BCX revitalisation appears on track

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 30 Jul 2008

JSE-listed IT services and solutions group Business Connexion (BCX) released an optimistic trading statement yesterday, which shows the company's revitalisation programme may well be working.

In the financial statement yesterday, the company indicated its operating profit for the financial year ended 31 May 2008 is expected to increase by between 45% and 55%. The group is also expecting an increase in headline earnings per share of between 15% and 25%.

Actual operating profit in November last year showed a bleak outlook for the company, with an operating profit of just R41.9 million, down from R108.5 million in May that year. In the results ending 31 May 2006, the company was sitting on an operating profit of R143,8 million.

According to Irnest Kaplan, MD of Kaplan Equity Analysts, the new projection is a sign that the company may well be turning around.

"In November, the company's operating profit was not looking good. The second half of the BCX's financial year looks like they may be expecting around R110 million. A stark change from the last results."

According to BCX's statement, "the revitalisation programme is showing early signs of a positive influence on the business and its performance".

In May, BCX announced that, as part of the revitalisation programme, management will not receive salary increases until September. The programme follows on heated criticism levelled against the company of late for not performing up to market expectations.

The revitalisation programme follows on a full review of the business which identified issues like poor performance, inefficiencies and duplication, poor accountability, and measurement, a lack of one set of numbers for managers to work from, as well as the absence of a unifying vision.

Change on the horizon

BCX also announced its Open Source Competency business unit has been awarded a contract by the State Information Technology Agency (SITA) to provide a change management methodology in SITA's migration to Open Source (OSS) operating system, Ubuntu.

The company will develop the methodology to migrate 3 500 users at the parastatal. "Users are increasingly coming to expect freedom of choice and FOSS represents the greatest level of freedom and flexibility, say BCX senior manager for OSS Gary Fortuin.

He says the company will focus on training users to take ownership of their systems. "We will also focus, in the technological implementation of the project, on making the most of the remarkable capacity of both Linux and Ubuntu to lower the total cost of ownership of technology and, in the process, assure government of a rapid return on investment."

He says the value of the tender cannot yet be released, referring to the company's closed period.

While the company is pleased with the tender, Isaac Mophatlane, the company's group executive for the public sector says the turmoil around the resignation of SITA's CEO Llewellyn Jones is a pity. "It would be a pity if Jones quit, as his years of technology experience made him well qualified for the job."

Jones confirmed yesterday that he has tendered his resignation, saying that he was 'gatvol'. He also confirmed that his resignation, tendered last week Thursday, was the result of a rift between him and government CIO Michelle Williams, who also serves as deputy-chairman of the SITA board.