Johannesburg, 09 Oct 2013
Integrated ICT solutions and services provider, Datacentrix, has announced its results for the six-month period ended 31 August 2013. The interim period has seen positive developments for the group, highlighted by growth in both the Managed Services and Infrastructure areas of the business, consolidating its position as a value-driven, services-led company.
The group generated revenue of R1 billion for the six months. Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 22% to R70.1 million. EBITDA margin increased from 5.9% to 6.9%. Earnings increased from R37.5 million to R40.9 million, and headline earnings per share (HEPS) increased from 19.2 cents to 21 cents.
The group maintained sound financial and operational discipline, with cash generated from operations amounting to R48.1 million, reflecting a closing cash balance of R245.6 million. Group operating margin improved by 11% to 5.5%.
Datacentrix CEO Ahmed Mahomed comments: "We have seen an improvement in performance from our strategic investment areas. Our continued focus on intelligent, complex solutions is contributing positively to group performance on both profitability and margins. Datacentrix is being seen as the ICT partner of choice and has been particularly successful in the areas of security, data centre and storage solutions. The group's execution capability is also being acknowledged by the renewal of all of its key outsourcing contracts without going to market."
With the exception of acquisitions, headcount growth in the group slowed over the reporting period, resulting in payroll costs being contained. Capital expenditure on necessary capability in support of the company's organic growth strategy resulted in a 63% increase in depreciation. Total costs were well managed.
Mahomed explains that the group's performance was characterised by growth in solutions-based revenue not only in Managed Services but also Infrastructure. The Managed Services division contributed the largest portion of group profit before tax (PBT) at 45%, while the Infrastructure division contributed 42%.
Revenue in Managed Services increased 21% with healthy contributions from the Managed Print Services (MPS) and Outsourcing businesses. The division has improved its operating margin to 12.3%, despite higher depreciation charges, as a result of investments in supporting capability in line with the strategy. The improved performance of the division was aided by the acquisition of eNetworks.
The Infrastructure division grew PAT by 25% and saw operating margin increase significantly from 2.7% to 3.6% as a result of higher-margin, solutions/systems integration revenue. The division continues to be a leading provider of total, integrated IT solutions and related services, from consulting, designing, provisioning, deployment through to ongoing support.
Within the Business Solutions division, the Business Intelligence (BI) and Enterprise Resource Planning (ERP) businesses showed marginal improvement in profitability for the six months.
The NokusaEI acquisition has consolidated the group's position as a leading Enterprise Information Management (EIM) solutions provider in the country, enhancing management capability, skills and expertise. The acquisition has also contributed positively to the performance of the EIM business. Earnings of the Business Solutions division were however largely negatively impacted by the group's Gauteng EIM operation. This has effectively offset good performances in the regional operations and the acquired entity.
Mahomed states: "Looking ahead, Datacentrix will continue to provide innovative solutions, enabling the implementation of our clients' business strategies by harnessing the power of technology. The company believes that this value-driven, customer-centric approach will fortify its position as one of the leading ICT players within the market. To complement our organic growth strategy we will continue to look for suitable acquisition opportunities to broaden our reach and further grow our capability."
Datacentrix holds a Level 2 (AAA) B-BBEE contributor status, with 125% procurement recognition.
In respect of the current reporting period, the board declared a gross cash dividend of 12.32 cents, a 9.5% increase on the comparative period.
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