Information and telecommunications technology group AST has reached its goal of consistently achieving revenue of more than R100 million a month.
This is despite tough trading conditions experienced by the IT industry in general as well as a number of challenges AST had to overcome in the six months to 31 December last year, says executive chairman Gerrie de Klerk.
"That we have now reached this goal is proof that our strategic partners accept our business model and that the group`s market share has matured to such an extent that the next dynamic steps can be taken," he adds.
Revenue for the six months amounted to R688.79 million, a 44% increase from the R479.06 million of the same six months of 1999. Foreign currency revenue grew to 12% of earnings, and the group believes this is sustainable over the long-term, despite AST`s rapid growth in SA.
Operating profit rose from R59.89 million to R81.2 million. "We are beginning to see a slight decrease in net margins, simply because of larger investments in creating the AST of tomorrow," says De Klerk.
"We have expensed R12 million on medium-term strategic positioning projects that will start showing returns in the foreseeable future. AST does not foresee the margin dropping below 11% for the full financial year."
An after-tax profit of R71.16 million compares with a year-earlier figure of R47.3 million, while headline earnings per share increased 37% to 12.01c from 8.75c previously.
The group`s net asset value stood at 70.85c a share at the end of the period, compared with 63.98c a year earlier. Cash generated from operations rose from R55.87 million to R67.43 million.
The group had cash resources of R143.51 million (R138.68 million previously) at the end of the six months.
The GEM acquisition in Australia was finalised during the period, and De Klerk says that "the marriage between Bentley West and GEM is working well".
He adds that the group`s prospects are exciting, and that AST believes its growth is sustainable.
Among other things, AST is increasing its revenue pool through competitive successes and gaining market share by hosting more of clients` non-core functions.
"We are, of course, also 'going global` to expand the revenue pool, but in this we are very diligent and selective," he adds.
"The cash resources demonstrate AST`s ability to continually generate positive cash flow and this enables the group to take advantage of the opportunities that the global market currently has to offer."
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