| Fri 9 Oct 2009, 15:04 | | DTH - DTH - Unaudited interim results for the 6 months ended 31 August 2009 |
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DTH
DTH
DTH - DTH - Unaudited interim results for the 6 months ended 31 August 2009
DTH DYNAMIC TECHNOLOGY HOLDINGS LIMITED
(Registration number 2004/016984/06)
Share Code: DTH
ISIN:ZAE000124681
("DTH" or "the group")
www.dth.co.za
UNAUDITED INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 AUGUST 2009
A neatly formatted version of this announcement in PDF form and the financial
results in a spreadsheet are available for download from the Investor Section of
the DTH website (www.dth.co.za).
HIGHLIGHTS
- Revenue increased by 32,9% to R46,5 million
- Maiden dividend of 3 cents per share paid
- Operating profit increased by 4,7% to R5,2 million
- Assets increased by 15,3% to R42,6 million
- Net tangible asset value per share up 22,2% to 46,1 cents
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
CONDENSED GROUP STATMENT OF 2009 2008 2009
COMPREHENSIVE INCOME R `000 R `000 R `000
Revenue 46 476 34 958 78 907
Operating profit 5 209 4 975 10 414
Operating profit margin (%) 11.2% 14.2% 13.2%
Investment revenue 407 441 1 250
Finance costs (0.2) (0.2) (57)
Profit before taxation 5 616 5 416 11 607
Taxation (1 653) (1 442) (2 960)
Profit from continued
operations 3 964 3 974 8 647
(Loss) / Profit from
discontinued operations (636) 142 232
Profit for the period 3 327 4 116 8 879
Attributable to:
Equity holders of the parent 3 282 4 053 8 734
Minority interest 46 63 145
Weighted number of shares in issue 47 952 968 50 000 000 49 948 231
Basic earnings per share (cents) 6.8 8.1 17.5
Headline earnings per share 6.8 8.1 17.5
Diluted Earnings per share 6.8 8.0 17.5
Diluted Headline earnings per share 6.8 8.0 17.5
Unaudited Unaudited Audited
6 months 6 months Year ended
to 31 August to 31 August to 28 February
CONDENSED GROUP STATEMENT OF 2009 2008 2009
CASH FLOWS R `000 R `000 R `000
Net cash from Operating activities 128 1 172 4 664
Cash generated from operations 4 627 2 076 6 028
Cash (utilised) / generated from
discontinued operations (884) (0.5) 161
Net interest income 407 441 1 192
Taxation paid (2 679) (1 345) (2 717)
Net dividend paid (1 344) - -
Net Cash from Investing activities (2 058) (595) (2 725)
Net Cash from Financing activities (8) (154) (5)
Net (decrease) / increase in cash
and cash equivalents (1 938) 423 1 934
Cash at beginning of period 13 752 11 818 11 818
Cash at end of period 11 814 12 241 13 752
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 August 31 August 28 February
2009 2008 2009
R `000 R `000 R `000
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Balance at beginning of period 33 658 25 496 25 496
Profit attributable to equity holders
of the parent 3 282 4 053 8 734
Net dividend paid - (1 344) - -
Treasury shares purchased by
Subsidiary - DVT Gauteng (Pty) Ltd (1 341) - (512)
Shares held by SIT - (153) (300)
Minority interest 46 63 145
Share based payment 39 78 96
Balance at end of period 34 340 29 536 33 658
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
CONDENSED GROUP STATEMENT OF 31 August 31 August 28 February
FINANCIAL POSITION 2009 2008 2009
R `000 R `000 R `000
Non-current assets 12 785 11 383 12 415
Property, plant and equipment 1 488 1 009 1 359
Goodwill and Intangible assets 10 880 10 181 10 760
Deferred tax 416 193 297
Current assets 29 832 25 593 30 600
Trade and other receivables 18 018 13 352 16 848
Cash and cash equivalents 11 814 12 241 13 752
Total assets 42 617 36 976 43 015
Equity 34 340 29 536 33 658
Equity attributable to equity holders
of parent 33 911 29 235 33 275
Share capital 11 841 13 842 13 182
Reserves 207 149 168
Retained income 21 862 15 244 19 925
Minority interest 429 301 383
Current liabilities 8 277 7 440 9 357
Trade and other payables 7 604 5 897 7 530
Deferred tax liability - 74 -
Taxation 673 1 469 1 827
Total equity and liabilities 42 617 36 976 43 015
Shares in issue at end of period 50 000 000 50 000 000 50 000 000
Net asset value per share (cents) 68,7 58,5 66,5
Net tangible asset value per share (cents) 46,1 37,7 44,4
Central
CONDENSED SEGMENTAL ANALYSIS Product Services Operations
Unaudited 6 months ended 31 August 2009
Turnover 5 186 41 290 -
Profit after tax 185 2 970 172
Unaudited 6 months ended 31 August 2008
Turnover 4 295 32 080 -
Profit after tax 467 3 331 318
Audited 12 months ended 28 February 2009
Turnover 9 504 72 278 -
Profit after tax 1 357 6 528 995
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
RECONCILIATION OF HEADLINE EARNINGS 2009 2008 2009
R `000 R `000 R `000
Earnings used in the calculation of
basic EPS from continuing operations 3 282 4 053 8 734
- no adjustment - - -
- no tax effects - - -
Headline earnings 3,282 4,053 8,734
OVERVIEW
Nature of Business
DTH is a group of businesses specialising in application software. Our core
focus is providing tailor-made solutions to fit the specific needs of our
clients. We typically use a blend of existing and custom built software and
components. Through our operating businesses, we offer solutions based on both
Microsoft .Net(TM) and Java(TM)development platforms and also provide
Specialist skills and professional services across the entire software
Development lifecycle.
The group`s operating business is as follows:
DVT - custom software development and related services
Offline Digital - specialist customised content solutions services
Emerald Consulting - legal industry software solutions
Basis of Preparation
The unaudited results for the six months ended 31 August 2009 have been
Prepared in accordance with International Financial Reporting Standards (IFRS),
and comply with IAS 34 - Interim Financial Reporting, the Listings requirements
of the JSE Limited and the Companies Act of South Africa. The accounting
policies used in the preparation of the interim results are consistent with
those used in the annual financial statements for the year ended 28 February
2009.
Financial Overview
- Revenue for the period increased by 32,9% to R46,5m due to strong organic
growth.
- Operating profits increased by 4,7% to R5,2m (2008: R5,0m) at a reduced
operating margin of 11,2% (2008: 14,2%). Prevailing market conditions are
characterised by continuous downward pressure on billable rates and upward
pressure on salary costs which reduced operating margins accordingly.
- During the period under review, the IT staffing and recruiting division was
discontinued due to sustained losses and a lack of business prospects. The
loss from discontinued operations in the period was R0,64m, as opposed to a
profit of R0,14m in the corresponding period last year. For purposes of
comparison, the prior year figures have been restated.
- The STC on the dividend paid had a negative impact on earnings for the period
Being a maiden dividend, there was no such effect in the corresponding period
last year.
- The Group achieved basic earnings of R3,3m, a decrease of 19,2% year on year
which equates to a decrease of 16,0% from 8,1c to 6,8c in both EPS and HEPS.
- Cash generated from continued operations increased 122,9% to R4,6m
- Included in financing and investing activities is the repurchase of 1,651,940
shares by subsidiary DVT Gauteng (Pty) Ltd for a total consideration of R1,3m
- Total assets in the Group increased 15,3% year on year from R40,0m to R42.6m,
which translates into a Net Asset Value per share of 69 cents (2008: 58cents)
and a Tangible Net Asset Value per share of 46 cents (2008: 38 cents).
- The group continues to remain un-geared with no long term debt, and continues
to enjoy strong levels of liquidity.
OPERATIONAL REVIEW
Generally poor market conditions affected the Group`s performance in the
6 months to 31 August 2009. Overall the Group was fairly resilient and
weathered the pressure well. Despite strong growth in turnover driven by
continuing demand for software development services, two major challenges
caused a disappointing reduction in operating margin and profits and a
resulting decline in EPS and HEPS.
Margin Pressure
Operating margins in our core services business have been reduced. This was
Mainly due to pressure to maintain and sometimes reduce our pricing from
clients who are themselves facing the challenges of the poor economy. As a
result we have had to adjust our pricing to retain several large services
contracts which materially reduced the margin on those contracts. In general,
inflationary influences and the ongoing shortage of IT skills has prevented us
from introducing any significant reductions in direct staff costs.
Discontinued Operation
The recruitment segment of the market has been particularly hard hit as staff
movement declines during periods of high uncertainty and risk. Recruitment
fees are often seen as a soft target for companies trying to reduce their costs
Our specialised IT recruitment business, The Talent Exchange, felt the full
brunt of these conditions and incurred an operating loss of R0,883m (loss of
R0,64m after tax) in the 6 months to 31 August 2009.
In the light of the losses in The Talent Exchange and the poor prospects for
recovery in the short term, the Group decided to discontinue the business at
the end of August 2009, so as to eliminate future losses. Two staff members
were retrenched and a third was redeployed.
Strong base
Despite the aforementioned negative events in the period under review, the
Group has preserved its strong base on which to build. This is reflected in
revenue growth which exceeded 30% which we consider to be a key performance
indicator in our business. By delivering excellent services and adapting our
contractual models to meet our clients changing needs, we retained and expanded
business with our large key clients. In addition, we were able to close new
business with a number of clients with potential for further growth.
Most importantly we have continued to invest in our people, resulting in good
staff retention and an ability to attract the best skills in the country. This
has resulted in an enlarged and strengthened team of IT professionals which
will ensure we can take full advantage of any future opportunities.
Corporate Activity
No transactions were concluded during the period under review. DTH continues
to look for opportunities to expand through acquisition, which will allow the
business to diversify into related and complementary technology and service
areas.
Prospects
A persistent global skills shortage remains the key driver in our industry. We
have made the necessary adjustments to our business to endure even a protracted
period of depressed market activity, and believe that we are well positioned to
take full advantage of any positive changes in market conditions.
Corporate Governance
The group recognises the need to conduct its business with integrity,
transparency and equal opportunity and subscribes to the spirit of good
corporate governance as set out in the King II Report.
Board of Directors
Mr R Fehrsen was appointed to the board as an Independent Non-Executive
Director on the 30th of March 2009 and chairs our audit committee..
Subsequent Events
No events material to the understanding of the report have occurred in the
period between the period-end date and the date of this report.
Dividends
A maiden dividend of 3 cents per share was declared and paid on 6 July 2009.
For and on behalf of the Board
H Ratshefola C Wilkins G Fowler
Chairman Chief Executive Officer Chief Financial Officer
Johannesburg
9 October 2009
Transfer secretaries:
Link Market Services (Pty) Ltd
11 Diagonal Street, Johannesburg, 2001
Company secretary and registered office:
D M Hughes
Ground Floor, Victoria Gate South, Hyde Lane, Hyde Park, Sandton, 2199.
Directors:
H Ratshefola (Chairman)*, C Wilkins (Group CEO), G Fowler (CFO), D M Hughes,
J Mamogale#, R Fehrsen#
* Non-executive directors, # independent non-executive directors
Auditors:
Andre Gerber
Greenwoods Chartered Accountants
Designated Advisor:
PSG Capital (Proprietary) Limited
Date: 09/10/2009 15:04:05 Produced by the JSE SENS Department.
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