Business Connexion achieved headline earnings of 23.2c a share for the six months to November, a 45.9% increase on the 15.9c a share of the same period a year earlier.
This is despite a 3.9% dip in revenue, from R1.42 billion to R1.36 billion.
CEO Peter Watt says the decline in revenue was mainly because there were fewer contracts awarded in Africa, as well as delays in respect of those that were awarded.
"The second six months are looking a lot stronger," he says. "The African business has always been very lumpy. You get a couple of large contracts and then things slow down before another large contract comes in. That`s why we bought Intrinsic. It has a presence in those countries and we expect that will smooth the revenue from Africa, make it less lumpy."
Instrinsic, a systems integrator with offices in Angola, Tanzania, Zambia and Namibia, was bought for an undisclosed sum late last year. Watt says the business is small, with 120 staff members, but is a good platform from which to establish an African presence.
It will also be a good source of annuity income as Business Connexion gets into the desktop support business.
"If you want to be serious about Africa you need to establish a presence. You can`t just go in after contracts," Watt says.
An operating profit of R62.8 million compared with a previous R59.3 million. The group also benefited from increases in investment income, associate`s share of profits and exceptional gains, as well as lower interest paid.
This helped Business Connexion to increase pre-tax profit from R63 million to R164.5 million.
Upturn
A net cash flow of R36.9 million from operating activities helped increase cash on the balance sheet to R812 million at the end of the period, compared with R782.4 million at 31 May last year and R88.8 million at the end of November 2003.
Watt says R380 million has been set aside for a trademark dispute. The balance is likely to be used to expand the infrastructure outsourcing business. This will be achieved organically, partly through investing in data centres.
He adds the group has begun to benefit from the merger of Comparex and Business Connexion. It now has a presence in government areas and is looking at a steady growth path, although large contracts in the government space have yet to be awarded.
He says there are also signs that the ICT market is about to experience an upturn. Among other things, there has been an increase in the number of requests for proposals and there has also been an increase in the number of staff being poached in some operations.
"Everybody is looking at the technology refresh cycle at the moment, and there is an increase in activity out there.
"We have a number of clients in the resource sector, and they tend to wait for direction from the rand and from commodity prices, but sometime it has to be done. We`ve been saying this for five years, but now the cycle is getting steeper. There will have to be a complete refresh rather than a simple upgrade."
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