Wrap Text
Group Interim Results for the 6 months ended 31 December 2014
Digicore Holdings Ltd
Co. Reg. No: 1998/012601/06, JSE code: DGC ISIN: ZAE000016945
(DigiCore or “the company” or “the group”)
Group interim results for the six months ended 31 December 2014
Always Visible
Revenue up 5%
EPS up 35%
profit before tax up 34%
Condensed consolidated statement of financial position
at 31 December 2014
Notes 31 Dec 2014 31 Dec 2013 30 Jun 2014
R’000 R’000 R’000
(Unaudited) (Unaudited) (Audited)
ASSETS
Non-current assets 481 589 449 069 473 974
Property, plant and equipment 2 139 078 143 329 137 619
Goodwill 3 176 851 164 133 178 332
Intangible assets 105 399 95 722 101 671
Investments in associates 4 11 647 9 145 11 002
Deferred tax 48 614 36 740 45 350
Current assets 293 609 455 710 286 386
Inventories 69 427 115 349 77 716
Current tax receivable 6 883 2 426 6 883
Trade and other receivables 189 772 300 684 182 520
Cash and cash equivalents 27 527 37 251 19 267
Total assets 775 198 904 779 760 360
EQUITY AND LIABILITIES
Equity attributable to equity holders of parent 578 049 609 162 565 978
Share capital and premium 166 324 166 324 166 324
Foreign currency translation reserve (759) 46 324 14 755
Share-based payment reserve 13 661 10 935 12 661
Retained income 398 823 385 579 372 238
Non-controlling interest (2 966) 17 399 (2 505)
Non-current liabilities 28 934 60 517 26 466
Other financial liabilities 5 12 767 45 415 14 135
Finance lease obligation 9 329 12 867 7 990
Deferred tax 6 838 2 235 4 341
Current liabilities 171 181 217 701 170 421
Other financial liabilities 5 3 265 35 957 18 235
Current tax payable 10 054 3 626 5 920
Finance lease obligation 5 023 6 929 9 837
Trade and other payables 94 245 111 036 83 332
Deferred income - 5 221 355
Provisions 1 642 6 614 3 019
Bank overdraft 56 952 48 318 49 723
Total equity and liabilities 775 198 904 779 760 360
Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2014
Notes Six months Six months Year ended
ended ended 30 Jun 2014
31 Dec 2014 31 Dec 2013 R’000
R’000 R’000 (Audited)
(Unaudited) (Unaudited)
Revenue 450 747 428 193 891 943
Cost of sales (153 249) (119 819) (325 189)
Gross profit 297 498 308 374 566 754
Other income 8 847 6 602 41 786
Operating expenses (241 879) (247 722) (510 050)
Earnings before interest, impairments, taxation,
depreciation, amortisation and capital items 64 466 67 254 98 490
Depreciation and amortisation (36 989) (39 854) (77 878)
Capital items 6 5 734 (64) (4 315)
Operating profit 33 211 27 336 16 297
Investment revenue - 1 3 643
Income from equity-accounted investments 2 018 1 300 3 064
Finance costs (5 517) (6 503) (14 345)
Profit before taxation 29 712 22 134 8 659
Taxation (3 588) (1 057) (864)
Profit after tax 26 124 21 077 7 795
Other comprehensive income:
Exchange differences on translating foreign
operations - reclassifiable (15 515) 3 142 (28 427)
Total comprehensive income for the period 10 609 24 219 (20 632)
Profit attributable to:
Owners of the parent 26 585 19 681 7 036
Non-controlling interest (461) 1 396 759
26 124 21 077 7 795
Total comprehensive income for the period
attributable to:
Owners of the parent 11 070 22 823 (21 391)
Non-controlling interest (461) 1 396 759
10 609 24 219 (20 632)
Earnings per share 7
Earnings per share (cents) 11,10 8,21 2,94
Diluted earnings per share (cents) 10,69 8,21 2,83
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2014
Six months ended Six months
31 Dec 2014 ended
R’000 31 Dec 2013
(Unaudited) R’000
(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 14 755 43 182
Translation differences for the period (15 515) 3 142
Balance at the end of the period (760) 46 324
Share-based payment reserve
Balance at the beginning of the period 12 661 10 935
Share-based payment cost for the period 1 000 -
Balance at the end of the period 13 661 10 935
Reserves at the end of the period 12 901 57 259
Retained income
Retained income at the beginning of the period 372 238 365 898
Profit for the period 26 585 19 681
Dividends paid - -
Retained income at the end of the period 398 823 385 579
Non-controlling interest
Balance at the beginning of the year (2 505) 16 003
Profit for the year (461) 1 396
Balance at the end of the period (2 966) 17 399
Condensed consolidated statement of cash flows
for the six months ended 31 December 2014
Notes Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
R’000 R’000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from operations 56 824 60 809
Interest income - 1
Finance costs (5 517) (6 503)
Tax received/(paid) (1 590) 3 741
Net cash from operating activities 49 717 58 047
Cash flows from investing activities
Purchase of property, plant and equipment (23 075) (18 790)
Proceeds on sale of property, plant and equipment 2 258 24 274
Movement in intangible assets (15 000) (23 758)
Proceeds on sale of shares in TPL Trakker Ltd 4 5 987 -
Net cash from investing activities (29 830) (18 274)
Cash flows from financing activities
Repayment of financial liabilities 5 (16 697) (34 204)
Proceeds from Grindrod facility 17 441 -
Finance lease payments (11 906) (7 125)
Net cash from financing activities (18 856) (41 329)
Total cash movement for the period 1 031 (1 556)
Cash and cash equivalents at the beginning of the period (30 456) (9 511)
Total cash and cash equivalents at the end of the period (29 425) (11 067)
Condensed segmental analysis
for the six months ended 31 December 2014
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
R’000 R’000
(Unaudited) (Unaudited)
Revenue
South African distribution 275 888 264 885
External revenue 270 474 257 971
Internal segment revenue 5 414 6 914
Foreign distribution 150 691 150 950
External revenue 150 691 150 950
Product development and manufacturing 93 001 106 557
External revenue 22 712 28 533
Internal segment revenue 70 289 78 024
Group services 10 034 5 620
External revenue 6 870 3 160
Internal segment revenue 3 164 2 460
529 614 528 012
Inter-segmental revenue (78 867) (99 819)
450 747 428 193
Operating profit/(loss)
South African distribution 23 291 9 231
Foreign distribution 7 539 (3 100)
Product development and manufacturing (660) 15 093
Group services 3 041 6 112
33 211 27 336
Investment revenue - 1
(Loss)/income from equity-accounted investments 2 018 1 300
Finance costs (5 517) (6 503)
Profit before taxation 29 712 22 134
Segment assets
South African distribution 286 507 378 811
Foreign distribution 158 135 183 288
Product development and manufacturing 172 800 220 775
Group services 229 041 243 887
846 483 1 026 761
Eliminations (71 285) (121 982)
Total assets 775 198 904 779
Segment liabilities
South African distribution (71 205) (57 938)
Foreign distribution (95 485) (114 101)
Product development and manufacturing (25 330) (25 937)
Group services (79 380) (202 224)
(271 400) (400 200)
Eliminations 71 285 121 982
Total liabilities (200 115) (278 218)
Notes to the condensed consolidated financial statements
1. Basis of preparation and presentation of financial statements
The condensed consolidated financial statements are prepared in accordance with 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 Financial Reporting Pronouncements as issued by the
Financial Reporting Standard Council, the JSE Limited Listings Requirements, and the requirements of the Companies Act 71
of 2008, as amended.
The accounting policies are in terms of IFRS and these together with the methods of computation, are consistent with those
of the consolidated annual financial statements at 30 June 2014 as issued on 29 September 2014. 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 PJ Grové CA(SA), the group chief financial officer and V Venkatkumar CA(SA), the group
financial manager.
Any reference to future financial performance included in this announcement has not been audited by our auditors.
The group’s auditors, Mazars (Gauteng) Inc, have not reviewed or audited the condensed consolidated financial statements.
2. Property, plant and equipment
The group has invested R17,1 million into rental assets over the six-month period to 31 December 2014
(2013: R18,7 million). Depreciation for the six-month period on rental units amounts to R17,1 million
(2013: R22,6 million).
3. Goodwill
The goodwill amount per the statement of financial position is reconciled as follows:
R’000
Cost 235 832
Accumulated impairments (57 500)
Carrying value at 30 June 2014 178 332
Foreign exchange movements (1 481)
Carrying value at 31 December 2014 176 851
Cost at 30 June 2014 234 351
Accumulated impairments at 30 June 2014 (57 500)
4. Investments in associates
On 31 December 2014 the group sold 6 273 500 shares or 11,5% of its shareholding in TPL Trakker Ltd, the group’s associate
incorporated in Pakistan, for an amount equivalent to R5 986 527. The group previously held 25,86% of the issued share
capital of TPL Trakker Limited and subsequent to this transaction, the group’s shareholding in TPL Trakker Limited is 22,97%.
A profit on the sale of the shares of R4 532 505 was recognised and is included in capital items in the statement of
comprehensive income.
5. Other financial liabilities
A group facility of R15 million was replaced during the six months ended 31 December 2014. The group also repaid R7,69 million
over the six months for facilities granted.
6. Capital items
Capital items consist of the following:
31 Dec 2014 31 Dec 2013
R’000 R’000
Profit/(loss) on sale of assets 1 702 698
Impairment of rental assets (501) (762)
Profit on sale of shares in TPL Trakker Ltd 4 533 -
Total 5 734 (64)
7. Earnings per share
Six months Six months
ended ended
31 Dec 2014 31 Dec 2013
Earnings per share (cents) 11,10 8,21
Diluted earnings per share (cents) 10,69 8,21
Headline earnings per share (cents) 9,37 8,23
Diluted headline earnings per share (cents) 9,03 8,23
Interim dividend per share (cents) - -
Earnings per share calculations
Number of ordinary shares in issue (‘000) 247 669 247 669
Weighted average number of ordinary shares in issue (‘000) 239 607 239 607
Adjusted for: potentially dilutive impact of share options 9 070
Weighted number of shares in issue to be used in the
calculation of diluted earnings per share 248 677 239 607
Reconciliation of headline earnings
Basic and diluted earnings 26 585 19 681
Adjusted for:
(Profit) on sale of shares in TPL Trakker Ltd (4 533) -
(Profit)/loss on sale of fixed assets (1 702) (698)
Impairment of fixed assets 501 762
20 851 19 745
Tax effect on adjustments 1 605 (18)
Non-controlling interest in adjustments - -
Basic and diluted headline earnings 22 456 19 727
8. Dividend declaration
No interim dividend will be declared and paid to the shareholders. The board agreed to retain cash for future growth
(2013:R nil).
9. Related parties
During the six months ended 31 December 2014, certain subsidiaries in the ordinary course of business entered into loans
and transactions with related parties under terms that are no less favourable than those arranged with third parties.
CORPORATE PROFILE
DigiCore is a JSE-listed group that specialises in vehicle tracking, fleet management solutions and insurance
telematics for an international client base. With almost 30 years of innovation, technical and implementation experience,
DigiCore provides advanced machine-to-machine communication and telematics solutions that add value to its base of
customers with mobile assets.
DigiCore’s end-to-end research, design, development, manufacture, sales and support of tailored solutions for
customers is serviced by a network of staff and team members in over 50 countries. Our technology and electronic
division designs and develops a 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 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 Network Rail (UK), Thames Water (UK), the 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.
CORPORATE GOVERNANCE
The board of directors aspires to conduct all facets of 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.
CHANGES TO THE BOARD / BOARD COMMITTEE
With effect from 26 January 2015, Adv Jacob D Wiese tendered his resignation as a non-executive director of the board as
well as chairman of the social, ethics and transformation committee.
As from 27 January 2015, Stephen P Naudé, who was previously elected as an alternate non-executive director for
Adv Jacob D Wiese, has been appointed as a permanent non-executive director to the board.
As from 27 January 2015, Johan PduP le Roux has been appointed as a non-executive director to the board and chairman of the
social, ethics and transformation committee. The board has subsequently elected Stephen P Naudé as chairman of the social,
ethics and transformation committee and Johan PduP le Roux to remain a committee member.
COMMENTARY
Performance for the first half of the financial year to 31 December 2014 has been very encouraging with all
operations, local and international, reporting profits and solid progress against our strategic objectives
and plans.
The investment and effort devoted to further enhancing our systems and processes in prior years are now paying off.
We are more responsive to our customers’ needs and our customers, in turn, benefit from competitive products and
pricing with solutions that are economically scalable across the markets and channels in which we operate.
Underscoring our continued investment in technology, DigiCore’s Ctrack received the 2014 Technology Top 100 award for
management of technology (large enterprise category), endorsed by the Department of Science and Technology, and is a
master innovator finalist in the Accenture Innovation Index.
Equally, investing in our sales structure and selling skills has enabled us to develop a healthy sales pipeline and
leverage a variety of solutions, including insurance telematics, jamming detection and fleet analytics.
A new camera and navigation solution, with workforce management, is progressing for release in the second half of the
financial year.
Partnering with the Future Group, we launched TruckX in August 2014, the first one-day conference of its kind for the
trucking and logistics fraternity, providing a forum for industry issues to be discussed with new and existing
stakeholders and customers.
The group is acquiring the remaining 49% of its subsidiary, FleetConnect, which provides asset lifecycle
software, and already supplies the software for fuel and maintenance management to three South African banks.
An agreement for distributing Ctrack products in the USA was signed in December 2014, opening new opportunities for the
group. Cash-flow improvement remains a priority as we continue to reduce stock levels and increase recoveries of old debt.
FINANCIAL OVERVIEW
Highlights of the first six months of the financial period were the long-anticipated turnaround of our international
operations, increase in revenue generated from the insurance industry, growth in the stolen vehicle
response (SVR) market and further success in cost-saving initiatives.
R7,5 million of the profit before tax of R29,7 million was generated by our international business, a welcome reversal
from the loss of R3,5 million reported in the comparative period.
Revenue increased by 5,3% (R22,5 million), mainly attributed to growth in the SVR and insurance markets.
Overhead expenditure decreased by R5,8 million mainly due to a lower provision for bad debts after the clean-up in the
previous financial period. After considering the impact of the bad-debt provision, overhead expenditure was in line
with the prior year, reflecting the effectiveness of cost-saving initiatives despite inflationary salary increases of 7%
for our employees.
The business continued to generate positive cash flows, allowing the group to settle a further R18,8 million on financing
facilities.
The group sold 6 273 500 shares (11,5% of our holding) in TPL Trakker Limited for R5,9 million which further enhanced
its cash position. The results include R2 million of TPL Trakker Limited’s profit which has been equity accounted by
DigiCore.
With costs now under control and internal processes being enhanced daily, management is left with the single task of
increasing the revenue of the group.
INDUSTRY COMMENTS
DigiCore has progressed well with the requirement from medium to large fleet operators for a more information-based
services-and-subscription model, allowing third-party information, such as routing and scheduling, and fuel-card
transactions to be incorporated in our reporting software. The integration with other systems gives operators the full
status of their operation in one report.
The scalability of our product has enabled us to develop and supply quality products at very attractive prices to improve
our market share in the competitive consumer market, while meeting insurance and safety-driven needs.
In addition, as we support customers with ‘big data’ analysis services, we will strengthen our competitiveness in
corporate and insurance channels.
We have developed a driver-behaviour and risk-rating programme with the support of the University of Pretoria. This
furthers our reputation in insurance telematics technology and enhances our product offering for insurerance houses
internationally.
OUTLOOK
After optimising our business in the 2014 financial year and stepping up sales resources and skills
over the past six months, we are on track to enter a growth phase.
Systems, controls and strategies to manage stock, debtors and cash flow more effectively are in place, allowing the
management team to focus externally on relationships, sales and marketing and to identify new opportunities for growth.
We remain cautiously optimistic that financial results will continue to improve.
For and on behalf of the board
NH Vlok PJ Grove
Chief executive officer Chief financial officer
26 February 2015
Centurion
Registered office
DigiCore Building, Regency Office Park, 9 Regency Drive, Route 21 Corporate Park, Irene Ext 30, Centurion, South Africa
PO 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
Executives
NH Vlok (Chief executive officer), PJ Grové (Chief financial officer)
Non-executive
G Pretorius* (Chairman), B Marx*, SP Naudé*, SS Ntsaluba*, JPduP le Roux
*independent non-executive director
Company secretary
N Bofilatos
www.digicore.com
www.ctrack.co.za
Date: 26/02/2015 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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