Alviva’s ICT distribution segment drives revenue
JSE-listed technology group Alviva delivered improved performance in the six months ended December 2020, uplifted by its ICT distribution unit due to the increased demand for work-from-home products.
The company says throughout the period, management maintained the constant, but delicate, balancing of maintaining and refining the execution of Alviva’s group strategy while navigating through uncertainty created by COVID-19.
Yesterday, Alviva said it anticipates this situation will remain a feature of the commercial environment for some time.
In the six months, Alviva’s ICT distribution segment, which is made up of Axiz, Obscure, Pinnacle and VH Fibre, delivered sensible returns, says the company.
“In summary, the ICT distribution segment is well-structured, well-managed and delivering reasonable returns in a difficult market.”
In the period under review, the ICT distribution segment grew revenue by 6%, while the services and solutions segment’s revenue reduced by 5%, thereby impacting overall gross profit margin percentages.
Alviva’s headline earnings per share were up 17% at 109.8c for the period.
The technology group, which is in takeover discussions with competitor Tarsus in a R185 million deal, says it has invested heavily in acquisitions over the last few years to broaden revenue streams.
Alviva says it has paid approximately R646 million to acquire businesses to improve its growth prospects and “the returns in attributable profit to the group, based on the six months to December 2020, has been R35 million.
“Within the next two years, once the intangible assets have been fully amortised, it is expected that these new acquisitions will contribute meaningfully to the group.”
With the acquisition of Tarsus, Alviva wants to expand the ICT distribution businesses into the retail customer segment where it has limited exposure.
In the six months to December, expenses grew by only 1%, as a result of good cost management and due to the freeze the group put on salary increases in July 2020, it notes.
“Cash flow management has been excellent throughout the period and net finance costs show a significant decrease of R31 million compared to the prior reporting period.”
Looking ahead, Alviva, which is led by CEO Pierre Spies, says the outlook for the year to 30 June 2021 is uncertain, as the economy is struggling to recover from the effects of COVID-19 and its related lockdowns.
“Nevertheless, the group is well-positioned to take advantage of any upturn in commercial activity. Consequently, the board expects that the group should exceed its earnings from those generated in the previous 12-month reporting period ended 30 June 2020.”