| Tue 5 Sep 2006, 9:00 | | DigiCore Holdings Limited - Group Audited Results |
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DGC
DGC
DigiCore Holdings Limited - Group Audited Results
DigiCore Holdings Limited
Registration number 1998/012601/06
JSE code: DGC & ISIN code: ZAE000016945
Group Audited Results
Operating profit 64%
Earnings per share 53%
Revenue 28%
Abridged group balance sheet
Restated
As at as at
30 June 30 June
2006 2005
R"000 (Audited) (Audited)
ASSETS
Non-current assets 87 194 80 730
Property, plant and equipment 22 566 18 347
Intangible assets: Goodwill 56 174 45 951
Investments: associates 1 979 1 939
Investments: other 382 6 150
Deferred tax 6 093 8 343
Current assets 198 477 157 929
Inventories 48 255 46 510
Trade and other receivables 88 800 62 818
Cash and cash equivalents 61 422 48 601
Total assets 285 671 238 659
Equity and liabilities
Capital and reserves 198 478 154 483
Equity Attributable to ordinary shareholders 188 633 152 370
Share capital and premium 11 630 19 264
Distributable reserves 1 427 6 590
Retained income 175 576 126 516
Minority interest 9 845 2 113
Non-current liabilities 15 746 29 325
Interest-bearing borrowings 15 746 21 987
Long term provisions - 7 338
Current liabilities 71 447 54 851
Trade and other payables 29 833 26 140
Current provisions 8 294 3 358
Taxation payable 30 590 22 527
Current portion of long-term borrowings 2 730 2 826
Total equity and liabilities 285 671 238 659
Net asset value per share (cents) 93.2 75.3
Abridged group income statement
Restated
Year year
ended ended
30 June 30 June
% 2006 2005
R"000 growth (Audited) (Audited)
Revenue 28 323 239 253 049
Cost of sales and operating expenses (229 548) (195 959)
Net operating profit for the year 64 93 691 57 090
Net investment income 2 975 439
Net (loss)/income from equity
accounted investments (112) 310
Profit before taxation 67 96 554 57 839
Income tax expense 94 (28 970) (14 907)
Profit for the year 67 584 42 932
Attributable to:
Minority shareholders 3 453 2 113
Equity holders of the parent 57 64 131 40 819
Number of ordinary shares in issue (`000) 202 355 202 355
Weighted average number of ordinary shares
in issue (`000) 198 572 193 954
Fully diluted number of ordinary
shares in issue (`000) 202 355 202 355
Basic earnings per share (cents) 53 32.3 21.1
Basic headline earnings per share (cents) 51 31.9 21.1
Interim dividend per share paid (cents) 100 4.0 2.0
Final dividend per share proposed (cents) 50 6.0 4.0
Determination of headline earnings:
Attributable to equity holders of the parent 64 131 40 819
Impairment of goodwill - 519
Profit on disposal of fixed assets (875) (458)
Headline earnings for the year 63 256 40 880
Reconciliation of previous GAAP to IFRS:
Profit after tax previously reported 40 930
Share based payment expense - IFRS2 (157)
Tax expense effect on above 46
Adjusted profit after taxation 40 819
Abridged group cash flow statement
Restated
Year year
ended ended
30 June 30 June
2006 2005
R"000 (Audited) (Audited)
Cash flows from operating activities 58 111 28 812
Cash generated from operating activities 73 903 29 156
Net investment income 2 975 439
Taxation paid (18 655) (1 093)
Net equity (loss)/profit from associate (112) 310
Cash flows from investing activities (11 086) (40 130)
Cash flows from financing activities (34 204) 13 726
Increase in cash and cash
equivalents for the year 12 821 2 408
Cash and cash equivalents
at the beginning of the year 48 601 46 193
Cash and cash equivalents
at the end of the year 61 422 48 601
Cash held in Rand accounts 47 389 45 617
Cash held in foreign accounts 14 033 2 984
Statement of changes in equity
Restated
Year year
ended ended
30 June 30 June
2006 2005
R"000 (Audited) (Audited)
Share capital and premium
Share capital and premium at beginning of year 19 264 15 541
Movement in treasury shares during the year (7 634) 15
Movements during the year - 3 708
Share capital and premium at end of the year 11 630 19 264
Distributable reserves
Distributable reserves at beginning of year 6 590 -
Movement in foreign currency
translation reserve during
the year 1 150 -
Movement in share based payment
equity reserve during
the year 136 141
Movement in foreign reserves during the year (6 449) 6 449
Distributable reserves at end of the year 1 427 6 590
Retained income
Retained income at beginning of the year 126 516 105 810
Movement in attributable earnings during the year 64 131 40 819
Dividends paid during the year (15 069) (20 113)
Retained income at the end of the year 175 576 126 516
188 633 152 370
Minority interest
Minority interest at beginning of the year 2 113 -
Movement in attributable earnings during the year 3 453 2 113
Movement through business combinations during the year 4 279 -
Minority interest at the end of the year 9 845 2 113
Comments
Introduction
The board is extremely proud to announce great performance for the fifth
consecutive year. To achieve in excess of 57% growth in attributable
earnings on top of the 80% on our previous year is a remarkable achievement
from our management and staff. This was achieved simultaneously with
substantial startup costs being incurred while establishing our new C-track
Secure stolen vehicle recovery (SVR) division.
Financial results
Turnover grew by 28% from R253 million to R323 million. Unit sales
increased by 52% over the year and assisted us in increasing operating profit
by 64% from R57 million in 2005 to R94 million for the current year.
Earnings per share increased by 53% to 32 cents per share from 21 cents per
share in the previous year. Headline earnings per share increased from 21
cents (2005) to 32 cents per share. These calculations are based on a total
weighted average of 198,572 million ordinary shares in issue. The
difference between the total number of shares in issue and the weighted
average number of shares in issue relates to treasury shares held in the
share trust.
Cash generated by operations grew from R29 million to R74 million. Cash on
hand increased by R13 million to R61 million. This is after the payment of
dividends, reduction in foreign borrowings, investment in the United
Kingdom subsidiary and additional marketing spent of R9 million during this
year. The group will continue to manage its cash resources with prudence.
Trade receivables increased to R89 million due to exceptionally high sales
in June 2006. This balance has subsequently been reduced to R60 million
with the payment of the trade receivables and cash in bank had increased by
a similar amount at the end of July 2006.
Inventory holding as a percentage of revenue is now at an acceptable level
compared with high inventory holding experienced at the end of the previous
year end.
Our 51% European subsidiary has grown turnover and NPAT by 81% and 210%
respectively, contributing R6,5 million to our consolidated profit for the
period, while at the same time reducing foreign loans. The total European
strategy is on track as per the original business plan and expectations.
During the year we have invested into our United Kingdom distributor by
purchasing a 51% shareholding in the business. This has enabled the
business to be poised for rapid expansion and growth.
Operations
The ongoing building and maintaining of customer relationships and the
bedding down of new technology in the previous year is starting to show
good results. Our technology, which allows customers to decrease their
monthly operating costs, helped grow turnover to R323 million.
This year has seen the full scale launch of our stolen vehicle recovery C-
track Secure product. Since January 2006 we have deployed a full team to
market and install this product in a separate division. Although we have
not fully reached all our goals, the division broke even in the last
quarter and is set to contribute towards our profitability in the future.
International
The international business has been growing through our well-established
distribution channels. We have signed distribution contracts with six new
companies in Europe, UAE and Asia. The intensified operational cooperation
between DigiCore Europe BV and C-track Benelux BV has lead to sharing of
expertise that greatly improved sales and marketing into the other European
countries.
The Pakistan operation has again met our expectations with good growth in
unit sales and has strengthened its number one position in the area.
Technology
The technology team has implemented an information "Gateway" or "Hub"
making it possible to service our customers better and cut their costs
through the implementation of GPRS in transferring more data at a reduced
tariff from the cellular network providers. At the same time this increased
our customer involvement thus creating another annuity based revenue
stream.
Optimising the hardware designs also assisted in reduced manufacturing
costs, thus protecting our margins which has resulted in not having to
increase prices to our valued customers.
Black Economic Empowerment (BEE)
An innovative BEE transaction in our South Africa Fleet Management business
was concluded. This deal will not only give us the required equity
credentials, but will add real value to this business in future with the
expertise that our partners bring. The Group also appointed our first black
executive director in this newly formed subsidiary, working full time to
achieve our goals set for the coming years. Our BEE partners will in
particular add value to our finance, legal, human resources and sales and
marketing divisions. The Group remains committed to grow all the other
pillars of Broad Based Black Economic Empowerment to ensure a truly South
African business.
The future
A continuation in development of world class software and hardware will
ensure we meet the basic needs of every vehicle owner on the Globe and will
remain one of our major goals. We will continue to dominate the markets we
select to operate in through this world class technology.
Further accelerated International expansion will be part of our strategy
going forward. It is our intention to strengthen and grow this division to
identify new markets and distributors, as well as to provide support to
ensure that they achieve success quicker than in the past.
We have embarked on entering the SVR market and will continue to build on
the foundations laid during the reporting period. Several agreements have
been entered into and the required approvals received, to enable us to make
inroads into this market.
This will allow for the future growth and long term sustainability of the
group.
Audit report
The group"s consolidated financial statements for the year ended 30 June
2006 have been audited by PKF (Pretoria) Incorporated, registered auditors
and accountants. The board has approved these annual financial statements
that have been abridged for purposes of this report. Their unqualified
audit report is available for inspection at the company"s registered
address.
Corporate governance
The group endorses the Code of Corporate Practice and Conduct as set out in
the King Committee Report on Corporate Governance in South Africa (2002).
Post balance sheet events
Other than the implementation of the BEE transaction effective from 1 July
2006, there have been no other significant events subsequent to year end
and up to the date of this report, that would require adjustment.
Basis of preparation and implications of adopting IFRS
The group, in accordance with the listing requirements of the JSE Limited, has
adopted International Financial Reporting Standards (IFRS)
for the financial year ended 30 June 2006. The date of transition to IFRS is 1
July 2004, which represents the earliest period of comparative information
disclosed. Comparative figures have been restated and no other adjustments to
periods ending prior to 30 June 2004 were needed. IFRS1, First Time Adoption of
International Financial Reporting Standards has been applied in preparing
the audited consolidated financial results in accordance with IAS34 -
Financial Reporting. As at the financial year end, there were no changes to
the impairment evaluation. The group no longer provides for amortisation of
goodwill and goodwill is subject to an annual impairment test.
Implications of adopting IFRS2 - share based payments
The group grants share options to employees. In accordance with the
requirements of IFRS2, the group now recognizes an expense in the income
statement with a corresponding credit to equity. The fair value at the date
of granting of options is charged to the income statement on a straight
line basis over the relevant vesting periods, which are adjusted to reflect
actual and expected levels of vesting.
The prior reporting period adjustments are R111 000 after tax and the
current period adjustment is R241 000.
Dividend announcement
In line with the company policy, the board has declared a final dividend of
6 cents (2005: 4 cents) per share. This is after the company paid an
interim dividend of 4 cents (2 cents) per share in April 2006.
Payment will be made on Monday, 9 October 2006 to all shareholders recorded
in the register on Friday, 6 October 2006. The last day to trade to qualify
for the dividend will be 29 September 2006 and the shares will be traded
ex-dividend from Monday, 2 October 2006.
Share certificates may not be dematerialised or rematerialised between
Monday, 2 October 2006 and Friday, 6 October 2006, both days inclusive.
NA Gasa NH Vlok
Chairman (acting) Chief executive officer
5 September 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, BC Esterhuyzen*,
DA Nieuwoudt, BJ Richards#, MD Rousseau,
BS Khuzwayo*, SS Ntsaluba*
* Non-executive # British
Company secretary
DA Nieuwoudt
www.digicore.com
Date: 05/09/2006 09:00:22 AM Produced by the JSE SENS Department
