Johannesburg, 21 Apr 2010
IT systems, software, hardware and consulting services provider, Datacentrix Holdings, has announced its annual financial results for the year ended 28 February 2010.
The group continues to maintain solid disciplines across the business, which are visible in the strong operating cash flows of R153 million generated, resulting in cash of R285 million in hand with no interest-bearing debt. Tangible net asset value improved by 7% to 187 cents. The board has announced that it will maintain last year's dividend payout, declaring a final dividend of 16.6 cents, resulting in an annual dividend payout of 30 cents.
Revenue contracted to R1.3 billion from R1.5 billion, owing to poor results in the public sector market, resulting in EBITDA dropping from R165 million to R127 million. Due to lower interest rates over the past year, group interest earned declined by R8 million contributing to the negative impact on both headline earnings per share and basic earnings per share from 61.5 cents to 41 cents.
The group is pleased with the overall performance of its three divisions with the exception of one operating unit within the Infrastructure division. Says Ahmed Mahomed, CEO of Datacentrix: "The Datacentrix group is in a healthy state, notwithstanding disappointing results in one of the operating units due to market conditions. Our three operating divisions - namely Infrastructure, Managed Services and Business Solutions - have performed well, in line with our strategy to evolve from a basic infrastructure integrator and services provider to a full solutions provider.
"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. A number of the larger tenders submitted have not been awarded due to various reasons. To this point, 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."
The Managed Services and Business Solutions divisions reflected healthy year-on-year profit before taxation (PBT) growth of 19% and 13% respectively. The Managed Services offering, and the success achieved in this division, has improved annuity revenue, decreasing the group's reliance on transactional business. The effect of growing annuity revenue will stand the group in good stead in the future.
Datacentrix's investment in a variety of value-based offerings ranges from selective outsourcing, managed print services (MPS) and data centre solutions capability to enterprise content management (ECM). Investment in IBM and Microsoft technical and management capabilities has also begun to yield results.
"In support of these businesses, Datacentrix continues to invest in improved operational capacity, strengthening both the MPS and outsourcing execution engines and continuing in its single-minded approach to provide excellent service to which its clients have become accustomed," he adds.
A number of these targeted growth areas have performed well during the year, achieving significant new client wins. Datacentrix also renewed expiring selective outsourcing contracts in the last financial year, testimony to the organisation's ability to execute and deliver on client expectations.
The Business Solutions division has shown growth largely due to good performance within the ECM space. The ECM and Business Process Management
(BPM) business units won local and international accolades for solutions deployed. The Enterprise Resource Planning (ERP) business, while profitable, remains under pressure.
"Management believes that its strategy to position the organisation to operate higher up the value chain has borne fruit, as highlighted by the solid growth shown by these divisions, and will set Datacentrix up for its next growth phase," states Mahomed. "While we have a bias towards organic growth, we are actively considering bolt-on acquisitions to strengthen our Business Solutions division."
Looking at 2010, Mahomed believes that the challenging climate will continue to fuel consolidation in the market, offering opportunities to access new clients and resources. "The strategy to grow our total solutions portfolio will continue, specifically in terms of the biometrics and access management security offering, data centre solutions, networking, enterprise content management, managed print services and outsourcing."
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