4Sight posts excellent results despite pandemic, set for continued strong growth
Results for 12 months to 31 December 2020:
- Increase in group revenue of 6%.
- Increase in net profit after tax margin to 5.6% from the 2019 loss.
- Decrease in operating expenses of 7.9%.
- Increase in cash balances of 41.9%.
- Improvement in debt-to-equity ratio of 32.7%.
- Increase in annuity-based revenue of 14.7%.
4Sight posted strong results for its financial year ending 31 December 2020. The group was able to achieve this excellent showing despite the COVID-19 pandemic and associated economic downturn because the new board and executive team had developed a new strategy that integrated and aligned all core capabilities, says Tertius Zitzke, CEO, 4Sight.
The highlights of the 2020 financial year include a 6% increase in revenue from R492.4 million to R522 million, and a decline of 0.1% in gross profit margin from 53.7% to 53.6% (from continuing operations, ie, excluding Digitata, which was disposed of during the reporting period).
Profit after tax on continuing operations improved by more than 100%, achieving a net profit after tax margin of 5.6% as compared to a loss in the previous reporting period (in USD).
Operating expenses for continuing operations for the year decreased by 7.9% compared to the prior year (in USD). Despite tough trading conditions, 4Sight was also able to increase its cash balances by 41.9%, from R 46.7 million to R 66.3 million. Cash flow from operations also increased by 37.4% from R 27.6 million to R 38 million. The group’s debt-to-equity ratio has also declined significantly, from 45.8% to 30.8%, an improvement of 32.7%.
“These results would be pleasing at any time, but in the current circumstances they are nothing short of stellar – a massive vindication of the strategic direction set by the board and the effective implementation by the executive team,” Zitzke says. “I am also delighted to report that the group’s financials received an unmodified review from its external auditors. I am confident we are on track for an unqualified audit when our annual financial statements are released in April.”
Financial results are largely given in rands in view of the group’s intention to move its domicile from Mauritius to South Africa during the current financial year. The rand’s 14% decline against the USD over the reporting period influenced the USD reporting negatively.
New strategy yields good results
4Sight’s new business strategy is founded on five pillars, also referred to as the 4Sight digital transformation business DNA: People, customers, operations, finance and innovation.
Despite 2020’s lockdowns, the group was able to continue investing in its people, which it sees as its key asset – the group has a unique mix of rare IT, financial and engineering skills that underpin its ability to deliver genuine digital transformation initiatives in support of the convergences between IT and operational technology.
During the reporting period, employees (people) received their annual salary increases and the employee complement increased by 20%. A continuing drive to upskill employees continued; as a Microsoft Gold Partner, 4Sight has one of the highest Gold certified competencies in the Middle East and Africa region, with 11 new Gold and three new Silver competencies, including DevOps, Security and Messaging.
In addition, 4Sight is also in the process of completing three advanced specialisations for Adoption and Change Management, Windows and SQL migrations and App Modernizations.
When it comes to customers, the new customer-first approach linked to the overall business strategy is paying off. “4Sight moved into 2021 with a strong rolling 12-month sales pipeline,” comments Willie Ackerman, Chief Sales and Marketing Officer. “We grew our annuity-based revenue from 49% in 2019 to 56% in 2020, and we aim to reach 70% in the next two years. In part, this will be achieved by our focus on deepening our relationship with our existing customer base.”
Operationally, the group was able to dispose of non-profitable and non-core businesses during the reporting period. It has now been structured into four operating clusters supported by a centralised shared services centre, creating economies of scale and optimising the value delivered to customers.
“4Sight continues to invest up to 33% of its profit after tax into innovation and acquisitions that align with its strategic direction. This represents an investment in the group’s future relevance and profitability,” Zitzke says.
“Our strong cash reserves, reduced debt-to-equity ratio and growing proportion of annuity-based revenue are powerful growth levers, especially when combined with our successful go-to-market strategy and the universal move towards digital transformation,” Zitzke concludes. “4Sight is positioned to play a leading role in the digital revolution now under way, and we expect our ambitious growth targets for the next three years to be achievable.”