State-owned IT group arivia.kom says new business development in Africa has been slower than expected, but the revenue potential of business on the continent has grown significantly.
Speaking at the presentation of the group`s results for the year to March, CEO Zeth Malele said Africa remained a strategic imperative for arivia.kom. "We still believe the market is there for the taking," he added, noting that the group aims to derive most of its revenue from the rest of Africa within five years.
"The revenue potential from Africa has grown significantly with a number of prospects expected to mature over the next financial year and a number of sizeable bids already submitted for adjudication."
Arivia.kom grew pre-tax income by 50% from R60.3 million to R90.64 million on the back of a 14% increase in revenue from R1.52 billion to R1.73 billion. An increased tax rate of 38.4%, resulting from non-deductible expenses, saw net profit fall by 14.6% from R65.02 million to R55.56 million.
Malele says the group`s performance is despite tough market conditions, with both global and local markets remaining depressed. "We have felt the tightening of the belt, and our competitors have felt the tightening of the belt, but we have reacted successfully to deal with the toughness of the market.
"We are still in for a period of belt-tightening, but arivia.kom is more ready than our competitors to deal with the pain."
Unfair advantage
Speaking at the same presentation, public enterprises director-general Eugene Mokeyane said that no IT professional services company could survive without efficient management and competitive prices.
"Many in the market view arivia.kom as having an unfair advantage relative to competitors in the public sector, due to being a state-owned enterprise. In fact, arivia.kom has been successful primarily due to its thorough understanding of the role players in this sector, and the strategic, business and technology issues that need to be addressed.
"Its competitive pricing, its track record and its strategy of putting the client first and taking careful note of their requirements have led to the group`s success in a competitive industry."
Cash generation was strong, with the group ending the year with cash and equivalents of R241.76 million compared with R118.23 million the previous year. Malele says while arivia.kom had planned to spend some of the cash on buying AST Group, it had decided to walk away from that deal.
However, it will still look for appropriate acquisitions to help it achieve its growth objectives.
Malele says black economic empowerment (BEE) also remains a crucial part of the group`s strategy. Of 1 533 permanent staff, 50.4% are black and 31.6% are women. Total procurement spend on assignable business was R119 million, of which 75.7% was spent on BEE procurement.
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