Fleet management and vehicle tracking solutions company, JSE listed DigiCore Holdings Limited, grew its interim revenue by 12% to R448.5 million for the half year ended 31 December 2012. Gross profit improved by 7% to R299.2 million over the comparative reporting period. Future annuity subscriptions and service revenue streams were secured with an additional 41,000 systems shipped.
Barney Esterhuyzen resigned as CEO in February 2013. During his 18 months as CEO, Barney implemented a substantial structural overhaul of the group for the purposes of driving future growth strategies and alignment of international operations. With this work done, Nick Vlok, founder of DigiCore, returns as CEO from the position of non-executive Chairman, with strong operational and customer focus to steer the group to the next level. Nick held the position of CEO from 2001 to June 2011.
The review period saw all international operations introduce the re-engineered technology platform providing a new generation of telematics products and solutions taken to market under the Ctrack brand. This latest technology platform is now well embedded in the business after extensive and enhanced technical training. This upgrade provides an even more robust and remotely scalable set of solutions for our customers’ rapidly changing requirements in both the consumer and commercial markets.
Further investment in market-leading driver behavior systems for insurance telematics customers such as Discovery Insure, an increased depreciation charge on our rental assets and an 11% growth in operating expenses contributed to the reduction in profit after tax from R26.4 million to R13.2 million.
“Some restructuring has been necessary in the South African operation to derive synergies and drive future growth strategies. There will be a cost benefit flowing to the bottom line in the coming months,” says Nick Vlok, CEO of DigiCore Holdings Limited.
While cellular connection incentive bonuses ended as a revenue stream, lower monthly airtime costs (down 70%) will have a much more positive effect on profitability in future. Cash flow during the period was negatively affected by this change.
The fleet business performed well, particularly in the light commercial vehicle sector, as companies adopt telematics solutions to manage down the operational costs of their fleets. In Europe where economic growth remains weak, the UK’s traditional fleet business is showing accelerated growth but this was diluted by flat sales in other European countries.
With Australia and New Zealand markets demanding solutions that support 3G, Ctrack launched its new technology platform with 3G giving customers the latest available in telematics solutions. This has presented Ctrack several opportunities related to compliance regulations, new technology such as electronic work book diaries and the emergence of new products catering for satellite communications and fatigue-management solutions.
The African region is growing rapidly and delivered the same net profit in the review period as it did in the full year 2012 with mining being the catalyst. These customers are using Ctrack’s mining solution to reduce vehicle abuse and increase the productivity of their operations vehicles.
Investment in a new data centre in Malaysia offers Ctrack customers market-leading tracking technology and services in the Asia region. Singapore was recently added to the Asian distributor network, represented by Mega Fortris Ctrack Solutions, to focus on the growing trend of cross border logistics from China to Singapore.
Installation of Ctrack insurance telematics systems has now passed 30,000 for Discovery Insure. There have been further investments in this industry sector in both Europe and Australia, alongside some of the regions’ market-leading insurance providers, which will open up new growth opportunities. However, sales performance in the traditional Stolen Vehicle Recovery (SVR) business in South Africa was flat.
The Integrated Fare Collection Systems subsidiary opened local operations in Kwazulu Natal to roll out its Tap-i-Fare solution to various taxi associations from April 2013 onwards. FleetConnect has worked very closely with Wesbank to further enhance their joint asset management solutions and partnerships.
MotorOne was sold to Autovest in January 2013 and will be a reseller of Ctrack product focusing on a broad base of motor dealerships.
“I am satisfied that the business has turned, albeit slowly. We increased turnover, system sales and annuity income in real terms and we have invested in our future growth”, CEO Nick Vlok said.
DigiCore is a JSE company specialising in fleet management and vehicle tracking for a global client base. With more than 25 years of experience, DigiCore is recognised as a world-leading provider of advanced machine-to-machine communication and telematics solutions that adds value to this global base of customers with mobile assets.
DigiCore’s end–to-end research, design, development, manufacturing, sales and support of customised solutions for customers is serviced by a global network of staff and team members in more than 50 countries through the Ctrack brand. The company’s technology and electronic division designs and develops a robust range of asset management and monitoring systems using GPS satellite positioning, GSM cellular communication systems and other advanced communication and sensory technologies. The result is innovative and advanced machine-to-machine communication that provide Ctrack customers with 24x7x365 information and monitoring of their mobile assets that help them to achieve operational efficiencies and cost reduction targets.
Operations span six continents, with over one thousand employees and 700,000 systems sold.