IT retailer Connection Group grew headline earnings per share more than 21% in the six months to November, and is in the position where for the first time all its entities are profitable.
Both Incredible Connection and Enterprise Connection generated solid earnings, with a strong turnaround achieved by Enterprise Connection.
CEO Toni Fourie says the 7.6% increase in revenue from continuing operations (which excludes Ultimate Connection, disposed of in May last year) was mainly due to turnover growth at Enterprise Connection.
Enterprise Connection generated operating profit of R2.5 million before interest, compared with a R2.8 million loss in the same period of 2001.
"The restructuring in January 2002 brought immediate benefits to Enterprise Connection," Fourie says.
"A more focused and rationalised business resulted in a reduced cost base and this, coupled with good revenue growth, ensured Enterprise Connection`s strong performance."
He says while market conditions are not likely to improve in the short term, Enterprise Connection has a manageable cost base and "some exciting products and projects to deliver to the market that should build on the performance of the last six months".
Incredible Connection grew operating profit before interest by 10% to R11.7 million, despite tough trading conditions in the technology retail sector.
The period was characterised by slower demand for PCs on the back of the four interest rate hikes, lack of stock continuity from some of the largest PC vendors and negative inflation in IT hardware as a result of the strengthening of the rand.
Fourie says that in the next six months Incredible Connection will focus on delivering a steady performance in what is likely to remain a difficult trading environment.
"Despite the tough economic conditions the group expects to improve its profitability in the next period and deliver real earnings growth for its shareholders."
He says the group still intends to pay a dividend at the year-end.
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