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Ansys delivers strong growth

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 30 Jun 2016
Teddy Daka will step down as Ansys CEO in September and take up the role of executive chairman.
Teddy Daka will step down as Ansys CEO in September and take up the role of executive chairman.

Ansys saw revenue soar almost 89% for the period ended 31 March 2016, to R474 million.

The AltX-listed technology group also saw headline earnings per share (HEPS) rise 25% to 5.55 cents per share, while basic earnings per share increased almost 36% to 5.55 cents.

Ansys Group CEO Teddy Daka says these results demonstrate the success of the group's strategy, which is focused on developing an IP-led engineering and technology solutions provider that is at the forefront of innovation in all its areas of operation.

The group, which acquired Tedaka Technologies in 2014 and Parsec Holdings and its subsidiaries in 2015, has been through an intensive consolidation phase in order to integrate and extend its offerings for the sectors it serves.

"Ansys has gone through a successful period of acquisition and restructuring. The business has now been fully consolidated and has very good prospects for organic growth in the current financial year," says Daka.

This, as EBITDA improved by 124%, to R42.7 million, and profit after tax rose 127.5%, to R22.8 million.

The group develops, produces, distributes and integrates niche technology-driven engineering solutions for harsh environments in four key sectors: rail, mining, defence and telecoms.

Segment growth

Revenue in the rail segment grew by almost 46% to R137 million, but the segment's profit fell by 7% to R15.9 million in 2016. This was mainly due to a change in the product mix and delayed client project roll-outs giving lower margins; as well as foreign exchange losses incurred in the final quarter. Ansys says it nevertheless has confidence in the rail market, both locally and internationally, and foresees growth going forward.

Performance in the defence and information security segment, however, exceeded all expectations. Revenue grew by 802% to R90.1 million, while profit was 1 116% up at R19 million. This was mainly due to the consolidation of the Ansys and Parsec defence businesses, which enabled the group to rationalise costs, exploit synergies and extend market reach. In general, the segment has also benefited from exports and the ongoing need for a high level of information security.

The mining and industrial segment has shown a dramatic increase in revenue and profit from the prior year, where revenue was up by 1 914.6% to R42.5 million. Profit was R5 million compared to a loss of R2.3 million the previous year.

The telecoms segment showed a notable improvement, with revenue growing by 41% to R204 million - mainly on the back of network spending from telecoms operators. Growth was also boosted by the acquisition of Parsec's telecoms business, but profit was subdued as a result of unforeseen forex losses between December 2015 and February 2016. As growth in demand for data continues to increase, Ansys anticipates robust growth in this sector in the future.

"Despite the projected weaker trading conditions in the South African economy, we expect better performance in the 2017 financial year," says Daka.

"With the successful integration of the Parsec business into the Ansys group, our four vertical markets have been strengthened in terms of both market access and delivery capability. This presents significant opportunities for growth," he adds.

Leadership shuffle

The company has, however, announced that Daka will be stepping down as CEO in September to take up the role of executive chairman.

Rynier van der Watt, current chief executive in charge of strategy, mergers and acquisitions, has been appointed to take over from Daka. Current non-executive chairman, Nonhlanhla Mjoli-Mncube, will become the lead independent non-executive director.

"This is a positive move for Ansys," says Daka, who took over the reins four years ago.

"The group's strategy has been to strengthen its presence in the four vertical markets in which it operates, reduce concentration risks and enhance delivery capacity. Our newly integrated structure now presents an excellent platform for growth, both in the current financial year and beyond," he says.

Ansys says during the time he has been at the helm, Daka has successfully moved the business out of distress and into the IP-led engineering and technology space, focusing on innovation for global markets.

"The group will continue to focus on organic growth and strategic acquisitions aligned to its business strategy and will position itself to redefine the norm in our industry."

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