JSE-listed solutions and services provider Datacentrix's margins have come under pressure, as the company invests to focus more on providing solutions and services.
The company this afternoon presented its results for the year to February and said revenue grew organically to R1.8 billion, a gain of 11.6%. Last year's turnover included gains from services provided for the 2010 Fifa Soccer World Cup.
Profit after tax increased slightly to R90.8 million, from R90.1 million, as earnings before interest and tax slowed from R150 million to R145 million, as the company invested in infrastructure security and network skills, IT infrastructure and a new security operation centre.
Chairman Gary Morolo says the company has continued with its three- to five-year strategic plan. He explains the company's services and solutions offerings now make up about half of revenue, which was heavily-weighted towards infrastructure a few years ago. “We think we are sitting in a very good position.”
Morolo says the company has been investing in “the future of the business” as it shifts towards services and solutions, and will continue to do so. However, the bulk of the spending is now behind the company, he adds.
Slow public spending
CEO Ahmed Mahomed says the investment has affected the company's margins, as operating margins went from 9.5% to 8.3%, but this is “short-term” pain to move the company into a new direction. He says the company invested between R10 million and R20 million in the last year.
Mahomed adds that Datacentrix has managed to replace the government revenue stream with new business from the private sector. State spending used to make up between 40% and 75% of the company's turnover, but Datacentrix no longer relies on the public sector as this spending is now negligible, he says.
However, Datacentrix is hanging onto its state-focused resources for when government investment picks up, notes Mahomed. He says this also affects the bottom line, but without resources the company will not have access to tender opportunities.
“The group's view is to maintain its investment in resources in this area in order to benefit optimally from IT spend as it may arise.”
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