| Tue 27 Sep 2005, 12:57 | | Datacentrix - Unaudited Interim Results For The S |
|
Datacentrix - Unaudited Interim Results For The Six Month Period Ended 31
August 2005
DATACENTRIX HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER: 1998/006413/06)
JSE CODE: DCT
ISIN: ZAE000016051
UNAUDITED INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 AUGUST 2005
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 AUGUST 2005
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28
2005 2004 February
R`000 R`000 2005
Restated R`000
Restated
Revenue 411 320 440 668 882 205
Earnings before depreciation, 28 301 44 659 82 771
amortisation, impairment of goodwill &
interest (EBITDA)
Depreciation (5 093) (5 632) (11 164)
Amortisation of intangibles (480) (786) (1 473)
Impairment of goodwill (4 502) (4 564) (8 471)
Operating income before interest and 18 226 33 677 61 663
taxation
Net interest received 4 796 2 929 5 764
Deemed interest (AC133 fair value - - (87)
adjustment)
Share of associate income - 176 472
Income before taxation 23 022 36 782 67 812
Taxation (10 673) (12 422) (24 157)
Earnings attributable to ordinary 12 349 24 360 43 655
shareholders
RECONCILIATION OF HEADLINE EARNINGS
12 349 24 360 43 655
Earnings attributable to ordinary
shareholders
Impairment of goodwill 4 502 4 564 8 471
Headline earnings 16 851 28 924 52 126
Headline earnings per ordinary share 8.6 14.8 26.6
(cents)
Diluted headline earnings per ordinary 8.1 14.1 25.2
share (cents)
Basic earnings per ordinary share 6.3 12.4 22.3
(cents)
Diluted basic earnings per ordinary 5.9 11.8 21.4
share (cents)
Weighted average number of shares in 195 945 195 714 195 801
issue (000s)
Weighted average number of shares in 208 219 205 665 203 696
issue for purposes of dilution (000s)
RECONCILIATION OF PREVIOUS REPORTED RESULTS TO RESTATED FIGURES
31 August 2004 28 February 2005
R`000 R`000
Earnings attributable to ordinary 24 807 44 659
shareholders as previously reported
under SA GAAP
Restatements for IFRS
Share based payments (442) (1 319)
Other restatements
Leases (5) 315
Restated earnings attributable to 24 360 43 655
ordinary shareholders
CONSOLIDATED BALANCE SHEET AS AT 31 AUGUST 2005
Unaudited Unaudited Unaudited
31 August 31 August 28
2005 2004 February
R`000 R`000 2005
Restated R`000
Restated
ASSETS
Non-current assets 61 694 65 123 70 722
Property and equipment 26 532 23 398 29 805
Investment property - - 2 333
Software 886 1 482 892
Goodwill 21 524 28 306 24 114
Investment in associate - 1 405 1 413
Advance payments - 1 947 -
Deferred taxation 12 752 8 585 12 165
Current assets 301 299 253 463 290 808
Inventories 10 544 8 407 7 320
Accounts receivable 119 498 98 109 116 116
Leases - - 226
Assets classified as held for sale 2 289 - -
Bank balances and cash 168 968 146 947 167 146
TOTAL ASSETS 362 993 318 586 361 530
EQUITY AND LIABILITIES
Capital and reserves 218 080 203 776 222 683
Share capital 20 20 20
Share premium 39 074 37 525 39 589
Treasury shares (14 682) (12 479) (14 060)
Equity settled share scheme 3 559 857 1 735
Acquisition consideration (shares) due - 1 746 -
to vendors
Distributable reserves 190 109 176 107 195 399
Non-current liability
Deferred revenue (long-term portion) 13 404 13 135 19 260
Current liabilities 131 509 101 675 119 587
Accounts payable and accruals 98 831 75 476 82 389
Provisions 8 524 4 166 13 299
Deferred revenue on contracts (short- 14 027 9 244 12 842
term portion)
Acquisition consideration (short-term - 833 920
cash) due to vendors
Leases 17 96 -
Taxation 10 110 11 860 10 137
TOTAL EQUITY AND LIABILITIES 362 993 318 586 361 530
Net asset value per share (cents) 111 107 114
Tangible net asset value per share 100 92 102
(cents)
Number of shares in issue (adjusted for 195 641 190 615 194 970
treasury shares) (000s)
RECONCILIATION OF PREVIOUS REPORTED RESULTS TO RESTATED FIGURES
31 August 28
2004 February
R`000 2005
R`000
Equity
Equity as previously reported under SA GAAP 203 870 222 457
Restatements for IFRS
Share based payments - raising equity balance 416 -
opening balance
Share based payments - opening retained earnings (416) -
adjustment
Share based payments - income statement impact (441) (1 319)
Share based payments - raising equity balance 441 1 319
Other restatements
Leases (94) 226
Restated Equity 203 776 222 683
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31
AUGUST 2005
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28
2005 2004 February
R`000 R`000 2005
Restated R`000
Restated
Opening balance as previously stated 222 683 193 768 193 768
Share based payments - IFRS 2 - (441) (1 319)
Equity settled share scheme - IFRS 2 - 441 1 319
Leases - (89) (89)
Opening balance restated 222 683 193 679 193 679
Net income for the period restated 12 349 24 360 43 655
Capital distribution - (13 444) (13 444)
Dividend paid (17 642) - -
(Loss)/profit on sale of treasury (395) 167 482
shares
Equity settled share scheme - IFRS 2 1 824 441 1 319
Share issue expenses (117) (25) (26)
Treasury shares - movement during the (622) (1 401) (2 982)
period
Closing balance 218 080 203 952 222 683
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 AUGUST 2005
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28
2005 2004 February
R`000 R`000 2005
Restated R`000
Restated
Income adjusted for non-cash items 25 301 44 826 83 089
Working capital changes 7 578 7 736 16 263
- Inventory (3 122) (1 769) (682)
- Receivables 591 17 983 (24)
- Payables 10 109 (8 478) 16 969
Cash generated from operations 32 879 52 563 99 352
Net interest received 4 796 2 929 5 764
Taxation paid (11 287) (2 434) (19 262)
Dividend paid (17 642) - -
Capital distribution - (13 444) (13 444)
Net cash inflow from operating 8 746 39 614 72 410
activities
Net cash outflow from investing (3 438) (10 897) (20 861)
activities
Net cash outflow from financing (3 486) (12 792) (15 425)
activities
Net increase in cash and cash 1 822 15 925 36 124
equivalents
Cash and cash equivalents at the 167 146 131 022 131 022
beginning of the period
Cash and cash equivalents at the end of 168 968 146 947 167 146
the period
Commentary
The directors of Datacentrix Holdings Limited present the unaudited interim
financial results of the group for the six months ended 31 August 2005.
In line with the group`s strategy to grow organically, significant
investments in management as well as technical and sales resources were made
during the period under review. These increased costs, together with lower
than anticipated sales, particularly in the infrastructure division, have
contributed to a decline in revenue and profitability.
Prospects for the balance of the year remain good and we expect that
operating margins will stay at an acceptable level. Management is therefore
confident that these increased costs will deliver for the group going
forward.
Basis of Preparation
The preliminary financial statements have been prepared in accordance with
the accounting policies of the group, which fully comply with International
Financial Reporting Standards (IFRS) for the first time for the year ending
28 February 2006. This interim report has been prepared in accordance with
International Accounting Standard (IAS) 34 - Interim Financial Reporting.
Comparative figures have accordingly been restated. The disclosures required
by IFRS 1 (First-time Adoption of International Financial Reporting
Standards) concerning the transition from South African Statements of
Generally Accepted Accounting Practice (SA GAAP) to IFRS and the required
changes in accounting policies are set out in the results.
The group adopted IFRS 2: Share based payments, which resulted in earnings
for the period under review having accordingly been reduced by R1,8 million
and R1,3 million for prior reporting periods. In terms of the standard, the
fair value of the share based payment instruments granted are recognised as
an expense in the income statement on a straight line basis over the vesting
period (adjusted to reflect actual levels of vesting), with a corresponding
credit to equity.
The group adopted IFRS 3: Business combinations, which resulted in a change
in accounting policies for goodwill. In accordance with this, the group has
ceased the amortisation of goodwill with effect from 1 March 2005 and has
tested it for impairment.
In compliance with circular 7/2005 issued by the South African Institute of
Chartered Accountants, the group now accounts for its fixed escalation
operating leases on a straight line basis over the period of the lease. The
effect of this is that the rental accounted for in the income statement is
the same as the period of the lease. Previously reported amounts have been
restated from the inception of all current operating leases.
The above results have also been restated for the impact of IAS 8: Revenue
and IAS 16: Property, plant and equipment, which has mainly been the
reclassification of the respective line items. The interim results presented
may differ from IFRS in effect at 28 February 2006 as a result of ongoing
review and possible amendments by interpretive guidance from the IASB and
IFRIC.
Basic earnings per share and headline earnings per share are reported after a
secondary taxation on companies (STC) charge of R2,3 million in respect of
Datacentrix` cash dividend paid in July 2005.
Infrastructure and Related Services
The substandard performance of the Infrastructure and related Services
division over the past six months is attributable to certain key factors.
In keeping with the group`s organic growth strategy, the division increased
its sales, technical and managerial capacity ahead of the revenue curve.
Simultaneously, the division also increased the number of value-add
offerings, which have lead to it pursuing larger, more complex transactions
with longer sales cycles. This reduced the division`s focus on the
traditional run-rate business, negatively impacting on sales during the
period. Fierce competition and the price deflation of technology have also
impacted on the division`s performance.
Management is taking the necessary measures to address these factors. These
include refocusing the sales force in the areas of traditional infrastructure
products and actively engaging with its technology partners to structure more
cost competitive offerings. The identified growth areas will also be
addressed through existing dedicated specialist resources.
Solutions
The Development and Integration business unit has won major deals in the
areas of workflow and data-mining. The Optimisation business unit, serving in
the electronic content management and archiving areas, has performed
creditably.
The ERP business unit experienced challenges over the last six months. In
particular it encountered difficulties with the implementation of an ERP
project. As a result of this the business unit incurred significant costs in
the deployment of resources during this reporting period to ensure an
acceptable outcome on this project.
Premier Foods has been a significant contributor to the division`s revenue
streams. The outsource contract has almost come to term and Datacentrix`
involvement has significantly scaled down.
Contract and project management capacity of the solutions division has been
enhanced and management is confident in the business unit`s execution
capability.
Black Economic Empowerment (BEE)
The board and Aka Capital, along with the pertinent financial institutions,
are currently engaging with a number of BEE parties to take up shareholding
that forms part of Aka Capital`s current control structure. The board`s
objective is to facilitate the required transformation in terms of the DTI
equity ownership guidelines. The board is eager to finalise the shareholding
structure and capital structure changes, but to achieve best compliance with
the codes, will conclude its activities once the codes of broad based
practice are finalised.
Datacentrix continues to rank very satisfactorily in independent BEE surveys.
The group, remains in the top 10 most empowered of all listed companies and
is still ranked the top empowered IT company. Datacentrix continues to focus
strongly on internal transformation imperatives and also participates
actively in the ICT forums to promote transformation.
Dividend
No interim dividend has been declared. The board expects to pay a final
dividend at year end.
Prospects
Datacentrix remains a strong and vibrant company and has maintained its
strong balance sheet. Its tight operational and financial controls, strong
customer and partner focus and performance-driven culture continue to make it
an ideal choice for vendors and customers looking for a long-term strategic
partner. The board will be taking steps to address the company`s capital
structure and excess cash. Options under consideration include adopting a
more aggressive dividend policy, capital reduction by means of a share
buyback program, or a combination thereof. The board remains confident of the
prospects of the company and looks forward to more positive results for the
balance of the financial year.
Board Composition
Datacentrix announced the appointment of Thenjiwe Chikane and Alwyn Martin as
independent, non-executive directors to the board. We regret to announce the
immediate resignation of Thenjiwe Chikane as a board member due to assumption
of new responsibilities as the incoming chairperson of SITA. Sam Nematswerani
resigned from the board during the period under review.
For and on behalf of the Board:
Gary Morolo
Chairman
27 September 2005
Directors: Gary Morolo (Chairman), Gerhard Uys (CEO), Ahmed Mahomed,
Alwyn Martin*, Charl Joubert, Christoff Botha*, Elizabeth Naidoo, Imogen
Mkhize*, Joan Joffe*, Klaas Lammers, Stewart Barker, Thenjiwe Chikane* (*non-
executive)
Registered Office: Block 7, Sanwood Park, 379 Queens Crescent, Lynnwood,
Pretoria
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Date: 27/09/2005 12:45:13 PM
