| Tue 27 Feb 2007, 7:05 | | DGC - DigiCore - Group Interim Results for the six |
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DGC
DGC
DGC - DigiCore - Group Interim Results for the six months ended 31 December 2006
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 2006
- Operating profit 43% up
- Headline Earnings per share 41% up
- Revenue 31% up
Commentary
The DigiCore Board is pleased to announce another period of strong and
consistent growth in all our markets. In South Africa, our traditional Fleet
Management business has performed extremely well and our Stolen Vehicle Recovery
(SVR) division has delivered conclusive proof of the market need for a
professional company with advanced technology at a competitive price.
DigiCore`s exports have again increased substantially as our new and existing
international markets expand their sales.
Financial results
Revenue increased by 31% to R190 million from the comparative period last year
with the local and offshore businesses showing good growth. Due to efficiency
in our factory, profit margins have also shown a marginal increase to 25,6% from
23,5% in the comparative period last year.
Income from associates has shown growth generated by a profitable DigiCore
Germany business that is effectively 25% owned.
Profit before tax for the six months is R50,4 million, a 41% increase on the
comparative period last year; while attributable earnings has risen 34% to R34,9
million.
Profit attributable to minority shareholders relates to profit attributable to
the outside shareholders of DigiCore Europe and our BEE partners as well as an
apportionment of the loss for the period from DigiCore Limited, our UK
subsidiary, that is expected to be profitable for the full year.
Earnings per share and headline earnings per share has grown by 40% to 16,1
cents (2005: 11,5 cents) and 41 % to 15,9 cents (2005: 11,3 cents per share)
from last year respectively.
The consolidated balance sheet at 31 December 2006 remains strong. Inventories
at year-end was high due to long lead times for components, as well as large
contracts locally and abroad that were not fully completed by year-end.
Repayment of loans by the European subsidiary reduced borrowings by R3,7 million
over the last six months.
Bank and cash has increased from R61,4 million to R64,8 million over the last
six months, with R42,4 million cash being generated by operations. Shareholders
were paid R11,9 million in dividends and R17,8 million was paid in taxation.
R7,2 million went into acquiring property, plant and equipment, and R3,7 million
in the repayment of foreign loans.
Local market
Unit sales in our Fleet Management business through our branch network increased
by 37% compared to the previous period. We have experienced an upturn in tender
activities which included orders worth R10 million from eThekwini, Western Cape
and City of Tshwane. The conclusion of our BEE transaction with Amabubesi and
Western Breeze on 1 July 2006 has ensured that we comply with the requirements
for securing Government business.
Our Stolen Vehicle Recovery (SVR) business has started to gain momentum. A
number of breakthroughs in this period have shown that innovative thinking and
value driven products will always find a keen market, even against well
established competitors. Our SVR business will continue to be a focus area for
management and should reach break-even during the next reporting period.
Our South African Communication Hub (Hub) in Centurion has become a major value
driver in our local business, currently hosting 35 000 vehicles and 800 clients.
The Hub enables us to provide an end-to-end service to our C-track clients,
allowing them to focus on their operations, using the vehicle and fleet
information we deliver to their desktops in real time. The Hub processes more
than three million transactions per day, increasing daily as more clients
realise the value the Hub brings to their businesses.
International business
It has been an exciting period for our International Division, with unit sales
growing 44%. Markets in countries other than Europe, UK and Pakistan have taken
off,showing growth of over 300% and laying the foundation for successful
businesses in these areas similar to our traditional markets. Across the globe,
our partner Grameen Phone in Bangladesh (with a 66% market share in their local
cellular industry) is gearing up to potentially match Pakistan in C-track unit
sales in mid-2008. Silver Ridge (Malaysia), a distributor focusing on the SVR
market, has also started to move ahead rapidly into its local OEM and insurance
markets.
We have been extremely successful with C-track in the UK, winning the last four
tenders we bid for and adding Virgin Media, Southern Water and two other large
new water utility companies to our customer base. DigiCore Europe`s distributors
showed good growth on a solid installed base whilst Pakistan again increased
unit sales by 27%.
Technology
Our R&D and Product Support divisions have increased their capacities in support
of our local and international growth. The release of new products and
enhancements during the period has helped secure a number of new clients and
orders. These new products, with the new South African maps due in March, will
ensure that DigiCore remains well ahead of the competition. With the internet
becoming a pervasive force in our industry, we have launched C-track Connect,
our web and internet base-station software with full dynamic mapping. Several of
our larger clients have now implemented C-track Connect in order to enjoy the
advantage of an intranet-based solution and huge infrastructural savings.
Several vertical market applications based on C-track have been released to add
support for remote workforce and people management.
Going forward
We are currently awaiting decisions on several major tenders, locally and
internationally; the award of any one of these will result in an extremely busy
and potentially profitable 12 months going forward.
Launching C-track Secure (our SVR product range) was very successful indeed. The
Secure business is growing exponentially, already delivering an annuity income
stream which is making a substantial contribution to DigiCore`s business and
profit. We are currently supplying +/-3% of this market monthly with large scope
and many opportunities to grow it further. Our C-track Secure is better placed
on a price-performance ratio than any of the other products in the market and
our high recovery rate has ensured that insurance companies are taking note.
The future is promising as the remaining 90% plus of commercial vehicle owners
will be considering some form of telematics or tracking product in their
vehicles in the next few years. DigiCore remains amongst the front runners in
our markets, with a solid product and technology base and significant market
experience. It is our belief that although the basic technologies applied in our
C-track products have matured, barriers to entry are in fact becoming higher and
we are optimistic about our future for the years to come.
For and on behalf of the board
NA Gasa NH Vlok
Chairman (acting) Chief executive officer
27 February 2007
Abridged group balance sheet
As at As at As at
31 Dec 31 Dec 30 June
2006 2005 2006
R`000 Note (Unaudited) (Unaudited) (Audited)
ASSETS
Non-current assets 91 056 83 023 87 194
Property, plant and equipment 2 24 837 17 769 22 566
Intangible assets: goodwill 56 649 50 762 56 174
Investments: associates and 2 559 6 035 2 361
other
Deferred tax 7 011 8 457 6 093
Current assets 213 891 159 389 198 477
Inventories 62 144 41 102 48 255
Trade and other receivables 86 971 65 014 88 800
Cash and cash equivalents 64 776 53 273 61 422
Total assets 304 947 242 412 285 671
EQUITY AND LIABILITIES
Capital and reserves 222 004 161 701 198 478
Equity attributable to 208 947 154 306 188 633
ordinary shareholders
Share capital and premium 11 751 13 409 11 630
Distributable reserves 1 714 (747) 1 427
Retained income 195 482 141 644 175 576
Minority interest 13 057 7 395 9 845
Non-current liabilities 14 750 18 550 15 746
Interest-bearing borrowings 14 750 18 550 15 746
Current liabilities 68 193 62 161 71 447
Current portion of long-term - - 2 730
borrowings
Provisions 9 531 5 938 8 294
Taxation 29 258 19 619 30 590
Trade and other payables 29 404 36 604 29 833
Total equity and liabilities 304 947 242 412 285 671
Net asset value per share 103,3 76,3 93,2
(cents)
Abridged group income statement
6 months 6 months Year
ended ended ended
31 Dec % 31 Dec 30 June
2006 growth 2005 2006
R`000 Notes (Unaudited) (Unaudited) (Audited)
Revenue 189 986 31 145 381 323 239
Cost of sales and (141 229) (111 179) (229 548)
operating expenses
Net operating profit 48 757 43 34 202 93 691
Net investment income 1 242 1 926 2 975
Net income/(loss) from
equity accounted
investments 439 (310) (112)
Profit before taxation 50 438 41 35 818 96 554
Income tax expense 3 (15 578) 58 (9 842) (28 970)
Profit for the period 34 860 34 25 976 67 584
Attributable to:
Minority shareholders 3 073 2 866 3 453
Equity holders of the 31 787 38 23 110 64 131
parent
Number of ordinary shares 202 355 202 355 202 355
in issue (`000)
Weighted average number 198 043 201 667 198 572
of ordinary shares in
issue (`000)
Fully diluted number of 202 355 202 355 202 355
ordinary shares in issue
(`000)
Basic Earnings per share 4 16,1 40 11,5 32,3
(in cents)
Basic Headline earnings 15,9 41 11,3 31,9
per share (in cents)
Dividend per share (in 5,0 25 4,0 10,0
cents)
Reconciliation between
basic to headline
earnings:
Attributable earnings 31 787 23 110 64 131
Profit on disposal of (279) (245) (875)
fixed asset
Headline earnings 31 508 22 865 63 256
Abridged group cashflow statement
6 months 6 months Year
ended ended ended
31 Dec 31 Dec 30 June
2006 2005 2006
R`000 (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities 14 415 26 595 43 041
Cash generated by operating 42 443 45 982 73 903
activities
Net finance income 1 242 1 926 2 975
Equity profit/(loss) from associates 439 (310) (112)
Dividends paid (11 881) (8 094) (15 070)
Taxation paid (17 828) (12 909) (18 655)
Cash flows from investing activities (7 743) (3 371) (11 086)
Cash flows from financing activities (3 318) (18 552) (19 134)
Increase in cash and cash 3 354 4 672 12 821
equivalents
Cash and cash equivalents at 61 422 48 601 48 601
beginning of the period
Cash and cash equivalents at end of 64 776 53 273 61 422
the period
Statement of changes in equity
6 months 6 months Year
ended ended ended
31 Dec 31 Dec 30 June
2006 2005 2006
R`000 (Unaudited) (Unaudited) (Audited)
Share capital and premium
Share capital and premium at 11 630 19 249 19 264
beginning of the period
Movement in treasury shares (5 840) (7 634)
Arising on shares issued in terms of 121 - -
the share incentive scheme
Share capital and premium at end of 11 751 13 409 11 630
the period
Distributable reserves
Foreign currency translation reserve
Balance at beginning of period 1 150 - -
Arising during current period 142 (747) 1 150
Balance at end of period 1 292 (747) 1 150
Equity-settled share-based payment
reserve
Balance at beginning of period 277 - 141
Employee share option scheme - - (205)
Arising during current period 145 - 341
Balance at end of period 422 - 277
1 714 (747) 1 427
Retained income
Retained income at beginning of the 175 576 126 628 126 516
period
Movement in attributable earnings 31 787 23 110 64 131
during the period
Dividends paid during the period (11 881) (8 094) (15 071)
Retained income at the end of the 195 482 141 644 175 576
period
Minority interest
Balance at beginning of period 9 845 2 113 2 113
Movement through business - 2 416 4 279
combinations
Share of recognised income and 3 073 2 866 3 453
expenses
Share of foreign currency 139 - -
translation reserve
Minority interest at end of the 13 057 7 395 9 845
period
Notes to the financial statements
1. Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34: Interim Financial Reporting and the requirements of the
South African Companies Act 1973, as amended and the JSE Limited.
These interim financial statements have not been audited or reviewed.
The accounting policies applied are consistent with those used in the
preparation of the Annual Financial Statements for the year ended 30 June 2006.
2. Property, plant and equipment
The group constructed a new workshop and office building in Cape Town in the
current reporting period. Costs amount to R2,5 million. The building was
commissioned in early January 2007.
3. Income tax expense
The tax rate of 30,9% (2005: 27,5%) comprises the annual income tax rate of
27,9% plus secondary tax on companies (STC) on the final dividend declared for
the year ended 30 June 2006, which was paid to shareholders in October 2006.
For the comparative period no STC was payable on dividends declared and paid.
4. Earnings per share
The difference between the total number of shares in issue and the weighted
number of shares in issue relates to treasury shares, which are held by the
share trust for share options given to employees that will convert in the
future.
Dividend announcement
In line with company policy, the board has declared an interim dividend of 5
cents per share (2005: 4 cents per share), which is a 25% increase on the
comparative period.
Payment will be made on Monday, 19 March 2007 to shareholders recorded in the
register on Friday, 16 March 2007.
The last day to trade to qualify for the dividend will be Friday, 9 March 2007
and the shares will be traded ex dividend from Monday, 12 March 2007.
Share certificates may not be dematerialised or rematerialised between Monday,
12 March 2007 and Friday, 16 March 2007, both days inclusive.
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
SS Ntsaluba*, Adv BS Khuzwayo*
* Non-executive # British
Company secretary
DA Nieuwoudt
www.digicore.com
Date: 27/02/2007 07:05:01 Produced by the JSE SENS Department.
