ISA Holdings has exceeded its targets for sub-Saharan Africa and CEO Clifford Katz is "cautiously optimistic" about prospects for ISA`s African business.
Katz says the security group set up a focused business development initiative to achieve 10% of its revenue from outside SA, but in fact 12% of revenue for the year to February was from sub-Saharan Africa.
He adds that the group is cautiously optimistic about prospects in the region and expects increased spending on information security, especially in Nigeria, Kenya and Botswana, which were the three main contributors to revenue from outside SA.
Katz says although optimistic, the group remains cautious for several reasons.
"The cultural complexities are unbelievable," he says. "Every time we sit back and think we`ve mastered it, we get surprised."
Some of the innocuous cultural differences include buying habits, but there are also negative factors. "Some areas are rife with corruption and we refuse to deal in those areas," Katz comments.
In some cases the company has walked a long way through the deal process only to have to walk away because of corruption.
"We`re grabbing for low-hanging fruit, and when you`re doing that you can hit a big deal now and then and that throws the figures out. And then you might not hit a big deal in the next financial year.
Emerging market
"It`s still an emerging market, so we are relying on single deals. We`re hoping to get volumes to where things can be more predictable."
Katz says the group uses a local partnership model as it is against a direct presence, partly because ISA does not have the risk appetite and partly because relationships in the security industry are built on trust, and it is easier for a local partner than a foreign company to build that.
ISA`s revenue for the year rose 20.6% to R37.94 million from R31.45 million the previous year. As expenses were kept close to previous levels, the operating margin improved from 14.1% to 18.3%, resulting in an operating profit of R6.94 million, up 56.7% from a previous R4.43 million.
The group`s attributable profit was 49.3% up at R7.48 million from R5.01 million previously, while earnings per share rose 48.7% to 5.8c from 3.9c and headline earnings per share were 52.5% up at 6.1c from 4c previously.
The group has declared a 4c a share dividend, to be paid out of cash, which stood at R11.9 million at the end of the period, compared with R4.93 million a year before.
ISA is still trading under a cautionary notice as it is in talks related to a black economic empowerment deal.
The ISA share gained 10c or 22% to close at 55c on the JSE yesterday. The group is listed on the alternative exchange, AltX.
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