Wrap Text
Group Interim Results For Six Months Ended 31 December 2013
DIGICORE HOLDINGS LIMITED
Company registration number 1998/012601/06
JSE code: DGC
ISIN: ZAE000016945
("DigiCore" or "the company" or "the group")
GROUP INTERIM RESULTS
FOR SIX MONTHS ENDED
31 DECEMBER 2013
EBITDA
R67,2 million
increased 16%
EPS AND HEPS
8,2 cents
increased 42%
NET CASH GENERATED
FROM OPERATIONS
R58.0 million
increased 3%
PROFIT BEFORE TAX
R22,1 million
increased
55%
CORPORATE PROFILE
DigiCore Holdings is a JSE-listed group that specialises in vehicle tracking, fleet
management solutions and insurance telematics for a global client base. With over
28 years of innovation, technical and implementation experience, DigiCore
is recognised as a world-leading provider of advanced machine-to-machine
communication and telematics solutions that add value to customers with
mobile assets worldwide. DigiCore's end-to-end research, design, development,
manufacture, sales and support of customised solutions is serviced by a
global network of team members in more than 50 countries. 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 products and solutions, ranging from basic
track-and-trace with stolen vehicle response services for the consumer market to
complete integrated enterprise-level solutions for large fleet owners such as the
Royal Mail (UK), South African Police Service, eThekwini Metro, BHP Billiton (global)
and many others under the Ctrack brand.
Operations span six continents with over 1,000 employees and more than
780 000 systems sold.
COMMENTARY
We are satisfied with the inroads made in all spheres of our business, as reflected in
the growth in profitability and cash flow generated from operations.
We have established a new management team during last year and the board is
of the opinion that a re-statement of the financial statements was required in terms
of policy changes and system errors, to allow us to accurately measure the actual
performance for the period. Results as now presented will allow management to
make more informed decisions about the business going forward.
Given the significant improvement in our cash flow during the period, we have repaid
R34million in loans and bank overdraft facilities plus R3.7 million to our exiting black
economic empowerment (BEE) partners.
From an operational perspective, services from our control room, customer care and
accounts departments have improved greatly, allowing our sales and management
team to focus on sales and customer interaction.
On the fleet side, we sold more externally financed units. On the consumer side, we
started sales into the dealer channel on a dual cash upfront basis – this covers costs
of manufacturing while a 36-month subscription strengthens our annuity income. We
are progressing well with key partners on this strategy.
Our new innovative products are stable and performing well. There is still some
development work to be done to supply suitable products (some new) to specific
parts of the world as required in those markets. The development roadmap is in place
and priorities have been agreed.
FINANCIAL OVERVIEW
The audit and risk committee and the board of directors of the group requested
that a detailed investigation be performed into the group's systems and operations
as part of a comprehensive business review. This review included a change of
management, an understanding of the costing of products and understanding the
process of internal controls and accounting for transactions.
As a result of this review, the results presented includes a restatement of the prior
period financial statements. Management is of the opinion that this restatement
will result in the company providing more reliable and more relevant information
regarding the performance and the financial position of the company. For a detailed
analysis of the restatement, refer to note 3.
For the purposes of the financial review, the prior period results excluding Worldmark
SA (Proprietary) Limited was used to ensure the results of the continued operations
were reflected objectively.
For the six months ended 31 December 2013, revenue rose by R14 million (3%), with
R7.5 million of the increase related to international operations and the balance to
South African operations. (Refer to note 6.)
Higher revenue was further supported by a strengthened gross profit margin of
72.01%, up from 65.47% in the comparative period and mainly due to the reduced
telematics cost.
Profit before tax increased from R14.2 million to R22.1 million, indicating that the
depreciation charge for rental units is now aligned with the revenue generated, and
that management's cost-saving initiatives are effective.
Cash flow from operating activities rose by 3.4% to R58 million (2012: R56 million).
Cash flow from financing activities, however, decreased from an inflow of R62 million
to an outflow of R41.3 million. This was mainly due to repaying R34.2 million in loans
and bank overdraft facilities during the period plus R7.1 million on finance lease
agreements.
TECHNOLOGY REVIEW
Ctrack's new-generation iS platform has received very positive feedback from both
distributors and end-users, and has proved invaluable for our sales teams. Releasing
new telematics devices to a worldwide audience always carries some risk, but
implementation has gone smoothly with no reliability or third-party compatibility
problems reported.
Ctrack On-the-Road®, a touch-screen terminal based on smartphone technology
has been well received in the market and significant orders have been secured,
validating our decision to have the screen manufactured in China. The latest
upgrade includes a forward-looking video camera for driver behaviour and accident
investigations, fully integrated into the Ctrack Maxx reporting environment. The
addition of video data to the cloud-based Ctrack environment required us to
upgrade Ctrack's cloud storage capacity, which has been increased to three times
the previous capacity. As reported in the previous period, our Ctrack OBD-II-based
Plug and Play telematics device has been released and POC's are ongoing with a
number of Insurance companies.
Ctrack released its new multi-communication module, allowing seamless and cost-
effective operation in and outside GSM areas. The module adds customer-selected
communication options and combinations of wi-fi, satellite communications
and even encrypted private digital radio networks like TETRA. An on-board least-
cost router and message priority scheme gives the client full control over wireless
communication costs.
Ctrack signed two significant global agreements. Firstly, a mapping agreement gives
Ctrack systems globally direct access to a cloud-based map database, ensuring the
latest maps and satellite images are always available to our clients and, secondly,
a technology partnership agreement to strengthen Ctrack's OBDII plug-and-play
technology.
The Phase 2 development of the Interactive Business Intelligence and Bureau
Reporting environment has been completed. This powerful system enables Ctrack
customers to receive automated reports as well as dynamic KPI reporting on drivers
and vehicles respectively. This allows business decisions to optimise fleet size and
performance and improve behaviour for safety and lower maintenance costs.
We continue to invest in insurance telematics technology, and a number of new
technologies, unique to Ctrack, have been made available under NDA to our
insurance clients.
OPERATIONAL REVIEW
South Africa
Ctrack
Continued investment in the sales structure has generated new opportunities in the
motor dealership and insurance channels. Sales skills have been expanded through
a mix of training and recruitment to meet the challenges of a more demanding
marketplace.
Our fleet sales focus is moving to a more consultative approach to assist customers
in optimising benefits from their Ctrack telematics solutions. The new iS hardware
platform, combined with world-class mobile software solutions, makes fleet
management easy and effective.
The launch of Ctrack On-The-Road has generated much interest among transporters
wanting to optimise their fleets. A new partnership with VSC Solutions , will assist in
selling a total fleet solution to our customers in the logistics sector.
Our continued success in the mining and logistics industry reflects the benefit of our
experience, and we have also focused on growing our footprint across various supply
chain segments, especially FMCG or fast-moving consumer goods.
The successful deployment of Ctrack's mobile resource management solution has
improved customer service and productivity at the installation stage.
The telesales function has focused on renewals in the existing customer base and
third-party call centres have been appointed to drive new business acquisition in
the consumer market in the new financial year. An agreement with International
SOS South Africa is providing the opportunity to sell value-added services, such as
medical support and roadside assistance, to the consumer customer base.
Discovery Insure installations have risen to over 51 000 Ctrack insurance telematics
systems to date. Strong growth is expected in coming years as the market becomes
more aware of the concept of rewarding better and safer driving habits.
In supporting the Action for Response system of the South African Police Service
(SAPS), we have rolled out the call-taking and dispatch system to over 20 response
centres nationally.
The customer-focused drive initiated in 2013 has set a new benchmark for customer
service. The introduction of tighter measurement criteria to improve our overall
service excellence is delivering higher levels of customer satisfaction.
Tap-i-Fare
Tap-i-Fare continues to work closely with the taxi industry. The outcome of a recent
request for proposal for the industry on both telematics and fare collection is believed
to be imminent. Our intention is to become a strategic partner for this industry.
Ctrack Mzansi
Ctrack Mzansi has completed its second year of operation and moved from a level
4 to level 1 BBBEE (broad-based black economic empowerment) contributor in 2013.
During the period, we secured a significant contract for the Department of Labour.
Ctrack Mzansi has now grown into a fully functioning division, tendering not only for
government contracts but also private operators. We await the outcome of other
fleet tenders.
INTERNATIONAL
Europe and UK
The economic climate in Europe still remains under pressure and this was evidenced
by the results of Ctrack generating a loss of €380 thousand (2012: €478 thousand).
The current focus is on improving operational efficiency and cost control across all
countries and remains one of the priorities of the European management team.
Ctrack in Europe and the UK has continued to work with customers and partners in
the insurance market. In the UK sales in this sector, while still modest, are growing
gradually as the capability of Ctrack and its partners is proven.
Management is currently investigating various opportunities to ensure growth of
sales and the reduction of cost resulting in the business becoming profitable in
the near future.
Africa
The mining sector in Africa is still a key contributor to Ctrack Africa's success. Despite
a recent period of growth, the mining industry is fundamentally a cyclical business
and companies have to adjust from time to time to accommodate risks, especially
when there are lives at stake. The telematics we supply have become an integral
part of the health and safety environment in which these companies operate.
Local distributors play a big role in our success by supplying the support base to
these projects. We are partnering with a global, multinational company to further
our footprint and service offering on the continent and build a more sustainable
business model.
Australia and New Zealand
Ctrack continues to trade profitably in this region and is poised for further growth
in the targeted industry segments of insurance telematics, mining, heavy vehicle
and fleet. It has recently started a trial for insurance telematics with an international
vehicle insurance underwriter and expects to launch this service in the second half
of the financial year.
Asia and Middle East
Sales in Asia and the Middle East have grown compared to last year. Ctrack's
footprint now includes the United Arab Emirates, Jordan and Oman in the Middle
East. In Asia, Singapore, Malaysia, Thailand and Indo-China are now connected,
resulting in customers using the Asian Road Network with Ctrack's roaming and free
tracking services under the Transported Asset Protection Association (TAPA). One of
the Malaysian Palm Oil Board's approved transporters was the first customer to be
contracted, with many more expected as results are shared amongst them.
INDUSTRY COMMENTS
DigiCore is progressing with the shift from selling tracking devices to an information-
based service-and-subscription revenue model supported by client options for
value-added solutions.
The strategic and special projects division continues to identify and define
innovative applications and future telematics trends. As a result, DigiCore maintains
its leadership in insurance telematics and today operates over 60 000 driver
behaviour-based insurance telematics systems in three continents. Under the Ctrack
brand, DigiCore was ranked as the 'best telematics technology provider' and ‘best
telematics service provider' in Asia, Latin American and other continents, including
Africa and Australasia, in the 2013 Insurance Telematics Supplier Ranking Study by
Ptolemus Consulting Group which helps insurers select their partners.
As rising fuel costs remain an important driver of telematics solutions for companies,
the concept of total fleet management is gathering momentum and will offer new
opportunities as we supply the means for deeper fleet analysis.
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. As example, Megafortris/ISIS, which is a
combination of client partner request, and our Thripp Container research strategy
won the Department of Trade and Industry's technology prize, and is now being
rolled out worldwide.
OUTLOOK
We will continue to drive sales, streamline factory efficiencies, manage our debtors,
and close any gaps in the cycle from installation to billing by automation and daily
reporting.
Our future sales model should be more balanced given the external funding now in
place. This will generate improved shorter-term profits and cash flow while enabling
DigiCore to build annuity income, although at a slower but more sustainable pace.
We have continued to recapture lost fleet management business and trust we will
improve this trend. New channels to distribute our stolen vehicle recovery products
have been opened and volumes are improving.
Partnerships and long-standing relationships with loyal customers, locally and
internationally, will contribute to the number of systems sold and growing annuity
revenue streams on the back of new technology and solid customer service.
DigiCore seeks to achieve outstanding long-term profitability for its shareholders,
while maintaining a high standard of ethics and developing and rewarding its
people accordingly.
For and on behalf of the board
NH Vlok PJ Grové
Chief executive officer and chairman Chief financial officer
Centurion
26 February 2014
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
at 31 December 2013
Restated Restated
Restated Year ended Year ended
31 Dec 13 31 Dec 12 30 June 13 30 June 12
R'000 R'000 R'000 R'000
Notes (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Assets
Non-current assets 449 069 543 026 450 509 526 636
Property, plant and equipment 4 143 329 174 566 162 243 173 037
Goodwill 5 164 133 223 811 158 780 220 584
Intangible assets 95 722 95 826 85 337 79 488
Investments in associates 9 145 5 595 7 939 7 110
Other financial assets – – – 1 250
Deferred tax 36 740 43 228 36 210 45 167
Current assets 455 710 426 750 397 900 364 141
Inventories 115 349 101 014 100 189 94 768
Current tax receivable 2 426 2 426 6 400 2 426
Trade and other receivables 300 684 256 949 248 780 225 628
Cash and cash equivalents 37 251 66 361 42 531 41 319
Assets held for sale – 25 862 – 28 606
Total assets 904 779 995 638 848 409 919 383
Equity and liabilities
Equity attributable to equity holders of parent 609 162 622 629 586 339 600 308
Share capital and premium 166 324 166 324 166 324 166 324
Foreign currency translation reserve 46 324 13 678 43 182 (524)
Share-based payment reserve 10 935 9 989 10 935 9 989
Retained income 385 579 432 638 365 898 424 519
Non-controlling interest 17 399 (10 945) 16 003 (14 524)
Non-current liabilities 60 517 62 939 55 357 33 040
Other financial liabilities 45 415 51 739 39 461 22 995
Finance lease obligation 12 867 8 965 14 481 7 810
Deferred tax 2 235 2 235 1 415 2 235
Current liabilities 217 701 228 875 190 710 204 011
Other financial liabilities 35 957 44 524 46 614 10 183
Current tax payable 3 626 10 452 6 726 16 222
Finance lease obligation 6 929 4 827 5 668 7 111
Trade and other payables 111 036 86 279 60 139 64 441
Deferred income 5 221 25 203 13 686 29 640
Provisions 6 614 7 754 5 835 6 244
Bank overdraft 48 318 49 836 52 042 70 170
Liabilities held for sale – 92 140 – 96 548
Total equity and liabilities 904 779 995 638 848 409 919 383
Net asset value per share (cents) 246,0 251,4 236,7 242,4
Net tangible asset value
per share (cents) 141,0 122,3 138,2 121,2
*Refer to the Restatements Note, Note 3 to the abridged consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the six months ended 31 December 2013
Restated
Six months Six months Restated*
ended ended Year ended
31 Dec 13 31 Dec 12 30 June 13
R'000 Growth R'000 R'000
Notes (Unaudited) % (Unaudited) (Unaudited)
Revenue 428 193 (5) 448 478 862 624
Cost of sales (119 819) (23) (154 872) (270 682)
Gross profit 308 374 5 293 606 591 942
Other income 6 602 12 338 25 898
Operating expenses (247 722) (247 858) (503 251)
Earnings before interest, impairments, taxation,
depreciation, amortisation and capital items 67 254 16 58 086 114 589
Depreciation and amortisation (39 854) (36 779) (82 929)
Capital items 7 (64) (1 338) (72 936)
Operating profit 27 336 37 19 969 (41 276)
Investment revenue 1 27 216
Income/(Loss) from equity accounted investments 1 300 (78) 2 131
Finance costs (6 503) (5 627) (14 378)
Profit before taxation 22 134 55 14 291 (53 307)
Taxation (1 057) (234) 790 (1 528)
Profit after tax 21 077 40 15 081 (54 835)
Other comprehensive income:
Exchange differences on translating foreign
operations - reclassifiable 3 142 14 202 43 706
Total comprehensive income for the period 24 219 (17) 29 283 (11 129)
Profit attributable to:
Owners of the parent 19 681 42 13 863 (54 925)
Non-controlling interest 1 396 1 218 90
21 077 15 081 (54 835)
Total comprehensive income for the period
attributable to:
Owners of the parent 22 823 (19) 28 065 (11 219)
Non-controlling interest 1 396 1 218 90
24 219 29 283 (11 129)
Earnings/(loss) per share (cents) 8 8,2 42 5,8 (22,9)
Diluted earnings/(loss) per share (cents) 8 8,2 42 5,8 (22,9)
Headline earnings per share (cents) 8 8,2 42 5,9 6,2
Diluted headline earnings per share (cents) 8 8,2 42 5,9 6,2
*Refer to the restatements note, note 3 to the abridged consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the six months ended 31 December 2013
Restated
Six months ended Six months ended
31 Dec 13 31 Dec 12
R'000 R'000
(Unaudited) (Unaudited)
Share capital and premium
Share capital and premium at the beginning of the period 166 324 166 324
Share capital and premium at the end of the period 166 324 166 324
Reserves
Foreign currency translation reserve
Balance at the beginning of the period 43 182 (524)
Translation differences for the period 3 142 14 202
Balance at the end of the period 46 324 13 678
Equity settled share-based payment reserve
Balance at the beginning of the period 10 935 9 989
Balance at the end of the period 10 935 9 989
Reserves at the end of the period 57 259 23 667
Retained income
Retained income at the beginning of the period 365 898 424 519
Profit for the period 19 681 13 863
Acquisition of 27% in Ctrack (Proprietary) Limited from outside shareholders – (5 744)
Retained income at the end of the period 385 579 432 638
Non-controlling interest
Balance at the beginning of the period 16 003 (14 524)
Profit for the period 1 396 1 218
Business combinations – 3 674
Acquisition of 27% in Ctrack (Proprietary) Limited from outside shareholders – (1 313)
Balance at the end of the period 17 399 (10 945)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended 31 December 2013
Restated
Six months ended Six months ended
31 Dec 13 31 Dec 12
R'000 R'000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from operations 60 809 64 247
Interest income 1 27
Finance costs (6 503) (5 627)
Tax received/(paid) 3 740 (2 520)
Net cash from operating activities 58 047 56 127
Net cash from investing activities (18 274) (72 706)
Net cash from financing activities (41 329) 61 955
Total cash and cash equivalents movement for the period (1 556) 45 376
Cash and cash equivalents at the beginning of the period (9 511) (28 851)
Total cash and cash equivalents at end of the period (11 067) 16 525
*Refer to the Restatements Note, Note 3 to the abridged consolidated financial statements.
CONDENSED SEGMENTAL ANALYSIS
for the six months ended 31 December 2013
Restated
Six months ended 6 months ended
31 Dec 13 31 Dec 12
R'000 R'000
(Unaudited) (Unaudited)
Revenue
SA distribution 264 885 275 911
External revenue 257 971 268 997
Internal segment revenue 6 914 6 914
Foreign distribution 150 950 143 446
External revenue 150 950 143 446
Internal segment revenue – –
Product development and manufacturing 106 557 108 391
External revenue 28 533 30 367
Internal segment revenue 78 024 78 024
Group services 5 620 8 136
External revenue 3 160 5 676
Internal segment revenue 2 460 2 460
528 012 535 884
Inter segmental revenue (99 819) (87 406)
428 193 448 478
Operating profit/(loss)
SA distribution 9 231 11 231
Foreign distribution (3 100) (6 305)
Product development and manufacturing 15 093 7 763
Group services 6 112 7 280
27 336 19 969
Investment revenue 1 27
Income/(loss) from equity accounted investments 1 300 (78)
Finance costs (6 503) (5 627)
Profit before taxation 22 134 14 291
Segment assets
SA distribution 378 811 466 739
Foreign distribution 183 288 192 527
Product development and manufacturing 220 775 217 496
Group services 243 887 246 860
1 026 761 1 123 622
Eliminations (121 982) (127 984)
Total assets 904 779 995 638
Segment liabilities
SA distribution (57 938) (197 935)
Foreign distribution (114 101) (101 031)
Product development and manufacturing (25 937) (18 350)
Group services (202 224) (194 622)
(400 200) (511 938)
Eliminations 121 982 127 984
Total liabilities (278 218) (383 954)
NOTES TO THE INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and presentation of financial statements
The interim condensed consolidated financial statements are prepared in accordance
with the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and contain the information required by IAS 34 Interim
Financial Reporting as well as the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee, the JSE Limited Listings Requirements, and the
requirements of the Companies Act, 2008.
The accounting policies are in terms of IFRS and are consistent with those of the
consolidated Annual Financial Statements at 30 June 2013 as issued on 25 September 2013.
Except as described below, The accounting policies are supported by reasonable
and prudent judgments and estimates.
The board has approved the financial statements which have been condensed for
purposes of this report.The financial statements were internally compiled by Mr PJ Grové
CA(SA), the Group Chief Financial Officer and Mr V Venkatkumar CA(SA), the Group
Financial Manager.
These interim condensed consolidated financial statements have not been reviewed or
audited by Mazars (Gauteng) Inc, the Group's auditors.
2. Changes in accounting policies not resulting in a restatement
The Group adopted the new, revised or amended accounting pronouncements as
issued by the IASB, which were effective and applicable to the Group from 1 July 2013,
none of which had any material impact on the Group's financial results for the year.
IFRS 10 Consolidated Financial Statements
The objective of IFRS 10 is to establish principles for the presentation and preparation of
consolidated financial statements when an entity controls one or more other entities.
The Group has revised its accounting policies on the consolidation of subsidiaries and
concluded that the adoption of IFRS 10 did not result in any material change in the
consolidation of the Group.
IFRS 13 Fair value measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure
requirements for use across IFRS. IFRS 13 was adopted and applied prospectively and it
was assessed that the adoption did not result in any material impact on the financial
results of the Group.
Full details on changes in accounting policies will be disclosed in the Group's
consolidated annual financial statements for the year ending 30 June 2014
3. Restatement
The audit and risk committee and the board of directors of the Group requested that a
detailed investigation be performed into the Group's systems and operations as part of
a comprehensive business review.
This review included a change of management, an understanding of the costing of
products and understanding the process of internal controls and accounting for
transactions.
As a result of this review, the following restatements to prior reported financial results were
identified, which the company believes should be amended:
Capitalisation of development costs as part of inventories and rental units
DigiCore provides a tracking solution to its customers through a tracking device paired
with tracking software. When revenue is recognised, the resulting cost of sale should
also be recognised for the tracking unit and the software used to provide the solution.
This was previously done by the DigiCore owned factory by including a profit margin
that recovers all manufacturing and development cost when tracking units were sold to
other subsidiaries within the DigiCore group. The Group therefore carried these tracking
units in inventory and rental assets at a value inclusive of manufacturing cost and the
allocated development cost.
Management have performed a detailed review of this process and concluded that a
more appropriate basis of capitalising these development costs as part of inventories
and rental units would be to capitalise the amortisation of development costs as
recognised in the financial period.
This change in the accounting policy changes the manner in which the cost is allocated
to inventories and rental units resulting in more relevant and reliable information about
the effects of the transactions.
Impairment of rental units
DigiCore rents a tracking solution to customers over a contract period. DigiCore will
receive rental income over the duration of the contract period and the unit should be
depreciated over the contract period.
The accounting system for the rental units was designed in such a manner that a number of rental
units that should have previously been impaired, but could not be identified from the accounting
system, as the economic benefit of these assets had been depleted.
The rental units have been impaired using a recoverable amount based on the
estimated value in use.
Controls have been implemented to improve the manner in which information from the
system is obtained and recorded.
Connection incentive bonus (CIB)
DigiCore previously received a fixed commission, CIB, from the cellular network service
providers on activation or renewal of a cellular line contract. Previously this commission
was recognised as revenue when received by the Group.
The cellular providers have subsequently ceased to pay these commissions and as a
direct result have significantly reduced the monthly subscription charge.
Due to the availability of this information, management concluded to change the
accounting policy from recognising the CIB revenue upfront to deferring the revenue
over the contract period to reflect the true substance of the transaction.
The following tables summarize the material impacts resulting from the above
restatements on the Group's financial position, comprehensive income and cash flows:
Interim condensed Consolidated Statement of financial position:
As at 31 December 2012 Effect of restatements
Balance Capital- Impair-
as isation of ment
previously develop- of rental CIB Balance
All figures in R'000 reported ment costs units revenue restated
Property, plant
and equipment 205 700 (26 277) (4 857) 174 566
Deferred tax 29 219 6 952 7 057 43 228
Inventories 105 217 (4 203) 101 014
Total 340 136 (23 528) (4 857) 7 057 318 808
Retained income 474 275 (19 833) (3 658) (18 146) 432 638
Non-controlling
interest (10 794) – (151) (10 945)
Total 463 481 (19 833) (3 809) (18 146) 421 693
Current tax
payable 11 500 (1 048) 10 452
Trade and other
payables 89 975 (3 696) – - 86 279
Deferred income 25 203 25 203
Total 101 475 (3 696) (1 048) 25 203 121 934
As at 30 June 2013 Effect of restatements
Balance Capital- Impair-
as isation of ment
previously develop- of rental CIB Balance
All figures in R'000 reported ment costs units revenue restated
Property, plant and
equipment 201 435 (25 029) (14 163) 162 243
Deferred tax 23 593 8 172 613 3 832 36 210
Inventories 104 347 (4 158) 100 189
Trade and other
receivables 249 579 (799) 248 780
Total 578 954 (21 015) (14 349) 3 832 547 422
Retained income 412 532 (21 016) (15 764) (9 854) 365 898
Non-controlling
interest 15 757 246 - 16 003
Total 428 289 (21 016) (15 518) (9 854) 381 901
Current tax payable 4 028 2 698 6 726
Trade and other
payables 61 667 (1 529) – 60 139
Deferred income 13 686 13 686
Total 65 695 – 1 169 13 686 80 551
As at 30 June 2012 Effect of restatements
Capital- Impair-
Balance as isation of ment
previously develop- of rental CIB Balance
All figures in R'000 reported ment costs units revenue restated
Property, plant and
equipment 203 730 (25 826) (4 866) 173 038
Deferred tax 29 358 7 510 8 299 45 167
Inventories 95 763 (995) 94 768
Total 328 851 (19 311) (4 866) 8 299 312 973
Retained income 468 199 (19 310) (3 029) (21 341) 424 519
Non-controlling
interest (14 524) (14 524)
Total 453 675 (19 310) (3 029) (21 341) 409 995
Current tax payable 16 222 16 222
Trade and other
payables 66 279 – (1 838) – 64 441
Deferred income 29 640 29 640
Total 82 501 – (1 838) 29 640 110 303
Interim condensed Consolidated Statement of comprehensive income:
Six months ended
31 December
2012 Effect of restatements
Capital- Impair-
Balance as isation of ment
previously develop- of rental CIB Balance
All figures in R'000 reported ment costs units revenue restated
Revenue 448 478 448 478
Cost of sales (149 292) (10 016) 4 436 (154 872)
Operating expenses (249 757) – 1 899 (247 858)
Depreciation and
amortisation (44 553) 6 357 1 417 (36 779)
Capital items 70 (1 408) (1 338)
Profit before taxation 11 606 (3 659) 1 908 4 436 14 291
Taxation 1 584 1 024 (576) (1 242) 790
Profit after tax 13 190 (2 635) 1 332 3 194 15 081
Non-controlling
interest 1 369 (151) 1 218
Capital- Impair-
Indicator as isation of ment
previously develop- of rental CIB Indicator
Earnings per share reported ment costs units revenue restated
Earnings per share
(cents) 4.9 (1.1) 0.6 1.4 5.8
Diluted earnings per
share (cents) 4.9 (1.1) 0.6 1.4 5.8
Headline earnings
per share (cents) 4.5 (1.1) 1.0 1.4 5.8
Diluted headline
earnings per share
(cents) 4.5 (1.1) 1.0 1.4 5.8
Year ended
30 June 2013 Effect of restatements
Balance Capital- Impair-
as isation of ment
All figures in previously develop- of rental CIB Balance
R'000 reported ment costs units revenue restated
Revenue 862 588 36 862 624
Cost of Sales (270 896) (14 598) 14 812 (270 682)
Depreciation and
amortisation (98 424) 12 232 3 263 (82 929)
Capital Items (60 373) (12 563) (72 936)
Profit before
taxation (56 489) (2 366) (9 300) 14 848 (53 307)
Taxation 4 362 662 (2 085) (4 467) (1 528)
Profit after tax (52 127) (1 704) (11 385) 10 381 (54 835)
Non-controlling
Interest (156) 246 90
Indicator Capital- Impair-
as isation of ment of
Earnings per previously develop- rental CIB Indicator
share reported ment costs units revenue restated
Earnings per share
(cents) (21.7) (0.7) (4.8) 4.3 (22.9)
Diluted earnings
per share (cents) (21.7) (0.7) (4.8) 4.3 (22.9)
Headline earnings
per share (cents) 3.3 (0.7) (0.7) 4.3 6.2
Diluted headline
earnings per
share (cents) 3.3 (0.7) (0.7) 4.3 6.2
4. Property, plant and equipment
The Group has invested R18.7 million into rental assets over the 6-month period to
31 December 2013. R24.2 million worth of rental units that was previously capitalised
for the project with Discovery Insure Limited has also been derecognised and sold to
Discovery Insure under the revised terms and conditions of the project. Depreciation
for the six-month period on rental units amounts to R22.6 million (31 December 2012
Restated: R28.5 million).
5. Goodwill
The goodwill amount per the statement of financial position is reconciled as follows:
Cost 216 280
Accumulated impairments (57 500)
Carrying value at 30 June 2013 158 780
Foreign exchange movements 5 353
Carrying value at 31 December 2013 164 133
Cost at 31 December 2013 221 633
Accumulated impairments at 31 December 2013 (57 500)
6. Disposal of subsidiary
On 31 January 2013, the group sold its shareholding in Worldmark SA (Proprietary)
Limited T/A Motor One. Please refer to the results announcement for the year ended
30 June 2013 for further details. In order to reflect the results of the continued operations,
the results of the Group for the six months ended 31 December 2012 are provided before
and after the results for Worldmark SA (Proprietary) Limited as follows:
Six months
ended
31 Dec
2013 Six months ended 31 Dec 2012
World-
mark
Growth SA
DigiCore DigiCore DigiCore (Proprietary) Balance
All figures in R'000 operations operations operations Ltd restated
Revenue 428 193 3% 414 112 34 366 448 478
Cost of Sales (119 819) (140 148) (14 724) (154 872)
Other income 6 602 8 330 4 008 12 338
Operating expenses (247 722) (226 794) (21 064) (247 858)
Depreciation and
amortisation (39 854) (36 779) - (36 779)
Capital Items (64) (1 338) - (1 338)
Investment Revenue 1 27 - 27
(Loss)/Income from
equity accounted
investments 1 300 (78) - (78)
Finance costs (6 503) (5 428) (199) (5 627)
Profit before taxation 22 134 86% 11 904 2 387 14 291
Taxation (1 057) (975) - 790
Profit after tax 21 077 93% 10 929 2 387 15 081
7. Capital items
Capital items consist of the following:
R'000
6 months ended
Year
ended
31 Dec 30 June
31 Dec 2012 2013
2013 Restated Restated
Profit on sale of assets 698 32 (2 771)
Impairment of rental assets (762) (1 370) (12 665)
Impairment of goodwill - - (57 500)
(64) (1 338) (72 936)
8. Earnings per share
Six months Year
Six months ended ended
ended 31 Dec 12 30 June 13
Earnings per share 31 Dec 13 Growth Restated Restated
Earnings per share (cents) 8.2 42% 5.8 (22.9)
Diluted earnings per share (cents) 8.2 42% 5.8 (22.9)
Headline earnings per share (cents) 8.2 42% 5.8 6.2
Diluted headline earnings per share
(cents) 8.2 42% 5.8 6.2
Weighted number of shares in issue to
be used in the calculation of basic and
diluted earnings per share 239 607 239 607 239 607
Reconciliation of headline earnings:
Basic and diluted earnings 19 681 13 863 (54 925)
Adjusted for:
Profit on sale of fixed assets (698) (32) (2 771)
Impairment of fixed assets 762 1 370 (12 665)
Bargain purchase on acquisition of
Alchemist House (Proprietary) Limited – (1 703) –
Loss on MotorOne – – 1 047
Impairment of goodwill – – 57 500
19 745 13 498 19 058
Tax effect on adjustments (18) (375) (4 322)
Non-controlling interest in adjustments – 766 –
Basic and diluted headline earnings 19 727 13 889 14 736
DIVIDEND DECLARATION
No interim dividend will be declared and paid to the shareholders. The board agreed to
retain cash for future growth. (31 December 2012 : 0 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.
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 strive 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. It 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 for which a report has been prepared in
accordance with GRI G3.1 guidelines. With the release of the integrated annual
report 2013 in October 2013, DigiCore followed the combined assurance model and
believes the report meets the requirements of level C. Please refer to the website for
further information on sustainability within the Group.
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
PO Box 61051, Marshalltown, 2107
Sponsor
PSG Capital (Pty) Limited
Auditors
Mazars (Gauteng) Incorporated
Directorate Executive
NH Vlok (Chief Executive Officer and Chairman), D du Rand,
MD Rousseau, PJ Grové (Chief Financial Officer)
Non-executive
Prof B Marx, SS Ntsaluba, G Pretorius (Lead independent), JD Wiese
Company secretary
DA Nieuwoudt
Company registration number 1998/012601/06, JSE code: DGC ISIN: ZAE000016945
("DigiCore" or "the company" or "the group")
www.digicore.com
www.ctrack.com
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