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DIGICORE HOLDINGS LIMITED - AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE
2002
DIGICORE HOLDINGS LIMITED
Registration Number 1998/012601/06
Share Code: DGC
ISIN: ZAE000016945
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
Comments
Nature of business
The business of the DigiCore Group is to provide and disseminate
pertinent management information to its customers, both commercial and
industrial, for the efficient and effective management of mobile assets
such as vehicles and their cargos for both logistic and security
purposes, using advanced information technology.
Financial performance
Revenue for the year ended 30 June 2002 was R193,7 million compared to
R308,4 million during the 2001 financial year which included the R150
million order from debis Fleet Management. Despite a stagnant local
market, the company broadened its revenue base organically, doubling
exports to Europe and Pakistan.
A substantial margin improvement was recorded with the focus on higher-
value sales, augmented by inflation-linked price increases and improved
stock management. Operating costs were reduced by R5,9 million through
closing non-viable branches and improved business efficiencies following
staff training programmes.
A provision of R2,6 million has been raised against the loan of R6,6
million granted to the DigiCore share incentive trust. This was due to
the devaluation of the market value of underlying assets.
Earnings per share declined from 9,7 cents to 5,5 cents. Headline
earnings decreased from 10,9 cents to 7,2 cents on a marginal decline in
the weighted average number of shares in issue to 237 010 413.
On a comparative basis, the balance sheet reflected slightly higher
working capital levels. Management is confident that with most major
operations now utilising the JD Edwards ERP system, a further
improvement in working capital can be achieved. More than R2 million was
expensed towards the purchase and implementation of the system during
the year under review.
Cash and cash equivalents at the end of the year increased to R20,3
million.
Dividend
No dividend was declared.
Operational overview
No longer an optional extra for certain luxury lines, DigiCore`s C-Track
system is now installed on an original-equipment-manufacturer basis at
Honda`s vehicle assembly plant in Pakistan. This drove the 144% growth
in turnover generated by the Pakistani operations.
Sales in Europe grew by 83%. DigiCore is well positioned to gain further
market share with the early E4 accreditation of the enhanced C-Track
system.
Although the rand value of sales in the local market showed little
growth, annuity income generated on the expanding C-Track and Co-driver
installed base from licence fees and cellular-related commissions
comprises 30% of the reported R16,6 million operating profit. Profits
were also enhanced by incentives offered by Nashua Mobile on Vodacom and
MTN lines.
Licence fees on C-Track and Co-driver base station software have been
introduced, with revenues to flow through in the next financial year. A
new cellular management service has been launched, reducing the
customer`s risk on cellular utilisation in vehicle monitoring. This will
further enhance future annuity-based earnings.
The extensive branch network, product range and empowerment partners
give DigiCore the leverage to participate in large tenders, such as
those by the Mpumalanga health department and several KwaZulu-Natal
government departments, with more to materialise in coming months.
DigiCore is well placed as preferred supplier to contenders short-listed
for the long-anticipated taxi industry overhaul.
Prospects
Although higher interest rates impact negatively on capital spend, the
rand`s devaluation places greater emphasis on managing and safeguarding
expensive equipment and vehicles. This provides an incentive to fleet
managers to invest in real-time vehicle management, tracking and
operational monitoring systems in optimising fleet utilisation and
curbing abuse.
Over the past eight months, the group has prepared itself to comply with
new European Union regulations on the manufacture of automotive
electronic components required for the continued sale of the C-Track
system in Europe. Feature-rich and reliable, the new system will be
phased into the South African market, giving customers greater control
through improved reporting.
With continuing pressure on the rail networks in Sub-Sahara Africa in
delivering cost-efficient rail solutions, and a backlog in
infrastructure spending, management expects other sectors of the
transportation business to grow in importance, underpinning DigiCore`s
growth.
As government improves its delivery capacity and with the formulation of
an official empowerment policy for the transport industry, synergies
will be derived from strategic empowerment shareholders, Pamodzi
Investment Holdings, and its interests in Alacrity and First Auto.
DigiCore has substantial strengths and market advantages, even though
financial and stock market performance does not reflect the full value
of these assets. The company`s strategy remains to invest consistently
in its information technology capabilities, entrenching DigiCore at the
forefront of profitable opportunities in the fleet management market.
For and on behalf of the board
Nick Vlok Dr Leonardus Truter
Executive deputy chairman Group managing director
18 September 2002
Income statement
Year ended Year ended
30 June 30 June
2002 2001
R`000 Audited Audited
Revenue 193 671 308 495
Operating profit 26 326 44 598
before depreciation
and impairment loss
Depreciation 3 272 2 887
Amortisation of 3 770 6 667
intangible assets
Impairment loss on 2 691 -
loan receivable
Net operating 16 593 35 044
profit
Net finance cost 2 127 479
Equity loss in 212 -
associate company
Profit before tax 14 254 34 565
Taxation 1 051 11 381
Profit after 13 203 23 183
taxation
Attributable to 47 (67)
outside
shareholders
Earnings
attributable
to ordinary 13 250 23 116
shareholders
Statistics
Number of shares in
issue (000`s)
- end of period 239 256 239 256
- weighted average 237 010 238 104
Headline earnings
per
share (cents) 7,2 10,8
Earnings per share 5,5 9,7
(cents)
EBITDA (%) 13,6 14,5
Balance sheet
As at As at
30 June 30 June
2002 2001
R`000 Audited Audited
ASSETS
Non-current assets 42 756 44 622
Property, plant and 10 150 10 155
equipment
Intangible assets 23 015 26 785
Deferred tax 574 -
Investments 5 109 1 082
Loans receivable 3 908 6 600
Current assets 93 749 84 738
Inventories 27 591 23 233
Trade receivables 43 543 43 373
Taxation 2 331 -
Term deposits 19 812 11 153
Bank balances 472 6 979
TOTAL ASSETS 136 505 129 360
EQUITY AND
LIABILITIES
Capital and 105 866 92 663
reserves
Issued capital 36 826 36 826
Minority interest 18 65
in subsidiaries
Distributable 69 022 55 772
reserve
Non-current 309 2 227
liabilities
Borrowings 309 2 063
Deferred taxation - 164
Current liabilities 30 330 34 470
Taxation - 7 472
Trade payables 30 011 25 911
Current portion of 319 1 087
borrowings
TOTAL EQUITY AND 136 505 129 360
LIABILITIES
Net asset value per 44,2 38,7
share (cents)
Tangible asset 34,6 27,5
value per share
(cents)
Reconciliation between earnings and headline earnings
Share of
Profit on retained Net profit
ordinary earnings of
R`000 activities Taxation associates 2002 2001
Net profit
per
income 14 254 (1 051) 47 13 250 23 116
statement
Impairment 2 691 2 691
loss on loan
Goodwill 1 218 1 218 1 218
amortisation
Loss on 1 561
investment
18 163 (1 051) 47 17 159 25 895
Statement of changes in equity
Distri-
Share Share Minority butable
R`000 capital premium interest reserve Total
Balance as at 239 36 587 65 55 772 92 663
1 July 2001
Net profit (47) 13 250 13 203
for the year
Balance as at 239 36 587 18 69 022 105 866
30 June 2002
Summarised cash flow statement
Year ended Year ended
30 June 30 June
2002 2001
R`000 Audited Audited
Cash generated by 21 089 49 428
operations
Net financing cost (2 127) (479)
Taxation paid (11 591) (5 980)
Cash flow from operating 7 371 42 969
activities
Cash flow from investing (5 388) (8 190)
activities
Cash flow from financing 169 (2 244)
activities
Net movement in cash 2 152 32 535
resources
Cash and cash 18 132 (14 403)
equivalents at beginning
of period
Cash and cash 20 284 18 132
equivalents at end of
period
Preparation of the results
The accounting policies used in the preparation of these financial
statements are consistent with those used in the annual financial
statements for the year ended 30 June 2002 and are in accordance with
the South African Statements of GAAP.
Fisher Hoffman PKF (Pretoria) Inc has audited the annual financial
statements. Their unqualified audit report is available for inspection
at the company`s registered office.
Company secretary
FW Britz
Registered address
20 Eddington Crescent, Highveld Technopark, Centurion. Tel: (012) 665-
7300
Transfer secretary
Computershare Investor Services Limited, Edura, 41 Fox Street,
Johannesburg
(PO Box 61051, Marshalltown, 2107)
Directors
BP Vundla (Chairman)*, NH Vlok (Deputy Chairman), Dr LE Truter
(Managing), SR Aberdein, FW Britz, D du Rand, BJ Richards+, KR Stanton,
JJ du Plooy*, NA Gasa*, U Khumalo*, SA Msibi*, AND Vilakazi*, N Ntsele*
**
*Non-executive, **Alternate, +British
Website
www.digicore.com
Date: 18/09/2002 10:00:00 AM Produced by the JSE SENS Department
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