Wrap Text
Unaudited Condensed Consolidated Interim Results for the Six Months Ended 31 August 2014 and Dividend Declaration
DATACENTRIX HOLDINGS LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
(REGISTRATION NUMBER: 1998/006413/06)
SHARE CODE: DCT
ISIN: ZAE 000016051
(“Datacentrix” or “the Group” or “the Company”)
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2014 AND DIVIDEND DECLARATION
Key financial indicators
* Operating profit increased by 18% to R66 million
* Earnings per share increased by 15% to 24.1 cents and headline earnings
per share increased by 16% to 24.3 cents
* Revenue increased by 9% to R1.102 billion
* Operating margin increased by 9% from 5.5% to 6%
* Net asset value per share increased by 6% from 275 cents to 292 cents
* Interim gross cash dividend declared of 8.0908 cents per share
Condensed Consolidated Statements of Comprehensive Income for the six
months ended 31 August 2014
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R’000 R’000 R’000
Revenue 1 102 340 1 008 924 2 279 512
Operating profit 65 963 55 991 125 290
Net interest received 1 028 3 030 1 174
Profit before taxation 66 991 59 021 126 464
Taxation (19 786) (18 083) (37 539)
Total comprehensive income
attributable to ordinary
shareholders 47 205 40 938 88 925
Basic earnings per ordinary share
24.1 20.9 45.4
(cents)
Diluted basic earnings per
23.9 20.8 45.2
ordinary share (cents)
Gross dividend per share (cents) 8.09 12.32 20.49
Earnings before interest,
taxation, depreciation and
amortisation (“EBITDA”) 78 924 70 082 152 398
Headline earnings per ordinary
24.3 21.0 45.6
share (cents)
Diluted headline earnings per
24.1 20.9 45.4
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 purpose of dilution*
(000s) 197 241 196 782 196 804
*adjusted for treasury shares
Reconciliation between earnings
for the period attributable to
ordinary shareholders and headline
earnings
Earnings attributable to ordinary 47 205 40 938 88 925
shareholders
Loss on sale of property and
327 119 374
equipment
Headline earnings 47 532 41 057 89 299
Condensed Consolidated Statements of Financial Position as at 31 August
2014
Unaudited Unaudited Audited
31 August 31 August 28 February
2014 2013 2014
R’000 R’000 R’000
ASSETS
Non-current assets 203 899 223 888 206 109
Property and equipment 66 459 67 067 69 006
Intangible assets – software 12 531 11 901 9 646
Intangible assets – business
90 154 89 963 91 516
combination
Investment in joint venture 103 977 914
Finance lease receivables – long-
1 675 29 727 7 191
term
Deferred taxation assets 32 977 24 253 27 836
Current assets 775 376 720 754 756 190
Current taxation assets 5 785 - 11 844
Finance lease receivables – short-
13 948 30 576 19 271
term
Inventories 72 888 57 310 44 408
Trade and other receivables 548 197 387 310 478 130
Cash and cash equivalents 134 558 245 558 202 537
TOTAL ASSETS 979 275 944 642 962 299
EQUITY AND LIABILITIES
Capital and reserves 570 949 512 790 537 943
Share capital 21 21 21
Share premium 36 100 35 934 36 079
Treasury shares (42 790) (42 333) (42 766)
Equity-settled share scheme 44 961 41 581 43 161
reserve
Retained earnings 532 657 477 587 501 448
Non-current liabilities 21 593 60 413 39 125
Loan payable – long-term 8 859 17 000 18 793
Deferred revenue – long-term 11 071 14 104 13 175
Finance lease payables – long-term 1 663 29 309 7 157
Current liabilities 386 733 371 439 385 231
Trade and other payables 291 721 260 463 306 872
Deferred revenue – short-term 67 635 42 376 53 284
Finance lease payables – short- 13 783 29 250 18 565
term
Current tax liabilities 528 11 858 112
Loans payable – short-term 10 381 24 575 3 517
Lease smoothing liability 2 685 2 917 2 881
TOTAL EQUITY AND LIABILITIES 979 275 944 642 962 299
Net asset value (adjusted for 291.6 261.9 274.7
treasury shares) per share (cents)
Tangible net asset value (adjusted
for treasury shares) per share 239.2 209.9 223.1
(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 2014
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
21 35 962 (42 335) 37 801 460 181 491 630
February 2013
Total comprehensive
- - - - 40 938 40 938
income
Treasury shares
- (28) 2 - - (26)
movement
Share-based
- - - 3 780 - 3 780
payments
Dividend paid - - - - (23 532) (23 532)
Balance at 31
21 35 934 (42 333) 41 581 477 587 512 790
August 2013
Total comprehensive
- - - - 47 987 47 987
income
Treasury shares
- 145 (433) - - (288)
movement
Share-based
- - - 1 580 - 1 580
payments
Dividend paid - - - - (24 126) (24 126)
Balance at 28
21 36 079 (42 766) 43 161 501 448 537 943
February 2014
Total comprehensive - - - - 47 205 47 205
income
Treasury shares
- 21 (24) - - (3)
movement
Share-based
- - - 1 800 - 1 800
payments
Dividend paid - - - - (15 996) (15 996)
Balance at 31
21 36 100 (42 790) 44 961 532 657 570 949
August 2014
Condensed Consolidated Statement of Cash Flows for the six months ended
31 August 2014
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 R’000 2013 2014
R’000 R’000
Profit before taxation 66 991 59 021 126 464
Adjusted for non-cash items 13 008 12 188 28 076
Working capital changes (90 612) (23 103) (11 913)
- Inventories (28 480) (20 163) (7 261)
- Trade and other receivables (70 067) (10 242) (100 886)
- Finance lease receivables 10 839 (5 376) 28 465
- Trade and other payables (2 904) 12 678 67 769
Cash (utilised)/generated from
(10 613) 48 106 142 627
operations
Net interest received 1 905 5 654 4 727
Dividend paid (15 996) (23 532) (47 658)
Taxation paid (18 452) (11 438) (60 414)
Net cash (outflow)/inflow from
(43 156) 18 790 39 282
operating activities
Net cash outflow from investing
(11 453) (49 114) (60 092)
activities
Net cash (outflow)/inflow from
(13 370) 2 121 (50 414)
financing activities
Net decrease in cash and cash
(67 979) (28 203) (71 224)
equivalents
Cash and cash equivalents at the
202 537 273 761 273 761
beginning of the period
Cash and cash equivalents at the
134 558 245 558 202 537
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, which are stated at fair value as applicable. The condensed
consolidated 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.
The condensed consolidated financial statements of the Group have not been
reviewed or audited by the Group’s auditors. The condensed consolidated
financial statements of the Group were prepared under the supervision of
Mrs Elizabeth Naidoo CA (SA), the Financial Director of the Group.
Subsequent events
No material events have occurred between the six month period ended 31
August 2014 (“interim period”) and the date of this announcement.
The business of Datacentrix
Datacentrix is an integrated ICT systems provider to corporate and public
sector organisations in South Africa. The Group’s comprehensive portfolio,
proven execution capability and value-driven strategy underpin its
position as one of the leading local ICT players. The Group consists of
three operational divisions: Managed Services, Technology (previously
Infrastructure) and Business Solutions.
Overview
Datacentrix has undergone a transformational journey over the last few
years. In 2008, product revenue accounted for the largest share of the
business. The organisation recognised that the business model would come
under pressure due to hardware commoditisation and technology prices
declining. Today, the company predominantly delivers complex
infrastructure solutions, with a growing managed service, application and
cloud business. Its portfolio includes most of the significant enterprise
hardware and software vendors. The Group has largely delivered on the
implementation of its organic growth strategy, having built the capability
to assist customers in navigating the ever-changing IT landscapes. The
Group will continue to complement its organic growth strategy with
acquisitions.
Datacentrix’ vision continues to be one of enhancing stakeholder
shareholder value by optimising and enriching the performance of its
existing business portfolio and expanding those selected capabilities that
offer the greatest potential for sustainable growth.
The board of directors of Datacentrix (“Board”) is pleased to announce the
financial results for the interim period ended 31 August 2014. The Group’s
financial performance reflects the success of its strategy, with operating
profit increasing by 18% to R66 million and revenue increasing to R1.102
billion from R1.009 billion. Despite the market remaining under margin
pressure, the Group’s operating margins improved from 5.5% to 6%, driven
by a shift to higher-value complex solutions revenue and focused cost
management. Profit after tax (“PAT”) increased by 15% from R40.9 million
to R47.2 million and headline earnings per share (“HEPS”) increased 16%
from 21.0 cents to 24.3 cents. As previously communicated, the move to a
solutions-systems integration business has increased working capital
requirements.
Operational review
The Group showed solid performance for the interim period, achieving
revenue and PAT growth from all divisions. The continued focus on complex
solutions is contributing positively to Group performance, with areas such
as solution sales into the datacentre and networking solutions gaining
good acceptance in the marketplace. In the cloud space, the Group launched
both Infrastructure as a Service (“IaaS”) and Platform as a Service
(“PaaS”) offerings during the reporting period.
The change in operating margin is as a result of cost management and
change in business mix. Overall expenditure was well managed, resulting in
payroll costs remaining consistent with the comparative period.
The Group comprises three operational divisions: Managed Services,
Technology and Business Solutions. The Managed Services division
contributed 35% to the Group’s PAT, with the Technology division
responsible for 50%, and the Business Solution division 13%.
Segmental analysis
Business
Managed Services Technology Solutions Corporate Total Group
Unaudited 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 Aug
six months ‘14 ‘13 ‘14 ‘13 ‘14 ‘13 ‘14 ‘13 ‘14 ‘13
ended R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
1 102 1 008
Revenue 253 407 234 875 763 531 700 799 85 402 73 250 - -
340 924
EBITDA 29 834 32 088 38 848 35 211 10 242 2 783 - - 78 924 70 082
Operating 23 964 24 012 33 325 29 924 8 674 2 055 - - 65 963 55 991
profit
Net (805) (2 272) - - - - 1 833 5 302 1 028 3 030
interest
Profit 23 159 21 740 33 325 29 924 8 674 2 055 1 833 5 302 66 991 59 021
before
taxation
Taxation (6 841) (6 838) (9 845) (9 177) (2 562) (637) (538) (1 431) (19 786) (18 083)
Total
comprehen-
sive income
for the 16 318 14 902 23 480 20 747 6 112 1 418 1 295 3 871 47 205 40 938
period
The comparative segmental information has been adjusted to more accurately
reflect a change in internal reporting that occurred subsequent to the
comparative year’s interim results. This has resulted in the Cloud
Services business being reflected as part of the Managed Services division
(previously included under in the Technology division).
Managed Services
The Managed Services division focuses on enabling customers to grow their
businesses by enhancing their business processes and systems to enable
meaningful management decision making. The division’s revenue grew by 8%
to R253 million, while PAT was up 10% for the reporting period.
Performance within this unit was not as high as expected due to a major
outsource customer insourcing its services in line with its local and
global strategy. The Internet Service Provider (“ISP”), Network Service
Provider (“NSP”) and communications business, eNetworks, continues to
perform well; and the division’s Managed Talent Services business enjoyed
a robust performance. The Group has developed a compelling cloud offering
(Microsoft Exchange, IAAS, PAAS and application hosting) that offer long-
term growth opportunities for the Managed Services business. With data
privacy and residency concerns being raised at a global level,
organisations will turn to local cloud providers. This has the potential
to be a driver for local cloud providers.
Technology
The Technology division helps customers drive their business strategies
forward through the provision of integrated technology systems that
simplify complex infrastructure solutions such as datacentre optimisation
and transformation. Tight cost management within the Technology division
contributed to a slightly improvement in operating margins from 4.3% to
4.4%. Revenue within this unit showed growth of 9% while PAT grew by 13%.
The investment in skills over the last few years has provided the unit
with the capability to design and implement complex infrastructure
solutions, resulting in more strategic customer engagements.
Business Solutions
The Business Solutions division aims to allow businesses to better utilise
the information generated, manipulated and stored within their ICT
infrastructures. Revenue in the Business Solutions division increased by
17% and PAT by 331%. The division contributed 13% to total earnings for
the period, with a robust performance in the six months. Good growth was
achieved within the Enterprise Information Management (“EIM”) business.
This business unit houses a significant EIM skills pool and is a leading
player in the local EIM solutions and services space. The Enterprise
Resource Planning (“ERP”) and Analytics, and Business Intelligence
business units had a more subdued performance, although there have been
some ERP project wins that will be deployed in the second half of the
year.
Prospects
The Group will continue on its path as a skilled, services and solutions-
led organisation. People are key to the business and Datacentrix will
support the ongoing development and nurturing of the right skills to
deliver intelligent, complex solutions to the market in an ever changing
IT landscape. The company is supported by top-level vendor accreditations
and accolades. Recent vendor awards recognise the enhanced execution
capability of the company. Two such awards include a global award by HP
and Microsoft as an ‘Outstanding Frontline Partner (FLP) for 2014 in
Unified Communications & Collaboration’, and ‘Canalys EMEA ‘Infrastructure
Growth Partner of the year’.
The company believes that its focus on complex solutions, execution
capability and its customer-centric approach has positioned the Group
favourably within the market. Datacentrix will continue to seek out
suitable acquisition opportunities to broaden its reach and to bringing
new solutions sets to its customers.
Black Economic Empowerment
Datacentrix has maintained its Level Two (AAA) B-BBEE Contributor status,
with 125% procurement recognition. The Group was also named by ratings and
research agency, Empowerdex, in the recent Mail and Guardian survey, as
South Africa’s most empowered company within the ICT services sector. In
addition, the organisation reached the number one spot in the socio-
economic development and management control categories and was ranked as
the 14th most empowered listed company overall.
Dividend
In respect of the six-month period ended 31 August 2014, the Board
declared a gross cash dividend of 8.0908 cents per share. The dividend for
the six-month period ended 31 August 2014 is payable on Monday, 3 November
2014 to all shareholders on the Register of Members as at Friday, 31
October 2014.
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 8.0908 cents per share;
* the dividend tax to be withheld by the Company amounts to 1.21362 cents
per share;
* therefore, the net dividend payable to shareholders who are not exempt
from dividends tax amounts to 6.87718 cents per share, while the gross
dividend payable to shareholders who are exempt from dividends tax amounts
to 8.0908 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: Tuesday, 7 October
Last day to trade: Friday, 24 October
Share trade ex-dividend: Monday, 27 October
Record date: Friday, 31 October
Payment date: Monday, 3 November
Share certificates may not be dematerialised or rematerialised between
Monday, 27 October 2014 and Friday, 31 October 2014, both days inclusive.
The Board would like to thank the management and staff at Datacentrix for
their commitment and hard work that has resulted in positive performance
for the period.
For and on behalf of the Board:
Nolitha Fakude, Independent Non-executive Chairman
Ahmed Mahomed, Chief Executive Officer
7 October 2014
Nolitha Fakude* (Chairman), Ahmed Mahomed (Chief Executive Officer), Alwyn
Martin*, Arnold Fourie#, Dudu Nyamane*, Elizabeth Naidoo (Group Financial
Director), (*independent, non-executive) (#non-executive)
Company secretary: iThemba Governance and Statutory Solutions Proprietary
Limited
Registered office: 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: 07/10/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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