The IQ Business Group grows 80% in its third year

By Iain Scott for IQ Business Group

Johannesburg, 18 Oct 2001

SA`s largest unlisted IT and business process group, The IQ Business Group, has reported growth of 80% in its third year of operation.

Turnover for the year to June 2001 rose to R334 million, up from R156 million the previous year. The group has cash assets of more than R100 million and a market value estimated at R750 million.

Speaking from London this morning, CEO Johan Roets said the group has been profitable from its inception.

Financial director Pieter van Tonder says the exact profit figures cannot be published because of shareholder sensitivity, although he says profit after tax is between 8% and 12% of turnover.

Roets attributes the group`s performance to the deepening of activities within South African markets, as well as its international expansion in the past few months.

"Having a large South African resource base is fortuitous. It underpins our global value proposition and the timing of taking our business to the international markets.

"We mustn`t deny the pressure the IT sector is under at the moment. We ourselves are feeling pressure with new sales because companies reduce their spending in this quarter with December coming up."

However, he says IQ has always come off a low base, but with the knowledge to scale quickly, which is one of its strengths.

"A lot of companies have gone completely over the top," he adds, noting that many companies used venture capital for expensive marketing campaigns and large head offices. "But they can`t scale down quickly enough as the economy slows down," he says.

IQ has set up operations in the UK and the US. Major projects have been entered into with blue-chip multinationals including BhpBilliton, Morgan Stanley Investec Bank UK and CitiStreet.

The Australian operations have also showed solid growth, contributing $A20 million in shareholder value. Of the international revenue, which forms 15% to 20% of total revenue, the bulk, 70%, came from Australia.

Roets says sentiment in Australia has been negative, particularly because of three large business failures recently. However, the group has identified a number of promising opportunities.

The UK and US operations contributed only in the fourth quarter.

The group is planning to raise the contribution of its offshore operations to 60%-70% of total revenue within the next two years.

Chris Sinclair, CEO of the South African operations, says each local division showed growth in the period.

He says the group plans to refocus its healthcare resources towards offshore opportunities.

The financial services arm has grown strongly, and the group is looking at an acquisition in the treasury arena further down the line.

The supply chain business is also growing, and Roets says the group is in a "multi-pronged attack" in this area, and is looking at various opportunities.