Datacentrix posts healthy interim results

Integrated ICT systems provider, Datacentrix, has announced positive interim results for the period ended 31 August 2015.

"Datacentrix achieved both revenue and earnings growth for the reporting period and was cash generative with a healthy cash balance," says Group CEO, Ahmed Mahomed.

The group achieved an increase in revenue of 11.3% to R1.23 billion. Earnings attributable to shareholders grew by 15.4% to R54.5 million and headline earnings per share ("HEPS") increased by 14% from 24.3 cents to 27.7 cents. Working capital was well managed, resulting in cash generated from operations of R107 million, converting 196% of earnings into cash. Datacentrix had a closing cash balance of R261 million.

"Datacentrix has performed well and we remain positive about the long-term prospects of the group, as the key drivers of IT remain robust. This, combined with our financial and market position, will drive growth. Furthermore, the group is in a healthy cash position, which will enable us to pursue suitable acquisitions."

Looking ahead, Mahomed states the group is encouraged by opportunities in Africa and its strategy is to follow customers further north into the continent. The group is currently engaging in opportunities across these areas.

Mahomed continues, saying the acquisition of Infrasol will complement the group's existing capabilities and contribute to driving economies of scale within the Managed Services division. "Synergies, including integration into Datacentrix's premises, financial, logistical and operational systems, are being leveraged. The combined capabilities of these entities will drive growth and, at this early stage, have resulted in the group securing new business."

Of its three divisions, Managed Services contributed 35% to the group's earnings, with Technology responsible for 46%, and Business Solutions 10%.

The Managed Services division grew revenue by 9.5% and earnings by 18% for the reporting period. Operating margin was maintained at 9.4%. The Internet and network service provider and communications business, eNetworks, performed well; and in particular the division's Managed Talent Solutions and Managed Print and Document Solutions businesses produced good growth.

Revenue within the Technology division grew by 14%, with good revenue growth achieved specifically within the datacentre, storage, security, and networking areas. Earnings grew by 6.4%, with an operating margin of 4.1%.

The Business Solutions division achieved an operating margin of 10.3% and contributed 10% to total earnings for the period. Good growth was achieved within the Enterprise Information Management ("EIM") business. Experienced management resources were appointed to this division during the period.

During the last reporting period, the group noted it had secured new multi-year contracts outside of the renewal contracts. Revenue realised from these new contracts was limited over the reporting period, with the bulk expected to flow in the next 12 months.

Mahomed says the group will continue on its path as a skilled, services and solutions-led organisation. "Our people are crucial to the growth of the business and Datacentrix will support ongoing development of the right skills to deliver intelligent, complex solutions to the market in an ever-changing IT landscape. Our technology partners remain core to our growth strategy," concludes Mahomed.

The Board has declared a gross cash dividend of 9.23 cents per share.