Listed outsourcing company Datacentrix is under pressure to increase its empowerment credentials, or lose out on future business opportunities.
The company yesterday released its results for the year to February and said revenue grew organically to R1.58 billion, from R1.3 billion the previous year. Its net profit went from R80.4 million to R90 million.
However, sales in the public sector, which had historically accounted for about 40% of revenue, declined to 10%.
Datacentrix saw a shift in profit mix in favour of the managed services and business solutions businesses. Its primary earner, the infrastructure division, contributed 51% to pre-tax profit, while managed services added 25% and business solutions accounted for 14%.
CEO Ahmed Mahomed says Datacentrix filled the gap in sales from the state with growth from the commercial sector. He says there are delays in awarding government tenders.
Or else
Mohamed says the company is under pressure from clients to increase its empowerment stake. He says this demand is especially being felt from state-owned entities, which need to procure services from empowered companies to aid their own rating.
risk losing business, especially from the public sector, he adds.
Datacentrix is a level four contributor in terms of the Department of Trade and Industry's code of good practices. It has black empowerment ownership of 10%. However, explains Mohamed, this share is not encumbered, which means its empowerment partners are not locked in and can sell the stake.
The company is looking at a few options to increase its empowerment holding and talks are under way, says Mohamed. Datacentrix wants to issue 30% of its shares to a new partner and a management trust. Thirty percent ownership seems to be the “de facto” level in ICT.
The draft ICT charter, which is expected to be gazetted shortly, will require ICT companies to be 30% empowered. However, it's not yet clear whether this applies to listed companies, as well as those not listed on the bourse.
“We anticipate making a definite announcement around the enhancement of our BEE shareholding. This topic is one that Datacentrix has marked as critical for the past three years, particularly in terms of the challenge we have experienced in augmenting our black shareholding in line with anticipated ICT charter requirements,” Mahomed says.
The company has cash-on-hand of R321 million, and no interest-bearing debt. Mahomed says “although Datacentrix has shown solid organic growth and continues to prefer this strategy, we are contemplating acquisition opportunities”.
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