| Wed 17 Sep 2008, 8:00 | | DGC - DigiCore - Abridged Results For The Year Ended 30 June 2008 and dividend |
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DGC - DigiCore - Abridged Results For The Year Ended 30 June 2008 and dividend
declaration
DigiCore Holdings Limited
Registration number 1998/012601/06
JSE code: DGC & ISIN: ZAE000016945
("DigiCore" or "the company" or "the group")
ABRIDGED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
HIGHLIGHTS
- Up Operating profit 52%
- Up Revenue 55%
- Up Earnings per share 55%
Commentary
The DigiCore board is proud to announce another record breaking set of results
for the year ended 30 June 2008.
With the successful continued implementation of global contracts with blue
chip customers all our divisions, subsidiaries and distributors have performed
well, allowing us to grow our revenue by 55% to R685 million (2007 : R441
million) whilst attributable earnings rose 59% from R88 million in the
previous year to R140 million for the current year. This remarkable
achievement is on the back of seven consecutive years of excellent growth.
In achieving this strong revenue performance we have continued to seek
opportunities in our chosen 36 international markets and this combined with
the ongoing management focus on controlling our overheads resulted in our
basic earnings per share increasing by 55% to 68.7 cents per share from 44.4
cents in 2007. Headline earnings per share increased 47% to 64.7 cents per
share.
During the year under review we increased our shareholding in our subsidiary
in the UK (DigiCore Ltd) from 50.1% to a wholly owned subsidiary with the
effective date of the transaction being 1 July 2007. The cost of the
transaction was R42.2 million which was part settled in cash and shares to be
issued on achieving profit warranties for the years 30 June 2008 and 30 June
2009. The full details can be found in the SENS release of 30 June 2008.
Our operating profit increased by 52% to R204 million from R135 million in
2007, remaining at an unchanged 30% mark of revenue for the year.
In order to support the operational growth, we have continued to invest in the
development of our technology and staff complement in order to deliver
superior and innovative C-track Mobile Asset Tracking, Management and
Information Solutions.
In this tougher trading period cash generated from operating activities
increased by 117% from R52 million to R113 million at June 2008, whilst cash
and cash equivalents increased by R49 million to R108 million at the end of
June 2008.
Nature of business
DigiCore is a leading provider of innovative Mobile Asset Tracking, Management
and Information Solutions for vehicle owners, globally.
We supply superior vehicle tracking solutions ranging from a basic track and
trace product used to recover stolen vehicles (although still being
interactive with the client), to complete integrated enterprise level
solutions for large fleet owners such as the Royal Mail (UK), the South
African Police Service, eThekwini Metro, BHP Billiton (global) and many
others.
Local operations
Our South African companies consist of divisions focused on the design,
development and manufacture of our products, the sales and support regarding
the management of fleets and the recovery of stolen vehicles (SVR). All three
divisions have grown substantially during the year.
DigiCore Fleet Management (DFM) maintained their position as the number one
service provider in South Africa and added several Blue Chip companies to its
customer base during the last financial year.
On the SVR front we have made inroads into various car dealerships and
insurance brokers which are the major sales channels for these products. These
initiatives will be the launching pad for next year`s growth in the SVR
sector. Although this market is challenging we are confident that we will soon
capture a sizeable portion of the new monthly installation requirements.
International operations
The number of units exported grew by 60% during the year to 52 617, being 50%
of our production. We have not only maintained our ground in established
markets, but have seen good expansion in the Middle East and Nigeria during
the past year.
Our world-wide investment in training people, support and commitment to our
distributors, is paying off. Our two wholly-owned subsidiaries, DigiCore Ltd
in the UK and DigiCore Europe, based in Holland, performed well.
In the UK we have a leading position in the utility company sector with
customers including the Royal Mail, Thames Water, Severn Trent Water, nPower,
Southern Water and Yorkshire Water.
In Pakistan we maintain our number one position as the SVR company of choice
with the largest customer base.
In the UAE, customers like the Abu Dhabi and Sharjah Municipalities, DHL as
well as the Dubai Police, have given us a solid base for future expansion.
In Nigeria a national order from Chevron, as well as a joint marketing
campaign with MTN for our SVR products, have made Nigeria our fifth biggest
export market.
The future
Amidst market pressure and a general slowdown in the world economy, we are
optimistic that the year ahead will again be a good year as we are continuing
to not only roll out contracts won during 2007 but adding large fleet owners
including Government departments to our client base as they all need to
increase their efficiencies.
With new innovative products soon to be launched, we aim to remain ahead of
global competitors to allow us to take full advantage of the needs of vehicle
owners to reduce their cost and protect their assets at the same time. Moving
some of our production abroad this year will also have the positive effect in
reducing our production costs.
With the expansion of our international team, we are looking forward to
growing our exports again in the coming year. Annuity income growth models
will also remain high on the agenda.
In conclusion, the board is confident that we can sustain reasonable growth
during the next financial year.
For and on behalf of the board
NA Gasa NH Vlok
Chairman Chief Executive Officer
17 September 2008
Group audited results for the year ended 30 June 2008
Abridged group balance sheet
As at As at
30 June 30 June
2008 2007
R`000 Notes (Audited) (Audited)
Assets
Non-current assets 222 199 154 678
Property, plant and equipment 2 50 053 38 857
Goodwill 3 156 901 107 364
Intangible assets 16 -
Investments in associates 3 506 2 818
Deferred tax 11 723 5 639
Current assets 401 935 278 726
Inventories 89 974 71 073
Current tax receivable 5 496 2 630
Trade and other receivables 198 059 145 780
Cash and cash equivalents 108 406 59 243
Total assets 624 134 433 404
Equity and liabilities
Equity
Equity attributable to ordinary
shareholders 455 124 257 361
Share capital and share premium 4 44 635 13 368
Reserves 4 59 043 2 533
Retained income 351 446 241 460
Minority interest 9 632 6 164
Total equity 464 756 263 525
Liabilities
Non-current liabilities 27 321 7 853
Other financial liabilities 20 286 4 897
Finance lease obligation 6 523 2 444
Deferred tax 512 512
Current liabilities 132 057 162 026
Other financial liabilities 5 072 67 762
Current tax payable 19 374 19 357
Finance lease obligation 1 926 1 376
Trade and other payables 85 625 59 318
Provisions 20 060 14 213
Total liabilities 159 378 169 879
Total equity and liabilities 624 134 433 404
Net asset value per share (cents) 212.8 127.2
Abridged group cash flow statement
Year ended Year ended
30 June 30 June
2008 2007
R`000 (Audited) (Audited)
Cash flows from operating activities 112 675 51 616
Cash generated from operations 179 590 103 376
Interest income 2 782 3 708
Dividends received 234 170
Finance costs (4 123) (2 266)
Tax paid (65 808) (54 138)
Other non-cash item - 766
Cash flows from investing activities (24 269) (29 987)
Cash flows from financing activities (39 243) (23 808)
Cash movement for the year 49 163 (2 179)
Cash at the beginning of the year 59 243 61 422
Cash at end of the year 108 406 59 243
Abridged segmental Report
Year ended Year ended
30 June 30 June
2008 2007
R`000 (Audited) (Audited)
Revenue
SA Distribution 431 498 253 636
Foreign Distribution 197 321 110 897
Product development and manufacturing 294 120 193 553
Group Services 15 254 8 710
938 193 566 796
Elimination (253 403) (126 129)
684 790 440 667
Operating profit
SA Distribution 43 307 34 767
Foreign Distribution 50 624 23 912
Product development and manufacturing 99 663 71 274
Group Services 10 508 4 626
Segment result 204 102 134 579
Investment revenue 3 016 3 708
Finance costs (4 123) (2 266)
Income from equity accounted investments 128 766
Profit before taxation 203 123 136 787
Abridged group income statement
Year ended Year ended
30 June 30 June
% 2008 2007
R`000 Notes growth (Audited) (Audited)
Revenue 55.4 684 790 440 667
Cost of sales and
operating expenses (480 688) (306 088)
Operating profit 51.7 204 102 134 579
Investment revenue 3 016 3 708
Income from equity accounted
investments 128 766
Finance costs (4 123) (2 266)
Profit before taxation 203 123 136 787
Taxation 5 (56 875) (40 986)
Profit for the year 52.7 146 248 95 801
Attributable to:
Equity holders of the parent 59.4 140 480 88 130
Minority interest 5 768 7 671
Number of ordinary shares
in issue (`000) 213 865 202 355
Weighted average number of
ordinary shares
in issue (`000) 204 527 198 585
Fully diluted number of
ordinary shares
in issue (`000) 218 676 208 865
Basic earnings per
share (cents) 6 54.7 68.7 44.4
Basic headline earnings per
share (cents) 6 46.7 64.7 44.1
Fully diluted earnings per
share (cents) 64.2 42.2
Fully diluted headline
earnings per share (cents) 60.5 41.9
Interim dividend per
share (cents) 6.0 5.0
Final dividend per
share (cents) 13.0 8.0
Total dividend per
share (cents) 46.2 19.0 13.0
Reconciliation between basic
to headline earnings:
Attributable earnings to
equity holders of 140 480 88 130
the parent
Profit on disposal of fixed asset (8 210) (650)
Headline earnings for the year 132 270 87 480
Abridged statement of changes in equity
Share Retained
R`000 capital Reserves income
Balance at 1 July 2006 11 630 1 427 175 576
Issue of shares 1 510 - -
Movement in currency
translation differences - 672 -
Movement in share based
payments reserve - 662 -
Employees share option scheme:
Proceeds of shares issued 228 (228) -
Profit for the year - - 88 130
Dividends paid - - (22 246)
Changes due to business
combinations - - -
Balance at 30 June 2007 13 368 2 533 241 460
Issue of shares 80 606 - -
Purchase of own treasury shares (49 976) - -
Movement in currency
translation differences - 13 780 -
Equity instrument to be issued - 38 241 -
Movement in share based
payments reserve - 5 126 -
Employees share option scheme:
Proceeds of shares issued 637 (637) -
Profit for the year - - 140 480
Dividends - - (30 494)
Changes due to business
combinations - - -
Balance at 30 June 2008 44 635 59 043 351 446
Total
attributable to
equity holders Minority Total
R`000 of the group interest equity
Balance at 1 July 2006 188 633 9 845 198 478
Issue of shares 1 510 - 1 510
Movement in currency
translation differences 672 - 672
Movement in share based
payments reserve 662 - 662
Employees share option scheme:
Proceeds of shares issued - - -
Profit for the year 88 130 7 671 95 801
Dividends paid (22 246) (22 246)
Changes due to business
combinations - (11 352) (11 352)
Balance at 30 June 2007 257 361 6 164 263 525
Issue of shares 80 606 - 80 606
Purchase of own treasury shares (49 976) - (49 976)
Movement in currency
translation differences 13 780 - 13 780
Equity instrument to be issued 38 241 - 38 241
Movement in share based
payments reserve 5 126 - 5 126
Employees share option scheme:
Proceeds of shares issued - - -
Profit for the year 140 480 5 768 146 248
Dividends (30 494) - (30 494)
Changes due to business
combinations - (2 300) (2 300)
Balance at 30 June 2008 455 122 9 632 464 756
Notes to the abridged 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 are presented in terms of disclosure
requirements set out in IAS34-interim financial reporting and the 1973
Companies Act and the JSE Listing Requirements, 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.
As disclosed in the trading update of 5 August 2008, the land and building at
the former DigiCore Head Office in Centurion was expropriated during the
financial year. The sale of the property realised a profit on sale of the
building of R8.5 million. No Capital Gains Taxation has been provided for as
the roll over provisions in the Act have been applied.
3. Goodwill
Goodwill during the year increased by R39.9 million through the purchase of
the 49.9% shareholding in DigiCore Limited from minorities. A further R9.6
million increase relates to the revaluation of the goodwill reported in
foreign currency held in DigiCore Europe BV.
4. Share capital, share premium and reserves
Share capital and premium increased by R38.7 million as a result of the issue
of 6.5 million shares during the year in respect of the DigiCore Europe BV
transaction. Treasury shares were purchased to the value of R7.2 million
during the year to be used to part settle the shares that will be issued to
the DigiCore Limited vendors.
An Equity reserve of R38.2 million was raised during the year for the shares
that will be issued in the future to the DigiCore Limited vendors.
5. Income tax expense
The effective tax rate of 28% (2007: 30%) includes a Secondary Tax on
Companies (STC) charge on the final and interim dividends declared and paid
during the years ended 30 June 2008 and 30 June 2007.
6. 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, held by the share trust
for share options given to employees that will convert in the future and
treasury shares bought back to be re-issued subsequent to year-end as part
payment for the DigiCore Limited vendor liabilities, as well as, shares issued
during the year in part payment for the purchase of the balance of
shareholding in DigiCore Europe BV from the minorities.
Post-balance sheet events
Due to the expropriation of the DigiCore Head Office in Centurion, new
premises were purchased to replace the Head Office in the Route 21 Corporate
Park in Irene. The property transfer will only take place in the deeds office
subsequent to year-end. The total purchase price of the buildings is
R33.4 million.
A bond facility with Absa Bank has been raised to part fund the purchase of
the buildings of R30 million.
Subsequent to year-end, it has been established that the profit warranty for
the DigiCore Limited share purchase from minorities as detailed in the SENS
announcement of 30 June 2008 has been met for the year ended 30 June 2008 and
as a result 2 405 078 shares will be issued to the vendors.
Except for the matters mentioned above, there have been no significant events
subsequent to year-end and up to the date of this report, that would require
adjustment.
Audit report
The group`s consolidated financial statements for the year ended 30 June 2008
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 company policy, the board has declared a final dividend of 13
cents per share (2007: 8 cents per share). This is after the payment of an
interim dividend paid by the company of 6 cents per share (2007: 5 cents per
share) in March 2008. This brings the total dividend declared and paid for the
year to 19 cents per share (2007: 13 cents per share) which constitutes a 46%
increase on the comparative period.
Payment will be made on Monday, 13 October 2008 to shareholders recorded in
the register on Friday, 10 October 2008. The last day to trade to qualify for
the dividend will be Friday, 3 October 2008 and the shares will be traded ex-
dividend from Monday, 6 October 2008. Share certificates may not be
dematerialised or rematerialised between Monday, 6 October 2008 and
Friday, 10 October 2008.
Registered office
DigiCore Building, Regency Office Park
9 Regency Drive, Route 21 Corporate Park
Irene Ext 30, Centurion, South Africa
(PO Box 68270, Highveld Park, 0169)
Tel: +27 12 450 2222 Fax: +27 12 450 2497
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
PSG Capital (Pty) Limited
Auditors
PKF (Pta) Incorporated
Directorate
NA Gasa* (Chairman), NH Vlok (Chief Executive Officer),
SR Aberdein, D du Rand, BC Esterhuyzen*, BS Khuzwayo*,
SS Ntsaluba*, BJ Richards#, MD Rousseau, FJ Schindehutte
* Non-executive # British
Company secretary
DA Nieuwoudt
Website
www.digicore.com www.ctrack.com
The annual financial results are also available on the internet at
www.digicore.com
Date: 17/09/2008 08:00:01 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.
