IT systems, software, hardware and consulting services provider Datacentrix saw revenue drop in the year to February, as deals in the public sector were not finalised.
The company reported revenue was down to R1.3 billion, from R1.5 billion, which resulted in operating profit dropping from R165 million to R127 million.
Datacentrix earned R8 million less in interest, which contributed to a negative impact on both headline earnings per share and basic earnings per share, dropping them from 61.5c to 41c.
Despite the slowdown in results, Datacentrix says it is pleased with its overall performance, and has declared a final dividend of 16.6c.
CEO Ahmed Mahomed says the group is “in a healthy state, notwithstanding disappointing results in one of the operating units due to market conditions”.
“The group's principal historical revenue earner, the infrastructure division, contributed 56% to profit before taxation. Our performance in the commercial sector showed strong growth; however, results in the public sector were less than expected.”
Mahomed explains a number of the larger tenders submitted have not been awarded, because of a variety of reasons. “Our earlier stated optimism regarding government-related business did not materialise, as a significant portion of the business we were in line for has yet to be awarded, but we continue to have confidence in our tender submissions.”
Disappointing
Frost & Sullivan ICT analyst Silvia Hirano Venter says the company must capitalise on its existing contracts within the government sector, and ensure it gains new deals.
Datacentrix is investing in its business intelligence and enterprise content management (ECM) offerings, as it believes these are key growth areas in the country. In February 2010, the company implemented an ECM system at the Forensic Pathology Services, designed to optimise management time and reduce paper consumption.
“This could be the beginning of an increased demand for services from the government sector,” Venter says. “Moreover, its presence at the World Cup as the company responsible for all the printing across all stadiums will certainly increase its visibility in the Southern African Development Community region.”
Venter, however, cautions that competition in the outsourcing market for IT services is growing. “It is crucial that Datacentrix is able to clearly differentiate the benefits of its offering.”
The company's shares closed 1.35%, or 5c, lower, at R3.65.
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