Business information and communication technology (ICT) company Alviva will leverage the investments made into its subsidiaries and infrastructure, which has helped to reduce gearing, broadened its offerings and improved efficiencies, to drive growth over the next year.
The firm had increased the earnings from its services segment to 33% of total earnings for the financial year ended June 30 (R271.9-million of R824-million), up from 22.5% a year ago, Alviva CEO Pierre Spies said on Thursday.
However, this growth was partly a result of the inclusion of wholly-owned subsidiary ICT services company Datacentrix in the results after the acquisition was completed over the past year.
Datacentrix provided Alviva with strong ICT project execution capabilities, and the subsidiary was involved in the technology upgrades for financial services firm Barclays Africa in several countries. Datacentrix continued to gain market share and had almost completed the ICT upgrade of 3 200 court rooms for the Department of Justice, which also reflected its capacity to execute large-scale and complex projects, Spies said.
The change in earnings was the result of Alviva’s strategy to diversify its business from predominantly distribution (51.3% of earnings) to services and solutions. It will continue to focus on growth and efficiencies in its services and solutions businesses going forward.
Alviva’s financial services subsidiary Centrafin increased its revenue for the financial year by 15.7% and its earnings by 16.1%. Centrafin also grew its financial lease book to R649-million from R607-million in a difficult financial environment.
Alviva expects investments to remain muted for the next six to nine months. It will maintain its focus on improving working capital, which has been a specific area the group’s management has focused on over the past year, and cash generation, he said.
“The group is keen to rigorously pursue commercial opportunities to take advantage of its efficient infrastructure and broad offerings in the distribution and services cluster,” it said in its 2017 financial results statement.
The company will continue to focus on cash generation. Its focus on cash generation and working capital management had already rejuvenated its balance sheet, which it would leverage to expand its offering through the acquisition of suitable companies.
The firm had acquired Datacentrix and solar photovoltaic (PV) company Solareff during the past year. It remained primed for further acquisitions both locally and offshore, Spies noted.
Solareff has installed rooftop PV systems on the Waterfall Mall, in Midrand, the Clearwater Mall, in Roodepoort, and the Vaal Mall, in Vanderbijlpark, and the company provides Alviva with a strong professional team with technical, design and implementation skills.
“We are now looking to add further renewable energy entities into the cluster and we remain optimistic about the possibilities that this young energetic team can deliver within this segment in the future,” Alviva said in its financial results statement.
Alviva also announced the acquisition of information technology infrastructure monitoring systems and services company Sintrex and electric vehicle charging software developer Gridcars on Thursday.
Meanwhile, the group, which changed its name from Pinnacle Holdings in February, announced strong results for the financial year, with revenue up by 16.8% to R12.8-billion and net profit up by 16.3% to R443.9-million.
Core earnings a share, which the group said was a useful measure of performance as it remains on the acquisition path, increased by 24.9% to 256.3c a share and it declared a dividend of 25c a share. Headline earnings a share increased by 23.3% to 243.9c a share.