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Unaudited Condensed Consolidated Interim Results for the six months ended 31 August 2015 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 2015 AND
DIVIDEND DECLARATION
Key financial indicators
• Revenue increased by 11.3% to R1.23 billion
• Earnings increased by 15.4% to R54.5 million
• Earnings per share increased by 15.4% to 27.8 cents and headline earnings per share increased by 14% to 27.7 cents
• Cash generated from operations of R107 million
• Cash on hand of R261 million
• Interim gross cash dividend declared of 9.23 cents per share
Condensed Consolidated Statements of Comprehensive Income for the six months ended 31 August 2015
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 August 2015 31 August 2014 28 February 2015
R’000 R’000 R’000
Revenue 1 227 418 1 102 340 2 249 661
Operating profit 70 361 65 963 143 802
Net investment income 6 649 1 028 2 655
Profit before taxation 77 010 66 991 146 457
Taxation (22 542) (19 786) (42 980)
Total comprehensive income attributable to ordinary
shareholders 54 468 47 205 103 477
Basic earnings per ordinary share (cents) 27.8 24.1 52.9
Diluted basic earnings per ordinary share (cents) 27.7 23.9 52.6
Gross dividend per share (cents) 9.23 8.09 17.55
Earnings before interest, taxation, depreciation and
amortisation (“EBITDA”) 86 894 78 924 170 438
Headline earnings per ordinary share (cents) 27.7 24.3 53.0
Diluted headline earnings per ordinary share (cents) 27.6 24.1 52.8
Weighted average number of shares in issue* (000s) 195 798 195 798 195 798
Weighted average number of shares in issue for purpose of
dilution* (000s) 196 689 197 241 196 780
*adjusted for treasury shares
Reconciliation between earnings for the period
attributable to ordinary shareholders and headline
earnings
Earnings attributable to ordinary shareholders 54 468 47 205 103 477
(Profit)/loss on sale of property and equipment (161) 327 324
Headline earnings 54 307 47 532 103 801
Condensed Consolidated Statements of Financial Position as at 31 August 2015
Unaudited Unaudited Audited
31 August 2015 31 August 2014 28 February 2015
R’000 R’000 R’000
ASSETS
Non-current assets 261 959 203 899 200 179
Property and equipment 67 213 66 459 68 421
Intangible assets – software 10 684 12 531 9 803
Intangible assets – business combination 148 873 90 154 88 854
Investment in joint venture - 103 -
Finance lease receivables 1 965 1 675 -
Deferred taxation assets 33 224 32 977 33 101
Current assets 823 803 775 376 780 739
Current taxation assets 2 633 5 785 1 998
Finance lease receivables 1 289 13 948 7 191
Inventories 38 563 72 888 31 122
Trade and other receivables 520 472 548 197 448 936
Cash and cash equivalents 260 846 134 558 291 492
TOTAL ASSETS 1 085 762 979 275 980 918
EQUITY AND LIABILITIES
Capital and reserves 649 297 570 973 612 425
Share capital 21 21 21
Share premium 36 020 36 100 36 092
Treasury shares (36 585) (35 983) (35 983)
Equity-settled share scheme reserve 40 808 38 178 39 208
Retained earnings 609 033 532 657 573 087
Non-current liabilities 14 937 21 593 19 889
Loans payable - 8 859 13 338
Deferred revenue 12 958 11 071 6 438
Deferred taxation liabilities 14 - 113
Finance lease payables 1 965 1 663 -
Current liabilities 421 528 386 709 348 604
Trade and other payables 335 085 291 697 265 096
Deferred revenue 69 517 67 635 67 580
Finance lease payables 1 289 13 783 7 157
Current tax liabilities 1 086 528 304
Loans payable 13 362 10 381 6 405
Lease smoothing liability 1 189 2 685 2 062
TOTAL EQUITY AND LIABILITIES 1 085 762 979 275 980 918
Net asset value (adjusted for treasury shares) per share
(cents) 331.6 291.6 312.8
Tangible net asset value (adjusted for treasury shares) per
share (cents) 250.1 239.2 262.4
Weighted average number of shares in issue* (000s) 195 798 195 798 195 798
Condensed Consolidated Statement of Changes in Equity for the six months ended 31 August 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 2014 21 36 079 (35 983) 36 378 501 448 537 943
Total comprehensive income - - - - 47 205 47 205
Treasury shares movement - 21 - - - 21
Share-based payments - - - 1 800 - 1 800
Dividend paid - - - - (15 996) (15 996)
Balance at 31 August 2014 21 36 100 (35 983) 38 178 532 657 570 973
Total comprehensive income - - - - 56 272 56 272
Treasury shares movement - (8) - (70) - (78)
Share-based payments - - - 1 100 - 1 100
Dividend paid - - - - (15 842) (15 842)
Balance at 28 February 2015 21 36 092 (35 983) 39 208 573 087 612 425
Total comprehensive income - - - - 54 468 54 468
Treasury shares movement - (72) (602) - - (674)
Share-based payments - - - 1 600 - 1 600
Dividend paid - - - - (18 522) (18 522)
Balance at 31 August 2015 21 36 020 (36 585) 40 808 609 033 649 297
Condensed Consolidated Statement of Cash Flows for the six months ended 31 August 2015
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 August 2015 31 August 2014 28 February 2015
R’000 R’000 R’000
Profit before taxation 77 010 66 991 146 457
Adjusted for non-cash items 10 225 13 008 25 057
Working capital changes 19 344 (90 612) 27 534
- Inventories (4 337) (28 480) 13 286
- Trade and other receivables (23 357) (70 067) 29 194
- Finance lease receivables (3 903) 10 839 19 271
- Deferred revenue and trade and other payables 50 941 (2 904) (34 217)
Cash generated/(utilised) from operations 106 579 (10 613) 199 048
Net interest received 6 805 1 905 3 997
Dividend paid (18 522) (15 996) (31 838)
Taxation paid (22 275) (18 452) (38 094)
Net cash inflow/(outflow) from operating activities 72 587 (43 156) 133 113
Net cash outflow from investing activities (91 303) (11 453) (22 956)
Net cash outflow from financing activities (11 930) (13 370) (21 202)
Net (decrease)/increase in cash and cash equivalents (30 646) (67 979) 88 955
Cash and cash equivalents at the beginning of the period 291 492 202 537 202 537
Cash and cash equivalents at the end of the period 260 846 134 558 291 492
Basis of preparation
The condensed consolidated financial statements of the Group for the six months ended 31 August 2015 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 board of directors of Datacentrix (“the Board”) takes full responsibility for the preparation of this interim report.
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. The condensed consolidated financial statements comprise the condensed statement of financial
position as at 31 August 2015 and the condensed statements of comprehensive income, changes in equity and cash flows for the year
then ended.
Subsequent events
No material events have occurred between the six-month period ended 31 August 2015 (“interim period”) and the date of this
announcement.
The business of Datacentrix
Datacentrix is an integrated information and communications technology (“ICT”) systems and services provider to both 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 players within this space. The Group comprises three operating divisions namely:
Managed Services, Technology and Business Solutions. The integrated nature of some solutions means that these three operating
divisions are inextricably linked.
Group financial performance
The Board is pleased to announce the financial results for the interim period ended 31 August 2015. Group revenue increased 11.3%
to R1.23 billion. Earnings attributable to shareholders grew by 15.4% to R54.5 million and headline earnings per share (“HEPS”)
increased by 14% from 24.3 cents to 27.7 cents. Working capital was well managed resulting in cash generated from operations of
R107 million, with cash conversion of earnings at 196%. The Group had a closing cash balance of R261 million. Cash utilisation
includes acquisitions (R80 million), dividends (R18.5 million) and payment of profit warranties (R8 million).
Divisional performance
The Managed Services division contributed 35% to the Group’s earnings, with the Technology division responsible for 46%, and the
Business Solutions division, 10%. The recently acquired company, Infrasol Proprietary Limited (“Infrasol”), is reflected within the
Managed Services’ segment results. Divisional performances varied, with Managed Services and Technology reflecting growth, while
Business Solutions’ performance was constrained. During our last reporting period, the Group noted that it had secured multi-year
contracts outside of the renewal contracts. Revenue realised from these new contracts was limited over the reporting period with the
bulk expected to flow in the next 12 months.
Managed Services Technology Business 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 ‘15 ‘14 ‘15 ‘14 ‘15 ‘14 ‘15 ‘14 ‘15 ‘14
ended R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 277 526 253 407 871 864 763 531 78 028 85 402 - - 1 227 418 1 102 340
EBITDA 34 301 29 834 43 220 38 848 9 373 10 242 - - 86 894 78 924
Operating 26 173 23 964 36 113 33 325 8 075 8 674 - - 70 361 65 963
profit
Net interest (108) (805) - - - - 6 757 1 833 6 649 1 028
Profit before 26 065 23 159 36 113 33 325 8 075 8 674 6 757 1 833 77 010 66 991
taxation
Taxation (6 853) (6 841) (11 120) (9 845) (2 488) (2 562) (2 081) (538) (22 542) (19 786)
Total
comprehen-
sive income
for the period 19 212 16 318 24 993 23 480 5 587 6 112 4 676 1 295 54 468 47 205
Managed Services
The division’s revenue grew by 9.5% and earnings by 18% for the reporting period. Operating margin was maintained at 9.4%. The
Internet Service Provider (“ISP”), Network Service Provider (“NSP”) and communications business, eNetworks, performed well; and in
particular the division’s Managed Talent Solutions and Managed Print and Document Solutions businesses produced good growth.
The Managed Services division’s portfolio encompasses: service aggregation; service desk solutions; managed systems; managed
networks; managed end user devices; network and system monitoring and control; managed hosting; colocation; managed print and
document solutions; security operations centre (SOC); IT facilities management; and managed talent solutions. The division also
houses the Group’s cloud offering.
Technology
Revenue in this division grew by 14% in a constrained IT market. Good revenue growth was particularly achieved in the datacentre,
storage, security, and networking areas. Earnings grew by 6.4% with operating margin at 4.1%.
The Technology division’s portfolio includes: unified communications; networking and datacentre capability – including the ability to
deploy cloud solutions; complex storage solutions; server platform solutions; security solutions; eLearning solutions; and end user
computing, incorporating a customisable procurement portal.
Business Solutions
Revenue and earnings in the Business Solutions division declined by 8.6%, largely due to delayed licencing revenue. The division
achieved an operating margin of 10.3% and contributed 10% to total earnings for the period. Good growth was achieved within the
Enterprise Information Management (“EIM”) business. Performance by the Enterprise Resource Planning (“ERP”) and Business
Intelligence (“BI”) and Analytics business units was constrained. The capability of the ERP and BI and Analytics business units has
been boosted with the appointment of experienced management resources.
The Business Solutions division aims to allow businesses to better utilise the information generated and stored within their ICT
infrastructures through solutions such as EIM, ERP and BI and analytics.
Acquisitions
On 30 July 2015, it was announced on SENS that, as the requisite approvals for the acquisition of Infrasol had been received from the
Competition Commission, the acquisition had become unconditional. Infrasol designs, deploys, manages and supports ICT
infrastructure for organisations across South Africa. This acquisition has strengthened the Group’s positioning in the managed services
space and will contribute to the growth of the Managed Services division. The purchase price related to the acquisition was R85 million
and the related goodwill has been accounted for on a provisional basis in terms of IFRS 3: Business Combinations. In terms of the
contractual agreement, the purchase consideration has been settled in full.
Prospects
The economy is contending with strong headwinds as a consequence of a global economic slowdown, power shortages, a weakening
rand, bureaucracy and labour disputes. The resources and manufacturing sectors are seemingly the hardest hit, leading to constrained
expenditure in the IT market.
Datacentrix has performed well and the Board remains positive about the long-term prospects of the Group as the key drivers of IT
remain robust. This combined with the Group’s financial and market position will drive organic growth. Datacentrix is cash generative,
enabling acquisitive growth.
The Group will continue on its path as a skilled, services and solutions-led organisation. People are key to the growth of the business
and Datacentrix will support the on-going development of the right skills to deliver intelligent, complex solutions to the market in an
ever-changing IT landscape. Datacentrix’ technology partners remain core to its strategy.
The Group is encouraged by the opportunities in Africa and its strategy is to follow its customers further north into the continent.
Datacentrix is cognisant of the complexities of operating in Africa and has entered into partnerships to strengthen its execution
capability.
The acquisition of Infrasol will complement the Group’s existing capabilities and contribute to driving economies of scale in the
Managed Services division. Synergies, including integration into Datacentrix’ premises, financial, logistical and operational systems are
being leveraged and new business wins have been secured utilising the combined capability within the Group.
Black Economic Empowerment
Datacentrix has maintained its Level Two (AAA) B-BBEE Contributor status, with 125% procurement recognition.
Dividend
In respect of the six-month period ended 31 August 2015, the Board has declared a gross cash dividend of 9.23 cents per share
payable on Monday, 9 November 2015 to all shareholders on the Register of Members as at Friday, 6 November 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 9.23 cents per share;
• the dividend tax to be withheld by the Company amounts to 1.3845 cents per share;
• therefore the net dividend payable to shareholders who are not exempt from dividends tax amounts to 7.8455 cents per share
while the gross dividend payable to shareholders who are exempt from dividends tax amounts to 9.23 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, 13 October 2015
Last day to trade: Friday, 30 October 2015
Share trade ex-dividend: Monday, 2 November 2015
Record date: Friday, 6 November 2015
Payment date: Monday, 9 November 2015
Share certificates may not be dematerialised or rematerialised between Monday, 2 November 2015 and Friday, 6 November 2015,
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 a
positive performance for the period.
For and on behalf of the Board:
Nolitha Fakude Ahmed Mahomed
Independent Non-executive Chief Executive Officer
Chairman
13 October 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: 13/10/2015 07:05:00 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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