| Thu 19 Apr 2007, 8:29 | | DTP - DataPro - Unaudited results for the six mont |
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DTP
DTP
DTP - DataPro - Unaudited results for the six months ended 28 February 2007
DataPro Group Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1998/016433/06)
Share code: DTP & ISIN code: ZAE000058061
("DataPro Group" or "the Company" or "the Group")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2007
- Revenue up 234% to R263 million
- Operating profit up 154% to R16.3 million
- Profit before taxation up 168% to R16.1 million
- Profit for the period up 150% to R11.6 million
- Earnings per share up 41% to 2.14 cents per share
- Headline earnings per share up 85% to 2.14 cents per share
- Cash on hand increased from R2 million to R217 million
Balance Sheet Unaudited Reviewed Audited
as at as at as at
28 February 28 February 31 August
2007 2006 2006
R`000 R`000 R`000
ASSETS
Non-current assets 585 863 127 434 206 911
Property, plant and 54 081 22 430 29 998
equipment
Intangible assets, 526 777 100 712 173 580
including goodwill
Deferred taxation 5 004 4 292 3 333
Current assets 379 149 27 263 53 150
Inventories 11 065 361 2 263
Trade and other 150 641 24 174 32 944
receivables
Taxation - 2 -
Cash and cash 217 443 2 726 17 943
equivalents
Total assets 965 012 154 697 260 061
EQUITY AND LIABILITIES
Capital and accumulated 568 027 100 894 192 587
loss
Share capital and 570 710 123 333 206 914
premium
Accumulated losses (2 683) (22 439) (14 327)
Non-current liabilities 175 090 16 622 14 737
Long term borrowings 175 090 15 040 14 737
Financial liability - 1 582 -
Current liabilities 221 895 37 181 52 737
Trade and other 209 394 23 454 38 140
payables
Short term borrowings 8 018 9 508 11 763
Shareholders` loans - 2 398 -
Taxation 4 484 1 182 2 834
Bank overdraft - 639 -
Total equity and 965 012 154 697 260 061
liabilities
Ordinary shares in 883 856 315 135 483 812
issue at period end
(`000)
Net asset value per 64.3 32.0 39.8
share (cents)
Net tangible asset 6.1 0.06 3.93
value per share (cents)
Fully diluted
information
Ordinary shares at 883 856 335 164 483 812
period end (`000)
Net asset value per 64.3 30.1 39.8
share (cents)
Net tangible asset 6.1 0.05 3.93
value per share (cents)
Income Statement Unaudited Reviewed Audited
for the six for the six for the
months ended months ended year ended
28 February 28 February 31 August 2006
2007 2006 R`000
R`000 R`000
Revenue 262 807 78 740 196 365
Cost of sales (189 444) (47 408) (114 730)
Gross profit 73 363 31 332 81 635
Operating and (51 123) (23 165) (53 187)
administrative expenses
Other operating income 78 2 737 485
Operating profit before 22 318 10 904 28 933
depreciation and
amortisation
Profit on disposal of - - 53
assets
Depreciation (4 416) (3 282) (7 181)
Amortisation of ( 1 539) (1 188) (2 792)
intangible assets
Operating profit 16 363 6 434 19 013
Finance charges (2 705) ( 1 243) (3 070)
Investment income 2 408 92 230
Fair value adjustments - (382) (257)
Negative goodwill - 1 101 1 574
Profit before taxation 16 066 6 002 17 490
Taxation (4 422) (1 345) (4 598)
Profit for the period 11 644 4 657 12 892
Calculation of headline
earnings
Profit for the period 11 644 4 657 12 892
Adjustments for:
Profit on disposal of - - (53)
assets
Negative goodwill - ( 1 101) (1574)
Tax effect of - - 15
adjustments
Headline earnings for 11 644 3 556 11 280
the period
Weighted average shares 543 487 306 371 336 383
in issue (`000)
Earnings per share 2.14 1.52 3.83
ordinary share (cents)
Headline earnings per 2.14 1.16 3.36
ordinary share (cents)
Dividend per share - - -
(cents)
Fully diluted
information
Weighted average shares 543 487 306 371 336 383
in issue (`000)
Earnings per share 2.14 1.52 3.83
ordinary share (cents)
Headline earnings per 2.14 1.16 3.36
ordinary share (cents)
Condensed Cash Flow Unaudited Reviewed Audited
Statement for the six for the six for the
months ended months ended year ended
28 February 28 February 31 August
2007 2006 2006
R`000 R`000 R`000
Net cash inflow from 32 569 998 17 092
operating activities
Net cash outflow from (364 328) (3 901) (58 360)
investing activities
Net cash inflow from 531 169 5 155 59 244
financing activities
Net increase in cash and 199 500 2 252 17 976
cash equivalents
Bank balance 17 943 (165) (33)
/(overdraft) at
beginning of the period
Cash and cash 217 443 2 087 17 943
equivalents at end of
the period
Statement of Changes Share Share Accumulated
in Equity capital premium losses Total
R`000 R`000 R`000 R`000
Balance as at 1 314 114 963 (27 218) 88 059
September 2005
Issue of shares 21 11 340 - 11 361
Profit for the - - 4 657 4 657
period
Equity instrument - (3 306) - (3 306)
acquired
Balance as at 28 335 122 997 (22 561) 100 771
February 2006
Write off of share - (1 506) - (1 506)
issue expenses
Issue of shares 149 80 459 - 80 608
Profit for the - - 8 235 8 235
period
Expiry of financial - 1 582 - 1 582
liability
Disposal of equity - 2 897 - 2 897
instruments for cash
Balance as at 31 484 206 429 (14 327) 192 587
August 2006
Issue of shares for 400 373 429 - 373 829
cash
Write off of share - (10 033) - (10 033)
issue expenses
Profit for the - - 11 644 11 644
period
Balance as at 28 884 569 826 (2 683) 568 027
February 2007
COMMENTARY
The board of directors ("the board") is pleased to present the company`s
unaudited results for the six months ended 28 February 2007. These financial
statements have been prepared in accordance with International Financial
Reporting Standards ("IFRS") which has been consistently applied to prior
periods.
BUSINESS OVERVIEW AND FUTURE PROSPECTS
Since the last reported results, the DataPro Group has continued with its
stated strategy of increasing earnings through a combination of organic
growth and concluding acquisitions that are accretive to earnings. Revenues
have increased by 234% or R184 million over the prior period through a
combination of organic growth, particularly in the ISP / data businesses and
as a result of the inclusion of one month`s revenue from Orion Telecom
("Orion") amounting to R76 million. The revenues of the DataPro Group are
traditionally affected by the seasonal downturn over the December and early
January holiday period (including the Telkom "Freeze" from 15 December
through 15 January) and we anticipate that the revenue growth for the second
half of the fiscal year will exceed that of the prior six months.
It was highlighted in the annual results for 2006 that the full potential of
DataPro Group will ultimately be achieved through its ability to take
advantage of deregulation. To achieve this the Group needed to, inter alia,
be able to interconnect with the incumbent fixed line operator Telkom, the
new Second Network Operator (SNO), Neotel and the existing cellular service
providers. The board is pleased to report that interconnection arrangements
are now operational with Telkom and Vodacom, whilst interconnect arrangements
with MTN and Cell C are expected to be operational shortly. The Company`s
growth, however, continues to be constrained by Telkom and ICASA delays in
the finalisation of interconnection rates for inbound call termination.
At the beginning of our fiscal year the board and management embarked on an
ambitious set of goals and objectives and we would like to highlight some of
the key achievements of the Group under the period of review as follows:
- Revenues increased by 234% to R263 million and net profit for the period
has increased by 150% to R11.6 million;
- Successful conclusion of the acquisition of Orion Telecom, a leading
supplier of voice and data services with annual revenues in excess of
R800 million;
- Successful conclusion of the capital raising process to the amount of
R550 million in debt and equity;
- Sustained organic growth across all business units through product
innovation and aggressive sales and marketing;
- Continued growth in the monthly contracted annuity base from R24,1
million as at 31 August 2006 to R29,4 million (excluding Orion) and to
R105 million (including Orion) as at 28 February 2007;
- Staff complement has increased from 256 to 465 employees through organic
growth and via acquisition; and
- Strengthening of the BEE shareholder base with a significant investment
in DataPro Group by Lereko Metier Capital Growth Fund ("LMCGF") and
Thembeka Capital (previously known as Arch Equity) as part of the Orion
transaction.
DataPro Group will continue with its objective of becoming the leading,
alternative telecommunications service provider in the South African market.
In order to achieve this the Group will be focused on the following key goals
and objectives:
- growth of our core businesses organically via channel partners and
direct sales;
- the acquisition of companies that accelerate our growth strategy in
Southern Africa and that are accretive to earnings;
- improving operational efficiencies by integrating all Least Cost Routing
("LCR") platforms, administration and technical support into Orion;
- expansion, upgrading and integration of the network infrastructure into
a single platform to support DataPro Group`s core data business,
including the VoIP platform;
- ongoing investment in our infrastructure and our people to ensure we
continue to deliver innovative, cost effective solutions to all our
customers;
- continuing to focus on operational excellence across all our businesses,
ensuring the delivery of the highest levels of customer service; and
- ongoing provision of a comprehensive telecommunications solution
comprising voice and data product offerings that deliver on convergence.
FINANCIAL OVERVIEW
Revenue, which includes only one month of Orion, grew R184 million (234%)
over the comparative period. Gross margins remained at 41% for the data
businesses but have moderated to 28% overall as a result of the inclusion of
Orion`s results. It is anticipated that this trend will continue as the
result of the lower margins achieved in voice services, particularly due to
the significant Orion contribution in the future, but will stabilise as data
revenues grow and the volumes in VoIP improve. Strong organic growth
continues in data services with increases of 47% and 43% in DataPro Group ISP
and @lantic respectively. Voice revenues, excluding Orion, have grown by R41
million or 52% over the prior period. Orion will make a significant
contribution to revenue for the remaining financial year.
Deregulation and competition continue to force prices down particularly in
data services. However, as the number of customers continue to grow and the
usage of these services grows, margins continue to be maintained. It is
anticipated that the `interconnect` rate for voice services will be reduced
in the future and that will impact the current rates of arbitrage with LCR
businesses. This will be offset by the continued gradual transfer of
customers to VoIP and the current practice of selling voice services as a
managed voice solution and not just a cost saving. Together with a converged
product offering of data and managed voice services it is anticipated that
this margin reduction will be negated.
Operating profit increased by 154% to R16.3 million and profit before
taxation increased by 168% to R16.1 million. Net profit for the period
reflected an increase of 150% to R11.6 million with headline earnings
increasing by 227% to R11.6 million. Both earnings and headline earnings per
share reflected an increase of 41% and 85% respectively to 2.14 cents per
share.
Monthly contracted revenue increased by 336% to R105 million, from R24.1
million, which includes R76 million from Orion, indicating strong performance
in revenue growth in real terms.
The balance sheet reflects a strong cash position of R217 million which
includes cash generated from operations and R170 million in long term loan
funding raised from Investec Bank Limited pursuant to the acquisition of
Orion. The large increase in other asset and liabilities, including
intangibles, arises principally from the inclusion of Orion as at 28 February
2007. It should be noted that the at acquisition balance sheet of Orion
consolidated as at 28 February 2007 into DataPro Group, is provisional and
will be finalised prior to year end.
SEGMENTAL REPORTING
The company does not separately identify assets, liabilities or expenses
attributable to different segments of the business and accordingly the only
segmental information available is turnover, details of which are set out
below:
28 February 2007 28 February 2006
Segment R`m R`m
Data (ISP and ADSL) 75 51
@lantic (ISP and 30 21
ADSL)
Voice (VoIP, LCR and 158 7
Call-Back)
Total 263 79
ACQUISITIONS AND ISSUE OF SHARES FOR CASH DURING THE YEAR
DataPro Group acquired Orion with effect from 1 February 2007. Orion is a
leading supplier of Least Cost Routing ("LCR") and VoIP telephony services to
corporate South Africa. The purchase price was R380 million settled by way
of an issue of 381 473 214 shares to the vendors of Orion, a portion of which
was then placed on behalf of the vendors at 112 cents and 175 000 000 shares
at 85 cents per share to BEE shareholders.
The acquisition of Orion is significant when considering the milestones
achieved by the DataPro Group. This will not only contribute significant
revenues, earnings and cashflow to the Group in the years ahead, but also
provides an enlarged customer base that will present significant
opportunities into which all data and voice products offered by the DataPro
Group can be sold.
In addition, given that the Orion capital raising was approximately five
times oversubscribed, the board deemed it prudent to raise additional capital
of R170 million through a combination of long term debt and by issuing an
additional 18 570 558 shares for cash at the same price of 112 cents per
share, to provide additional funds for further acquisitions and working
capital requirements. Some of this has already been utilised for a few
smaller acquisitions, details of which are set out below, which continues the
DataPro Group`s strategy of acquiring businesses that are earnings accretive.
The total funding raised in the capital raising process for Orion amounted to
R550 million with an additional 400 043 772 new DataPro Group ordinary shares
being issued. The total number of shares in issue is 883 855 693 at 28
February 2007.
BLACK ECONOMIC EMPOWERMENT ("BEE")
Simultaneously with the Orion transaction, the BEE shareholding of DataPro
Group Limited was enhanced via the introduction of the LMCGF as a 20%
shareholder in DataPro Group through the placement of 175 000 000 shares at
85 cents per share.
Thus LMCGF`s investment, together with Thembeka Capital and Vantage Capital
Fund Managers, increases the DataPro Group`s BEE shareholding to 28.4%, which
excludes the broadbased shareholding previously distributed to the
shareholders of Black Information Technology Empowerment Holdings Limited
("Blitec"). In addition the BEE status of the board of directors has been
enhanced with the appointment of Dr Lulu Gwagwa, a LMCGF principal.
SUBSEQUENT EVENTS
With effect from 1 April 2007, DataPro Group acquired Dial Electronics
(Proprietary) Limited and VOIP Telecorporation (Proprietary) Limited, trading
as Dial Telecoms and VOIP Telecoms respectively, for an undisclosed amount.
All conditions precedent, including Competition Commission approval, have
been fulfilled. Dial Telecoms and VOIP Telecoms are suppliers of LCR and
VoIP telephony services predominately to the Government market.
DIRECTOR CHANGES
JA du Toit, the managing director of Orion, was appointed as an executive
director of the DataPro Group with effect from 13 February 2007. MJ
Krastanov resigned as a non-executive director on 13 February 2007 and RT
Dalais and Dr N Gwagwa were appointed as non-executive directors to the board
on the same date. RT Dalais and Dr N Gwagwa are principals of LMCGF.
CHANGE OF AUDITORS
Deloitte has replaced Grant Thornton as auditors of the DataPro Group.
Deloitte was selected for their access to the telecommunications expertise of
the global Deloitte network as well as their in depth knowledge of the local
telecommunications market.
DIVIDENDS
With the application of cash generated from operations and the recent capital
raising being focussed on further earnings enhancing acquisitions, new
initiatives and working capital requirements, the directors have decided not
to declare a dividend for the period under review.
By order of the Board
AP van Marken DG Reed
Chairman Chief Executive Officer
19 April 2007
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg, 2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Directors
AP van Marken, DG Reed, CM von Holdt, GP Sweidan, JA du Toit, RT Dalais*, N
Gwagwa* MC Mogase* (Alternate CM Lister-James)
* Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Computershare Investor Services 2004
(Proprietary) Limited (Proprietary) Limited
Date: 19/04/2007 08:29:45 Produced by the JSE SENS Department.
