Listed security solutions provider SecureData lost a fair bit of operating profit because of the strong rand, but reinstated its dividend policy despite the currency headwind.
The company yesterday released its year-end results for the 12 months to July and said revenue was slightly down, from R464 million to R458 million. Earnings before interest, taxation, depreciation and amortisation (Ebitda) was flat at R57 million.
However, the company paid out less in interest after paying more than was required into a loan, which aided net profit. Net earnings for the year improved from R5.7 million to R15.9 million.
CEO Dean Brazier says had the rand not fluctuated to its current strong position during the year, the company could have gained between 10% and 15% at the operating profit level. He is satisfied with SecureData's performance considering the economic climate in the UK and SA.
War chest
Brazier says it remains cash-generative in a non-growth market and will return to revenue growth if the rand stabilises. He explains that the company is selling more product, but the strong rand erodes the value.
It will use some of the cash to pay a dividend to shareholders, a policy it has reinstated after a three-year lapse, says Brazier. SecureData has declared a 5c a share dividend.
Brazier says the cash could also be used to make an acquisition in the UK, where the firm operates MIS-CDS, one of the largest independent information security solution providers in the country. “I wouldn't mind having a war chest for a potential acquisition,” he says.
However, the company does not currently have any deals on the table, he adds. MIS-CDS posted a 15% increase in revenue with a 24% improvement in Ebitda in sterling. However, when these gains were translated into local currency, MIS-CDS operating growth Ebitda only improved 3% and revenue went backwards.
SecureData also wants to increase its presence in east and west Africa, and wants to put more people on the ground, says Brazier.
The company's shares closed flat at 95c yesterday.
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