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Ansys achieves turnaround, eyes profitability in H2

27th November 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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Following a difficult year of extensive losses and subsequent restructuring, AltX-listed Ansys reversed the downward trend during the first half of 2014 and, with a buoyant order book and optimistic market outlook, the company expected to move back into the black by the second half of the year.

The share price of the Centurion-headquartered information technology firm rose 6.67% as it narrowed its loss for the period, from R2.7-million in the six months to August 2013, to a loss of R209 000 in the first half of the current year.

By the end of this financial year, Ansys expected to be out of the red.

The Teddy Daka-led group posted an interim headline loss of R400 000, an improvement on the headline loss of R3-million reported in the comparative period the year before.

A headline loss per share of 0.16c was achieved in the six-month period under review, after the company recorded a headline loss of 1.87c apiece in the six months to August 2013. The basic loss a share of 0.09c was also an improvement on the prior period’s 1.65c apiece basic loss.

During the period under review, Ansys turned its earnings before interest, taxes, depreciation and amortisation positive with a reported R2.1-million – a 165% improvement on the R3.3-million loss as at August 2013.

Revenue of R80.5-million was generated in the first half of the year, compared with the R27.5-million generated in the prior corresponding period.

Daka said the company’s improved financial position was the outcome of a successful internal restructuring programme and strategic acquisition, with careful market consideration and a rebalancing of the group’s revenue stream to fill any void.

To this end, Ansys acquired and integrated Tedaka Technologies into its telecommunications business unit in December 2013.

Tedaka, which exposed Ansys to the high-growth telecommunications market using complementary engineering skills, offered quicker turnaround projects to balance the longer-term projects in other sectors for a more predictable, consistent revenue stream.

The inclusion of the new addition further bolstered group financial performance, with Tedaka being included for the full period for the first time and contributing the “lion’s share” of the revenue generated in the six months to August.

Meanwhile, the group’s post-period acquisition of information technology engineering group Parsec Holdings would further strengthen the group’s resources – both in terms of people, with the addition of 45 highly skilled engineers, and intellectual property –and broaden its market footprint as Ansys marked a first-time entry into the international defence market through certain of Parsec’s product lines.

The deal would see Ansys pay out R86.5-million plus the net consideration for the property of about R6.7-million for an opportunity to diversify Ansys' income streams by enhancing its mining, defence and telecommunications divisions.

The acquisitions would provide the company with intellectual property and access to scarce skills, a modern production facility also used for third-party contract manufacturing purposes, general economies-of-scale benefits and new products for Ansys' existing clients and markets.

The deal remained subject to certain conditional and statutory requirements.

ORDER BOOK HIKE
Ansys boosted its order book from R190-million in May, to the current R400-million, as several new contracts were secured during the period under review.

The company’s rail division secured a R188-million contract from Transnet for the supply of an integrated dashboard display system (ISD) for its newly procured locomotives.

“The Transnet ISD contract should start moving out of the costly research and development phase and into production, which will realise top and bottom line benefit for the rail division,” Daka said, adding that, post-period, about 100 units had been produced.

Ansys also secured a further R120-million contract from Transnet to supply an upgraded version of its vehicle identification system, which would enable Transnet to identify trains and their location remotely.

Meanwhile, Daka expected to secure more work for its defence division as government committed to increase investment in the defence sector.

“[The] Defence Review 2014 recommends increasing defence spend from 1.1% of gross domestic product (GDP) to 1.6% in 2015 and 2% in 2016 and 2.4% in 2017, which will augur [well for] our business,” he said.

Parastatals would “have to” outsource to the private sector to meet the tight delivery requirements, Daka said, citing Denel’s need to leverage the private sector to clear a R31-billion order book.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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