State-owned arivia.kom increased its pre-tax income by 50% to R90.64 million in the year to March, despite what CEO Zeth Malele calls tough market conditions.
Revenue for the period grew by 14% to R1.73 billion, while earnings before interest, tax, depreciation and amortisation rose by 24% to R214.94 million.
The effective tax rate rose to 38.4% as a result of non-deductible expenses incurred during the year. The previous year saw a deferred tax asset being raised for the first time, resulting in a tax credit on the income statement for the March 2003 financial year.
As a result of the increased tax rate, the group`s net income fell from R65.02 million to R55.56 million.
Cash generation was strong, with cash on the balance sheet rising from R118.23 million to R241.76 million.
Malele says the group achieved solid growth despite negative market conditions.
"The general experience of the past year is that businesses are under pressure in every respect, and reacting in a very retrained manner to IT expenditure, focusing on getting back to basics and containing costs. In other words, very much a buyer`s market.
"In these circumstances, revenue growth in the IT services sector is a great challenge"
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