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Unaudited interim results for the six months ended 31 August 2012, dividend declaration and appointment of directors
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”)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012,
DIVIDEND DECLARATION AND APPOINTMENT OF INDEPENDENT NON-EXECUTIVE
DIRECTORS
Key Financial Indicators
Revenue increased by 7%
EBITDA decreased to R57.4 million
Earnings per share and headline earnings per share decreased by 28%
Cash generated from operations of R52.7 million resulted in cash on hand
of R288 million
Interim gross cash dividend declared of 11.25 cents per share
Condensed Consolidated Statements of Comprehensive Income for the six
months ended 31 August 2012
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Revenue 976 726 912 652 1 757 762
Operating profit 48 559 69 634 123 447
Net interest received 6 094 7 100 11 964
Profit before taxation 54 653 76 734 135 411
Income taxation expense (17 194) (24 581) (44 567)
- normal and deferred taxation (16 917) (22 697) (39 932)
- secondary taxation on companies (277) (1 884) (4 635)
Total comprehensive income
attributable to ordinary
shareholders 37 459 52 153 90 844
Basic earnings per ordinary share
19.1 26.6 46.4
(cents)
Diluted basic earnings per
18.8 26.1 45.6
ordinary share (cents)
Dividend per share (cents) 11.25 13.4 30.0
Earnings before interest, 57 374 80 914 145 226
taxation, depreciation and
amortisation (EBITDA)
Headline earnings per ordinary
19.2 26.8 46.9
share (cents)
Diluted headline earnings per
18.9 26.2 46.1
ordinary share (cents)
Weighted average number of shares
195 798 195 798 195 798
in issue* (000s)
Weighted average number of shares
in issue for purposes of dilution*
(000s) 198 827 199 790 199 016
*adjusted for treasury shares
Reconciliation between earnings for the period attributable to
ordinary shareholders and headline earnings
Earnings attributable to ordinary 37 459 52 153 90 844
shareholders
Loss on disposal of assets 29 274 906
Earnings for the purpose of basic
and diluted headline earnings per
share 37 488 52 427 91 750
Condensed Consolidated Statements of Financial Position as at 31 August
2012
Unaudited
Unaudited
31 August Audited
31 August
2011 29 February
2012
Restated 2012 R'000
R'000
R'000
ASSETS
Non-current assets 131 117 91 322 104 122
Property and equipment 56 815 34 680 38 845
Goodwill 15 596 15 596 15 596
Other intangible assets – software 9 485 6 221 7 098
Investment in joint venture 2 190 - 1 022
Finance lease receivable – long-
19 435 6 010 17 503
term
Long-term receivables 116 - 284
Deferred taxation assets 27 480 28 815 23 774
Current assets 678 918 700 485 653 211
Current taxation asset 4 511 - 4 025
Finance lease receivable – short-
16 896 4 376 11 202
term
Inventories 30 194 27 885 34 764
Trade and other receivables 339 603 338 280 289 843
Cash and cash equivalents 287 714 329 944 313 377
TOTAL ASSETS 810 035 791 807 757 333
EQUITY AND LIABILITIES
Capital and reserves 470 512 457 463 471 053
Share capital 21 21 21
Share premium 36 187 37 473 37 522
Treasury shares (42 249) (38 889) (39 720)
Equity-settled share scheme
34 201 28 181 30 101
reserve
Retained earnings 442 352 430 677 443 129
Non-current liabilities 41 821 30 437 40 363
Deferred revenue – long-term 24 013 24 427 25 241
Finance lease payables – long-term 17 808 6 010 15 122
Current liabilities 297 702 303 907 245 917
Trade and other payables 225 051 232 199 184 530
Finance lease payables – short-
14 880 4 376 8 958
term
Provisions 2 539 1 904 1 640
Deferred revenue – short-term 52 111 45 866 48 005
Lease smoothing liability 3 110 2 513 2 784
Current taxation liabilities 11 17 049 -
TOTAL EQUITY AND LIABILITIES 810 035 791 807 757 333
Net asset value (adjusted for
240.3 233.6 240.6
treasury shares) per share (cents)
Tangible net asset value (adjusted
for treasury shares) per share 227.5 222.5 229.0
(cents)
Weighted average number of shares
195 798 195 798 195 798
in issue (000s)
Condensed Consolidated Statement of Changes in Equity for the six months
ended 31 August 2012
Share Share Treasury
capital premium shares
R'000 R'000 R'000
Balance at 28 February 2011 21 37 544 (38 799)
Profit for the period - - -
Treasury shares movement - - (90)
Share-based payments - - -
Dividend paid - - -
Profit on sale of treasury shares - (71) -
Balance at 31 August 2011 21 37 473 (38 889)
Profit for the period - - -
Treasury shares movement - - (831)
Share-based payments - - -
Dividend paid - - -
Profit on sale of treasury shares - 49 -
Balance at 29 February 2012 21 37 522 (39 720)
Profit for the period - - -
Treasury shares movement - - (2 529)
Share-based payments - - -
Dividend paid - - -
Loss on sale of treasury shares - (1 335) -
Balance at 31 August 2012 21 36 187 (42 249)
Equity
settled
share
scheme Retained
reserve earnings Total
R'000 R'000 R'000
Balance at 28 February 2011 24 761 396 500 420 027
Profit for the period - 52 153 52 153
Treasury shares movement - - (90)
Share-based payments 3 420 - 3 420
Dividend paid - (17 976) (17 976)
Profit on sale of treasury shares - - (71)
Balance at 31 August 2011 28 181 430 677 457 463
Profit for the period - 38 691 38 691
Treasury shares movement - - (831)
Share-based payments 1 920 - 1 920
Dividend paid - (26 239) (26 239)
Profit on sale of treasury shares - - 49
Balance at 29 February 2012 30 101 443 129 471 053
Profit for the period - 37 459 37 459
Treasury shares movement - - (2 529)
Share-based payments 4 100 - 4 100
Dividend paid - (38 236) (38 236)
Loss on sale of treasury shares - - (1 335)
Balance at 31 August 2012 34 201 442 352 470 512
Condensed Consolidated Statement of Cash Flow for the six months ended 31
August 2012
Unaudited
Unaudited six months Audited
six months ended 12 months
ended 31 August ended
31 August 2011 29 February
2012 R'000 Restated 2012
R'000 R'000
Profit before taxation 54 653 76 734 135 411
Adjusted for non-cash items 6 407 8 429 14 285
Working capital changes (8 350) (48 563) (70 587)
- Inventory 4 570 (17 008) (23 887)
- Trade and other receivables (49 592) (85 037) (36 884)
- Increase in finance lease
(7 626) (10 386) (28 705)
receivable
- Trade and other payables 44 298 63 868 18 889
Cash generated from operations 52 710 36 600 79 109
Net interest received 6 094 7 100 14 615
Dividend paid (38 236) (17 976) (44 215)
Taxation paid (21 375) (14 682) (50 701)
Net cash (outflow)/inflow from
(807) 11 042 (1 192)
operating activities
Net cash outflow from investing
(30 935) (12 564) (29 760)
activities
Net cash inflow from financing
6 079 10 296 23 159
activities
Net (decrease)/increase in cash
(25 663) 8 774 (7 793)
and cash equivalents
Cash and cash equivalents at the
313 377 321 170 321 170
beginning of the period
Cash and cash equivalents at the
287 714 329 944 313 377
end of the period
Basis of Preparation
The 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 condensed 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 the JSE Limited
(“the Listings Requirements”), and the Companies Act of South Africa (Act
71 of 2008). The principal accounting policies, which comply with IFRS,
have been consistently applied in all material respects in the current and
comparative years.
The condensed financial statements of the Group have not been reviewed or
audited by the Group's auditors. The condensed financial statements of the
Group were prepared under the supervision of Elizabeth Naidoo, the
Financial Director of the Group.
Subsequent Events
No material events have occurred between the period end and the date of
this announcement.
The Business of Datacentrix
Datacentrix is a South African-based, empowered company that provides
Information and Technology (“IT”) solutions to the country's corporate and
public sectors. It delivers 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. The Group comprises three operating divisions,
namely Infrastructure, Managed Services and Business Solutions.
Commentary
The directors of Datacentrix announce interim financial results for the
six months ended 31 August 2012. The Group showed organic revenue growth
of 7.0%, from R913 million to R977 million. Earnings declined from R52.2
to R37.5 million. Operating margins deteriorated from 7.6% to 5.0%.
Headline earnings per share (“HEPS”) decreased from 26.8 cents to 19.2
cents.
The Group maintained sound financial and operational disciplines, with
cash generated from operating activities amounting to R52.7 million,
reflecting a closing cash balance of R288 million with no interest-bearing
debt. It continues to invest in growing capability organically.
Datacentrix has invested substantially in both capital expenditure and
skills.
The Managed Print Services business unit, within Managed Services had
entered into printing solution transactions in the previous financial year
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. The position as at 31 August 2011 has been restated
to reflect this situation. The effect of the restatement has been to
increase finance lease receivables and finance lease payables by R10.4
million on the statement of financial position. On the cash flow
statement, working capital has decreased with R10.4 million, and
investment in financing activities has increased by R10.4 million. The
net effect of this reclassification has had no impact on earnings per
share, headline earnings per share, net asset value per share or tangible
net asset value per share for the six months ended 31 August 2011.
Operational Review
The Group has seen a significant improvement in trading conditions in the
second quarter of the fiscal year after a particularly constrained first
quarter. Revenue was stronger in the commercial sector, whilst performance
in the public sector deteriorated further. Datacentrix has made
considerable investments in growing competencies and capabilities
organically, therefore bearing a significant portion of the investment
costs during the reporting period. The Infrastructure division contributed
35% of Group profit before tax (“PBT”), while the Managed Services and
Business Solutions divisions added 38% and 14% respectively.
Infrastructure generated an operating margin of 2.7% whilst Managed
Services generated a margin of 11.1%, and the Business Solutions division
generated 12.3%.
Segmental Analysis
Infrastructure Managed Services
Unaudited six months 31 Aug '12 31 Aug '11 31 Aug '12 31 Aug '11
ended R'000 R'000 R'000 R'000
Revenue 719 194 703 748 193 809 163 384
Operating profit 19 159 37 596 21 540 20 415
Net interest received - - (648) -
Profit before
taxation 19 159 37 596 20 892 20 415
Income tax expense (5 363) (10 596) (5 850) (5 777)
- normal and
deferred taxation
(5 363) (10 596) (5 850) (5 777)
- secondary tax-
ation on companies
- - - -
Earnings for the
period attribute-able
to ordinary share-
holders
13 796 27 000 15 042 14 638
Business Solutions Corporate
Unaudited six months 31 Aug '12 31 Aug '11 31 Aug '12 31 Aug '11
ended R'000 R'000 R'000 R'000
Revenue 63 723 45 520 - -
Operating profit 7 860 11 625 - -
Net interest received - - 6 742 7 100
Profit before
taxation 7 860 11 625 6 742 7 100
Income tax expense (2 200) (3 247) (3 781) (4 961)
- normal and
deferred taxation
(2 200) (3 247) (3 504) (3 077)
- secondary tax-
ation on companies
- - (277) (1 884)
Earnings for the
period attribute-able
to ordinary share-
holders
5 660 8 377 2 961 2 139
Total Group
Unaudited six months 31 Aug '12 31 Aug '11
ended R'000 R'000
Revenue 976 726 912 652
Operating profit 48 559 69 634
Net interest received 6 094 7 100
Profit before
taxation 54 653 76 734
Income tax expense (17 194) (24 581)
- normal and
deferred taxation
(16 917) (22 697)
- secondary tax-
ation on companies
(277) (1 884)
Earnings for the
period attribute-able
to ordinary share-
holders
37 459 52 153
Infrastructure
Revenue in the Infrastructure division showed marginal growth, and
earnings was impacted by competitive market forces.
Revenue in the commercial segment of the market showed growth, albeit with
tighter margins. The Group is experiencing continued decline in public
sector revenue with little prospect for an upturn in the fiscal year.
Sizeable tenders have been submitted in the public sector. The revenue and
profitability in this division is primarily from the private sector.
Significant investment in the technical capabilities of the division has
been made to take the Infrastructure division up the value curve, away
from the commoditised end of the market. The revenues expected from this
investment currently lag the significant costs associated with the
investment. This increased cost base which is ahead of expected revenue
generation, together with significantly tightened margins, especially in
the commoditised end of the market, are the key contributors to decreased
profitability of the Group.
Managed Services
Datacentrix' Managed Services division achieved a 19% revenue growth for
the six months. The Managed Services division, which encompasses the
Managed Print Services (“MPS”), Outsourcing, Resourcing and Projects
business units, contributed 40% to group earnings.
Our areas of investment in this division over the last few months have
begun to contribute to profitability and operational effectiveness.
Business Solutions
The Business Solutions division, which comprises the Enterprise Resource
Planning (“ERP”), Business Intelligence (“BI”) and Enterprise Content
Management (“ECM”) business units, achieved revenue growth of 8%. Earnings
in the ECM segment are coming under margin pressure as new entrants
entered this market. The ECM business is making inroads into the local
government healthcare industry.
Prospects
The Group believes its current organic growth strategy and consequent
investments have positioned it well to compete effectively in these
selected areas of growth, particularly in the private sector. The Group
believes there could be benefits derived from targeted acquisitions.
Black Economic Empowerment
Datacentrix has secured a Level 2 (AAA) B-BBEE Contributor status, with
125% procurement recognition.
Directorate
In compliance with paragraph 3.59 of the Listings Requirements, the board
of directors of Datacentrix (“the Board”) is pleased to announce the
immediate appointment of two new independent, non-executive directors,
Messers Antony Ball and Peter Backwell. Both individuals bring a wealth of
experience and their appointment is expected to complement the skills and
the experience base of the Board.
Dividend
In respect of the current period, the Board declared a gross cash dividend
of 11.25 cents. The proposed dividend for August 2012 is payable to all
shareholders on the Register of members on 29 October 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 11.25 cents per share;
- the dividend tax to be withheld by the Company amounts to 1.68750 cents
per share;
- therefore the net dividend payable to shareholders who are not exempt
from dividends tax amounts to 9.56250 cents per share, while the gross
dividend payable to shareholders who are exempt from dividends tax
amounts to 11.25 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: Monday, 1 October 2012
Last day to trade: Friday, 19 October 2012
Share trade ex-dividend: Monday, 22 October 2012
Record date: Friday, 26 October 2012
Payment date: Monday, 29 October 2012
Share certificates may not be dematerialised or rematerialised between
Monday, 22 October 2012 and Friday, 26 October 2012, both days inclusive.
For and on behalf of the Board:
Gary Morolo
Chairman
Ahmed Mahomed
Chief Executive Officer
2 October 2012
Gary Morolo (Non-executive Chairman), Ahmed Mahomed (Chief Executive
Officer), Alwyn Martin*, Dudu Nyamane*, Elizabeth Naidoo (Financial
Director), 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
Date: 02/10/2012 09:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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