JSE-listed fleet management and vehicle tracking group, DigiCore has reported a decline in sales for the for the six months ending December 2012, but forecasts a turnaround following the completion of a restructuring process.
Revenue for the interim period increased 12% to R448.48 million, but operating profit dropped 54% to R17.28 million.
Diluted headline earnings per share declined 55% to 4.5 cents, from 10 cents in 2011.
A 7% increase in gross profit to R299.2 million was affected by the 11% increase in operating expenses to R250.2 million.
“We are satisfied that the business has turned, albeit slowly. We increased turnover, unit sales and annuity income in real terms. We have restructured and changed management teams, an investment for future growth,” it said.
DigiCore noted that while cellular connection incentive bonuses ended, lower monthly costs (down 70%) will have a much more positive effect on profitability in years to come. Cash flow during the period was affected by this change, it said.
The group said it expanded into new areas geographically, and through some smaller acquisitions in the past 18 months. “We will, in the next 12 months, consolidate the businesses to better manage working capital, cash flow and expenditure,” the group said.
For the six months ended December 2012 the group increased its installed base, with an additional 41,000 systems shipped. “Additional investments have also been made in maintaining and enhancing our technology offerings,” DigiCore said.
For Ctrack South Africa, contract renewals improved over the period and continue to increase monthly.
DigiCore said that a number of long-standing fleet orders and partnerships have come
to fruition and initial roll outs will start to gather momentum.
“The fleet tender business has been particularly busy, with many tenders in adjudication over the next three months. Partner channels to market have expanded and the groundwork completed to support sustainable growth,” it said.
DigiCore said its gross margin declined to 66.7% from 69.5%, as a result of selling units for its deal with Discovery at reduced margins.
The group provides Discovery with telematics products for its short-term insurance entity Discovery Insure.
Discovery Insure recorded solid growth. “While not meeting full volume expectations, this initiative has comfortably exceeded 30,000 Ctrack insurance telematics systems installed to date,” DigiCore said.
Looking ahead, DigiCore said it is cautiously optimistic of an improved trading performance in the year ahead. “With management and structural changes complete, and a new product set released, the group is well positioned to capitalise on opportunities in the fleet, mining, government and insurance telematics industries.”