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Sekunjalo aims to push IT growth

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 23 Apr 2014
Sekunjalo may spin off its ICT unit once it reaches critical mass, says CEO Khalid Abdulla.
Sekunjalo may spin off its ICT unit once it reaches critical mass, says CEO Khalid Abdulla.

Sekunjalo aims to grow its IT unit into an entity that will overtake its largest revenue-spinner - its fishing operations - and bring in income of between R400 million and R500 million over the next few years.

The group is also on the lookout for small acquisitions to add to its current capability, as well as a large deal which could cost it anywhere between R50 million and R200 million. CEO Khalid Abdulla says with R619 million in the bank, a strong balance sheet and very little debt, the group can afford a large deal, and now is the time to grow.

Abdulla notes the IT division is showing strong growth year-on-year and has proven itself in the IT market, having started as "nothing" a few years ago. In the six months to February, the unit turned over R88.8 million, down from the prior year's R103.7 million.

This was because the company's contract with the National Health Laboratory Services was fully implemented, and has now moved to maintenance and servicing, says Abdulla. He notes the annuity income is "nicer", because it is more certain.

Abdulla adds Sekunjalo is now chasing the next deal, as well as potential acquisitions. He anticipates smaller deals over the short-term, which can quickly be expanded to deliver faster return on investment.

Sekunjalo also wants to move into becoming a general outsourcing entity, and is looking for a large deal that will aid it in this ambition, says Abdulla. He adds the group wants to take its healthcare offerings further into the continent.

The listed company's ICT offerings include development house Saratoga Software, Digital Matter, Health System Technologies, and World Wide Creative, which was acquired last year. Abdulla says, once the unit reaches critical mass, Sekunjalo may spin it off, which could be done through a separate listing.

Sekunjalo grew revenue 7% during the first half, to R242 million, while pre-tax profit gained R8.5 million, to R32.7 million. Chairman Iqbal Surv'e notes the group traditionally has a stronger second half.

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