| Mon 27 Feb 2006, 8:00 | | Digicore - Group Interim Results For The Six Month |
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DGC
DGC
Digicore - Group Interim Results For The Six Months Ended 31 December 2005
Digicore Holdings Limited
Registration number 1998/012601/06
JSE code: DGC
ISIN code: ZAE000016945
("the Group")
Group Interim Results for the six months ended 31 December 2005
* Operating profit 70% up
* Interim dividend 100% up
* EPS 35% up
* Revenue 36% up
* Cash on hand R53,3 million
Abridged group balance sheet
As at As at As at
31 December 31 December 30 June
2005 2004 2005
R"000 (Unaudited) (Unaudited) (Audited)
ASSETS
Non-current assets 83 023 44 041 80 731
Property, plant and equipment 17 769 15 516 18 346
Intangible assets 50 762 20 016 45 951
Investments 6 035 5 351 8 090
Deferred tax 8 457 3 158 8 344
Current assets 159 389 108 419 157 928
Inventories 41 102 34 747 46 511
Trade and other receivables 65 014 50 186 62 817
Bank balances and cash 53 273 23 486 48 600
TOTAL ASSETS 242 412 152 460 238 659
EQUITY AND LIABILITIES
Capital and reserves 161 701 122 630 154 439
Ordinary shareholders" funds 154 306 122 630 152 326
Share capital and premium 18 419 15 832 19 249
Treasury shares (5 010) - -
Distributable reserves - - 6 449
Foreign currency translation (747) - -
reserve
Retained income 141 644 106 798 126 628
Minority interest 7 395 - 2 113
Non-current liabilities 24 488 - 29 324
Interest-bearing borrowings 18 550 - 21 986
Provisions 5 938 - 7 338
Current liabilities 56 223 29 830 54 896
Current portion of long-term - 177 2 826
borrowings
Taxation 19 619 6 882 22 573
Trade and other payables 36 604 22 771 29 497
TOTAL EQUITY AND LIABILITIES 242 412 152 460 238 659
Net asset value per share (cents) 76,3 63,9 75,3
Abridged group income statement
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2005 % 2004 2005
R"000 (Unaudited) growth (Unaudited) (Audited)
Revenue 145 381 36 107 265 253 049
Cost of sales and overheads (107 516) (85 184) (188 423)
Operating profit before 37 865 71 22 081 64 626
depreciation and amortisation
Depreciation (3 663) (1 995) (6 862)
Impairment of goodwill - - (404)
Amortisation of goodwill - - (115)
Net operating profit 34 202 70 20 086 57 245
Net finance income 1 926 694 439
Net income from associate (310) 405 310
companies
Profit before tax 35 818 69 21 185 57 994
Taxation (9 842) 98 (4 970) (14 951)
Profit after tax 25 976 60 16 215 43 043
Minority shareholders" portion (2 866) - (2 113)
Attributable to ordinary 23 110 43 16 215 40 930
shareholders
Number of shares in issue 202 355 191 970 202 355
("000)
Weighted average number of 201 667 191 259 193 954
shares ("000)
Fully diluted number of shares 202 355 202 355
in issue ("000)
Basic earnings per share (in 11,5 35 8,5 21,1
cents)
Basic headline earnings per 11,3 35 8,4 21,1
share (in cents)
Fully diluted earnings per 11,5 8,2 21,1
share (in cents)
Dividend per share (in cents) 4,0 100 2,0 6,0
Reconciliation between basic to
headline earnings:
Attributable earnings 23 110 16 215 40 930
Impairment of goodwill - - 519
Profit on disposal of fixed (245) (161) (458)
asset
Headline earnings 22 865 16 054 40 991
Abridged group cash flow statement
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities 26 596 (18 036) 7 606
Cash generated/(utilised) by operating 45 983 (2 927) 28 062
activities
Net finance income 1 926 694 439
Equity (loss)/profit from associate (310) 405 310
Dividends paid (8 094) (15 228) (20 113)
Taxation paid (12 909) (980) (1 092)
Cash flows from investing activities (3 371) (3 558) (40 125)
Cash flows from financing activities (18 552) (1 113) 34 926
Increase/(decrease) in cash and cash 4 673 (22 707) 2 407
equivalents
Cash and cash equivalents at beginning 48 600 46 193 46 193
of the period
Cash and cash equivalents at end of the 53 273 23 486 48 600
period
Statement of changes in equity
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 (Unaudited) (Unaudited) (Audited)
Share capital and premium at beginning 19 249 15 540 15 540
of the period
Treasury shares (5 010) - -
Movements for the period (830) 292 3 709
Share capital and premium at end of the 13 409 15 832 19 249
period
Distributable reserves at beginning of 6 449 - -
the period
Movements for the period (7 196) - 6 449
Distributable reserves at end of the (747) - 6 449
period
Retained income at beginning of the 126 628 105 811 105 811
period
Attributable earnings for the period 23 110 16 215 40 930
Dividends paid during the period (8 094) (15 228) (20 113)
Retained income at end of the period 141 644 106 798 126 628
154 306 122 630 152 326
Commentary
Introduction
The DigiCore board is delighted to announce for the fourth consecutive year
strong growth for the period under review. Organic growth locally from a booming
economy and growth abroad, as well as the acquisition of C-track Benelux by our
subsidiary DigiCore Europe BV during last year, has contributed to the success
story.
In line with our vision to become a significant player in the stolen vehicle
recovery ("SVR") market an amount of approximately R7 million was expended on
the C-track Secure business to establish the brand during this period, affecting
our short-term attributable earnings growth by 30%. We envisage our strategy
will pay handsome dividends as we obtain a bigger market share in the SVR
market. The full impact of our marketing strategy will be seen in the next 24
months.
Basis of preparation and IFRS adoption
The interim financial statements comply with IAS 34 (AC 127) of International
Financial Reporting Standards (IFRS).
In accordance with the listings requirements of the JSE Limited, the group is
adopting IFRS with effect from 1 July 2005. As the group publishes comparative
information with this interim report, the date of transition to IFRS is 1 July
2004, which represents the start of the earliest period of comparative
information disclosed.
The application of IFRS has not resulted in any changes from the previous
application of South African Statements of Generally Accepted Accounting
Practice and the accounting policies used are consistent with those used for the
year ended 30 June 2005 except where accounting policies have changed as a
result of the first time adoption of IFRS 2. Comparative figures have not been
adjusted at this time.
Financial results
Revenue increased by 36% from R107 million to R145 million over the comparative
period. Profit before interest and tax increased by 70% to R34,2 million from
R20,1 million. This is after a sharp increase in the depreciation charge.
Interest received for the period under review increased to R1 million due to
improved working capital and cash flow management. A R310 000 loss from
associate was recognised, due to our 30% associate, Trakker Pakistan, reporting
losses for the six months. This was due to the launch of their new subsidiary,
Trakker Direct, a short-term insurance company in Pakistan. All indications are
that the associate will be marginally profitable at year-end. The taxation
charge increased significantly for the period. The European subsidiary also has
a tax rate higher than South Africa. Earnings attributable to outside
shareholders increased due to DigiCore Europe posting record profits for the six
months. Earnings attributable to ordinary shareholders increased by 42% to R23
million, with 78% being generated from local operations and 22% by the offshore
subsidiaries. Basic earnings per share have increased from 8,5 cents per share
to 11,5 cents per share, an increase of 35% for the comparable period.
The balance sheet remains solid with the high stock holding at the factory
improving materially over the last six months and cash reserves increasing.
Intangibles increased with the acquisition of 50,1% share in DigiCore Limited, a
UK-based company, in December. These results have been consolidated into the
balance sheet at 31 December 2005.
Cash on hand continued to grow to R53,2 million, with cash generated from
operating activities of R46 million for the last six months compared with a net
cash outflow from operating activities of R2,5 million for the comparative six
months. This is after the investment into the UK of R8,7 million being funded
from cash reserves, the repayment of long-term borrowings of R6,3 million,
investments in fixed assets of R3 million and R21 million being paid out in
taxation and dividends over the period. The working capital reduced over the
six-month period by R10,4 million.
Technology
Our team continues to produce innovative and more cost-effective products,
making C-track more affordable for fleet owners with cars and lighter commercial
vehicles. The US-based company, ABI Research, rated DigiCore as the second best
of 200 global suppliers of telematics solutions, after Qualcomm, a $66 billion
US company.
DigiCore has continued its investment in new technology and products during this
period.
Local market
Unit sales through our South African branches increased by 35% from the previous
comparable period driven by the strength of the local economy and our continued
domination of the sector in South Africa, based on our industry leading
technology. This trend is expected to continue for the rest of the financial
year.
DigiCore Fleet Management should conclude a new BEE transaction shortly that
will allow us better access to business in government and parastatal
departments.
International
Distributorships in UAE, Indonesia and Malaysia have been established and
revenue should increase in the coming months, with initial orders being shipped
during the period. Exports to our main markets are expected to grow considerably
during coming months.
The transaction to acquire 50,1% of our UK distributor, DigiCore Limited, was
concluded during December. A small loss is expected in the next 12 months from
this subsidiary due to rapid accelerated expansion of the sales team and
facilities.
The future
The foundation for C-track Secure has been laid, the technology is new,
affordable and exciting. We are thus looking to take a 10% share of the local
SVR market in the next 12 months that will lead to an increase in our annuity
income. Our traditional European, UK and Pakistan partners, as well as the newer
ones, are set to boost our export sales substantially for the remainder of this
year. Higher vehicle sales and fuel prices should also play a part in our
overall growth in the future. Once DFM"s BEE partners are in place we should be
the preferred supplier to government, particularly where they need to improve on
service delivery.
Directorate
Mr Barney Esterhuyzen was appointed to the board as a non-executive director on
13 December 2005.
Dividend announcement
In line with the company policy, the board has declared an interim divided of 4
cents per share. This is double the interim dividend for the period ended 31
December 2004.
Payment will be made on Monday, 10 April 2006 to shareholders recorded in the
register on Friday, 7 April 2006. The last day to trade to qualify for the
dividend will be Friday, 31 March 2006 and the shares will be traded ex dividend
from Monday, 3 April 2006. Share certificates may not be dematerialised or
rematerialised between Monday, 3 April 2006 and Friday, 7 April 2006, both days
inclusive.
For and on behalf of the board
NA Gasa NH Vlok
Chairman (acting) Chief executive officer
27 February 2006
Registered office
20 Eddington Crescent, Highveld Park, Centurion
(PO Box 68270, Highveld Park, 0169)
Tel: +27 12 665 7300 Fax: +27 12 665 5376
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
PSG Capital Limited
Directorate
NA Gasa* (Acting Chairman),
NH Vlok (Chief Executive Officer),
SR Aberdein, D du Rand, B Esterhuyzen*,
DA Nieuwoudt, BJ Richards#,
MD Rousseau, DV Simelane*
* Non-executive # British
Company secretary
DA Nieuwoudt
Visit our website: www.digicore.com
Date: 27/02/2006 08:00:19 AM Produced by the JSE SENS Department
