the acquisition occurred on
1 July 2011.
The acquisition of Worldmark SA is based on provisional fair values as the group has not yet determined the fair values of the identifiable
assets, liabilities and or contingent liabilities. The fair value of the business will be accurately determined by the next reporting date.
Dedical (Proprietary) Limited
On 1 October 2011 the group acquired a further 16% of the voting equity interest of Dedical (Proprietary) Limited which resulted in
the group obtaining control over Dedical. This was in addition to an existing interest of 35%. Dedical's results were accounted for using
the equity method until 30 September 2011. The fair value purchase consideration was set at R1 000 and paid in cash. Dedical is
principally involved in the public transport industry in South Africa.
Fair value of assets acquired and liabilities assumed
R'000
Property, plant and equipment 598
Other financial assets 851
Inventories 3 638
Trade and other receivables 4 254
Cash and cash equivalents 295
Other financial liabilities (3 298)
Trade and other payables (5 226)
Total identifiable net assets 1 112
Non-controlling interest (544)
Gain on bargain purchase (567)
1
Acquisition date fair value of consideration paid
Cash 1
Non-controlling interest is measured at the non-controlling interest's proportionate share of the acquirer's identifiable net assets.
Revenue of Rnil and losses of R984 000 of Dedical (Proprietary) Limited have been included in the group's results since the date of
acquisition. If the acquisition occurred on 1 July 2011, management estimates that Dedical (Proprietary) Limited would have contributed
revenue at Rnil and a loss after taxation of R984 274. In determining these amounts, management have assumed that the fair value
adjustments determined provisionally that arose on the date of acquisition would have been the same if the acquisition occurred on
1 July 2011.
The acquisition of Dedical (Proprietary) Limited is based on provisional fair values as the group has not yet determined the fair values
of the identifiable assets, liabilities and/or contingent liabilities. The fair value of the business will be accurately determined by the next
reporting date.
6. Post-balance sheet events
On 16 July 2012,TPL Trakker (Private) Limited, an associate of the group, listed on the Karachi Stock Exchange at a price of PKR10 per share.
During the listing an additional 30 000 000 shares were issued, which resulted in a dilution of DigiCore's shareholding in the company
from 30% to 25.86%. At the listing date, the fair value of the investment was PKR561 747 000, which translated at the spot rate of PKR0.0879:
R1.00 equates to R49 377 552.
On 31 August 2012, the group obtained a further 27% shareholding in Ctrack (Proprietary) Limited. This takes the group shareholding in
the company to 92%. The consideration of AUD783 000 was paid in cash.
Other than disclosed above, there have been no significant events subsequent to year-end and up to the date of this report that would
require adjustment to the annual financial statements or further disclosure.
Registered office
DigiCore Building, Regency Office Park, 9 Regency Drive,
Route 21 Corporate Park, Irene Ext 30, Centurion, South Africa
P.O. Box 68270, Highveld Park, 0169, Tel: +27 (0)12 450 2222,
Fax: +27 (0)12 450 2497
Transfer secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
P.O. Box 61051, Marshalltown, 2107
Sponsor
PSG Capital (Pty) Limited
Auditors
PKF (Gauteng) Incorporated
Directorate
Executive
BC Esterhuyzen (Chief Executive Officer), SR Aberdein,
D du Rand, MD Rousseau, A J Voogt (Chief Financial Officer),
J Verster
Non-executive
NH Vlok (Chairman), NA Gasa (Lead Independent),
BS Khuzwayo, B Marx, LG Msengana-Ndlela, SS Ntsaluba,
G Pretorius, J Wiese
Company secretary
DA Nieuwoudt
www.digicore.com
www.ctrack.co.za
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