Datacentrix posts solid performance

Local enterprise solution provider Datacentrix continues to post strong figures, despite its lack of interest in industry consolidation efforts.

Speaking to analysts yesterday, company CEO Gerhard Uys noted its 16% growth in revenue, to R1.2 billion, had been achieved through organic efforts. This had been largely supported by Datacentrix's continued focus on customer satisfaction and retention, he explained.

However, growth in alternative indicators outstripped the company's revenue climb. Operating profit grew 62%, to R114 million, largely due to the turnaround of its solutions division, boosting earnings before income tax, depreciation and amortisation by 40%, to R124 million.

Headline earnings per share and earnings per share rose 41% and 57%, to 40.4c and 40c, respectively. The company declared a final dividend of 13.2c per share, bringing the annual dividend to 20.2c.

The infrastructure and related services division achieved strong results during the year, with revenue climbing 15%, to R1.1 billion, and net profit before interest and tax rising 48%, to R66.7 million for the year.

Datacentrix's solutions division saw higher profits despite an 8% decline in revenues. The division's net profit before interest and tax grew 705%, to R16 million, off a base of R1.9 million in 2006.

Company chairman Gary Morolo said this turnaround was largely due to rectifying the problems experienced in previous years.

"We have always been pleased with the top line of our solutions business, but our bottom line was being impacted by the costs of going back to clients to fix or re-install solutions. Charl Joubert stepped down from the board to focus on the operation issues in this division and we are satisfied appropriate methodologies and business processes have been implemented to ensure we will continue to retain our profits," he explained.

Although Datacentrix's competitors have stated their intentions to enter market consolidation activities, Morolo said it has no desire to do so.

"We don't believe in growth by acquisition and we are not on the lookout for potential takeover targets. Yes, we looked at arivia.kom when it came onto the market but we found the conditions problematic so left it at that. It really would have to be a spectacular opportunity to tempt us into taking acquisitive action."

Morolo noted the company is happy with its mix of offerings and clients, and is in a good position to benefit from opportunities in the next year.

"We have good contractual relationships with government, increased bottom line contributions from our solutions division, increased buying impetus from the release of Microsoft's new range, and penetration into those service and outsourcing areas that we feel best suit our business offerings."

Analysts attending yesterday's presentation were largely pleased with the company's consistent performance.

By close of trade yesterday, Datacentrix's share price had climbed 5%, to R4.89.