Mar

Digicore announces 34% increase in profit after tax

2015-03-05 11:57
Nick Vlok C.E.O of Digicore

Performance for the first half of the financial year to 31 December 2014 has been very encouraging with all operations local and international, reporting profits and solid progress against our strategic objectives and plans.

Nick Vlok, CEO of DigiCore, supplier of Ctrack, advised that the investment and effort devoted to further enhancing the organisation’s systems and processes in prior years are now yielding results. “We are more responsive to our customers’ needs and our customers, in turn, benefit from competitive products and pricing with solutions that are economically scalable across the markets and channels in which we operate”, Vlok added.

Underscoring continued investment in technology, DigiCore’s Ctrack received the 2014 Technology Top 100 award for management of technology (large enterprise category) endorsed by the Department of Science and Technology, and is a master innovator finalist in the Accenture Innovation Index.

Equally, investing in sales structure and selling skills has enabled Ctrack to develop a healthy sales pipeline and leverage a variety of solutions, including insurance telematics, jamming detection and fleet analytics. A new camera and navigation solution, with workforce management, is progressing for release in the second half of the financial year.

The group is acquiring the remaining 49% of its subsidiary, FleetConnect, which provides asset lifecycle software and already supplies the software for fuel and maintenance management to three South African banks.

An agreement for distributing Ctrack products in the USA was signed in December 2014, opening new opportunities for the group.

Cash-flow improvement remains a priority as we continue to reduce stock levels and increase recoveries of old debt.

Highlights of the first six months of the financial period were the long-anticipated turnaround of Ctrack’s international operations, increase in revenue generated from the insurance industry, growth in the stolen vehicle response (SVR) market and further success on cost-saving initiatives.

R7,5 million of the profit before tax of R29,7 million was generated by the international business, a welcome reversal from the loss of R3,5 million reported in the comparative period. Revenue increased by 5,3% (R22,5 million), mainly attributed to growth in the SVR and insurance markets.

Overhead expenditure decreased by R5,8 million mainly due to a lower provision for bad debts after the clean-up in the previous financial period. After considering the impact of the bad-debt provision, overhead expenditure was in line with the prior year, reflecting the effectiveness of cost-saving initiatives despite inflationary salary increases of 7% for their employees.

The business continued to generate positive cash flows, allowing the group to settle a further R18,8 million on financing facilities.

The group sold 6 273 500 shares (11,5% of our holding) in TPL Trakker Limited for an amount of R5,9 million which further enhanced the cash position of the group. The results include R2 million of TPL Trakker Limited’s profit which has been equity accounted by DigiCore.

With costs now under control and internal processes being enhanced daily, Vlok concluded, “management is left with the single task of increasing the revenue of the group and managing relationships that will further cement a positive outlook for the group.”

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