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Preliminary Audited Summarised Consolidated Results For The Financial Year Ended 28 February 2015
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”)
PRELIMINARY AUDITED SUMMARISED CONSOLIDATED RESULTS FOR THE FINANCIAL YEAR ENDED
28 FEBRUARY 2015 AND FINAL DIVIDEND DECLARATION
Key financial indicators
- Earnings increased by 16.4% from R 89million to R103 million
- Headline earnings per share increased by 16.2% to 53.0 cents
- Operating margin increased from 5.5% to 6.4%
- Tangible net asset value per share increased by 17.6% from 223.1 to 262.4 cents
- Cash generated from operations of R199 million
- Cash on hand of R291 million, with no interest-bearing debt related to operations
- Final annual gross cash dividend declared of 17.55 cents per share
Summarised Consolidated Statement of Comprehensive Income for the year ended 28 February 2015
Audited Audited
2015 2014
R’000 R’000
Revenue 2 249 661 2 279 512
Operating profit 143 802 125 290
Net investment income 2 655 1 174
Profit before taxation 146 457 126 464
Taxation (42 980) (37 539)
Total comprehensive income attributable to ordinary shareholders 103 477 88 925
Basic earnings per ordinary share (cents) 52.9 45.4
Diluted basic earnings per ordinary share (cents) 52.6 45.2
Total declared dividend per share (cents) 17.55 20.49
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) 170 438 152 398
Headline earnings per ordinary share (cents) 53.0 45.6
Diluted headline earnings per ordinary share (cents) 52.8 45.4
Weighted average number of shares in issue* (000s) 195 798 195 798
Weighted average number of shares in issue for purpose of dilution* (000s) 196 780 196 804
*adjusted for treasury shares
Reconciliation between earnings attributable to ordinary shareholders and headline earnings
Earnings attributable to ordinary shareholders 103 477 88 925
Loss on sale of property and equipment 324 374
Headline earnings 103 801 89 299
Summarised Consolidated Statement of Financial Position as at 28 February 2015
Audited Audited
2015 2014
R’000 R’000
ASSETS
Non-current assets 200 179 206 341
Property and equipment 68 421 69 006
Intangible assets – business combination 88 854 91 516
Intangible assets – software 9 803 9 646
Investment in joint venture - 914
Finance lease receivables - 7 191
Deferred taxation assets 33 101 28 068
Current assets 780 739 756 190
Current taxation assets 1 998 11 844
Finance lease receivables 7 191 19 271
Inventories 31 122 44 408
Trade and other receivables 448 936 478 130
Cash and cash equivalents 291 492 202 537
TOTAL ASSETS 980 918 962 531
EQUITY AND LIABILITIES
Capital and reserves 612 425 537 943
Share capital 21 21
Share premium 36 092 36 079
Treasury shares (35 983) (35 983)
Equity-settled share scheme reserve 39 208 36 378
Retained earnings 573 087 501 448
Non-current liabilities 19 889 39 357
Deferred revenue 6 438 13 175
Loans payable 13 338 18 793
Deferred taxation liabilities 113 232
Finance lease payables - 7 157
Current liabilities 348 604 385 231
Trade and other payables 265 096 306 872
Deferred revenue 67 580 53 284
Finance lease payables 7 157 18 565
Current tax liabilities 304 112
Loans payable 6 405 3 517
Lease smoothing liability 2 062 2 881
TOTAL EQUITY AND LIABILITIES 980 918 962 531
The carrying amount of all financial instruments measured at amortised cost closely approximates fair value.
Net asset value (adjusted for treasury shares) per share (cents) 312.8 274.7
Tangible net asset value (adjusted for treasury shares) per share (cents) 262.4 223.1
Total number of shares in issue (000s) 195 798 195 798
Summarised Consolidated Statement of Changes in Equity for the year ended 28 February 2015
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 2013 21 35 962 (35 983) 31 449 460 181 491 630
Total comprehensive income for the year - - - - 88 925 88 925
Treasury shares – movement during the - 117 - (431) - (314)
year
Share-based payments - - - 5 360 - 5 360
Dividend paid - - - - (47 658) (47 658)
Balance at 28 February 2014 21 36 079 (35 983) 36 378 501 448 537 943
Total comprehensive income for the year 103 477 103 477
Treasury shares – movement during the - 13 - (70) - (57)
year
Share-based payments - - - 2 900 - 2 900
Dividend paid - - - - (31 838) (31 838)
Balance at 28 February 2015 21 36 092 (35 983) 39 208 573 087 612 425
*Treasury share movements relating to the share incentive scheme of the Group have been accounted for in the equity-settled share
scheme reserve as this reflects the nature of the transaction.
Summarised Consolidated Statement of Cash Flows for the year ended 28 February 2015
Audited Audited
2015 2014
R’000 R’000
Profit before taxation 146 457 126 464
Adjusted for non-cash items 25 057 28 076
Working capital changes 27 534 (11 913)
- Inventories 13 286 (7 261)
- Trade and other receivables 29 194 (100 886)
- Finance lease receivables 19 271 28 465
- Deferred Revenue and Trade and other payables (34 217) 67 769
Cash generated from operations 199 048 142 627
Net interest received 3 997 4 727
Dividend paid (31 838) (47 658)
Taxation paid (38 094) (60 414)
Net cash inflow from operating activities 133 113 39 282
Net cash outflow from investing activities (22 956) (60 092)
Net cash outflow from financing activities (21 202) (50 414)
Net increase/(decrease) in cash and cash equivalents 88 955 (71 224)
Cash and cash equivalents at the beginning of the year 202 537 273 761
Cash and cash equivalents at the end of the year 291 492 202 537
Basis of preparation
The audited summarised consolidated financial statements for the year ended 28 February 2015 were prepared under the supervision
of Mrs Elizabeth Naidoo CA (SA), the Group Financial Director. The audited summarised consolidated financial statements comprise
the summarised statement of financial position at 28 February 2015 and the summarised statements of comprehensive income,
changes in equity and cash flows for the year then ended.
The board of directors of Datacentrix (“the Board”) takes full responsibility for the preparation of this preliminary report and that the
financial information has been correctly extracted from the underlying audited consolidated annual financial statements.
The audited summarised consolidated 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 audited summarised 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. The
accounting policies applied in the audited summarised consolidated financial statements are the same as those applied in the
Group’s consolidated annual financial statements. All new interpretations and standards were assessed and adopted with no material
impact.
Auditor’s opinion and subsequent events
The auditor, SizweNtsalubaGobodo Inc., has issued its opinion on the Group’s audited consolidated annual financial statements for
the year ended 28 February 2015. The audit was conducted in accordance with International Standards on Auditing.
SizweNtsalubaGobodo Inc. has issued an unmodified audit opinion on the Group’s audited consolidated annual financial statements.
These summarised consolidated financial statements have been derived from the Group’s audited consolidated annual financial
statements and have been audited by SizweNtsalubaGodobo Inc. The auditors issued an unmodified audit opinion on the
summarised consolidated annual financial statements stating that these summarised consolidated annual financial statements are
consistent in all material respects with the Group’s audited consolidated annual financial statements. A copy of this auditor’s report is
available for inspection at the Company’s registered office. This auditor’s report does not necessarily report on all the information
contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditor’s engagement they should obtain a copy of this auditor’s report together with the accompanying summarised financial
information from 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. Other than mentioned in this report, there were no material subsequent
events that required disclosure.
The business of Datacentrix
Datacentrix is an integrated ICT systems provider to private 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 has developed the capability to assist customers in navigating the ever-changing IT landscapes. The three
operating divisions of Datacentrix are: Managed Services, Technology and Business Solutions. The integrated nature of some
solutions means that these three businesses are inextricably linked.
Group financial performance
The Board is pleased to announce the financial results for the year ended 28 February 2015. Earnings increased by 16.4% from
R88.9 million to R103.5 million and headline earnings per share (“HEPS”) increased by 16.2% from 45.6 cents to 53.0 cents.
Operating margins increased from 5.5% to 6.4% with total operating expenditure declining by 3.1%. Revenue was essentially
sustained at R2.25 billion on the back of constrained spending experienced in the private sector. Tangible net asset value increased
17.6% from 223.1 cents to 262.4 cents.
The Group maintained sound financial and operational disciplines, with cash generated from operations amounting to R199 million,
reflecting a closing cash balance of R291 million. This equates to an earnings to cash conversion ratio of 192%. Cash was utilised for
settling of finance leases and the consideration of past acquisitions (R21.2 million), purchasing of assets in the normal course of
business (R23 million), returns to shareholders (R31.8 million) and tax obligations (R38.1 million).
The Managed Services division contributed 45% to the Group earnings; 44% was attributable to the Technology division and 11% to
the Business Solution division (excluding Corporate).
Segmental analysis
Business
Managed Services Technology Solutions Corporate Group
Audited 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb
12 months 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
ended R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 516 695 518 222 1 572 023 1 596 935 160 943 164 355 - - 2 249 661 2 279 512
EBITDA 83 985 80 695 69 693 56 322 16 760 15 381 - - 170 438 152 398
Operating
profit 65 661 65 766 64 450 46 923 15 293 13 975 (1 602) (1 374) 143 802 125 290
Net interest (1 179) (3 349) - - - - 3 834 4 523 2 655 1 174
Profit before
taxation 64 482 62 417 64 450 46 923 15 293 13 975 2 232 3 149 146 457 126 464
Taxation (18 922) (18 538) (18 915) (13 935) (4 488) (4 150) (655) (916) (42 980) (37 539)
Total
comprehen-
sive income
for the year 45 560 43 879 45 535 32 988 10 805 9 825 1 577 2 233 103 477 88 925
Managed Services
Earnings increased from R43.9 million to R45.6 million for the reporting period. Operating margins are at a healthy 12.7%. Total
operating expenses were well managed and declined by 6.1%.
Performance within this division was impacted by an outsource customer insourcing its services during the period, in line with the
entity’s local and global strategy. The Group has developed a compelling Cloud offering (Microsoft Exchange, IaaS, PaaS and
application hosting) that offers long-term growth opportunities. The Cloud Services business continues to be in an investment phase.
The communications business, eNetworks, continues to perform well and the Managed Talent Services business enjoyed a robust
year. The Outsourcing business secured new contracts in addition to extending a key outsource contract for a five-year term.
The Managed Services division focuses on enabling customers to grow their businesses by driving efficiency, enhancing their
business processes and systems and enabling management to make meaningful business decisions. The division’s portfolio
encompasses:
- Outsourcing services;
- Cloud services;
- Internet and Network Service Provider (“ISP” and “NSP”) and communications;
- Managed print and document solutions; and
- Human capital supplementation.
Technology
The Technology division grew earnings significantly by 38% from R33 million to R45.5 million based on improved operating margins.
Operating margins increased from 2.9% to 4.1% due to effective cost management that resulted in a reduction of operating costs and
improved gross margins from more complex technology solutions.
Public sector performance showed improvement, while revenue from the private sector was constrained driven by customer cost
management strategies.
The investment in skills over the last few years has provided the division with the capability to design and implement intricate
technology solutions, resulting in more strategic customer engagements.
Datacentrix is supported by top-level vendor accreditations with best of breed vendors and skills in the market. The organisation is a
significant player locally and in Hewlett Packard’s (“HP”) Europe, Middle East and Africa (“EMEA”) region. The Technology division
garnered no less than 10 of the 12 top local awards at the HP partner event held in November 2014.
Furthermore, Datacentrix received the “Infrastructure Growth” award for the EMEA region by analyst company, Canalys. The award
recognised the organisation for its sustainable investment for the future, its performance, its demonstrated expertise and the resulting
business value generated for its customers.
The Technology division assists customers in driving their business strategies forward through the provision of integrated technology
systems that simplify complex infrastructure solutions such as datacentre optimisation. Offerings include:
- IT hardware;
- Infrastructure software solutions;
- End user computing;
- Enterprise systems, datacentre, storage, server platforms and networking; and
- Security solutions.
Business Solutions
Earnings in the Business Solutions division increased by 10% from R9.8 million to R10.8 million. The division’s operating margins
improved from 8.5% to 9.5%. Good growth was achieved within the Enterprise Information Management business, while the
Enterprise Resource Planning business unit had good wins albeit at lower margins. The performance of the Business Intelligence and
Analytics business unit was subdued.
The Business Solutions division provides customers the solutions to allow them to better utilise the information generated,
manipulated and stored within their ICT infrastructures. There are three key solution focus areas, namely:
- Enterprise Information Management (“EIM”);
- Enterprise Resource Planning (“ERP”); and
- Business Intelligence (“BI”) & Analytics.
The EIM business is one of the leading EIM solutions providers in the country. As South Africa’s only Platinum Partner, Datacentrix
was named OpenText’s “Fast Growth Market Partner of the year” across the regions of Latin America, CIS/CEE (Russia and Eastern
Europe), Middle East, Africa, India, China and Japan at the international Enterprise World 2014 conference. This is a result of the
Company’s licence sales, implementation projects, breadth of coverage within OpenText’s portfolio, depth of skills, investment in
skills, customer reference sites and the Company’s overall commitment to OpenText.
Acquisition
As reported on SENS on 17 April 2015, the Group has entered into an agreement with Pinnacle Holdings Limited for the acquisition
of Infrasol Proprietary Limited, an outsourcing and datacentre facilities business. The acquisition will complement the Group’s existing
capabilities and contribute to the Managed Services division improving efficiencies and achieving improved economies of scale. The
maximum cash acquisition price will amount to R85 million for a 100% interest in the share capital of the entity. The effective date of
the transaction will be 1 July 2015, subject to approval by the Competition Commission and Datacentrix’ shareholders.
Prospects
The capability built over the years has resulted in the Group securing new three- to five-year contracts to the value of approximately
R500 million. The revenue from these transactions will start to materialise in the new financial year. In addition, the Managed
Services division extended expiring contracts valued in excess of R300 million. The integrated nature of these solutions will benefit
both the Managed Services and Technology divisions. The recent contract wins and extensions bode well for the business, and bear
testimony to the recognised value that Datacentrix creates for its customers.
The Group plans to accelerate its acquisition strategy and will focus on seeking out suitable acquisition opportunities to complement
current offerings, creating economies of scale in existing business areas and bringing new solutions to market in areas such as
Managed Services and Business Solutions.
As Cloud technology experiences increased adoption in the market, continued investment in the Cloud Services business unit will be
required. There has been growth in the usage of Cloud services by existing customers, while further new opportunities have been
secured. As the capacity of the Cloud infrastructure is increased, revenue will grow while economies of scale are achieved and the
business will start to contribute positively to earnings.
Skilled staff members are crucial to business success; as such Datacentrix will continue to develop the right skills to assist customers
in navigating the complex and ever changing IT landscape.
Datacentrix believes that its single-minded customer-centric approach has positioned it favourably within the market. To this end,
Frost & Sullivan awarded Datacentrix the “2015 Southern African IT Systems Integration Competitive Strategy Innovation and
Leadership Award”. In addition, Canalys and leading vendors have awarded the Company with top industry awards, and
accreditations, recognising the enhanced execution capability of the Company. This credibility is and will prove invaluable in building
a long-term sustainable business.
Black Economic Empowerment
Datacentrix has maintained its Level Two (AAA) B-BBEE Contributor status, with 125% procurement recognition. The Group was
named by ratings and research agency, Empowerdex, in the 2014 Mail and Guardian survey, as South Africa’s most empowered
company within the ICT services sector and was recognised as the 14th most empowered listed company overall.
Changes to the Board
The board appointed Richard Lyon, the Chief Financial Officer of Pinnacle Holdings Limited, as a non-executive director to the Board
effective 25 February 2015.
Dividend
In line with the current dividend policy, the Board declared a gross cash dividend of 9.46 cents per share for the year ended
28 February 2015, bringing the total dividend for the year to 17.55 cents per share. The declared dividend for the year ended
28 February 2015 is payable to all shareholders on the Register of Members on 22 May 2015.
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;
- The dividend to utilise in determining the dividends tax is 9.46 cents per share;
- the dividend tax to be withheld by the Company amounts to 1.419 cents per share;
- therefore the net dividend payable to shareholders who are not exempt from dividends tax amounts to 8.041 cents per share,
while the gross dividend payable to shareholders who are exempt from dividends tax amounts to 9.46 cents per share;
- the issued share capital of the Company at the declaration date comprises of 205 265 683 ordinary shares; and
- the Company's income tax reference number is 9739/002/71/6.
Declaration date: Monday, 20 April 2015
Last day to trade: Friday, 15 May 2015
Share trade ex-dividend: Monday, 18 May 2015
Record date: Friday, 22 May 2015
Payment date: Monday, 25 May 2015
Share certificates may not be dematerialised or rematerialised between Monday, 18 May 2015 and Friday, 22 May 2015, both days
inclusive.
The Board would like to thank the management and staff at Datacentrix for their dedication, commitment and hard work that has
resulted in this year’s positive performance.
For and on behalf of the Board:
Nolitha Fakude, Chairman Ahmed Mahomed, Chief Executive Officer
17 April 2015
Nolitha Fakude* (Chairman), Ahmed Mahomed (Chief Executive Officer), Alwyn Martin*, Arnold Fourie#, Dudu Nyamane*, Elizabeth
Naidoo (Group Financial Director), Richard Lyon# (*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: 20/04/2015 04:37:00 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.
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