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DCT
DCT
DCT - Datacentrix Holdings - Audited Results For The Financial Year Ended
28 February 2010
DATACENTRIX HOLDINGS LIMITED
REGISTRATION NUMBER: 1998/006413/06
JSE CODE: DCT
ISIN: ZAE000016051
("Datacentrix" or "the group")
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2010
Key Financial Indicators
- Basic earnings per share and headline earnings per share decreased 33% to
41 cents
- Cash on hand of R284.8 million, with no interest-bearing debt
- Cash generated from operations of R153.3 million
- Final dividend declared of 16.6 cents per share, bringing annual dividend
to 30.0 cents per share
- Tangible net asset value per share increased 7% from 175.4 to 186.9 cents
per share
Condensed Consolidated Statements of Comprehensive Income for the year ended 28
February 2010
Audited Audited
2010 2009
R`000 R`000
Revenue 1 290 781 1 513 322
Operating profit 107 173 153 176
Net interest received 14 924 23 304
Profit before taxation 122 097 176 480
Income taxation expense (41 692) (56 061)
Profit attributable to ordinary shareholders 80 405 120 419
Total comprehensive income attributable to 80 405 120 419
shareholders
Basic earnings per ordinary share (cents) 41.1 61.5
Diluted basic earnings per ordinary share 40.6 61.0
(cents)
Proposed and declared dividend per share 30.0 30.0
(cents)
Earnings before interest, taxation, 126 619 165 534
depreciation and amortisation (EBITDA)
Headline earnings per ordinary share (cents) 41.0 61.5
Diluted headline earnings per ordinary share 40.5 61.0
(cents)
Weighted average number of shares in issue* 195 798 195 785
(000`s)
Weighted average number of shares in issue 198 258 197 295
for the purpose of dilution* (000`s)
*adjusted for treasury shares
Reconciliation between earnings attributable
to ordinary shareholders
and headline earnings
Earnings attributable to ordinary 80 405 120 419
shareholders
Profit on sale of property and equipment (212) (64)
Headline earnings 80 193 120 355
Condensed Consolidated Statements of
Financial Position as at 28 February 2010
Audited Audited
2010 2009
R`000 R`000
ASSETS
Non-current assets 72 099 82 623
Property and equipment 39 297 41 275
Intangible assets 17 276 17 138
Long-term receivables 1 036 3 256
Deferred taxation assets 14 490 20 954
Current assets 518 155 527 710
Inventories 12 882 10 438
Trade and other receivables 220 437 284 431
Cash and cash equivalents 284 836 232 841
TOTAL ASSETS 590 254 610 333
EQUITY AND LIABILITIES
Capital and reserves 383 152 360 625
Share capital 21 21
Share premium 37 442 37 366
Treasury shares (38 200) (37 166)
Equity-settled share scheme reserve 17 872 15 272
Retained earnings 366 017 345 132
Non-current liability
Deferred revenue 11 921 16 328
Current liabilities 195 181 233 380
Trade and other payables 158 019 179 511
Provisions 1 849 1 132
Deferred revenue 32 520 43 505
Lease smoothing liability 1 695 1 145
Current taxation liabilities 1 098 8 087
TOTAL EQUITY AND LIABILITIES 590 254 610 333
Net asset value (adjusted for treasury 195.7 184.2
shares) per share (cents)
Tangible net asset value (adjusted for 186.9 175.4
treasury shares) per share (cents)
Closing number of shares in issue (000`s) 195 798 195 785
Condensed Consolidated Statements of Changes in Equity for the year ended 28
February 2010
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
Balance at 29 21 38 145 (35 901) 12 672 279 539 294 476
February 2008
Total - - - - 120 419 120 419
comprehensive
income for
the year
Treasury - - (1 265) - - (1 265)
shares -
movement
during the
year
Share-based - - - 2 600 - 2 600
payments
Dividend paid - - - - (54 826) (54 826)
Loss on sale - (779) - - - (779)
of treasury
shares
Balance at 28 21 37 366 (37 166) 15 272 345 132 360 625
February 2009
Total - - - - 80 405 80 405
comprehensive
income for
the year
Treasury - - (1 034) - - (1 034)
shares -
movement
during the
year
Share-based - - - 2 600 - 2 600
payments
Dividend paid - - - - (59 520) (59 520)
Profit on - 76 - - - 76
sale of
treasury
shares
Balance at 28 21 37 442 (38 200) 17 872 366 017 383 152
February 2010
Condensed Consolidated Statements of Cash Flow for the year ended 28
February 2010
Audited Audited
2010 2009
R`000 R`000
Profit before taxation 122 097 176 480
Adjusted for non-cash items and separately 7 547 (8 259)
disclosable items
Working capital changes 23 689 (35 581)
- Inventories (2 444) 538
- Trade and other receivables 62 300 (49 339)
- Trade and other payables, and other (36 167) 13 220
liabilities
Cash generated from operations 153 333 132 640
Net interest received 14 924 23 304
Dividend paid (59 520) (54 826)
Taxation paid (42 217) (70 335)
Net cash inflow from operating activities 66 520 30 783
Net cash outflow from investing activities (13 491) (16 566)
Net cash outflow from financing activities (1 034) (3 272)
Net increase in cash and cash equivalents 51 995 10 945
Cash and cash equivalents at the beginning of 232 841 221 896
the year
Cash and cash equivalents at the end of the 284 836 232 841
year
Basis of Preparation
The condensed annual financial statements of the group are prepared as a going
concern on a historical cost basis except for certain financial instruments, at
amortised cost or fair value. The condensed annual financial statements conform
to International Accounting Standard 34: Interim Financial Reporting, the
Listings Requirements of the JSE Limited, and the Companies Act of South Africa
(Act 61 of 1973). The principal accounting policies, which comply with
International Financial Reporting Standards, have been consistently applied in
all material respects in the current and comparative years. All new
interpretations and standards were assessed and adopted with no material impact,
except for IFRS 8: Operating Segments which required additional disclosure.
Auditors` Opinion and Subsequent Events
The group`s auditors, Deloitte & Touche, have audited these results and a copy
of their unmodified audit opinion on this set of condensed financial information
as well as their accompanying unmodified audit report on the annual financial
statements is available for inspection at the group`s registered office. No
material events have occurred between the financial year end and the date of the
audit report.
Nature of business
Datacentrix is a leading South African company that operates within the
Information and Communication Technology (ICT) sector. The group is split into
three operating divisions, namely Infrastructure, Managed Services and Business
Solutions, providing end-to-end IT solutions that are generic in nature and thus
well suited to all sectors within the local market.
Commentary
Datacentrix announces its annual financial results for the year ended 28
February 2010. The group continues to maintain solid disciplines across the
business, which is visible in the strong operating cash flows of R153.3 million
generated, resulting in cash of R284.8 million in hand with no interest-bearing
debt. Tangible net asset value improved by 7% to 187 cents.
Gross revenue contracted to R1.3 billion from R1.5 billion, because of poor
results in parts of the Infrastructure division, while EBITDA dropped from
R165.5 million to R126.6 million. Due to lower interest rates over the past
year, group interest earned declined by R8 million, impacting on both headline
earnings per share and basic earnings per share from 61.5 cents to 41 cents.
Segmental Analysis
Infrastructure Managed Services
28 Feb 28 Feb 2009 28 Feb 2010 28 Feb 2009
2010 R`000 R`000 R`000
R`000
Revenue 974 282 1 243 185 281 537 262 590
Operating profit 68 983 120 830 26 440 22 260
Net interest received - - - -
Profit before taxation 68 983 120 830 26 440 22 260
Income tax expense (19 677) (34 454) (7 538) (6 344)
- normal and deferred (19 677) (34 454) (7 538) (6 344)
taxation
- secondary taxation on - - - -
companies
Earnings for the year 49 306 86 376 18 902 15 916
attributable to ordinary
shareholders
Business Solutions Other Total Group
28 Feb 28 Feb 28 Feb 28 Feb 28 Feb 28 Feb
2010 2009 2010 2009 2010 2009
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 97 874 81 063 (62 912) (73 516) 1 290 781 1 513
322
Operating 12 092 10 660 (342) (574)
profit 107 173 153 176
Net interest - - 14 924 23 304 14 924 23 304
received
Profit 12 092 10 660 22 730 122 097 176 480
before 14 582
taxation
Income tax (3 446) (3 038) (11 031) (12 225) (41 692) (56 061)
expense
- normal and (3 446) (3 038) (4 791) (6 478) (35 452) (50 314)
deferred
taxation
- secondary - - (6 240) (5 747) (6 240) (5 747)
taxation on
companies
Earnings for 8 646 7 622 3 551 10 505 80 405 120 419
the year
attributable
to ordinary
shareholders
Operational Review
The group is pleased with the performance of its divisions with the exception of
a component of Infrastructure. The group`s historical principal revenue earner,
the Infrastructure division, contributed 56% to group profit before taxation.
The Managed Services and Business Solutions divisions reflected healthy year-on-
year profit before taxation (PBT) growth of 19% and 13% respectively. The
Managed Services offering, and the success achieved in this division, has
improved annuity revenue, decreasing the group`s reliance on transactional
business. The effect of growing annuity revenue will stand the group in good
stead in the future.
The commercial sector reflected strong growth however the results in the public
sector were less than expected. A number of tenders submitted have not been
awarded, due to a change in priorities. Given the historic high contribution of
this segment to group revenues, it has had a significant impact on group`
results, dampening the good performance of the rest of the Infrastructure
business.
Datacentrix` investment in a variety of value based offerings ranges from
selective outsourcing, Managed Print Services (MPS), data centre solutions,
Enterprise Content Management (ECM), IBM and Microsoft technical and management
capabilities. The group also expanded its geographical footprint to the Eastern
Cape with the official opening of an office in Port Elizabeth, and an office in
East London, which opened on 1 April 2010.
A number of these targeted growth areas have performed well, showing significant
new client wins. Datacentrix also renewed expiring selective outsourcing
contracts in the last financial year, testimony to the organisation`s ability to
execute and deliver on client expectations.
The company has maintained its deliberate strategy to invest in both technical
and management capacity taking advantage of a volatile market. The group still
boasts healthy operating margins viewed within the context of the market despite
lower revenue streams from government and continued investment in resources.
Infrastructure
The Infrastructure division remains a foremost provider for the supply of
products, deployments, maintenance and support of integrated IT infrastructure
in the country, as well as being the largest and most broadly certified HP
integrator in the local marketplace. Although the year has been challenging for
this division, the commercial sector business achieved double digit growth as a
result of new client wins in all regions.
The division successfully deployed end-to-end data centre solutions utilising
some of the newest technologies in the market. In doing so, it leveraged its
entire portfolio of services, from end user computing to business critical
hardware and software technologies and expertise.
The division has also performed well in the specialist technology areas. It has
made significant progress in strengthening its IBM capabilities, securing the
services of pre-eminent management and technical resources in this space.
Datacentrix` Security business unit has successfully deployed an upgraded
biometrics security solution. Furthermore, the company is encouraged by the
developments in the focused Networking business unit addressing two main areas,
bandwidth optimisation, which deals with solutions designed to improve bandwidth
utilisation; and the provisioning of network infrastructure, which focuses on
new network technologies.
Managed Services
Strong performances were delivered within the Managed Services division, with
Managed Print Services (MPS), outsourcing and resourcing reflecting healthy
double digit growth. The Outsourcing business unit in particular closed three
deals in the latter part of 2009. The MPS unit is recognised in the information
technology market as a leader in its field.
In support of these businesses, Datacentrix continues to invest in improved
operational capacity, strengthening both the MPS and outsourcing execution
engines and continuing in its single minded approach to provide excellent
service delivery to which its clients have become accustomed.
Business Solutions
This division has also shown healthy growth. The Enterprise Content Management
(ECM) business in particular showed remarkable growth, resulting in a solid
performance from the Business Solutions division.
The ECM and Business Process Management (BPM) business units won local and
international accolades for the solutions deployed. The business unit has one of
the largest services capabilities in the market and is focused primarily on the
ECM, BPM and Information Lifecycle Management (ILM) spaces. The Enterprise
Resource Planning (ERP) business offering, whilst profitable, remains under
pressure.
The Board
In line with implementing the pertinent aspects of King III, the roles of some
directors have changed. Joan Joffe has assumed the role of Lead Independent
Director effective 1 March 2010 in line with King III. Risk management has been
separated from the Audit Committee and a new Risk Management Committee of the
board has been set up under the chairmanship of Thenjiwe Chikane. Alwyn Martin
continues in his role as Chairman of the Audit Committee. Dudu Nyamane assumes
the chairmanship of the Remuneration and Human Resources Committee. All of the
above are independent, non-executive directors.
Prospects
The current climate will continue to fuel consolidation in the market, offering
opportunities to access new clients and resources. The strategy to grow the
total solutions portfolio will continue, specifically with regard to the
biometrics and access management`s security offering, data centre solutions,
enterprise content management, managed services and outsourcing.
Management has been driving a strategy to position Datacentrix to operate higher
up the value chain. This has borne fruit so far and indications are that it will
set Datacentrix up for its next growth phase. While our optimism this year in
government related business did not materialise, a significant portion of the
business that Datacentrix was in line for is yet to be awarded and we continue
to have confidence in our tender submissions. Recent wins in the outsourcing
business have substantially augmented the base for annuity income going forward.
While Datacentrix has a bias towards organic growth, management and the board
are actively considering bolt-on acquisitions to strengthen the Business
Solutions division.
Dividend
An annual dividend of 30.0 cents per share has been declared.
Declaration date: Tuesday, 20 April 2010
Last day to trade: Friday, 07 May 2010
Share trade ex dividend: Monday, 10 May 2010
Record date: Friday, 14 May 2010
Payment date: Monday, 17 May 2010
Share certificates may not be dematerialised or re-materialised between Monday,
10 May 2010 and Friday, 14 May 2010, both days inclusive.
Annual General Meeting
It is expected that the annual report will be dispatched to shareholders no
later than 12 May 2010. Notice is hereby given that the annual general meeting
of the company will be held at the company`s registered office on Friday, 4 June
2010 at 10:00.
For and on behalf of the Board:
Gary Morolo
Chairman
19 April 2010
Gary Morolo (Non-executive Chairman), Ahmed Mahomed (CEO), Alwyn Martin*, Dudu
Nyamane*, Elizabeth Naidoo (FD), Joan Joffe*, Thenjiwe Chikane*
*independent, non-executive
Company Secretary: Ithemba Governance and Statutory Solutions (Proprietary)
Limited
Registered Office: Block 7, Sanwood Park, 379 Queens Crescent, Lynnwood,
Pretoria
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited, 70
Marshall Street, Johannesburg
Sponsor: Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited
Date: 20/04/2010 12:55:01 Produced by the JSE SENS Department.
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