Wrap Text
Audited Results for the Year Ended 28 February 2013, Final Dividend Declaration, Notice of AGM, Change to the Board
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”)
AUDITED CONDENSED CONSOLIDATED RESULTS FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2013, FINAL
DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
Key Financial Indicators
- Revenue increased by 9% to R1.919 billion
- Basic earnings per share decreased by 15% to 39.5 cents
- Headline earnings per share decreased by 16% to 39.6 cents
- Cash on hand of R274 million, with no interest-bearing debt
- Cash generated from operations of R57 million
- Net asset value per share increased by 4% from 240.6 to 251.1 cents
- Gross final dividend of 12.02 cents per share declared
Condensed Consolidated Statement of Comprehensive Income for the year ended 28 February 2013
Audited Audited
2013 2012
R’000 R’000
Revenue 1 919 487 1 757 762
Operating profit 106 163 123 447
Net interest received 6 356 11 964
Profit before taxation 112 519 135 411
Taxation (35 199) (44 567)
Total comprehensive income attributable to ordinary shareholders 77 320 90 844
Basic earnings per ordinary share (cents) 39.5 46.4
Diluted basic earnings per ordinary share (cents) 39.0 45.6
Declared net dividend per share (cents) 19.7 30.0
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) 126 341 145 227
Headline earnings per ordinary share (cents) 39.6 46.9
Diluted headline earnings per ordinary share (cents) 39.1 46.1
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) 198 024 199 016
*adjusted for treasury shares
Reconciliation between comprehensive income attributable to ordinary
shareholders and headline earnings
Earnings attributable to ordinary shareholders 77 320 90 844
Loss on sale of property and equipment 142 906
Headline earnings 77 462 91 750
Condensed Consolidated Statement of Financial Position as at 28 February 2013
Audited Audited
2013 2012
R’000 R’000
ASSETS
Non-current assets 190 216 104 122
Property and equipment 66 682 38 845
Intangible assets 67 204 22 694
Investment in joint venture 744 1 022
Long-term receivables - 284
Finance lease receivables – long-term 30 266 17 503
Deferred taxation assets 25 320 23 774
Current assets 707 815 653 211
Current taxation assets - 4 025
Finance lease receivables – short-term 24 661 11 202
Inventories 36 500 34 764
Trade and other receivables 372 893 289 843
Cash and cash equivalents 273 761 313 377
TOTAL ASSETS 898 031 757 333
EQUITY AND LIABILITIES
Capital and reserves 491 630 471 053
Share capital 21 21
Share premium 35 962 37 522
Treasury shares (42 335) (39 720)
Equity-settled share scheme reserve 37 801 30 101
Retained earnings 460 181 443 129
Non-current liabilities 47 800 40 363
Deferred revenue – long-term 18 126 25 241
Finance lease payables – long-term 29 674 15 122
Current liabilities 358 601 245 917
Trade and other payables 235 620 184 530
Provisions 1 800 1 640
Deferred revenue – short-term 43 775 48 005
Finance lease payables – short-term 22 591 8 958
Current tax liabilities 6 028 -
Loans payable – short-term 45 750 -
Lease smoothing liability 3 037 2 784
TOTAL EQUITY AND LIABILITIES 898 031 757 333
Net asset value (adjusted for treasury shares) per share (cents) 251.1 240.6
Tangible net asset value (adjusted for treasury shares) per share (cents) 216.8 229.0
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 2013
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 2011 21 37 544 (38 799) 24 761 396 500 420 027
Total comprehensive income for the year - - - - 90 844 90 844
Treasury shares – movement during the year - - (921) - - (921)
Share-based payment - - - 5 340 - 5 340
Dividend paid - - - - (44 215) (44 215)
Profit on sale of treasury shares - (22) - - - (22)
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 - - (2 615) - - (2 615)
Share-based payment - - - 7 700 - 7 700
Dividend paid - - - - (60 268) (60 268)
Profit on sale of treasury shares - (1 560) - - - (1 560)
Balance at 28 February 2013 21 35 962 (42 335) 37 801 460 181 491 630
Condensed Consolidated Statement of Cash Flows for the year ended 28 February 2013
Audited Audited
2013 2012
R’000 R’000
Profit before taxation 112 519 135 411
Adjusted for non-cash items 11 765 14 285
Working capital changes (67 737) (70 587)
- Inventories (1 736) (23 887)
- Trade and other receivables (75 402) (36 884)
- Finance lease receivables (26 222) (28 705)
- Trade and other payables 35 623 18 889
Cash generated from operations 56 547 79 109
Net interest received 10 653 14 615
Dividend paid (60 268) (44 215)
Taxation paid (28 406) (50 701)
Net cash outflow from operating activities (21 474) (1 192)
Net cash outflow from investing activities (89 462) (29 760)
Net cash inflow from financing activities 71 320 23 159
Net decrease in cash and cash equivalents (39 616) (7 793)
Cash and cash equivalents at the beginning of the year 313 377 321 170
Cash and cash equivalents at the end of the year 273 761 313 377
Basis of Preparation
The audited condensed consolidated 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 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.
Auditor’s Opinion and Subsequent Events
The auditor, Deloitte & Touche, has issued its opinion on the Group’s financial statements for the year ended 28 February 2013.
The audit was conducted in accordance with International Standards on Auditing. Deloitte & Touche 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. Any reference to future financial performance included in this announcement has not been reviewed
or reported on by the Company’s auditor. There were no material subsequent events that required disclosure.
The Business of Datacentrix
Datacentrix is a South African-based, level two empowered company that provides information technology (“IT”) solutions to the
country's corporate and public sectors. It delivers a comprehensive offering, ranging from the core areas of infrastructure and
related IT services to business solutions and outsourcing. Datacentrix’ strategic drive is to be a partner of choice to its vendors and
clients alike, adding business value to these entities. The Group, operating three focused operating divisions namely
Infrastructure, Managed Services and Business Solutions, provides seamless and integrated solutions to its clients.
The Market
The world-wide IT industry has been impacted by a combination of factors, ranging from macro-economic conditions through to
industry volatility. As a result of the global economic crisis, development of disruptive technologies and the continued
commoditisation of infrastructure hardware, the industry is in a state of flux. These factors have necessitated a business model
change for many organisations. On the international stage, it is evident that sizeable global players are trying to reinvent their
businesses. While doing this, some organisations have made costly mistakes, albeit driven by necessity, to adapt to ever-changing
sectoral pressures. The effects on companies have been varied, with some paying dearly for acquisition judgement errors, while
others have embarked on a strategy to change their business model out of the glare of the markets by delisting.
The South African IT industry is experiencing pressure from the telecommunications industry. Telecommunication companies are
facing their own challenges in the form of slowing revenues in their traditional voice business and are attempting to supplement
this by extending offerings in the traditional IT sector, such as cloud computing, a strategy that they hope will diversify their
income base and, in the process, drive data revenues.
With regards to the local environment, market conditions continue to be constrained, with industry growth estimated to be in the
single digit range. Some competitors continue to seek growth through aggressive acquisition strategies, while others are facing
sustainability challenges. Further consolidation of the industry is inevitable, and where appropriate, Datacentrix will play a
proactive role in these market changes.
Commentary
The past few years, though profitable, have been challenging for the Group. As a consequence of both market dynamics and the
change in the technology landscape, Datacentrix has strategically repositioned itself in the market, moving from being a pure
hardware supplier to a fully-fledged systems integrator and solutions provider. This strategy has necessitated investment in
infrastructure, as well as technical and managerial resources that were previously not required. These additional investments have
been funded through the income statement, preserving the strength of the Group’s balance sheet. The consequence of the
strategy over the last few years has been a change in client and portfolio mix, as is evident from the segmental report.
It is in this context that the directors of Datacentrix announce the financial results for the year ended 28 February 2013. The
Group showed revenue growth of 9%, from R1.758 billion to R1.919 billion. Earnings declined by 15% from R90.8 million to R77.3
million. Headline earnings per share (“HEPS”) was 39.6 cents.
While Group revenue remained resilient, investments (in both resources and capital projects) and sustained gross margin
pressures, resultant from a dip in the industry cycle, have weakened operating margins from 8% to 6%. The business is yet to
reach optimal functionality in some areas, as certain of these investments have not yielded returns at this stage and, in some
cases, have negatively impacted profitability. In general, as is the case with business, sales will initially lag investment cycles.
Moreover, traditional revenue streams, such as the public sector, have dwindled significantly. Government revenue contributed
40% to 45% to Group revenue at its peak, and now accounts for less than 10% of total revenue.
The Group maintained sound financial and operational disciplines, with cash generated from operating activities amounting to
R57 million, reflecting a closing cash balance of R274 million with no interest-bearing debt.
Operational Review
The Group has seen an improvement in trading conditions in the second half of the fiscal year after a particularly constrained first
quarter and, consequently, first half of the year. Revenue was stronger in the commercial sector, while performance in the public
sector continued to decline. The Infrastructure division contributed 35% of Group profit after tax (“PAT”), while the Managed
Services and Business Solutions divisions added 38% and 22% respectively. This means that these two fairly new areas of
business are now contributing a combined 60% of Group PAT.
Infrastructure produced an operating margin of 2.8% whilst Managed Services achieved 10.7% and the Business Solutions division
17.9%.
Datacentrix strategically invested in both capital expenditure and resources over the last four years. This investment phase is by-
and-large drawing to an end, with Group capability significantly boosted by these investments, putting it in an enviable position as
an end-to-end integrated IT partner.
The Group is a systems integration partner that has the required skills to successfully compete in providing a range of solutions -
from basic infrastructure provisioning through to complex specialised solutions. This capability is further enabled through the
Company’s consulting, design, deployment, management expertise and comprehensive vendor networks. Importantly, the
Company has laid the framework to provide its own cloud offering, positioning it well within this space.
Segmental Analysis
Infrastructure Managed Services Business Solutions Corporate Total Group
28 Feb 29 Feb 28 Feb 29 Feb 28 Feb 29 Feb 28 Feb 29 Feb 28 Feb 29 Feb
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 1 375 218 1 342 838 414 690 329 989 129 579 84 935 - - 1 919 487 1 757 762
Operating profit
39 074 60 607 44 314 40 631 23 161 22 209 (386) - 106 163 123 447
Net interest
received - - (3 884) (2 116) - - 10 240 14 080 6 356 11 964
Profit before
taxation 39 074 60 607 40 430 38 515 23 161 22 209 9 854 14 080 112 519 135 411
Taxation
(12 113) (16 991) (11 320) (10 784) (6 486) (6 218) (5 280) (10 574) (35 199) (44 567)
Total
Comprehensive
26 961 43 616 29 110 27 731 16 675 15 991 4 574 3 506 77 320 90 844
income
Infrastructure
Revenue in the Infrastructure division showed growth of 2.4%. In contrast, earnings declined due to competitive market forces,
but improved compared to the first half of the year. Costs grew at a higher rate because of strategic resource investments.
This division’s revenue and profitability is derived primarily from the private sector, which showed growth despite tighter margins.
Assuming these competitive pressures stabilise, it is anticipated that operating margins should improve as the new businesses that
have been established begin contributing to profitability and our share of government spend improves. Datacentrix retains
adequate sales and delivery infrastructure for public sector business and several sizeable tenders have been submitted.
The Infrastructure division has all the required capabilities to continue competing effectively within this space as a result of the
abovementioned investments.
Managed Services
Datacentrix’ Managed Services division, which encompasses the Outsourcing, Managed Print Services (“MPS”) and Resourcing
businesses, achieved a 26% revenue growth and contributed 38% to Group earnings for the financial year.
The division has implemented a tier 3 cloud-ready data centre, a command centre and improved its service desk capabilities. Our
investments in this division have contributed to operational efficiencies and effectiveness as well as enhanced offerings.
Datacentrix’ excellent execution capacity, together with this new enhanced capability, has contributed to a strong, positive
reputation in the market.
Datacentrix is a relative new-comer in the Managed Services space and is regularly invited to bid for outsource business in the first
tier sector of the market.
As in all other sectors of its business, Datacentrix’ business model in Managed Services is predicated on only engaging in
transactions with sustainable operating profit margins, in an environment where marginal, or even loss making business, is
considered a strategic entry into new opportunities or a means of retaining current business. As industry analysts have observed,
the price that wins is not the price that succeeds.
Business Solutions
The Business Solutions division, comprising the Enterprise Resource Planning (“ERP”), Business Intelligence (“BI”) and Enterprise
Information Management (“EIM”) business units, achieved revenue growth of 53% and contributed 22% to Group earnings.
Datacentrix acquired EIM specialist, Nokusa Engineering Informatics Proprietary Limited (“NokusaEI”), for R45.8 million in
December 2012 to strengthen its position in the EIM space. Goodwill on the acquisition amounted to R36 million. Profitability was
positively impacted by the acquisition. The acquisition positions the EIM business unit as a leader in this space.
This division’s implementation of specialised solutions has resulted in clients receiving multiple awards for innovation and
excellence. This includes the recent Ministerial Award presented to the Western Cape Provincial Government Health’s Khayelitsha
Hospital in recognition of its drive, through EIM, to ensure that it delivers a world-class, patient-centric clinical service.
Vendor Partnerships
The Group has solidified its vendor partnerships over the past year. HP recognised Datacentrix as its gold level partner with the
highest overall revenue, while one of Datacentrix’ enterprise managers was named “Outstanding Services Channel Champion”. The
Group was also named as the solution provider with the highest revenue growth of all local IBM business partners and won the title
of the top growth contributor for IBM maintenance services for excellence in IBM storage, and for excellence in the area of System
Z, more commonly known as the mainframe.
In addition, Datacentrix won the title of OpenText (EIM solution) local partner of the year and became the first Riverbed Accredited
Support Partner in Africa, joining the ranks of a select, invitee-only programme that allows the Group to provide high-value
support services to local Riverbed clients.
Management Structure
The Group has strengthened its management structure with the appointment of two senior executives to its team. Werner
Lindemann joins Datacentrix’ senior management team as Managing Director - Technology Solutions, after holding various
executive positions a major vendor over the past ten years. Abrie Peens, previously a senior business unit manager, will take up
the position of Managing Director for Managed Services - Outsourcing.
Black Economic Empowerment
Datacentrix is now a level two (AAA) B-BBEE contributor, with 125% procurement recognition. The Group was recently ranked as
the 18th most empowered organisation in a Group of over 100 JSE-listed companies, following significant investments in its
learnerships, graduate and management development programmes. Datacentrix saw the graduation of its first Group of
learnership programme students, with learners nationally successfully completing a year of both practical and theoretical training
and earning a Microsoft Certified IT Professional (MCITP) qualification.
In addition to this, the Group’s corporate social responsibility projects have helped improve the performance and life opportunities
of a significant number of school learners and teachers.
Prospects
Datacentrix believes its current organic growth strategy and significant investments have positioned it well to compete effectively
in its selected areas of growth. For the year ahead, the Company plans to continue the consolidation of its transition into an
integrated solutions and services-based business, backed by top level vendor accreditations and technical capability. Datacentrix
will continue reinforcing its skills base, extend the cloud solution and has already created greater focus in the Technology and
Outsourcing business units with the new senior management appointments.
Datacentrix maintains its view that benefits could be derived from targeted acquisitions and will continue exploring suitable
opportunities.
Dividend
Notice is hereby given that the directors have declared a gross final dividend of 12.02 cents for the financial year ended
28 February 2013, which is based on the dividend policy and adjusted for withholding tax. The final dividend has not been included
as a liability in these condensed consolidated financial statements as it was declared subsequent to year end. The final dividend for
February 2013 is payable to all shareholders on the Register of Members on Friday, 17 May 2013. 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 12.02 cents per
share;
- the dividend tax to be withheld by the Company amounts to 1.803 cents per share;
- therefore the net dividend payable to shareholders who are not exempt from dividends tax amounts to 10.217 cents per
share, while the gross dividend payable to shareholders who are exempt from dividends tax amounts to 12.02 cents per
share;
- the issued share capital of the Company at the declaration date comprises 205 265 683 ordinary shares; and
- the Group’s income tax reference number is 9739/002/71/6.
Therefore a total gross annual dividend of 23.27 cents per share, which includes the gross interim dividend of 11.25 cents per
share paid on 29 October 2012, has been declared for the year.
Declaration date: Tuesday, 16 April 2013
Last day to trade: Friday, 10 May 2013
Shares trade ex-dividend: Monday, 13 May 2013
Record date: Friday, 17 May 2013
Payment date: Monday, 20 May 2013
Share certificates may not be dematerialised or rematerialised between Monday, 13 May 2013 and Friday, 17 May 2013, both days
inclusive.
Directorate
In compliance with paragraph 3.59 of the Listings Requirements, the Board of directors of Datacentrix (“the Board”) is sad to
announce the retirement of Joan Joffe, who served the Board most diligently for the last 14 years, with effect from the conclusion
of the Annual General Meeting on 21 June 2013. The Board would like to take this opportunity to thank Joan for her wise counsel
and her guidance in this very important phase of transition of Datacentrix. Her significant experience and contribution to the Board
will be sorely missed.
Annual General Meeting
It is expected that the 2013 Integrated Annual Report will be dispatched to shareholders no later than 30 May 2013. Notice is
hereby given that the Annual General Meeting of the Group will be held at Datacentrix’ registered office at 10:00 on Friday, 21
June 2013.
For and on behalf of the Board:
Gary Morolo Ahmed Mahomed
Non-executive chairman Chief executive officer
16 April 2013
Gary Morolo (non-executive chairman), Ahmed Mahomed (Chief Executive Officer), Alwyn Martin*, Dudu Nyamane*, Elizabeth
Naidoo (Financial Director), Joan Joffe*, Thenjiwe Chikane*, Antony Ball*, Pete Backwell*
*independent, non-executive
Company secretary: iThemba Governance and Statutory Solutions Proprietary Limited
Registered office: Corporate Landing 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
Date: 16/04/2013 07:42:00 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.
Sharenet Sites 
