| Tue 5 Oct 2010, 13:00 | | DCT - Datacentrix Holdings Limited - Unaudited interim results for the six |
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DCT
DCT
DCT - Datacentrix Holdings Limited - Unaudited interim results for the six
months ended 31 August 2010
DATACENTRIX HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER: 1998/006413/06)
JSE CODE: DCT
ISIN: ZAE000016051
("Datacentrix" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
Key Financial Indicators
Revenue increased by 22%
EBITDA increased by 10% to R88 million
Earnings per share (EPS) and headline earnings per share (HEPS) increased by 4%
Net asset value increased by 7% to 209 cents
Cash generated from operations of R64 million resulted in cash on hand of R294
million
Interim dividend declared of 13.9 cents per share
Condensed Consolidated Statements of Comprehensive Income for the six months
ended 31 August 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Revenue 836 030 687 587 1 290 781
Operating profit 75 381 70 649 107 173
Net interest received 6 886 8 495 14 924
Profit before taxation 82 267 79 144 122 097
Income taxation expense (27 748) (26 633) (41 692)
- normal and deferred taxation (24 341) (23 143) (35 452)
- secondary taxation on companies (3 407) (3 490) (6 240)
Total comprehensive income 54 519 52 511 80 405
attributable to ordinary
shareholders
Basic earnings per ordinary share 27.8 26.8 41.1
(cents)
Diluted basic earnings per 27.5 26.6 40.6
ordinary share (cents)
Dividend per share (cents) 13.9 13.4 30.0
Headline earnings per ordinary 27.9 26.8 41.0
share (cents)
Diluted headline earnings per 27.5 26.5 40.5
ordinary share (cents)
Weighted average number of shares 195 798 195 785 195 798
in issue* (000s)
Weighted average number of shares 198 630 197 379 198 258
in issue for purposes of dilution*
(000s)
*adjusted for treasury shares
Earnings before interest, 87 963 79 733 126 619
taxation, depreciation and
amortisation (EBITDA)
Reconciliation between earnings
for the period attributable to
ordinary shareholders and headline
earnings
54 519 52 511 80 405
Earnings attributable to ordinary
shareholders
Loss (profit) on sale of assets 161 (110) (212)
Earnings for the purpose of basic 54 680 52 401 80 193
and diluted headline earnings per
share
Condensed Consolidated Statements of Financial Position as at 31 August 2010
Unaudited Unaudited Audited
31 August 31 August 28 February
2010 2009 2010 R`000
R`000 R`000
ASSETS
Non-current assets 73 723 83 278 72 099
Property and equipment 37 650 46 028 39 297
Goodwill 15 596 15 596 15 596
Other intangible assets - software 1 211 2 258 1 680
Deferred taxation assets 19 266 17 325 14 490
Long-term receivables - 2 071 1 036
Current assets 630 456 481 487 518 155
Inventories 27 883 19 125 12 882
Trade and other receivables 308 547 216 485 220 437
Current taxation asset - 6 210 -
Cash and cash equivalents 294 026 239 667 284 836
TOTAL ASSETS 704 179 564 765 590 254
EQUITY AND LIABILITIES
Capital and reserves 408 708 383 000 383 152
Share capital 21 21 21
Share premium 37 477 37 381 37 442
Treasury shares (38 286) (37 336) (38 200)
Equity-settled share scheme 21 461 18 572 17 872
reserve
Retained earnings 388 035 364 362 366 017
Non-current liability 16 169 12 915 11 921
Deferred revenue - long-term 16 169 12 915 11 921
portion
Current liabilities 279 302 168 850 195 181
Trade and other payables 225 131 131 786 158 019
Provisions 2 063 1 084 1 849
Deferred revenue - short-term 35 592 32 545 32 520
portion
Lease smoothing liability 1 622 1 558 1 695
Current taxation liabilities 14 894 1 877 1 098
TOTAL EQUITY AND LIABILITIES 704 179 564 765 590 254
Net asset value (adjusted for 208.7 195.6 195.7
treasury shares) per share (cents)
Tangible net asset value (adjusted 200.1 186.5 186.9
for treasury shares) per share
(cents)
Weighted average number of shares 195 798 195 785 195 798
in issue (000s)
Condensed Consolidated Statement of Changes in Equity for the six months ended
31 August 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 28 21 37 366 (37 166) 15 272 345 132 360 625
February 2009
Profit for the - - - - 52 511 52 511
period
Treasury shares - - (170) - - (170)
movement
Share-based - - - 3 300 - 3 300
payments
Dividend paid - - - - (33 281) (33 281)
Profit on sale of - 15 - - - 15
treasury shares
Balance at 31 21 37 381 (37 336) 18 572 364 362 383 000
August 2009
Profit for the - - - - 27 894 27 894
period
Treasury shares - - (864) - - (864)
movement
Share-based - - - (700) - (700)
payments
Dividend paid - - - - (26 239) (26 239)
Profit on sale of - 61 - - - 61
treasury shares
Balance at 28 21 37 442 (38 200) 17 872 366 017 383 152
February 2010
Profit for the - - - - 54 519 54 519
period
Treasury shares - - (86) - - (86)
movement
Share-based - - - 3 589 - 3 589
payments
Dividend paid - - - - (32 501) (32 501)
Profit on sale of - 35 - - - 35
treasury shares
Balance at 31 21 37 477 (38 286) 21 461 388 035 408 708
August 2010
Condensed Consolidated Statement of Cash Flow for the six months ended 31
August 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2010 R`000 2009 R`000 2010
R`000
Profit before taxation 82 267 79 144 122 097
Adjusted for non-cash items 9 088 4 207 7 547
Working capital changes (27 429) (2 887) 23 689
- Inventory (15 001) (8 687) (2 444)
- Trade and other accounts (87 074) 67 946 62 300
receivable
- Trade, other accounts payable 74 646 (62 146) (36 167)
and liabilities
Cash generated from operations 63 926 80 464 153 333
Net interest received 6 886 8 495 14 924
Dividend paid (32 501) (33 281) (59 520)
Taxation paid (18 728) (35 424) (42 217)
Net cash inflow from operating 19 583 20 254 66 520
activities
Net cash outflow from investing (10 307) (13 258) (13 491)
activities
Net cash outflow from financing (86) (170) (1 034)
activities
Net increase in cash and cash 9 190 6 826 51 995
equivalents
Cash and cash equivalents at the 284 836 232 841 232 841
beginning of the period
Cash and cash equivalents at the 294 026 239 667 284 836
end of the period
Basis of Preparation
The condensed interim 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 interim financial statements has
been prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (IFRS),
the AC 500 standards as issued by the Accounting Practices Board and the
information as required by IAS 34: Interim Financial Reporting, Listing
Requirements of the JSE Limited, and the Companies Act of South Africa (Act 61
of 1973), as amended. 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.
Subsequent Events
No material events have occurred between the period end and the date of this
announcement.
The Business of Datacentrix
Datacentrix is a leading South African IT 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 of the market.
Commentary
The directors of Datacentrix are pleased to announce positive interim financial
results for the six months ended 31 August 2010. Group revenue and earnings
before interest, taxes, depreciation and amortisation (EBITDA) grew organically
by 22% and 10% respectively. Gross revenue increased to R836 million from R688
million. Both headline earnings per share (HEPS) and basic earnings per share
(EPS) increased by 4%. Tangible net asset value improved by 7% from 187 cents to
200 cents per share. Cash generated from operations was R64 million, resulting
in a cash balance of R294 million with no interest bearing debt. The Group has
maintained double-digit EBITDA margins of 10.5%.
Previously identified strategic growth areas show strong performance and the
Group will continue to cautiously invest in areas closely aligned to the core
focus of the Group.
Operational Review
All operating divisions grew earnings in the period under review notwithstanding
a constrained ICT market. The Group was pleased by the performance of the
Managed Services division, which increased earnings by 32%, increasing its
contribution to almost a third of group earnings. This is in line with the
Group`s strategy to evolve from a basic infrastructure and services provider to
a complete IT solutions partner.
Growth was achieved despite a decline in expenditure from government, which
affected all operating divisions. The State Information Technology Agency (SITA)
confirmed in a media briefing in September 2010 that government spending was
significantly lower in the last two years. In the briefing, SITA indicated
government`s share of the market to be 15% of the total ICT market in the last
two years, down from historical levels of 40 to 50%. The Group believes that
this trend will continue in light of the pressure on the fiscus - resultant from
the 2010 Soccer World Cup expenditure, wage demands from public sector employees
and lower tax collections. The group remains well positioned to take advantage
of any upturn from public sector spend.
Investments made in the Business Solutions and Managed Services divisions have
improved these divisions` contribution to group earnings, decreasing the Group`s
reliance on transactional business in favour of annuity revenue. The effect of
growing annuity revenue will place the company in good stead.
Segmental Analysis
Infrastructur Managed Business Other Total Group
e Services Solutions
Unaudit 31 Aug 31 Aug 31 Aug 31 31 Aug 31 31 31 31 31
ed 6 `10 `09 `10 Aug `10 Aug Aug Aug Aug Aug
months R`000 R`000 R`000 `09 R`000 `09 `10 `09 `10 `09
ended R`000 R`00 R`00 R`00 R`00 R`000
0 0 0 0
Revenue 606 522 201 149 46 698 52 (18 (36 836 687
663 510 558 533 424 889) 880) 030 587
Operati 46 278 46 864 21 727 16 7 538 7 (162 (32) 75 70
ng 747 070 ) 381 649
profit
Net - - - - 8
interes - - 6 495 6 8 495
t 886 886
receive
d
Profit
before 46 278 46 864 21 727 16 7 538 7 6 8 82 79
taxatio 747 070 724 463 267 144
n (12 (13 (6 (2 111)
Income 958) 591) 084) (4 (2 (6 (6 (27 (26
tax 857) 050) 596) 135) 748) 633)
expense
-
normal
and (12 (13 (6 (4 (2 111) (2 (3 (2 (24 (23
deferre 958) 591) 084) 857) 050) 189) 645) 341) 143)
d
taxatio
n
-
seconda
ry - - - - - - (3 (3 (3 (3
taxatio 407) 490) 407) 490)
n on
compani
es
Earning
s for
the
period
attribu 33 320 33 273 15 644 11 5 427 5 128 2 54 52
table 890 020 328 519 511
to
ordinar
y
shareho
lders
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 Hewlett-
Packard integrator in the local marketplace. The division, which is the Group`s
principal revenue earner, contributed 61% to Group earnings. The division grew
revenue by 16%, maintaining earnings despite competitive market pressures.
Inventory was uncharacteristically high at R28 million mainly as a result of
partial shipments, which could not be deployed before close of reporting period.
The commercial sector was buoyant as a result of new client wins and spin-offs
from the 2010 Soccer World Cup, cushioning the impact from decreased activity in
existing clients including government, declining technology costs and a
diminished technology footprint.
Further investments were made in a variety of value-based offerings ranging from
IBM solutions competencies, infrastructure security, data centre solutions
capability and storage solutions. These investments have contributed positively
to Group profitability. These capabilities form part of the Group`s strategy to
be a leading service provider in data centre solutions encompassing all
disciplines of architecture, implementation and maintenance.
Managed Services
Strong performances were delivered within the Managed Services division, with
Managed Print Services (MPS), Outsourcing and Resourcing reflecting high double-
digit growth. The division continues to deliver industry leading services to its
client base. Investment in operational capacity is envisaged to continue. The
successful deployment of the MPS solution during the Soccer World Cup
demonstrated the level of maturity of the offering.
Business Solutions
The Business Solutions division grew earnings by 8%. The Business Intelligence
(BI) and Enterprise Content Management (ECM) solutions contributed positively to
the growth in the division.
Prospects
The market is expected to remain constrained, leading to possible further
consolidation both locally and internationally. The economic downturn has
refocused Chief Information Officers` (CIO) priorities to process efficiencies
and cost savings. The optimisation of current assets will remain firmly on the
agenda, with virtualisation technologies playing a prominent role in data centre
efficiencies.
Management is encouraged by the growth achieved in the strategic growth areas
and will continue to invest in these areas to provide a total IT solution. While
the Group has a bias towards organic growth, the Group is actively considering
`bolt-on` acquisitions in complementary business areas.
The Group believes that the challenging economic climate will continue to fuel
consolidation, offering opportunities to access new clients and invest in
further resources. The investments made to position the Group as a leader in the
data centre space will continue and, together with key business partners, the
Group will leverage these competencies that include unified communications,
infrastructure security, biometrics and access management, networking, data
centre and desktop virtualisation.
Directorate
There have been no changes to the board for this reporting period.
Dividend
An interim dividend of 13.9 cents has been declared in line with the dividend
policy of two times cover on HEPS.
Declaration date: Tuesday, 05 October 2010
Last day to trade: Friday, 22 October 2010
Share trade ex dividend: Monday, 25 October 2010
Record date: Friday, 29 October 2010
Payment date: Monday, 01 November 2010
Share certificates may not be dematerialised or rematerialised between 25
October 2010 and 29 October 2010, both days inclusive.
For and on behalf of the Board:
Gary Morolo
Chairman
5 October 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: 05/10/2010 13:00:01 Produced by the JSE SENS Department.
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