| Mon 5 Apr 2004, 13:49 | | Results For The Financial Year Ended 29 Feb 04 |
|
Datacentrix Holdings Limited - Audited Results For The Financial Year Ended 29
Release Date: 05/04/2004 12:55:00 Code(s): DCT
DATACENTRIX HOLDINGS LIMITED - AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 29
FEBRUARY 2004
DATACENTRIX HOLDINGS LIMITED
REGISTRATION NUMBER: 1998/006413/06
SHARE CODE: DCT
ISIN CODE: ZAE 000016051
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2004
Key Financial Indicators
* Revenue decreased 1% to R764 million
* Operational performance (EBITDA) decreased 2% to R57 million
* Headline earnings per share (HEPS) decreased 10% to 20.7 cents and earnings
per share 16% to 16.3 cents
* Cash generated from operations of R28 million, resulting in R131 million cash
on hand, with no interest-bearing debt
* Net asset value increased 17% to 97 cents and tangible net asset value
increased 27% to 81 cents
* Maiden capital distribution of 6.9 cents per share proposed
Consolidated Income Statement for the year ended 29 February 2004
2003 2004
R"000 R"000
Revenue 770 738 763 782
Operating expenses (712 423) (706 620)
Earnings before depreciation, goodwill
amortised and interest, adjusted for profit on
disposal of business (EBITDA) 58 315 57 162
Depreciation (5 589) (7 297)
Net profit from disposal of business 1 383 -
Goodwill amortised (7 677) (8 672)
Operating income before interest and taxation 46 432 41 193
Net interest received 7 420 10 476
Deemed interest (AC133 fair value adjustment) - (1 243)
Share of associate income 1 134 343
Income before taxation 54 986 50 769
Taxation (18 069) (19 023)
Earnings attributable to ordinary shareholders 36 917 31 746
Note: Accounting policies were changed Pre acc Post acc Post acc
to incorporate AC133 and the policy policy policy
consolidation of the share trust and changes changes changes
options 2003 2003 2004
Headline earnings per ordinary share 21.8 22.9 20.7
(cents)
Diluted headline earnings per ordinary 21.8 22.6 19.9
share (cents)
Basic earnings per ordinary share 18.6 19.5 16.3
(cents)
Diluted basic earnings per ordinary 18.6 19.3 15.7
share (cents)
Weighted average number of shares in 198 363 189 040 195 024
issue (000"s)
Weighted average number of shares in 198 363 191 489 202 628
issue for the purposes of dilution
(000"s)
Reconciliation between earnings attributable
to ordinary shareholders and headline earnings
Earnings attributable to ordinary 36 917 31 746
shareholders
Goodwill amortised 7 677 8 672
Net profit from disposal of business (1 383) -
Headline earnings 43 211 40 418
Consolidated Balance Sheet as at 29 February 2004
2003 2004
R"000 R"000
ASSETS
Non-current assets 68 922 59 658
Property and equipment 14 191 13 737
Intangible assets 37 191 32 585
Investment in associate 917 1 233
Advance payments 5 527 3 050
Deferred taxation 11 096 9 053
Current assets 249 071 258 821
Inventories 10 403 11 707
Accounts receivable 120 884 116 092
Bank balances and cash 117 784 131 022
TOTAL ASSETS 317 993 318 479
EQUITY AND LIABILITIES
Capital and reserves 159 993 193 768
Share capital 20 20
Share premium 43 740 50 831
Treasury shares (10 135) (11 078)
Non-distributable reserves 14 543 -
Acquisition consideration (shares) due to 6 796 1 746
vendors
Distributable reserves 105 029 152 249
Non-current liability
Acquisition consideration (long-term cash) 12 155 833
due to vendors
Current liabilities 145 845 123 878
Accounts payable and accruals 102 853 86 763
Provisions 3 295 3 838
Deferred revenue on contracts 21 555 19 905
Acquisition consideration (short-term cash) 7 231 11 098
due to vendors
Taxation 10 911 2 274
TOTAL EQUITY AND LIABILITIES 317 993 318 479
Net asset value per share (cents) 83 97
Tangible net asset value per share (cents) 64 81
Number of shares in issue (000"s) 193 081 199 863
Consolidated Statement of Changes in Equity for the year ended 29 February 2004
2003 2004
R"000 R"000
Opening balance as previously stated 119 345 159 993
Consolidation of employee share incentive (10 097) -
trust
Opening balance restated 109 248 159 993
Net income for the year 36 917 31 746
Share issue expenses (242) (86)
(Loss) / Profit on sale of treasury shares (6) 102
held in employee share incentive trust
Deemed interest (AC133 fair value - 931
adjustment)
Treasury shares - movement during the year (106) (943)
Non-achievement of profit warranties (1 042) -
Share issues 15 224 2 025
Closing balance 159 993 193 768
Consolidated Cash Flow Statement for the year ended 29 February 2004
2003 2004
R"000 R"000
Income before taxation 54 986 50 769
Adjusted for non-cash items 3 350 6 495
58 336 57 264
Working capital changes 12 829 (13 709)
- Inventory (1 509) (1 304)
- Receivables 16 594 4 792
- Payables (2 256) (17 197)
71 165 43 555
Net interest received 7 420 10 476
Taxation paid (16 415) (25 959)
Net cash inflow from operating activities 62 170 28 072
Net cash outflow from investing activities (12 860) (7 380)
Net cash outflow from financing activities (2 991) (7 454)
Net increase in cash and cash equivalents 46 319 13 238
Cash and cash equivalents at the beginning 71 465 117 784
of the year
Cash and cash equivalents at the end of the 117 784 131 022
year
Nature of Business
Datacentrix operates as a technology reseller and solution provider. Its major
activities comprise the supply, integration and optimisation of IT
infrastructure, solutions and related services to enterprise South Africa.
Commentary
The directors of Datacentrix Holdings Limited present the annual financial
results of the group for the year ended 29 February 2004. The performance of the
company, its competitive profile, delivery capacity and its prospects have not
changed materially in a difficult and challenging environment. The company has
maintained and even increased its level of activity and the operations remain
strong. Although the company achieved good growth in sales volumes of hardware
and software products during the year, the results were negatively impacted by
the change in the value of the Rand relative to the US Dollar.
Overall the directors are pleased with the results and believe that the company
is extremely well positioned to continue its solid performance, particularly in
a more stable exchange rate environment and given the significant level of
transformation already achieved from a shareholding, employment equity and
procurement point of view over the past five years.
Accounting Policies
The annual financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. The JSE
Securities Exchange of South Africa ("JSE") issued guidance on the consolidation
of share trusts and the Datacentrix Holdings Employee Share Trust is accordingly
consolidated into the annual financial statements of the group. This represents
a change in accounting policy and in accordance with the requirements of AC103:
Net Profit or Loss for Period, Fundamental Errors and Changes in Accounting
Policies, the comparative figures have been restated. The group also adopted
AC133 Financial Instruments: Recognition and Measurement during the current
financial year. As a result of adopting AC133 and in accordance with transition
requirements of AC133, comparative figures have not been adjusted except for the
restatement of current year opening retained earnings. The implementation of
AC133 has a material negative impact on our current year results of a net R1,24,
million owing to the fair valuing of acquisition consideration due to vendors at
the beginning and end of the financial year under review.
Results
Revenue was down 1% compared to the corresponding period, mainly due to the
change in value of the Rand (the equivalent revenue in US Dollars shows growth
of more than 30% for hardware and software sales, which are all imported). As a
consequence, EBITDA, earnings and headline earnings per share were down 2%, 16%
and 10% respectively. Net asset value per share increased 17% to 97 cents
compared to the corresponding period and tangible net asset value per share
increased 27% to 81 cents. Cash generated from operations was R28 million,
resulting in R131 million cash on hand with no interest-bearing debt. Lower cash
conversion was primarily due to cash reserves being utilised to pay trade
creditors earlier in order to benefit from settlement discounts.
Infrastructure and Services
The Infrastructure division has shown healthy growth during the period under
review when one allows for the scrapping of import duties and the change in the
value of the Rand. The division continues to be a pre-eminent player in the
supply, maintenance and support of IT infrastructure.
In this reporting period the division chalked up a number of significant wins,
heightened its technology partner accreditations, retained all its major
existing customers and renewed existing contracts. A key focus for 2003 was to
make inroads into the Johannesburg market and Datacentrix is now firmly
entrenched within this sector, winning over a number of blue-chip customers and
gaining larger long-term contracts. The opportunities presented by server and
storage consolidation trends continue to fuel growth for high-end servers,
storage and enterprise backup library solutions. The division is firmly
established as a serious player in the enterprise solutions space. Management
within the Infrastructure division has been bolstered to assist the group to
meet its growing customer needs.
Datacentrix Services is a single service provider for an enterprise"s diverse
requirements. The supply of products through Infrastructure and the outsourcing
capabilities of Services provide cost effective and capable solutions to
Datacentrix" customers. The focal point for Services has been customer
satisfaction through the successful achievement of exceptional service levels.
Opportunities within the selective outsourcing market have been identified as
key, bringing the benefit of stronger strategic customer relationships, improved
resource utilisation and annuity income. The single-source managed support
contract, that brings together multiple-point services, is gaining momentum as
the preferred method of contracting and doing business with support providers.
Datacentrix is a highly accredited warranty service provider for all major
vendors and performs in-warranty repairs on their behalf for customers. Direct
partner contracts have been renewed and accreditations maintained during the
year.
Solutions
The growth within Datacentrix Solutions has been fuelled by the market"s need
for archiving of data and documents, integration of dissimilar applications,
document management and workflow; business intelligence; the move towards
outsourcing of business applications; and Microsoft"s entry into the CRM market.
The result has been a number of successful contract wins, particularly on the
ERP side, which will be executed during the new financial year. Some of these
wins include Cashbuild, Pride Milling, Brenner Mills and Astral Foods.
Datacentrix Solutions division attained the Microsoft Business Solution Partner
of the Year award in August 2003 and was accredited as a Microsoft Gold
Certified Partner for Business Intelligence, reinforcing Datacentrix" expertise
and position in the local market. The division"s strong Microsoft partnership
has been fortified with its offering of Microsoft CRM solutions to new and
existing customers.
Black Economic Empowerment
Datacentrix continues to focus strongly on internal transformation imperatives
and also participates actively in the ICT forums to promote transformation.
Strong equity and empowerment shareholder involvement and employment equity
credentials place Datacentrix ahead of the anticipated ICT charter requirements.
The "A" rating accredited by EmpowerDEX, an economic empowerment rating and
research agency, provides independent confirmation of our progress in this area.
Particular focus is now being placed on further improving our empowerment
supplier purchases and corporate social investment programs.
Future Prospects
Datacentrix" solid business model, maintained focus on business basics and its
prudent and conservative management have resulted in its continued
profitability, consistent performance, strong balance sheet, steadily improved
empowerment profile, strong vendor relationships and accreditations and its high
customer satisfaction levels. The group"s strategic focus remains unchanged,
with expected growth areas encompassing enterprise systems and the Johannesburg
market. 2004 should mark the start of a number of sizeable "refresh" projects
worldwide, as organisations start to upgrade equipment implemented during the
Y2K boom. With a number of long outstanding government tender evaluations
finally resolved in Datacentrix" favour, the company expects significant growth
from this sector as well. Other areas of future strategic importance to
Datacentrix include a focus on selective outsourcing in both the desktop and the
server environment as well as in output management (printing, copying, faxing).
The company remains confident that it best represents the ideal long-term
strategic channel partner for vendors and customers.
Capital Distribution
Datacentrix is proud to announce the proposed declaration of a maiden capital
distribution of 6.9 cents per share. This represents a three times HEPS cover,
which the company expects to maintain as a policy going forward. A capital
distribution, to be paid out of share premium, of 6.9 cents per share for the
year ended 29 February 2004 has been recommended. Shareholders will be asked to
consider, and if deemed fit, approve the capital distribution at the annual
general meeting of the company to be held on 09 June 2004. Subject to
shareholder approval, the following dates will be applicable to the capital
distribution:
Last day to trade: 25 June 2004
Trading commences ex distribution: 28 June 2004
Record date: 02 July 2004
Payment date: 05 July 2004
Share certificates may not be dematerialised or rematerialised between 28 June
2004 and 02 July 2004, both days inclusive.
Auditor"s Opinion and Subsequent Events
The group"s auditors, Deloitte & Touche, have audited these results and a copy
of their unqualified audit report is available for inspection at the company"s
registered office. No material events have occurred between the end of the
financial year and the date of the audit report.
Changes to the Board
Natanya Kuper resigned from the board of directors effective 20 November 2003.
Her contribution has been greatly valued and appreciated. In compliance with JSE
regulations the positions of Chairman and Chief Executive Officer have been
separated. Gerhard Uys is now the CEO while Gary Morolo retains the position of
Executive Chairman. Further, in line with corporate governance requirements, the
board is involved in efforts to strengthen the non-executive independent
director component of the board.
For and on behalf of the Board
Gary Morolo
Executive Chairman
Pretoria - 5 April 2004
Executive Directors: Gary Morolo (Executive Chairman), Gerhard Uys (CEO), Klaas
Lammers, Stewart Barker, Charl Joubert, Ahmed Mahomed, Elizabeth Naidoo Non-
Executive Directors: Sam Nematswerani, Joan Joffe, Christoff Botha, Imogen
Mkhize
Registered Office: Block 7, Sanwood Park, 379 Queens Crescent, Lynnwood,
Pretoria
Transfer Secretaries: Computershare Limited, 70 Marshall Street, Johannesburg
www.datacentrix.co.za
