| Tue 18 Sep 2007, 7:00 | | DGC - Digicore - Group Audited Results: Year Ended |
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DGC
DGC
DGC - Digicore - Group Audited Results: Year Ended 30 June 2007 and dividend
declaration
DIGICORE HOLDINGS LIMITED
Registration number: 1998/012601/06
Share Code: DGC
ISIN Number: ZAE000016945
("DigiCore" or "the Group")
Group Audited Results
for the year ended 30 June 2007
- Operating profit up 44%
- Revenue up 36%
- Earnings per share up 37%
ABRIDGED GROUP BALANCE SHEET
As at As at
30 June 30 June
2007 2006
R`000 Note (Audited) (Audited)
Assets
Non-current assets 154 678 87 194
Property, plant and equipment 2 38 857 22 566
Goodwill 107 364 56 174
Investments: associates 2 818 1 979
Investments: other - 382
Deferred tax 5 639 6 093
Current assets 276 096 198 477
Inventories 71 073 48 255
Trade and other receivables 145 780 88 800
Cash and cash equivalents 59 243 61 422
Total assets 430 774 285 671
Equity and liabilities
Capital and reserves 263 523 198 478
Equity attributable to ordinary 257 359 188 633
shareholders
Share capital and premium 13 368 11 630
Distributable reserves 2 533 1 427
Retained income 241 458 175 576
Minority interest 6 164 9 845
Non-current liabilities 20 188 15 746
Interest-bearing borrowings 19 676 15 746
Deferred tax 512 -
Current liabilities 147 063 71 447
Trade and other payables 59 320 29 833
Provisions 14 213 8 294
Taxation payable 16 727 30 590
Current portion of long-term borrowings 1 376 2 730
Vendor liabilities 55 427 -
Total equity and liabilities 430 774 285 671
Net asset value per share (cents) 127,2 93,2
ABRIDGED GROUP INCOME STATEMENT
Year Year
ended ended
30 June 30 June
% 2007 2006
R`000 Notes growth (Audited) (Audited)
Revenue 36 440 667 323 239
Cost of sales and operating (306 090) (229 548)
expenses
Net operating profit for the 44 134 577 93 691
year
Net investment income 1 442 2 975
Net income/(loss) from equity 766 (112)
accounted investments
Profit before taxation 136 785 96 554
Income tax expense 3 (40 986) (28 970)
Profit for the year 42 95 799 67 584
Attributable to:
Minority shareholders 7 671 3 453
Equity holders of the parent 37 88 128 64 131
Number of ordinary shares in 202 355 202 355
issue (`000)
Weighted average number of 198 585 198 572
ordinary shares in issue
(`000)
Fully diluted number of 208 865 202 355
ordinary shares in issue
(`000)
Basic earnings per share 4 37 44,4 32,3
(cents)
Basic headline earnings per 4 38 44,1 31,9
share (cents)
Fully diluted earnings per 42,2 31,7
share (cents)
Interim dividend per share 5,0 4,0
paid (cents)
Final dividend per share 8,0 6,0
declared (cents)
Determination of headline
earnings:
Attributable to equity holders 88 128 64 131
of the parent
Profit on disposal of fixed (650) (875)
assets
Headline earnings for the year 87 478 63 256
ABRIDGED GROUP CASH FLOW STATEMENT
Year Year
ended ended
30 June 30 June
2007 2006
R`000 (Audited) (Audited)
Cash flows from operating activities 52 591 58 111
Cash generated from operating activities 104 520 73 903
Net investment income 1 442 2 975
Taxation paid (54 137) (18 655)
Net equity profit/(loss) from associate 766 (112)
Cash flows from investing activities (30 817) (11 086)
Cash flows from financing activities (23 953) (34 204)
(Decrease)/increase in cash and cash (2 179) 12 821
equivalents for the year
Cash and cash equivalents at the beginning 61 422 48 601
of the year
Cash and cash equivalents at the end of 59 243 61 422
the year
Cash held in Rand accounts 30 635 47 389
Cash held in foreign accounts 28 608 14 033
STATEMENT OF CHANGES IN EQUITY
Year Year
ended ended
30 June 30 June
2007 2006
R`000 (Audited) (Audited)
Share capital and premium
Share capital and premium at beginning of 11 630 19 264
year
Movements in treasury shares during the 1 738 (7 634)
year
Share capital and premium at end of the 13 368 11 630
year
Distributable reserves
Distributable reserves at beginning of 1 427 6 590
year
Movement in foreign currency translation 672 1 150
reserve during the year
Movement in share based payment equity 434 136
reserve during the year
Movement in foreign reserves during the - (6 449)
year
Distributable reserves at end of the year 2 533 1 427
Retained income
Retained income at beginning of the year 175 576 126 516
Movement in attributable earnings during 88 128 64 131
the year
Dividends paid during the year (22 246) (15 071)
Retained income at the end of the year 241 458 175 576
Equity attributable to ordinary 257 359 188 633
shareholders
Minority interest
Minority interest at beginning of the year 9 845 2 113
Movement in attributable earnings during 7 671 3 453
the year
Movement through business combinations (11 352) 4 279
during the year
Minority interest at the end of the year 6 164 9 845
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated annual financial statements set out in this report have been
prepared in accordance and comply with the statements of International Financial
Reporting Standards and the 1973 Companies Act, and are based on appropriate
accounting policies, consistently applied with those in the prior year, which
are supported by reasonable and prudent judgements and estimates.
Goodwill is tested annually for impairment. No impairment of the goodwill was
needed as a result of the group exceeding its profit forecast.
2. Property, plant and equipment
The significant growth in property, plant and equipment is due to the increase
of C-track units on rental in customers` vehicles which amount to a net book
value of R11,6 million.
3. Income tax expenses
The effective tax rate of 30% (2006: 30%) includes a secondary tax on companies
(STC) charge on the final and interim dividends declared and paid during the
year ended 30 June 2007. For the comparative period no STC charge was payable on
dividends declared and paid, due to available STC credit.
4. Earnings per share
The difference between the total number of shares in issue and the weighted
number of shares in issue relates to treasury shares, which are held by the
share trust for share options given to employees that will convert in the
future.
Implications of adopting IFRS2 - share based payments
The group grants share options to employees. In accordance with the requirements
of IFRS2, the group now recognises an expense in the income statement with a
corresponding credit to equity. The fair value at the date of granting of
options is charged to the income statement on a straight line basis over the
relevant vesting periods, which are adjusted to reflect actual and expected
levels of vesting.
Post balance sheet events
Subsequent to year end, the purchase price of R61,136 million for the purchase
of the 49% shareholding in DigiCore Europe BV from Stramco BV was settled partly
in cash of e2,458 million and partly through the issue of 6 509 874 DigiCore
shares after fulfilment of the suspensive conditions. The allotment of the 6 509
874 ordinary DigiCore Holdings Limited shares came into effect on 10 September
2007, bringing the total issued share capital to 208 865 351 shares. The
purchase price is recorded in the balance sheet under long-term borrowings, and
vendor liabilities.
Audit report
The group`s consolidated financial statements for the year ended 30 June 2007
have been audited by PKF (Pta) Incorporated, registered auditors and
accountants. The board has approved these annual financial statements that have
been abridged for purposes of this report. The auditors` unqualified audit
report is available for inspection at the company`s registered address.
Corporate governance
The group endorses the Code of Corporate Practice and Conduct as set out in the
King Committee Report on Corporate Governance in South Africa (2002).
DIVIDEND ANNOUNCEMENT
In line with the company policy, the board has declared a final dividend of 8
cents (2006: 6 cents) per share. This is after the company paid an interim
dividend of 5 cents (2006: 4 cents) per share in March 2007.
Payment will be made on Monday, 15 October 2007 to all shareholders recorded in
the register on Friday, 12 October 2007. The last day to trade to qualify for
the dividend will be Friday, 5 October 2007 and the shares will be traded ex-
dividend from Monday, 8 October 2007.
Share certificates may not be dematerialised or rematerialised between Monday, 8
October 2007 and Friday, 12 October 2007, both days inclusive.
NATURE OF BUSINESS
The group specialises in the research, design, development, manufacture, sales
and support of technologically advanced GPS/GSM fleet management and vehicle
tracking solutions locally and internationally.
COMMENTARY
Introduction
It is with great pleasure that we announce sterling growth for six consecutive
years. Achieving a 37% growth in earnings per share whilst still building new
markets was remarkable. The 36% increase in revenue is proof of our world class
products and services, now delivered to 32 countries. We were simultaneously
able to secure tenders from several blue chip companies, amongst others BHP
Billiton and the South African Police Services, to be delivered during the
coming year.
Financial results
Revenue rose by 36% to R440.6 million (2006: R323.2 million) while operating
profit increased by 44% to R135 million as margins remain stable.
Earnings per share increased 37% from 32,3 cents to 44,4 cents for the period.
Headline earnings per share also increased to 44,1 cents from 31,9 cents, a 38%
upwards move.
Our cash balance reduced slightly to R59 million mainly due to an increase in
tax and dividend payments as well as an increased requirement for working
capital to fulfil the large orders received during June and only expedited in
July 2007.
Trade receivables increased to R146 million mainly due to an all time record
sales performance in June 2007 whilst Inventories increased R23 million in
anticipation of several large orders.
We were able to finalise the negotiations for the acquisition of the remaining
49% stake in Digicore Europe BV during May 2007 at a PE of 8,5. Accordingly,
effective 1 January 2007 the full 100% of Digicore Europe has been consolidated
in the results for 2007.
Fleet Management Operations
We have maintained and grown our market share in most of the countries we
operate in.
In South Africa we have again proved to be the service provider of choice,
building relationships and supplying superior technology like never before.
Amongst others we have successfully installed over 5 000 units for eThikweni
(Durban) Municipality resulting in more efficient control, service delivery and
cost savings.
The fleet services part of our business has managed to increase income from our
management information bureau, cellular, product servicing and software
licensing divisions by 36%, which now mainly consists of annuity based income.
Our "Customer for Life" strategy has also been successfully expanded to Europe
and other countries.
We are further delighted with our international expansion strategy. Our team has
assisted the UK operation (50,1% subsidiary) to win several tender contracts.
DigiCore UK has contributed to our earnings this year, for the first time, and
is structured to deliver on-going profits in future.
DigiCore Europe managed to increase their NPAT by 27%. Newly appointed
distributors are starting to deliver and further enhance our service capability
in the area.
Stolen Vehicle Recovery (SVR) Operations
C-track South Africa had a very successful year and produced a profit whilst
continuing to spend approximately R10 million on brand building and above the
line advertising.
Our marketing campaign, bundling Navigation and in-car DVD systems with the C-
track Secure product offering, is producing very encouraging results.
Relationships were built with motor dealers, insurance companies and brokers
during the period.
Trakker Pakistan reached a new milestone with 50 000 installations earlier this
year and growth of 31% in unit sales. This is currently our most successful SVR
operation.
Black Economic Empowerment (BEE)
The relationship with our new empowerment partners is working well and this has
contributed to the success of our local fleet management business.
Transformation remains on our agenda and we have made progress regarding the 5
pillars, other than equity ownership in the business. The first two black women
were appointed to the DigiCore Fleet Management board at our July 2007 board
meeting.
The future
Several of the large tenders we have been awarded will be rolled out over the
next three years and this provides us with a higher level of guaranteed sales
income than we have ever had before. The full implementation of these tenders
does, in some cases, depend on the successful implementation of an initial few
thousand units and the achievement of the organisation`s goals and savings.
The rapid software development requirements of these tenders will continue to
provide leading world class solutions, further enhancing our opportunities to
continue winning larger tenders worldwide, in time to come.
Indications from several research companies point to rapid growth for our
industry in the next five years and we believe we are well placed to participate
in the opportunities.
The prospects for the local SVR market look promising as customers realise the
benefits of our superior products and services.
Owning 100% of our subsidiary in Europe will allow us to contribute to a planned
strategic expansion programme in the area that should allow us to remain in the
forefront of the Automated Vehicle Location Technology market.
With our ethical and service orientated approach we are looking forward to
another blessed year ahead.
Thank you
Our appreciation goes to our customers, suppliers, distributors worldwide and
our employees for a stunning year. We have all the faith that we will take the
group from strength to strength in years to come.
For and on behalf of the board
NA Gasa NH Vlok
Chairman Chief executive officer
18 September 2007
Registered office
20 Eddington Crescent, Highveld Park, Centurion
(PO Box 68270, Highveld Park, 0169)
Tel: +27 12 665 7300
Fax: +27 12 665 5376
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
PSG Capital (Pty) Limited
Directorate
NA Gasa* (Chairman), NH Vlok (Chief Executive Officer), SR Aberdein, D du Rand,
B Esterhuyzen*, BS Khuzwayo*, SS Ntsaluba*, BJ Richards#, MD Rousseau, FJ
Schindehutte
* Non-executive # British
Company secretary
DA Nieuwoudt
Website
www.digicore.com
Date: 18/09/2007 07:00:01 Produced by the JSE SENS Department.
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