Digicore issues warning

By Iain Scott, ITWeb group consulting editor

Johannesburg, 17 Jul 2000

Digicore Holdings has warned that earnings for the year to 30 June 2000 are expected to be lower than those for the previous year.

The results are expected to be announced on 29 August.

The profit warning should come as no surprise, as MD Nick Vlok said in June that the company`s year-end financial results would be reflective of the company`s interims.

However, the share was trading at 20c this morning, 4c down from Friday. The share opened the year at 60c.

In the six months to December 1999, Digicore`s attributable earnings fell by 45% to R3.3 million.

The company says that several factors had a negative effect on the earnings for the year.

Most significant were the restructuring and the establishment of an international market. The restructuring programme was completed in March.

Digicore is the holding company of several companies involved in the cellular, fleet management, and instrumentation industries, among others.

"Macroeconomic conditions, such as high interest rates, contributed to a difficult trading market," the company says.

"However, the last two months have seen an upturn in orders. New commercial vehicle sales indicate a recovery in the transport industry.

"This upturn has come too late, though, to contribute significantly to our current financial year."

In addition to the professional carriers, the group has started to focus on the government and users of smaller commercial vehicles, which it says has increased the size of its market significantly.

The group says it expects a total turnaround in the next six months, and it expects turnover to increase considerably in the next 12 months, with the debis Fleet Management contract being a major contributor.

"Digicore has always been committed to invest in long-term growth," the group says. "Management is confident that the group will from now on grow profitably, both locally and internationally."