| Tue 4 Oct 2011, 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 2011
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 2011
Key Financial Indicators
Revenue increased by 9%
EBITDA decreased by 8% to R81 million
Earnings per share (EPS) and headline earnings per share (HEPS) decreased by 4%
Net asset value increased by 9% to 234 cents
Cash generated from operations of R47 million resulted in cash on hand of R330
million
Interim dividend declared of 13.4 cents per share
Condensed Consolidated Statements of Comprehensive Income for the six months
ended 31 August 2011
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Revenue 912 652 836 030 1 575 739
Operating profit 69 634 75 381 124 438
Net interest received 7 100 6 886 12 794
Profit before taxation 76 734 82 267 137 232
Income taxation expense (24 581) (27 748) (47 034)
- normal and deferred taxation (22 697) (24 341) (40 773)
- secondary taxation on (1 884) (3 407) (6 261)
companies
Total comprehensive income 52 153 54 519 90 198
attributable to ordinary
shareholders
Basic earnings per ordinary 26.6 27.8 46.1
share (cents)
Diluted basic earnings per 26.1 27.5 45.3
ordinary share (cents)
Dividend per share (cents) 13.4 13.9 23.1
Earnings before interest, 80 914 87 963 150 091
taxation, depreciation and
amortisation (EBITDA)
Headline earnings per ordinary 26.8 27.9 46.3
share (cents)
Diluted headline earnings per 26.2 27.5 45.5
ordinary share (cents)
Weighted average number of 195 798 195 798 195 798
shares in issue* (000s)
Weighted average number of 199 790 198 630 199 190
shares in issue for purposes of
dilution* (000s)
*adjusted for treasury shares
Reconciliation between earnings
for the period attributable to
ordinary shareholders and
headline earnings
52 153 54 519 90 198
Earnings attributable to
ordinary shareholders
Loss on sale of assets 274 161 425
Earnings for the purpose of 52 427 54 680 90 623
basic and diluted headline
earnings per share
Condensed Consolidated Statements of Financial Position as at 31 August 2011
Unaudited Unaudited Audited
31 August 31 August 28 February
2011 2010 2011 R`000
R`000 R`000
ASSETS
Non-current assets 85 312 73 723 76 997
Property and equipment 34 680 37 650 37 536
Goodwill 15 596 15 596 15 596
Other intangible assets - 6 221 1 211 2 354
software
Deferred taxation assets 28 815 19 266 21 511
Current assets 696 109 630 456 585 444
Current taxation asset - - 154
Inventories 27 885 27 883 10 877
Trade and other receivables 338 280 308 547 253 243
Cash and cash equivalents 329 944 294 026 321 170
TOTAL ASSETS 781 421 704 179 662 441
EQUITY AND LIABILITIES
Capital and reserves 457 463 408 708 420 027
Share capital 21 21 21
Share premium 37 473 37 477 37 544
Treasury shares (38 889) (38 286) (38 799)
Equity-settled share scheme 28 181 21 461 24 761
reserve
Retained earnings 430 677 388 035 396 500
Non-current liability 24 427 16 169 18 292
Deferred revenue - long-term 24 427 16 169 18 292
portion
Current liabilities 299 531 279 302 224 122
Trade and other payables 232 199 225 131 177 773
Provisions 1 904 2 063 1 500
Deferred revenue - short-term 45 866 35 592 42 962
portion
Lease smoothing liability 2 513 1 622 1 887
Current taxation liabilities 17 049 14 894 -
TOTAL EQUITY AND LIABILITIES 781 421 704 179 662 441
Net asset value (adjusted for 233.6 208.7 214.5
treasury shares) per share
(cents)
Tangible net asset value 222.5 200.1 205.4
(adjusted for treasury shares)
per share (cents)
Weighted average number of 195 798 195 798 195 798
shares in issue (000s)
Condensed Consolidated Statement of Changes in Equity for the six months ended
31 August 2011
Share Share Treasury Equity settled Retained Total
capital premium shares share scheme earnings R`000
R`000 R`000 R`000 reserve R`000
R`000
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 - 35 - - - 35
of treasury
shares
Balance at 31 21 37 477 (38 286) 21 461 388 035 408 708
August 2010
Profit for the - - - - 35 679 35 679
period
Treasury shares - - (513) - - (513)
movement
Share-based - - - 3 300 - 3 300
payments
Dividend paid - - - - (27 214) (27 214)
Profit on sale - 67 - - - 67
of treasury
shares
Balance at 28 21 37 544 (38 799) 24 761 396 500 420 027
February 2011
Profit for the - - - - 52 153 52 153
period
Treasury shares - - (90) - - (90)
movement
Share-based - - - 3 420 - 3 420
payments
Dividend paid - - - - (17 976) (17 976)
Profit on sale - (71) - - - (71)
of treasury
shares
Balance at 31 21 37 473 (38 889) 28 181 430 677 457 463
August 2011
Condensed Consolidated Statement of Cash Flow for the six months ended 31
August 2011
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2011 R`000 2010 R`000 2011
R`000
Profit before taxation 76 734 82 267 137 232
Adjusted for non-cash items 8 429 9 088 20 468
Working capital changes (38 177) (27 429) 5 417
- Inventory (17 008) (15 001) 2 005
- Trade and other receivables (85 037) (87 074) (32 806)
- Trade and other payables 63 868 74 646 36 218
Cash generated from operations 46 986 63 926 163 117
Net interest received 7 100 6 886 12 794
Dividend paid (17 976) (32 501) (59 715)
Taxation paid (14 682) (18 728) (55 307)
Net cash inflow from operating 21 428 19 583 60 889
activities
Net cash outflow from investing (12 564) (10 307) (23 956)
activities
Net cash outflow from financing (90) (86) (599)
activities
Net increase in cash and cash 8 774 9 190 36 334
equivalents
Cash and cash equivalents at the 321 170 284 836 284 836
beginning of the period
Cash and cash equivalents at the 329 944 294 026 321 170
end of the period
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 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 71
of 2008). The principal accounting policies, which comply with IFRS, have been
consistently applied in all material respects in the current and comparative
years.
Subsequent Events
No material events have occurred between the period end and the date of this
announcement.
The Business of Datacentrix
Datacentrix is a South African based black empowered company that provides high
performing and secure Information and Technology (IT) solutions to the country`s
corporate and public sectors. It provides a comprehensive offering ranging from
the core areas of infrastructure and business solutions, to outsourcing and
other related IT services, positioning it as a long-term strategic partner of
choice to clients. The Group comprises three operating divisions, namely
Infrastructure, Managed Services and Business Solutions.
Commentary
The directors of Datacentrix Holdings Limited announce its interim financial
results for the six months ending 31 August 2011. The Group showed good organic
revenue growth of 9% from R836 million to R913 million, a creditable performance
in light of the anticipated revenue drop-off following the once-off FIFA World
Cup event last year.
Earnings declined from R54.5 to R52.2 million for the period, due to a decline
in operating margin from 9% to 8%. The margin decline was a consequence of
increased margin pressure on transactional business and a greater investment in
key technical competencies. However margins increased on a six-month sequential
basis. Headline earnings per share (HEPS) decreased from 27.9 cents to 26.8
cents.
The Group maintained sound financial and operational disciplines, with cash
generated from operating activities amounting to R47 million reflecting a
closing cash balance of R330 million, up from R294 million shown in the 2010
interim results and R321 million at financial year end. The Group has no
interest-bearing debt. The Group continues to invest in skills in new business
areas; these costs are being absorbed by the income statement and support the
Group`s organic growth strategy. Net asset value increased by 9% from 214.5
cents to 233.6 cents over the six month period.
Excluding FIFA World Cup income, group revenue grew by approximately 19%.
Operational Review
The nature of Group business activities has changed and will continue to change
in keeping pace with industry trends and client expectations. The Group is
satisfied with the overall performance of its divisions, despite negative
comparison to last year`s windfall profits from the FIFA World Cup event. The
Infrastructure division contributed 52% of group earnings while the Managed
Services and Business Solutions divisions contributed 28% and 16% respectively,
with a total contribution of 44% of group earnings. Both the Managed Services
and Business Solutions divisions produced solid margins of 12% and 20%
respectively. The Business Solutions division grew divisional earnings by 54%,
supported by strong performances in the Enterprise Content Management (ECM) and
the Business Intelligence (BI) business sectors.
Segmental Analysis
Infrastructure Managed Business Corporate Total Group
Services Solutions
Unaudi 31 Aug 31 31 31 31 31 31 31 31 31
ted 6 `11 Aug Aug Aug Aug Aug Aug Aug Aug Aug
months R`000 `10 `11 `10 `11 `10 `11 `10 `11 `10
ended R`000 R`000 R`000 R`000 R`000 R`000 R`000 R`000 R`000
Revenu 717 662 606 167 201 59 46 (31 (18 912 836
e 663 551 558 424 698 985) 889) 652 030
Operat 37 845 46 20 21 11 7 538 (442) (162) 69 75
ing 278 633 727 598 634 381
profit
Net - - 7 100 6 886
intere - - - - 7 100 6 886
st
receiv
ed
Profit
before 37 845 46 20 21 11 7 538 6 658 6 724 76 82
taxati 278 633 727 598 734 267
on (10 596) (2 (4 (6
Income (12 (5 (6 (3 111) 961) 596) (24 (27
tax 958) 777) 084) 247) 581) 748)
expens
e
*
Normal
and (10 596) (12 (5 (6 (3 (2 (3 (3 (22 (24
deferr 958) 777) 084) 247) 111) 077) 189) 697) 341)
ed
taxati
on
*
second-
ary - - - - - - (1 (3 (1 (3
tax on 884) 407) 884) 407)
comp-
anies
Earnin
gs for
the
period
attrib 27 249 33 14 15 8 351 5 427 1 697 128 52 54
ute- 320 856 644 153 519
able
to
ordina
ry
share-
holder
s
Infrastructure
The Infrastructure division is migrating from being mainly a transactional
commodity player to a solutions provider in the infrastructure segment of the
market. The division, amongst other, houses our Infrastructure technology
competencies. It continues to be a leading supplier of total integrated IT
solutions and related services from consulting, designing, provisioning,
deployment through to maintenance and on-going support.
As expected the Infrastructure division reflected a decline in earnings (18%)
for the six months, but revenue in the division grew a healthy 18%. The earnings
decline is occasioned by competitive forces in the transactional offering and an
increase in investment in the technical capability and the establishment of the
Security Operation Centre (SOC) of the division.
The Group finalised the establishment of a SOC, which incorporates leading
technologies to address the security needs of our clients on a proactive basis.
In addition, the Group offers a mail Cloud solution and is in the process of
expanding its Cloud offering. As Cloud technology matures, the Group will
continue to evaluate opportunities closely and will make the necessary
investment.
Datacentrix is currently recognised as the largest and most broadly certified HP
integrator, not only in South Africa but also the Middle East, Mediterranean and
African (MEMA) region, winning this year`s awards as HP`s service partner of the
year for South Africa and runner-up in the MEMA category.
Datacentrix attained platinum level partner status with Symantec, as well as
Storage Management and High Availability specialisation, and strengthened its
position with IBM and VMware where it boasts some of the highest certified
virtualisation skills in the country.
The commercial segment of the market continues to be buoyant. Whilst the Group
has seen marginal improvement in the public sector performance, this is still
far from pre-downturn levels. Activities in this space continue to be subdued
and unpredictable, but the Group will maintain the investment in resources in
the sector in order to benefit optimally from ICT spend as it arises.
Managed Services
The Managed Services division comprises of Managed Print Services (MPS),
Outsourcing, Resourcing and Projects. The division contributed 28% to group
earnings and showed a healthy operating margin of 12%. The division had an
expected performance decline in the Managed Print Services side following
windfall profits brought in by this sector following the FIFA World Cup. The
Outsourcing business however, showed healthy double digit growth for the period.
The Managed Services division is committed to delivering solutions that enable
its clients to use IT 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 in earnings of 54%
for the period, generated in particular by the ECM business unit, which now has
one of the largest services capabilities in the market and is focused on the
ECM, Business Process Management (BPM) and Information Lifecycle Management
spaces. The BI business unit has also shown good results for the period after a
skills injection last year, albeit from a low base.
Black Economic Empowerment
At the previous annual financial results presentation the Group announced that
it was engaged in the process to improve its BEE credentials and to this end a
cautionary announcement was issued in anticipation of a swift conclusion. The
anticipated agreement was not reached and the Group has withdrawn the cautionary
due to the discussions with a particular party being discontinued; however it
continues its urgent evaluation of other opportunities of improving its BEE
equity holding.
Prospects
The Group`s strategy is to continue to drive the business up the value chain,
delivering tangible strategic business value to its clients. Wins in the Managed
Services and Solutions divisions have substantially strengthened the
organisation`s market positioning. The Group has expanded its offering
organically to incorporate Datacentre (including Cloud deployment), Microsoft,
Storage (software), BI, Security, MPS, Outsourcing expertise and the deployment
of SOC.
Datacentrix` growth has been organic; however the Group is exploring
acquisitions to accelerate growth in identified areas. Acquisitions will
principally be done to enter into new market segments and to create critical
mass in existing competencies.
Directorate
There have been no changes to the board for this reporting period.
Dividend
An interim dividend of 13.4 cents has been declared for the six months ended 31
August 2011 in line with the dividend policy of two times cover on HEPS.
Declaration date: Tuesday, 4 October 2011
Last day to trade: Friday, 21 October 2011
Share trade ex dividend: Monday, 24 October 2011
Record date: Friday, 28 October 2011
Payment date: Monday, 31 October 2011
Share certificates may not be dematerialised or re-materialised between Monday,
24 October 2011 and Friday, 28 October 2011, both days inclusive.
For and on behalf of the Board:
Gary Morolo, Chairman
Ahmed Mahomed, Chief Executive Officer
4 October 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
Date: 04/10/2011 13:00:01 Produced by the JSE SENS Department.
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