When Nick Vlok, CEO and chairman of JSE-listed DigiCore Holdings Ltd, supplier of Ctrack, took to the podium in February last year (2013) to deliver the interim financial results of the company for the period ending December 31, 2012, he wasn’t a happy man. This year was different. He was a ‘happy chappy’– and he has every reason to be so writes Patrick O’Leary.
From last year’s rather dismal tale of bad service, losing clients and things going generally wrong, Vlok was able to sketch a far brighter picture this year telling of a profit before tax growth of 55% to R22.1-million for the six months ended December 31, 2013. The gross profit margin was strengthened to 72% from 65.5% in the comparative period.
Cash flow from operating activities increased by 3.4% to R58-million and the improvement in the company’s cash flow position enabled it to repay R34.2-million in loans and bank overdraft facilities. The bulk of fleet systems sold have been externally financed, bringing additional benefits.
Vlok said that from an operational perspective, service improvements in the support centre, customer care and accounts departments had allowed sales and management to place greater focus on new business acquisitions and account management. “The new consumer sales strategy is generating opportunities within the dealership and insurance channels thus driving annuity revenues,” he said.
Vlok also pointed to a new partnership with VSC Solutions as bringing good news as it will assist in selling a total fleet solution to customers in the logistics sector in South Africa.
The company is also continuing to work closely with the taxi industry with its Tap-i-Fare offering and the outcome of a recent request for proposals on both telematics and fare collection is believed to be imminent. Ctrack Mzansi has grown into is a fully functioning division, tendering for Government and private operator contracts.
On the bad news front, Vlok said the economic climate in Europe continued to adversely impact business, with cost control measures leading to the closure of Belgium and France offices which are now supported from the Netherlands.
However, operations in Australia and New Zealand are trading profitably and poised for good future growth on the back of the mining, heavy duty and fleet sectors. Ctrack’s footprint in Africa, Asia and the Middle East has been further expanded through the appointment of local distributors.
According to Vlok, the insurance telematics sector is growing rapidly and he reckons DigiCore is now well poised to support this industry. On the telematics front, an accolade which came from the Ptolemus Consulting Group was for DigiCore to be ranked ‘best telematics technology and service provider’ in Asia, Latin America and other continents, including Africa and Australasia, in the 2013 Insurance Telematics Supplier Ranking Study. Good stuff!
Vlok also pointed out that the later part of the review period saw some new products being released which will serve to support DigiCore’s market position and open new future growth opportunities. These include:
- Ctrack On-the-Road, a complete on-board system that helps fleet operators save time and money through advanced navigation, task management, messaging, optimal routing, driver behaviour and video. He said this product has generated much interest and future orders. (See elsewhere in this edition for a report on this product).
- Ctrack’s Multi-comms module which now offers seamless communications to multinationals and large corporate companies operating in non-GSM areas with the options of Wi-Fi and Iridium satellite. The mining sector in Africa, Asia and Australia has shown particular interest in this solution.
- OBDII developments have provided fuel reading and plug-and-play vehicle tracking solutions.
The bottom line, according to Vlok, is that “the growth in profitability and the cash flow generated from operations provides a sound basis on which to accelerate our top line growth in the second half of this financial year.”
Pleased the ‘wobble’ is over
FleetWatch is pleased to hear all this for, to be honest, DigiCore went some way off the map over the past few years – in fact from the time Vlok retired on June 25, 2011. From a company which over the years had made great inroads into the trucking sector via its Ctrack offerings, it was wobbling – not to the extent of falling totally off the cliff but it certainly wasn’t on the firm ground it used to stand on.
In the competitive market in which Ctrack operates – what with strong opposition like MiX Telematics and a fast growing Cartrack, as well as a growing trend towards propriety OEM fleet management systems such as FleetBoard from Mercedes-Benz – it was the wrong time to ‘go wrong’.
It was thus that after going shopping with his wife once, mowing the lawn twice, going fishing three times and trying to hit a golf ball four times, Vlok parked the golf cart he received as a retirement gift, packed away his golf clubs, handed the lawn-mower over to his wife, threw the fishing rods into the dam (he never caught anything anyway) and drove back to work to take over the reins once again so as to get the company back on track. He was back where he belonged.
To go into all the actions taken to effect the required turn-around would take too much space here. However, they included putting an entire new management team in place, reviewing all systems and processes, improving the monthly financial reporting to enable more informed decisions to be made and most importantly, getting the sales team back into the market interfacing with its clients.
It wasn’t easy and as Vlok admits, it took longer than he expected. However, the corner has been turned and he is now confident Ctrack is back on track.
FleetWatch welcomes this news because DigiCore has always been a strong and reputable player in the market. In fact, the company, with its innovative products, was – along with the then Matrix Vehicle Tracking (now MiX Telematics) – a pioneering ‘world leader’ in the vehicle tracking and fleet management arena.
I recall many years ago attending a press conference held by Scania at the Hannover Truck Show in Germany. The president of Scania was on the podium and after reporting the company’s financial results and other achievements, he announced a new, exciting development. It was that Scania was in the process of developing a system which would allow fleet operators to track their vehicles in real-time on a computer screen from their offices. Huh!
You could feel the excitement in the room but at question and answer time, I think I put a bit of a damper on the break-through news when I took the microphone and said: “But that’s not new. We’ve been doing that in South Africa for years. Why not send your development engineers out to us and we’ll introduce you to the people who are doing that.”
Yes, DigiCore was a world pioneer and to have such a company flounder is not good for anyone – even for the opposition.
“We’ve seen DigiCore weaken over the past two years and have not been happy about it because if the market sees a strong player flounder, the whole sector could be seen as being dodgy and that is not good for us. We welcome good opposition. It keeps us on our toes and keeps the whole industry segment healthy.” These words came from a top manager in one of DigiCore’s opposition companies.
Obviously I am not going to reveal who said this to me but there you have it DigiCore. Even your opposition is happy that you’ve turned the corner. Go for it!
Click on the video below for an interview by FleetWatch Editor, Patrick O’Leary, with Nick Vlok, CEO and Chairman of DigiCore Holdings Ltd, on the road travelled over the past year and a bit. I apologise for it being slightly out of focus. This blinking camera and I are still getting to know each other. I need to turn the corner with it as well – blinking thing!