Datacentrix looks north for growth

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Datacentrix CEO Ahmed Mahomed says the company plans to follow customers further north into the continent.
Datacentrix CEO Ahmed Mahomed says the company plans to follow customers further north into the continent.

Datacentrix is looking north and is encouraged by opportunities in Africa, as the company released a strong set of interim results.

The integrated ICT systems provider saw revenue rise 11.3% to R1.23 billion for the half year ended 31 August, while headline earnings per share increased by 14% to 27.7 cents.

"Datacentrix has performed well and we remain positive about the long-term prospects of the group, as the key drivers of IT remain robust. This, combined with our financial and market position, will drive growth. Furthermore, the group is in a healthy cash position, which will enable us to pursue suitable acquisitions," says group CEO Ahmed Mahomed.

The group says it is engaging in opportunities across Africa and has a strategy to "follow customers further north into the continent".

"Datacentrix is cognisant of the complexities of operating in Africa and has entered into partnerships to strengthen its execution capability."

This as the company says the South African economy is contending with strong headwinds "as a consequence of a global economic slowdown, power shortages, a weakening rand, bureaucracy and labour disputes".

"The resources and manufacturing sectors are seemingly the hardest hit, leading to constrained expenditure in the IT market," according to Datacentrix.

Despite this, the company's board remains positive about the group's long-term projections, and will continue to drive organic as well as acquisitive growth.

Mahomed believes the recent acquisition of Infrasol will complement the group's existing capabilities and contribute to driving economies of scale within the managed services division.

Infrasol designs, deploys, manages and supports ICT infrastructure for organisations across South Africa. The purchase price was R85 million and Datacentrix says the related goodwill has been accounted for on a provisional basis.

"Synergies, including integration into Datacentrix's premises, financial, logistical and operational systems, are being leveraged. The combined capabilities of these entities will drive growth and, at this early stage, have resulted in the group securing new business," Mahomed adds.

The board declared a gross cash dividend of 9.23 cents per share, while earnings attributable to shareholders grew by 15.4% to R54.5 million. Datacentrix says working capital over the period was well managed, resulting in cash generated from operations of R107 million, converting 196% of earnings into cash.

The business' technology division, which accounts for 46% of earnings, saw revenue boosted by 14%. The revenue growth was achieved specifically within the data centre, storage, security, and networking areas, while earnings for the division rose 6.4%

The managed services division grew revenue by 9.5% and earnings by 18% for the period. The unit contributes 35% to the group's earnings.

"The Internet and network service provider and communications business, eNetworks, performed well; and in particular the division's Managed Talent Solutions and Managed Print and Document Solutions businesses produced good growth."

Mahomed says the group will continue on its path as a skilled, services and solutions-led organisation.

"Our people are crucial to the growth of the business and Datacentrix will support ongoing development of the right skills to deliver intelligent, complex solutions to the market in an ever-changing IT landscape. Our technology partners remain core to our growth strategy."

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13 Aug
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