Datacentrix, commenting on its future prospects in its interim results, says it will continue to look for suitable acquisition opportunities to broaden its reach and further grow its skills base.
The group says in a statement that the six months to August yielded "positive developments" that were highlighted by growth in both its managed services and infrastructure units.
Datacentrix reported turnover of R1 billion, up from R976.7 million in the first half of the last year. It notes that earnings before interest, taxes, depreciation and amortisation gained 22%, to R70.1 million.
Its operating margin improved by 11 percentage points, to 5.5%, while earnings gained from R37.5 million to R40.9 million. It ended the year on R245.6 million.
CEO Ahmed Mahomed says the group has seen an improvement in performance from its strategic investment areas. "Our continued focus on intelligent, complex solutions is contributing positively to group performance on both profitability and margins."
Mahomed notes that solutions-based revenue grew during the period at both of its units, which characterised this period's results. The managed services division contributed the largest portion of profit before tax at 45%, with infrastructure adding 42%.
Mahomed says Datacentrix would like to grow more into the application and execution space and is looking for acquisitions in those areas. He says the company is seeking to add business intelligence to its offerings, as well as enterprise solutions such as SAP and Oracle.
Acquisitions could either be for cloud services, or enterprise applications, says Mahomed. Datacentrix has been focusing on growing its cloud offerings this year. "To complement our organic growth strategy, we will continue to look for suitable acquisition opportunities to broaden our reach and further grow our capability."
Bolstering margins
Revenue in managed services gained 21% and its operating margin grew to 21%. "The improved performance of the division was aided by the acquisition of eNetworks."
Datacentrix said in August it had bought eNetworks, for an undisclosed amount, to give it control over the pipeline between the end-user and its data centres. Datacentrix has been building on its cloud capabilities and has implemented a tier three cloud-ready data centre, a command centre and improved service desk capabilities in its managed services unit.
As part of its strategy, the infrastructure division has evolved towards becoming a solutions provider within the infrastructure segment of the market, says Datacentrix. The unit's operating margin gained from 2.7% to 3.6% on marginally lower revenue, while profit after tax gained 25%.
"The investment in skills over the last few years and continued focus on selling solutions has resulted in higher operating margins," it says. Datacentrix adds new investment areas are starting to positively impact profitability.
Datacentrix says in its results commentary that a "significant portion" of group revenue was generated in the private sector, as public sector revenue growth remains a "significant" challenge. Mahomed notes that while public sector business is improving, this is not at the levels it would like to see.
Stripping out acquisitions, headcount growth slowed, leading to payroll costs being contained. "Total costs were well managed."
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