| Tue 19 Apr 2011, 13:06 | | DCT - Datacentrix Holdings Limited - Audited results for the financial year |
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DCT
DCT
DCT - Datacentrix Holdings Limited - Audited results for the financial year
ended 28 February 2011 and cautionary announcement
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 2011 AND CAUTIONARY
ANNOUNCEMENT
Key Financial Indicators
Revenue increased 22% to R1.576 billion
Basic earnings per share (EPS) increased by 12% to 46.1 cents
Headline earnings per share (HEPS) increased by 13% to 46.3 cents
Cash on hand of R321.2 million, with no interest-bearing debt
Cash generated from operations of R163.1 million
Tangible net asset value per share increased 10% from 186.9 to 205.4 cents per
share
Condensed Consolidated Statements of Comprehensive Income for the year ended 28
February 2011
Audited Audited
2011 2010
R`000 R`000
Revenue 1 575 1 290
739 781
Operating profit 124 438 107 173
Net interest received 12 794 14 924
Profit before taxation 137 232 122 097
Income taxation expense (47 034) (41 692)
Total comprehensive income attributable to ordinary 90 198 80 405
shareholders
Basic earnings per ordinary share (cents) 46.1 41.1
Diluted basic earnings per ordinary share (cents) 45.3 40.6
Declared dividend per share (cents) #13.9 30.0
# interim dividend only
Earnings before interest, taxation, depreciation and 150 091 126 619
amortisation (EBITDA)
Headline earnings per ordinary share (cents) 46.3 41.0
Diluted headline earnings per ordinary share (cents) 45.5 40.5
Weighted average number of shares in issue* (000`s) 195 798 195 798
Weighted average number of shares in issue for the 199 190 198 258
purpose of dilution* (000`s)
*adjusted for treasury shares
Reconciliation between comprehensive income attributable
to ordinary shareholders and headline earnings
Earnings attributable to ordinary shareholders 90 198 80 405
Loss (profit) on sale of property and equipment 425 (212)
Headline earnings 90 623 80 193
Condensed Consolidated Statements of Financial Position as
at 28 February 2011
Audited Audited
2011 2010
R`000 R`000
ASSETS
Non-current assets 76 997 72 099
Property and equipment 37 536 39 297
Intangible assets 17 950 17 276
Long-term receivables - 1 036
Deferred taxation assets 21 511 14 490
Current assets 585 444 518 155
Current taxation asset 154 -
Inventories 10 877 12 882
Trade and other receivables 253 243 220 437
Cash and cash equivalents 321 170 284 836
TOTAL ASSETS 662 441 590 254
EQUITY AND LIABILITIES
Capital and reserves 420 027 383 152
Share capital 21 21
Share premium 37 544 37 442
Treasury shares (38 799) (38 200)
Equity-settled share scheme reserve 24 761 17 872
Retained earnings 396 500 366 017
Non-current liability
Deferred revenue - long-term 18 292 11 921
Current liabilities 224 112 195 181
Trade and other payables 177 773 158 019
Provisions 1 500 1 849
Deferred revenue - short-term 42 962 32 520
Lease smoothing liability 1 887 1 695
Current taxation liabilities - 1 098
TOTAL EQUITY AND LIABILITIES 662 441 590 254
Net asset value (adjusted for treasury shares) per share 214.5 195.7
(cents)
Tangible net asset value (adjusted for treasury shares) 205.4 186.9
per share (cents)
Weighted average number of shares in issue (000`s) 195 798 195 798
Condensed Consolidated Statements of Changes in Equity for the year ended 28
February 2011
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
Total comprehensive - - - - 80 405 80 405
income for the year
Treasury shares - - - (1 034) - - (1 034)
movement during the
year
Share-based payment - - - 2 600 - 2 600
Dividend paid - - - - (59 520) (59 520)
Profit on sale of - 76 - - - 76
treasury shares
Balance at 28 21 37 442 (38 200) 17 872 366 017 383 152
February 2010
Total comprehensive - - - - 90 198 90 198
income for the year
Treasury shares - - - (599) - - (599)
movement during the
year
Share-based payment - - - 6 889 - 6 889
Dividend paid - - - - (59 715) (59 715)
Profit on sale of - 102 - - - 102
treasury shares
Balance at 28 21 37 544 (38 799) 24 761 396 500 420 027
February 2011
Condensed Consolidated Statement of Cash Flow for the year ended 28
February 2011
Audited Audited
2011 2010
R`000 R`000
Profit before taxation 137 232 122 097
Adjusted for non-cash items 20 468 7 547
Working capital changes 5 417 23 689
- Inventories 2 005 (2 444)
- Trade and other receivables (32 806) 62 300
- Trade and other payables 36 218 (36 167)
Cash generated from operations 163 117 153 333
Net interest received 12 794 14 924
Dividend paid (59 715) (59 520)
Taxation paid (55 307) (42 217)
Net cash inflow from operating activities 60 889 66 520
Net cash outflow from investing activities (23 956) (13 491)
Net cash outflow from financing activities (599) (1 034)
Net increase in cash and cash equivalents 36 334 51 995
Cash and cash equivalents at the beginning of the 284 836 232 841
year
Cash and cash equivalents at the end of the year 321 170 284 836
Basis of Preparation
The condensed 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 have
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 IFRS,
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.
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 intends to continue to be the preferred ICT partner to the majority
of South Africa`s corporate and public sector organisations. The company plans
to grow in a profitable, yet responsible manner and continue delivering complete
solutions to its Southern African clients, maximising value, and utilising the
latest technology together with the talent of its resources. This is given
direction by the company`s shared values of pride, passion, professionalism and
performance.
Commentary
Datacentrix is pleased to announce its annual financial results for the year
ended 28 February 2011 showing solid organic revenue, and a profit profile
between the divisions that is shifting in favour of the Managed Services and
Business Solutions divisions.
The group continues to maintain diligent financial and operational discipline
across the business, evident in the strong operating cash flow generation of
R163 million, resulting in cash on hand of R321 million with no interest-bearing
debt. Tangible net asset value improved by 10 percent to 205 cents. Revenue grew
organically from R1.3 billion to R1.6 billion, a growth of 22 percent, while
EBITDA increased from R127 million to R150 million, a rise of 19 percent. EBITDA
margins have held steady at 9.5 percent. Due to lower interest rates, group
interest earned declined by R2.1 million. Headline earnings per share increased
from 41 cents to 46 cents, a growth of 13 percent.
Segmental Analysis
Infrastructur Managed Business Corporate Total
e Services Solutions Group
28 Feb 28 28 Feb 28 28 28 28 28 28 28
2011 Feb 2011 Feb Feb Feb Feb Feb Feb Feb
R`000 2010 R`000 2010 2011 2010 2011 2010 2011 2010
R`00 R`00 R`00 R`00 R`000 R`00 R`000 R`000
0 0 0 0 0
Revenue 1 203 974 345 419 281 100 97 (73 (62 1 575 1 290
762 282 537 489 874 931) 912) 739 781
Operating 70 251 68 34 771 26 19 12 (357) (342 124
profit 983 440 773 092 ) 438 107
173
Net - - - - - - 12 14 12
interest 794 924 794 14
received 924
Profit
before 70 251 68 34 771 26 19 12 12 14 137 122
taxation 983 440 773 092 437 582 232 097
Income tax
expense (19 (19 (9 736) (7 (5 (3 (12 (11 (47 (41
670) 677) 538) 537) 446) 091) 031) 034) 692)
- normal
and
deferred (19 (19 (9 736) (7 (5 (3 (5 (4 (40 (35
taxation 670) 677) 538) 537) 446) 830) 791) 773) 452)
- secondary
taxation on
companies - - - - - - (6 (6 (6 (6
261) 240) 261) 240)
Comprehensi
ve income
for the
year
attributabl
e to 50 581 49 25 035 18 14 8 346 3 90 80
ordinary 306 902 236 646 551 198 405
shareholder
s
Operational Review
The group is satisfied with the overall performance of its divisions. Its
primary contributor, the Infrastructure division contributed 51 percent to group
profit before taxation (PBT), while the Managed Services and Business Solutions
divisions contributed 25 and 14 percent respectively. The Managed Services and
Business Solutions divisions grew divisional PBT by 32 and 64 percent
respectively, boosting the combined contribution of these divisions to a healthy
40 percent of group PBT.
Targeted growth areas have performed well, showing significant new client wins.
Good performances were noted within both newly established and existing
competencies, in particular storage, security, data centres, outsourcing and
managed print services (MPS). The company has invested in the basic constructs
of a cloud solution and has already started engaging clients.
Infrastructure
The Infrastructure division reflected a marginal PBT (3 percent) increase for
the year under review. When contextualised against the backdrop of the continued
subdued public sector expenditure, the performance of the rest of the business
was commendable, more than offsetting the poor public sector performance. While
public sector tender activity is still robust, the awarding of these tenders
remains inhibited.
The Infrastructure division continues to be a leading supplier of total,
integrated IT solutions and related services, from design to provisioning and
deployment through to maintenance and ongoing support. Although the year was
challenging for this division, as mentioned, the commercial sector business
outperformed as a result of increasing its share of wallet in existing clients
and new project wins. The specialist technology areas within the division also
performed well.
The Datacentrix Infrastructure division is the largest and most broadly
certified HP integrator in the local market. In addition, the company is now
also one of the strongest partners for both IBM and Symantec, after
strengthening its capabilities by securing the services of pre-eminent
management and technical resources in these spaces. At the same time, the
division boasts some of the highest certified technical skills in virtualisation
technologies (VMware), a targeted growth area.
Managed Services
A strong performance was delivered by the Managed Services division, increasing
divisional PBT by 32 percent. This performance benefited handsomely from a once-
off MPS project relating to the 2010 FIFA World Cup South Africa and the recent
signing of a three year infrastructure outsourcing term contract with a large
mining house. MPS is an area where Datacentrix has gained recognition as a
leading contender.
The Managed Services division is committed to delivering solutions that enable
its clients to use information technology as a strategic asset in achieving
their business objectives, while at the same time, reducing cost and risk. In
support of this strategy, Datacentrix will continue to invest in improved
operational capacity including people, processes and technology.
Business Solutions
The Business Solutions division has shown excellent growth over the year in
review, highlighted in particular by the Enterprise Content Management (ECM)
business unit, which has one of the largest services capabilities in the market
and is focused primarily on the ECM, Business Process Management (BPM) and
Information Lifecycle Management (ILM) spaces.
The Business Intelligence (BI) business unit has shown a revival after a skills
injection, resulting in a positive contribution to the division`s overall
performance.
With regards to its Enterprise Resource Planning (ERP) offering, the group has
decided to invest in Softline`s SAGE X3 ERP solution expertise. This will
increase Datacentrix` presence in the ERP market and will complement its current
Microsoft solution set.
Relocation of Offices
We are pleased to have finalised the consolidation of our three Gauteng offices,
spread between Pretoria, Samrand and Woodmead into a single, centrally situated
office in Midrand. The demonstrated benefits of this move have been compelling.
Foremost has been the enhanced level of communication and cooperation between
various individuals and business units, and enhancement of efficiencies and
elimination of duplication. Added benefits include reduced travelling time
especially between offices, improved employee morale and pride in the workplace,
and improvement in the cultivation of a common corporate culture. The new office
has been secured at comparable overall office rental and other operating costs.
Datacentrix now also enjoys visibility and brand awareness, with corporate
signage fronting the busiest corridor route in Gauteng.
Prospects
Industry consolidation is expected to continue. From Datacentrix` perspective,
the company`s strategy to grow its total solutions portfolio will continue, with
specific focus this year turning to further enhancing its security and data
centre capabilities, including selected cloud solutions.
Management is committed to its strategy to move the group`s operations higher up
the value chain. While the company`s hopeful expectations this year regarding
government related business did not materialise, the company remains focused on
this segment in order to benefit optimally from public sector ICT spending as it
may arise. Recent wins in the outsourcing business have substantially
strengthened the company`s market positioning and places it in good stead for
future growth. The company intends to continue developing business solutions to
deliver tangible business value to its clients.
The Board
The board is pleased to announce the appointment of Troy Dyer as an independent,
non-executive director to the board, effective from 23 March 2011. He will also
serve as a member of the Audit Committee and the Risk Committee.
Black Economic Empowerment and Cautionary Announcement
The company is currently in discussions and anticipates making a definite
announcement about enhancing its BEE shareholding. In the past three years
Datacentrix has flagged the issue, particularly the challenge the company has
had in augmenting its black shareholding in line with anticipated ICT Charter
requirements. Accordingly, shareholders are advised to exercise caution when
dealing in shares of the company until a full announcement is made in this
regard as the anticipated transaction may have a material impact on the share
price.
Dividend
The board advises that the declaration of the final dividend has been postponed
pending the finalisation of the envisaged BEE transaction in the next few weeks
as the board anticipates getting better clarity about the cash requirements of
the company going forward.
Annual General Meeting
It is expected that the annual report will be dispatched to shareholders no
later than 19 May 2011. Notice is hereby given that the annual general meeting
of the company will be held at the company`s registered office on Friday, 10
June 2011 at 10:00.
For and on behalf of the Board:
Gary Morolo Ahmed Mahomed
Chairman Chief Executive Officer
18 April 2011
Gary Morolo (Non-executive Chairman), Ahmed Mahomed (CEO), Alwyn Martin*, Dudu
Nyamane*, Elizabeth Naidoo (FD), Joan Joffe*, Thenjiwe Chikane*, Troy Dyer*
*independent, non-executive
Company Secretary: Ithemba Governance and Statutory Solutions (Proprietary)
Limited
Registered Office: Sage Corporate Park North, 238 Roan Crescent, Old Pretoria
Road, Midrand
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited, 70
Marshall Street, Johannesburg
Sponsor: One Capital, 17 Fricker Road, Illovo
Johannesburg
19 April 2011
Date: 19/04/2011 13:06:26 Produced by the JSE SENS Department.
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