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DATACENTRIX HOLDINGS LIMITED - Preliminary Audited Summarised Consolidated Results for the four-month period ended 30 June 2016

Release Date: 06/09/2016 16:00
Code(s): DCT     PDF:  
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Preliminary Audited Summarised Consolidated Results for the four-month period ended 30 June 2016

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 FOUR-MONTH PERIOD ENDED
30 JUNE 2016

Key financial indicators

    Revenue of R961.7 million
    Earnings attributable to shareholders of R41.1 million
    Earnings per share and headline earnings per share of 21.0 cents respectively
    Cash on hand of R122.5 million

Change in financial reporting period end

Shareholders were advised that the financial year-end of the Company was changed from February to June as per the
announcement released on SENS on 18 April 2016. The comparative information in the summarised financial statements represents
the twelve-month reporting period ended 29 February 2016. The current period information in the summarised financial statements
represents the four-month reporting period ended 30 June 2016.

Supplementary information provided

Except for supplementary information provided in the commentary of the preliminary report, the unaudited interim results for the six-
month period ended 31 August 2015 have been included in the summarised consolidated financial statements and segmental
reporting analysis as supplementary information. The supplementary information has not been audited by the Group’s auditor as
indicated.


Summarised Consolidated Statement of Profit or Loss and Other Comprehensive Income for the four-month
period ended 30 June 2016
                                                                                     Audited             Audited           Unaudited
                                                                                    4 months           12 months            6 months
                                                                                       ended               ended               ended
                                                                                30 June 2016         29 Feb 2016         31 Aug 2015
                                                                                       R’000               R’000               R’000
  
    Revenue                                                                          961 738           2 609 256           1 227 418
    Operating profit                                                                  54 753             164 300              70 361
    Net investment income                                                              3 253               9 180               6 649
    Profit before tax                                                                 58 006             173 480              77 010
    Tax                                                                              (16 871)            (50 309)            (22 542)
    Total comprehensive income attributable to ordinary shareholders                  41 135             123 171              54 468


    Basic earnings per ordinary share (cents)                                           21.0                62.9                27.8
    Diluted basic earnings per ordinary share (cents)                                   20.9                62.7                27.7
    Total declared dividend per share (cents)                                             -                 9.23                9.23
 

    Earnings before interest, taxation, depreciation and amortisation
    (“EBITDA”)                                                                        65 694             196 237              86 894
    Headline earnings per ordinary share (cents)                                        21.0                62.8                27.7
    Diluted headline earnings per ordinary share (cents)                                20.9                62.6                27.6
    Weighted average number of shares in issue* (000s)                               196 098             195 848             195 798
    Weighted average number of shares in issue for purpose of dilution*
    (000s)                                                                           196 713             196 320             196 689
    *adjusted for treasury shares

    Reconciliation between earnings attributable to ordinary
    shareholders and headline earnings
    Earnings attributable to ordinary shareholders                                    41 135             123 171              54 468
    Profit on sale of property and equipment net of taxation effect                      (26)               (241)               (161)
    Headline earnings                                                                 41 109             122 930              54 307



                                                                                                                                        
Summarised Consolidated Statement of Financial Position as at 30 June 2016
                                                                                 Audited       Audited     Unaudited
                                                                            30 June 2016   29 Feb 2016   31 Aug 2015
                                                                                   R’000         R’000         R’000
ASSETS
Non-current assets                                                               242 021       251 260       261 959
Property and equipment                                                            58 798        61 778        67 213
Intangible assets – business combinations                                        144 974       146 467       148 873
Intangible assets – software                                                       9 957         6 458        10 684
Long-term receivable                                                               3 574         4 173             -
Finance lease receivables                                                              -             -         1 965
Deferred tax assets                                                               24 718        32 384        33 224


Current assets                                                                   878 355       933 775       823 803
Current tax assets                                                                 3 855         1 146         2 633
Finance lease receivable                                                             763           489         1 289
Inventories                                                                      110 907       154 766        38 563
Trade and other receivables                                                      640 328       656 897       520 472
Cash and cash equivalents                                                        122 502       120 477       260 846


TOTAL ASSETS                                                                   1 120 376     1 185 035     1 085 762


EQUITY AND LIABILITIES
Capital and reserves                                                             728 596       690 734       649 297
Share capital                                                                         21            21            21
Share premium                                                                     58 295        58 365        36 020
Treasury shares                                                                  (45 542)      (45 439)      (36 585)
Equity-settled share scheme reserve                                               15 023        18 123        40 808
Retained earnings                                                                700 799       659 664       609 033


Non-current liabilities                                                           29 230        29 382        14 937
Deferred revenue                                                                  29 213        29 097        12 958
Finance lease payables                                                                 -             -         1 965
Deferred tax liabilities                                                             17            285            14


Current liabilities                                                              362 550       464 919       421 528
Trade and other payables                                                         267 368       351 334       335 085
Deferred revenue                                                                  85 902        96 677        69 517
Finance lease payables                                                              763            489         1 289
Current tax liabilities                                                            6 201           602         1 086
Loan payable                                                                           -        13 658        13 362
Operating lease liability                                                          2 316         2 159         1 189


TOTAL EQUITY AND LIABILITIES                                                   1 120 376     1 185 035     1 085 762



Net asset value (adjusted for treasury shares) per share (cents)                   371.6         352.7         331.6
Tangible net asset value (adjusted for treasury shares) per share (cents)          292.5         274.6         250.1
Total number of shares in issue (adjusted for treasury shares) (000s)            196 098       195 848       195 798




                                                                                                                       
Summarised Consolidated Statement of Changes in Equity for the four-month period ended 30 June 2016
                                                                                               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
 Audited balance at 28 February 2015                    21        36 092        (35 983)        39 208        573 087       612 425
 Total comprehensive income for the year#                -             -              -              -         54 468        54 468
 Treasury shares – movement during the
 year                                                    -           (72)          (602)             -              -          (674)
 Share-based payments                                    -              -             -          1 600              -         1 600
 Dividend paid                                           -              -             -              -        (18 522)      (18 522)
 Unaudited balance at 31 August 2015                    21        36 020        (36 585)        40 808        609 033       649 297
 Total comprehensive income for the year#                -             -              -              -         68 703        68 703
 Treasury shares – movement during the
 year                                                    -        (8 159)        (2 638)             -              -       (10 797)
 Share-based payments                                    -             -              -          1 603              -         1 603
 Transfer between reserves*                              -       30 504          (6 216)       (24 288)             -             -
 Dividend paid                                           -             -              -              -        (18 072)      (18 072)
 Audited balance at 29 February 2016                    21        58 365        (45 439)        18 123        659 664       690 734
 Total comprehensive income for the
 period#                                                 -             -             -               -         41 135        41 135
 Treasury shares – movement during the
 period                                                  -           (70)          (103)             -              -          (173)
 Share-based payments                                    -             -             -          (3 100)             -        (3 100)
 Audited balance at 30 June 2016                        21        58 295        (45 542)        15 023        700 799       728 596

* The transfer of shares between reserves relates to treasury shares and the equity-settled share-based payment reflecting the
correct value.
# The total comprehensive income for the period/year represents profit for the reporting period as no element of other comprehensive
income exists.

 Summarised Consolidated Statement of Cash Flows for the four-month period ended 30 June 2016
                                                                                    Audited                Audited          Unaudited
                                                                                   4 months              12 months           6 months
                                                                                      ended                  ended              ended
                                                                               30 June 2016            29 Feb 2016        31 Aug 2015
                                                                                      R’000                  R’000              R’000

 Profit before tax                                                                   58 006                173 480             77 010
 Adjusted for non-cash items                                                          4 625                 17 426             10 225
 Working capital changes                                                            (33 872)              (167 304)            19 344
 - Inventories                                                                       43 859               (120 540)            (4 337)
 - Trade and other receivables                                                       17 168               (163 955)           (23 357)
 - Finance lease receivables                                                           (274)                 6 702             (3 903)
 - Deferred revenue and trade and other payables                                    (94 625)               110 489             50 941


 Cash generated from operations                                                      28 759                 23 602            106 579
 Net interest received                                                                3 268                  9 245              6 805
 Dividend paid                                                                            -                (36 594)           (18 522)
 Tax paid                                                                            (6 583)               (47 921)           (22 275)
 Net cash inflow/(outflow) from operating activities                                 25 444                (51 668)            72 587
 Net cash outflow from investing activities                                          (9 932)               (94 470)           (91 303)
 Net cash outflow from financing activities                                         (13 487)               (24 877)           (11 930)
 Net increase/(decrease) in cash and cash equivalents                                 2 025               (171 015)           (30 646)
 Cash and cash equivalents at the beginning of the period                           120 477                291 492            291 492
 Cash and cash equivalents at the end of the period                                 122 502                120 477            260 846
Financial instruments information
                                                                                                                                       
The Group has not disclosed the fair values of financial instruments measured at amortised cost as their carrying amounts closely
approximate their fair values. There were no financial instruments measured at fair value that were individually material at the end of
the current reporting period.

Related-party transactions
The Company and its subsidiaries entered into various sale and purchase transactions with related parties in the ordinary course of
business. These transactions occurred under terms that are not any different than those arranged with third parties.

Management’s responsibility
The audited summarised consolidated financial statements for the period ended 30 June 2016 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 30 June 2016 and the summarised statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the reporting period ended then.

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 financial statements.

Basis of preparation
The preliminary 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 preliminary audited summarised 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
periods. The accounting policies applied in the audited summarised consolidated financial statements are the same as those applied
in the Group’s consolidated financial statements. All new interpretations and standards were assessed and adopted with no material
impact.

These preliminary audited summarised consolidated financial statements should be read in conjunction with the Group’s audited
consolidated financial statements for the period ended 30 June 2016, which have been prepared in accordance with IFRS. A copy of
the full set of the Group’s audited consolidated financial statements can be obtained from the Company’s registered office.

Auditor’s opinion
The preliminary summarised consolidated financial statements have been derived from the Group’s audited consolidated financial
statements and have been audited by SizweNtsalubaGobodo Inc. The auditor, SizweNtsalubaGobodo Inc., has issued its opinion on
the Group’s audited consolidated financial statements for the period ended 30 June 2016. 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 financial statements. The auditor issued an unmodified audit opinion on the summarised consolidated financial
statements stating that these summarised consolidated financial statements are consistent in all material respects with the Group’s
audited consolidated financial statements.

The auditor’s report issued in terms of the summarised consolidated financial statements does not necessarily report on all the
information contained in this announcement. Any reference to future financial performance included in this announcement has not
been reviewed or reported on by the Company’s auditor. This includes the supplementary information provided in terms of the
summarised consolidated financial statements and segmental reporting analysis.

A copy of the auditor’s report on the summarised consolidated financial statements and of the auditor’s report on the consolidated
financial statements are available for inspection at the Company’s registered office, together with the financial statements identified in
the respective auditor’s reports. Shareholders are advised to obtain the relevant auditor’s report to gain a full understanding of the
nature of the respective auditor’s engagement.

Subsequent events
The following non-adjusting events took place after the reporting date:

Change in company secretary
Ms L Grobler was appointed as the company secretary on 4 July 2016, replacing Mr JV Parkin.

Share buy-back
After 11 July 2016, the Board has exercised its authority, obtained in June from its regulator and at the last two AGMs from its
shareholders by way of special resolution in terms of Sections 46 and 48 of the Companies Act of South Africa (Act 71 of 2008), as
amended, and mandated a buy-back of issued ordinary shares of the Company, to a maximum of 5% of the issued ordinary shares.
Since the mandate, 5 091 472 ordinary shares have been bought back totalling 2.48% of the total issued share capital (excluding
treasury shares).

Inventory
On 8 August 2016, inventory items were stolen from the Samrand warehouse. As per the Group policy, all items are adequately
insured and covered against theft. No potential operating losses are expected to be incurred in terms of the theft of these items.
                                                                                                                                          
Legal proceedings
Datacentrix Proprietary Limited (a wholly-owned subsidiary) has been cited in an application in the High Court of South Africa seeking
to review and to set aside a bid awarded to the company in January 2015, as communicated in the SENS announcement issued by
the Board on 18 April 2016. Datacentrix Proprietary Limited and the Department of Justice and Constitutional Development (“DOJ”)
are opposing the matter. Subsequently a hearing has been scheduled for 15 September 2016, to decide on a further application for
an urgent interim interdict, preventing the DOJ from further executing the contract related to the awarded bid pending the outcome of
the first application. Both the DOJ and Datacentrix Proprietary Limited are opposing this application as well. Material developments
will be appropriately communicated.

Other than mentioned in this report, there were no other material events after the reporting date that require disclosure.

The business of Datacentrix
Datacentrix is an ICT solutions provider that uses leading technologies to deliver sustainable value to corporate and public sector
organisations. The Group strategically partners with its customers, equipping them with valuable insight and helping them to align
their technology undertakings with their business strategy. It offers a holistic value proposition by delivering integrations between
technologies that help safeguard the future of its customers.

The three operating divisions of Datacentrix are: Managed Services, Technology Solutions and Business Applications. The integrated
nature of the technology landscape means that these three businesses are inextricably connected. The breadth of the portfolio
encompasses all the significant enterprise hardware and software vendors.

Group financial performance
The change in financial year-end resulted in no comparable comparative financial statements being published for the four-month period
under review. The last financial results published were for the full twelve-month period ended 29 February 2016. The users of the
summarised financial statements are cautioned to be attentive when comparing current financial results to the comparative financial
results and to note that all financial information is not necessarily comparable.

The Board is pleased to report that the Group achieved revenue for the four months ended 30 June 2016 of R961.7 million and
earnings attributable to shareholders of R41.1 million. Group operating margin was 5.7% with earnings per share and headline
earnings per share of 21.0 cents respectively. The Group generated R25.4 million cash. The Group’s closing cash balance was
R122.5 million.

Datacentrix continues to focus on the fundamental principles of business: quality skills; leading vendor partnerships; sound and
prudent financial management; resilient operations; strong technical and execution capability; and a commitment to black economic
empowerment imperatives.

The Managed Services and Business Applications divisions contributed 39.5% and 9.9% respectively to the Group’s profit after tax
(“PAT”), with the Technology Solutions division contributing 47.1% for the current four-month reporting period ended 30 June 2016.

Segmental analysis
The reader is reminded that the current reporting period ended 30 June 2016 represents only a four-month period, whereas the
comparative period ended 29 February 2016 represents a twelve-month period. The supplementary information included, for the
interim reporting period ended 31 August 2015, represents a six-month period.

                                                                           Operating           Net       Profit                      Total
                                                  Revenue        EBITDA       profit      interest   before tax      Taxation       income

 Managed Services
  30 June 2016        Audited          R’000      224 367        27 710       22 927            -        22 927       (6 668)       16 259
  29 Feb 2016         Audited          R’000      622 840        96 956       78 477           28        78 505      (22 834)       55 671
  31 Aug 2015       Unaudited          R’000      277 526        34 301       26 173         (108)       26 065       (6 853)       19 212

 Technology Solutions
  30 June 2016        Audited          R’000      680 004        31 834       27 306            -        27 306       (7 942)       19 364
  29 Feb 2016         Audited          R’000    1 823 717        81 979       73 005            -        73 005      (21 171)       51 834
  31 Aug 2015       Unaudited          R’000      871 864        43 220       36 113            -        36 113      (11 120)       24 993

 Business Applications
  30 June 2016        Audited          R’000       57 367         6 150        5 726            -         5 726       (1 666)        4 060
  29 Feb 2016         Audited          R’000      162 699        17 302       15 840            -        15 840       (4 594)       11 246
  31 Aug 2015       Unaudited          R’000       78 028         9 373        8 075            -         8 075       (2 488)        5 587
 
 Corporate
  30 June 2016        Audited          R’000            -             -       (1 206)        3 253        2 047         (595)        1 452
  29 Feb 2016         Audited          R’000            -             -       (3 022)        9 152        6 130       (1 710)        4 420
  31 Aug 2015       Unaudited          R’000            -             -            -         6 757        6 757       (2 081)        4 676

 Total Group
  30 June 2016        Audited          R’000      961 738        65 694       54 753         3 253       58 006      (16 871)       41 135
  29 Feb 2016         Audited          R’000    2 609 256       196 237      164 300         9 180      173 480      (50 309)      123 171
  31 Aug 2015       Unaudited          R’000    1 227 418        86 894       70 361         6 649       77 010      (22 542)       54 468

# The total comprehensive income for the period/year represents profit for the reporting period/year as no element of other
comprehensive income exists.
* The segments of the entity is based on the information reported to the chief operating decision maker (CEO) and has not changed
from the prior reporting period.

Managed Services
The Managed Services division accounted for 39.5% of Group PAT, at R16.3 million. The division achieved an operating margin of
10.2%.

The division delivered a strong performance, specifically in the outsourcing, ICT facility services, Internet Service Provider (“ISP”) and
Network Service Provider (“NSP”) businesses. New outsource contracts transitioned in the previous financial year contributed
positively to the period under review. Improved service delivery and efficiencies have enhanced the division’s ability to address
customer needs more cost effectively and efficiently.

The Managed Services division is a progressive centre of excellence that delivers end-to-end ICT services. It provides customers
with a constantly measured environment that ensures that what is being done today is both pertinent to customer needs and supports
their relevance into the future.

Technology Solutions
The Technology Solutions division performed well over the four-month period. Good growth was achieved in the storage, data centre
and networking businesses. The division delivered revenue of R680 million and PAT of R19.4 million in the four-month period. The
division contributed 47.1% to Group PAT for the period.

The division increased its revenue from longer-term service delivery projects; kick-started the period with the formalisation of a
number of complex, longer-cycle deals; focused on managing costs; and ensured a high repeatability of service delivery in the face of
a slower economy.

The Group upgraded its security operations centre and enhanced its execution capability in the security business. Management is
encouraged by the opportunities in this area of the market and the business is well positioned to capitalise on these.

The Technology Solutions division is a trusted technology solutions integrator, recognised by all top leading technology vendors
globally. The division leads in visionary technology innovation that delivers real business value from traditional compute, storage and
networking, to a software-defined, data-driven world where the infrastructure adapts around customer demands.

Business Applications
PAT in the Business Applications division was R4.1 million. The division contributed 9.9% to Group earnings for the period. Operating
margin was 10.0%.

Good growth was achieved in the Enterprise Information Management (“EIM”) business over the four-month period. The business
closed out one of its large projects in the education domain, signed up a substantial, enterprise licence agreement in the public
sector, rolled out the initial project phase for a regional healthcare provider, and acquired new business across various industries .

The Enterprise Resource Planning (“ERP”) business performance improved for the period. The Business Intelligence and Analytics
capability has now been integrated into the broader EIM offering.

The Business Applications division enables organisations to take advantage of the information that is created and stored in their ICT
infrastructures by applying leading EIM, ERP solutions and professional services. The division enables informed business
management and growth through solutions that automate; integrate; and monitor and control business processes.
                                                                                                                                          
Prospects
In the period under review, the Group secured new business that will be executed in the new financial year. The Company will
continue bidding for higher value business and exploring opportunities in Africa.

Datacentrix differentiates its offering through its service-focused culture, and its service offering flexibility, which enables customers to
flex or shrink their service requirements and expenditure in line with the demands of their business.

The Group’s deliberate strategy to build a cohesive, efficient, agile and skilled organisation that is focused on service delivery has
positioned it as a formidable competitor in the market. This bodes well for the organisation in a market that remains challenging,
offering only single-digit growth.

Broad-based Black Economic Empowerment
Datacentrix has maintained its Level Two (AAA) B-BBEE Contributor status, with 125% procurement recognition.

Dividend
The Group previously indicated that as it expands and secures the provisioning of complex turnkey solutions, working capital
requirements will increase. As a result, investment is required not only to support this organic growth strategy, but also potential
acquisitions. Consequently, the Board has decided not to declare a dividend payment for the four-month period ended 30 June 2016.

The Board would like to thank the management and staff at Datacentrix for their dedication, commitment and hard work that have
resulted in the period’s positive performance.

For and on behalf of the Board:



Arnold Fourie, Chairman               Ahmed Mahomed, Chief Executive Officer

6 September 2016
Arnold Fourie# (Chairman), Ahmed Mahomed (Chief Executive Officer), Alwyn Martin*, Dudu Nyamane*, Elizabeth Naidoo (Group
Financial Director), Henry Ferreira#, Nolitha Fakude* (Deputy Chairman, Lead Independent Director), Richard Lyon^
(*independent, non-executive) (#non-executive) (^alternate director to the Chairman)

Company secretary:                    Liezel Grobler
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




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Date: 06/09/2016 04:00:00 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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