| Wed 19 Apr 2006, 14:33 | | Datacentrix - Annual General Meeting, Cautionary |
|
Datacentrix - Audited results for the financial ye 19 Apr 2006
DCT
DCT
Datacentrix - Audited results for the financial year ended 28 February 2006
Datacentrix Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/006413/06
JSE Code: DCT
ISIN: ZAE000016051
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2006
* Key Financial Indicators
* Revenue increased 17% to over R1 billion for the first time
* EBITDA increased 14% to R88.7 million
* Earnings per share (EPS) increased 19% to 25.5 cents
* Headline earnings per share (HEPS) increased 12% to 28.7 cents
* Net asset value increased 14% to 124.9 cents
* Tangible net asset value increased 20% to 116.2 cents
* Cash on hand of R165.6 million
* Total dividend declared of 30 cents per share (ordinary 14 cents per share,
special 16 cents per share)
Abridged Consolidated Income Statement for the year ended 28 February 2006
Audited Restated
2006 2005
R"000 R"000
Revenue 1 034 397 882 205
Operating profit 70 430 59 435
Net interest received 7 856 5 677
Income from associate - 472
Profit before taxation 78 286 65 584
Income tax expense (28 341) (23 571)
Profit for the year attributable to ordinary 49 945 42 013
shareholders
Earnings before interest, taxation, 88 661 78 084
depreciation and amortisation (EBITDA)
Basic earnings per ordinary share (cents) 25.5 21.5
Diluted basic earnings per ordinary share 24.9 20.9
(cents)
Headline earnings per ordinary share (cents) 28.7 25.7
Diluted headline earnings per ordinary share 27.9 25.1
(cents)
Dividend per share (cents) 30.0 9.0
Weighted average number of shares in issue 195 647 195 801
(000"s)
Weighted average number of shares in issue for 200 713 200 690
the purposes of dilution (000"s)
Reconciliation between profit for the year
attributable to ordinary shareholders and
headline earnings
Profit for the year attributable to ordinary 49 945 42 013
shareholders
Goodwill impaired/amortised 7 857 8 471
Profit on sale of property and equipment - (75)
Profit on sale of subsidiary (74) -
Profit on sale of investment property (1 671) -
Headline earnings 56 057 50 409
Changes in accounting policies, restatements and disclosures
Previously IFRS Other Restated
stated R"000 restatement 2005
2005 s R"000
R"000 R"000
Net profit 44 659 (1 319) (1 327) 42 013
Operating profit 68 816 (1 319) (1 913) 65 584
Taxation (24 157) - 586 (23 571)
Basic earnings per ordinary 22.8 (0.7) (0.6) 21.5
share (cents)
Diluted basic earnings per 21.9 (0.7) (0.3) 20.9
ordinary share (cents)
Headline earnings per 27.1 (0.7) (0.7) 25.7
ordinary share (cents)
Diluted headline earnings per 26.0 (0.6) (0.3) 25.1
ordinary share (cents)
Abridged Consolidated Balance Sheet as at 28
February 2006
Audited Restated
2006 2005
R"000 R"000
ASSETS
Non-current assets 68 194 77 682
Property and equipment 31 217 33 360
Investment property - 2 333
Intangible assets 17 008 25 006
Investment in associate - 1 413
Long-term receivables 7 230 -
Deferred tax assets 12 739 15 570
Current assets 381 947 290 027
Inventories 4 836 6 765
Trade and other receivables 211 496 116 116
Cash and cash equivalents 165 615 167 146
TOTAL ASSETS 450 141 367 709
EQUITY AND LIABILITIES
Capital and reserves 244 347 214 150
Share capital 21 20
Share premium 40 311 39 589
Treasury shares (20 203) (14 060)
Equity-settled share scheme reserve 5 042 1 735
Retained earnings 219 176 186 866
Non-current liabilities 19 746 19 260
Obligations under finance leases 4 205 -
Deferred revenue - long-term 15 541 19 260
Current liabilities 186 048 134 299
Trade and other payables 136 423 82 389
Provisions 26 611 27 879
Deferred revenue - short-term 17 590 12 842
Acquisition consideration due to vendors - 920
Lease liability 300 163
Current tax liabilities 5 124 10 106
TOTAL EQUITY AND LIABILITIES 450 141 367 709
Net asset value (adjusted for treasury 124.9 109.4
shares) per share (cents)
Tangible net asset value (adjusted for 116.2 96.6
treasury shares) per share (cents)
Weighted average number of shares in issue 195 647 195 801
(adjusted for treasury shares) (000"s)
Changes in accounting policies, restatements and disclosures
Previously IFRS Other Restated
stated R"000 restatement 2005
2005 s R"000
R"000 R"000
Property, plant and equipment 25 001 - 8 359 33 360
Deferred tax assets 12 165 - 3 405 15 570
Inventories 12 124 - (5 359) 6 765
Equity-settled share scheme - 1 735 - 1 735
reserve
Retained earnings 196 908 (1 735) (8 307) 186 866
Current tax liabilities 10 137 - (31) 10 106
Provisions 13 299 - 14 580 27 879
Lease liability - - 163 163
Abridged Consolidated Statement of Changes in Equity for the
year ended 28 February 2006
Share Share Treasury Equity Acqui- Retained Total
capital premium shares settled sition earnings R"000
R"000 R"000 R"000 share conside- R"000
scheme ration
reserve due to
R"000 vendors
R"000
Balance 20 50 831 (11 078) - 1 746 152 249 193 768
at 29
February
2004
Effect of - - - 416 - (416) -
adoption
of IFRS
Effect of - - - - - (6 980) (6 980)
other
restateme
nts
Balance 20 50 831 (11 078) 416 1 746 144 853 186 788
at 29
February
2004
restated
Net - - - - - 42 013 42 013
income
for the
year
Net - - - - - 44 659 -
income as
previousl
y stated
Effect of - - - - - (1 319) -
adoption
of IFRS
Effect of - - - - - (1 327) -
other
restateme
nts
Share - (26) - - - - (26)
issue
expenses
Share - - - 1 319 - - 1 319
based
payments
Shares - 1 746 - - (1 746) - -
issued
for
profit
warrantie
s
Treasury - (2 982) - - - (2 982)
shares
movement
Capital - (13 444) - - - - (13 444)
distribut
ion
Profit on - 482 - - - - 482
sale of
treasury
shares in
trust
Balance 20 39 589 (14 060) 1 735 - 186 866 214 150
at 28
February
2005
Net - - - - - 49 945 49 945
income
for the
year
Treasury - - (6 143) - - - (6 143)
shares
movement
Share - (10) - - - - (10)
issue
expenses
Share - - - 3 307 - - 3 307
based
payments
Dividend - - - - - (17 635) (17 635)
paid
Raised on 1 912 - - - - 913
new
acquisiti
ons
Loss on - (180) - - - - (180)
sale of
treasury
shares in
trust
Balance 21 40 311 (20 203) 5 042 - 219 176 244 347
at 28
February
2006
Abridged Consolidated Cash Flow Statement for
the year ended 28 February 2006
Audited Restated
2006 2005
R"000 R"000
Income before taxation 78 286 65 584
Adjusted for non-cash items 11 894 14 019
Working capital changes (37 678) 21 279
- Inventory 2 031 1 439
- Receivables (88 545) (24)
- Payables 48 836 19 864
Cash generated from operations (including 52 502 100 882
restatement of R3,409 million)
Net interest received 7 856 5 764
Dividend paid (17 635) (13 444)
Taxation paid (30 492) (19 263)
Net cash inflow from operating activities 12 231 73 939
(including restatement of R3,409 million)
Net cash outflow from investing activities (13 797) (23 709)
(including restatement of R3,409 million)
Net cash inflow (outflow) from financing 35 (14 106)
activities
Net increase in cash and cash equivalents (1 531) 36 124
Cash and cash equivalents at the beginning of 167 146 131 022
the year
Cash and cash equivalents at the end of the year 165 615 167 146
Commentary
The directors of Datacentrix Holdings Limited are proud to
announce the annual financial results of the group for the
year ended 28 February 2006. The directors believe that the
results reflect creditable performance after experiencing a
particularly tough trading environment in the first half of
the year. Growth has been achieved in respect of all the
indices as normally reported on. In particular Datacentrix is
proud to announce the achievement of a historic milestone of
exceeding one billion Rand in turnover. This milestone was
achieved despite a relatively strong currency and a generally
deflationary environment for IT infrastructure, illustrating
Datacentrix" resilience and strong market presence.
Basis of Preparation
These results have been prepared in accordance with
International Accounting Standard IAS 34: Interim Financial
Reporting, applicable to financial reporting, the Listing
Requirements of the JSE Limited and schedule 4 of the
Companies Act of South Africa. In the current year, the group
has adopted all of the new and revised standards and
interpretations issued by the International Accounting
Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC) of the IASB that
are relevant to its operations and effective for accounting
periods beginning on or after 01 January 2005. The adoption of
these new and revised standards and interpretations has
resulted in changes to the group"s accounting policies in the
following areas that have affected the amounts reported for
the current and/or prior years:
share-based payments (IFRS 2);
property and equipment (IAS 16); and
business combinations (IFRS 3).
IFRS 2: Share-Based Payments requires the recognition of
equity-settled share-based payments at fair value at the date
of grant and the recognition of liabilities for cash-settled
share-based payments at the current fair value at each balance
sheet date. Prior to the adoption of IFRS 2, the group did not
recognise the financial effect of share-based payments until
such payments were settled.
IFRS 3: Business Combinations has been adopted for business
combinations for which the agreement date is on or after 31
March 2004. The option of limited retrospective application
of the standard has not been taken up, thus avoiding the need
to restate past business combinations. After initial
recognition, IFRS 3 requires goodwill acquired in a business
combination to be carried at cost less any accumulated
impairment losses. Under IAS 36: Impairment of Assets (as
revised in 2004), impairment reviews are required annually, or
more frequently if there are indications that goodwill might
be impaired. IFRS 3 prohibits the amortisation of goodwill.
Previously the group carried goodwill on its balance sheet at
cost less accumulated amortisation and accumulated impairment
losses.
In compliance with circular 7/2005 issued by the South African
Institute of Chartered Accountants and IAS 17 (revised), the
group now accounts for its fixed escalation operating leases
on a straight-line basis over the period of the lease.
The above results have also been restated with reference to
IAS 18: Revenue and IAS 16: Property, Plant and Equipment,
which has mainly resulted in the reclassification of the
certain line items and an adjustment to depreciation of spares
stock.
The group has entered into finance leases with customers and
suppliers. These have resulted in long-term receivables and
finance lease obligations.
With effect 1 March 2005, Vukani Technologies (Proprietary)
Limited became a full subsidiary of the group. All shares were
disposed on 1 September 2005.
In 2001 the board approved an incentive plan to reward
nominated executive directors with share options based on the
achievement of targets for growth in headline earnings per
share. The detail of the incentive plan is fully disclosed in
the circular dated 15 December 2005. Given the ongoing
negotiations regarding the shareholding of the company certain
key shareholders decided not to vote in favour of the issue of
these shares, and agreed in principle to compensate the
directors concerned with cash bonuses in lieu of the share
options. The services in relation to this bonus have been
rendered in the respective years of 2002, 2003 and 2005. A
provision for bonuses has been raised in each of the financial
years and in total amounts to R14,580 million and comparative
figures have been restated to this effect.
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.
There were no material events subsequent to year end, which
required additional disclosure.
Infrastructure and Related Services
The Infrastructure division produced significant growth in the
second half of the year, resulting in the division completing
the financial year with healthy organic growth. It is the
largest segment of the group and contributes R959,8 million
and R44,5 million to revenue and profit for the year
respectively. The division continues to be a dominant player
in the supply, deployment, maintenance and support of IT
infrastructure solutions. In the period under review the
division had a number of significant wins, retained all its
major customers, renewed existing contracts and strengthened
its technology partner accreditations. Regarding the latter,
the division was recognised as the best performing HP reseller
for the ISE (International Sales Europe) region outdoing other
EMEA competitors both in terms of volume and growth. The
division experienced strong performance from most segments of
the market, most notably from the coastal region, government
sector and enterprise systems unit. The strategic focus
remains unchanged, with expected growth areas encompassing
managed output solutions, enterprise systems, government
spending and infrastructure refresh projects. Datacentrix
continues to ensure that the group is accredited by its
vendors at the highest possible technical level. This
competency provides customers with peace of mind that
Datacentrix is a cost effective partner for the supply,
installation and maintenance of equipment over its entire
lifecycle.
Customer satisfaction remains extremely high with the product
life-cycle focus that Datacentrix has in the supply and
support of hardware. This focus ensures customers are assisted
through the needs determination, the product evaluation and
selection, the configuration and installation process and the
support of the infrastructure thereafter. The additional
services, which Datacentrix is extending its competencies in,
are performing according to expectation. The advanced
infrastructure projects business unit employs highly skilled
Microsoft certified engineers and performs large Microsoft-
based projects. Datacentrix" innovative approach to
outsourcing is finding a very receptive market and this
specialised division has gained further momentum this year
with the award of two blue chip clients who have outsourced
their entire IT infrastructure management to Datacentrix.
Solutions
The ERP business unit encountered challenges during the year.
Contract management has been improved and better methodologies
employed to curtail the reoccurrence of this situation. The
systems and processes continue to be reviewed and management
has been strengthened. Client relationships have been
reinforced and service delivery enhanced. Management remains
confident that these turnaround activities have improved the
efficiencies of the business and look forward to future
contributions by the business unit to the growth in earnings.
The development and integration business unit within the
Solutions Division has won major deals in the areas of
workflow and data-mining during the year. The optimisation
business unit, serving in the electronic content management
and archiving areas, has also performed creditably.
Black Economic Empowerment (BEE)
With the DTI Codes of Practice largely in place, clarity has
been provided for companies to begin to purposefully address
their empowerment credentials. Accordingly, Datacentrix will
be reviewing its credentials. The intention of the company is
that this would among other things entail the empowerment of
senior staff and management whose contribution is considered
key to the current and future success of the business. While
Datacentrix has been evaluating a number of options to this
end, consolidation in the industry may also provide an
opportunity to achieve the same goals.
Future Prospects
The board remains cautiously optimistic about the prospects of
the company. Datacentrix continues to be a well-placed partner
to government, specifically on the existing SITA contracts.
Government spending on IT has increased markedly in the last
few months and we expect to see continued activity from this
sector. The anticipated large infrastructure roll-outs
including rail and ports, electricity, Gautrain, the hosting
of the 2010 World Cup, and improved service delivery from
government departments all contribute to a positive economic
climate with positive spin-offs for the IT sector. The
pressure to make broadband more accessible and affordable to
stimulate economic growth and to make South Africa viable as a
call centre destination also adds to a positive outlook for
the IT industry. The demand for IT infrastructure and related
services continues to generate growth to the company"s
earnings. The Solutions Division is being put on a sound
footing and there are expectations that it will return to
being a significant contributor to the bottom line.
Dividend
The directors announce a review of the company dividend policy
to provide the return of a greater proportion of the cash to
shareholders. Accordingly, the normal dividend policy has been
adjusted from three times cover to two times cover on HEPS,
resulting in a dividend of 14 cents per share. In addition,
after due consideration of the company"s cash resources, the
board has decided to approve the payment of a special dividend
of 16 cents per share to be paid concurrently with the
dividend above. This will contribute significantly to
improving shareholder returns.
Declaration date: Tuesday, 18 April 2006
Last day to trade: Friday, 5 May 2006
Share trade ex dividend: Monday, 8 May 2006
Record date: Friday, 12 May 2006
Payment date: Monday, 15 May 2006
Share certificates may not be dematerialised or rematerialised
between Monday, 8 May and Friday, 15 May 2006, both days
inclusive.
Auditors" Opinion
The consolidated annual financial statements for the year
ended 28 February 2006 have been audited by Deloitte & Touche
and their accompanying unqualified audit report as well as
their unqualified audit report on this set of summarised
financial statements are available for inspection at the
company"s registered office. These summarised financial
statements have been derived from the group financial
statements and are consistent in all respects, with the group
financial statements.
Annual General Meeting
Notice is hereby given that the annual general meeting of the
company will be held at the company"s registered office on 15
June 2006 at 10h00. It is expected that the Annual Report
will be dispatched to shareholders no later than 22 May 2006.
Cautionary Update
Further to the renewal of the cautionary announcement dated 17
March 2006, shareholders are advised that negotiations
relating to the shareholding of the company, which may have a
material affect on the price of the company"s securities, are
still in progress. Accordingly, shareholders are advised to
continue exercising caution when dealing in the company"s
securities on the JSE Limited until a further announcement is
made.
Board Composition
Effective immediately, Gary Morolo, assumes the position of
non-executive chairman.
For and on behalf of the Board:
Gary Morolo
Chairman
19 April 2006
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,
*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: 19/04/2006 01:00:56 PM Produced by the JSE SENS Department
