The June addition of technology investment group Parsec Holdings to the Ansys stable has invigorated the niche technology-driven engineering group’s interim performance, precipitating a 93% uptick in revenue to R155.1-million and a 333% improvement in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R9.1-million for the six months ended August 31.

Reflecting across-the-board portfolio growth, Ansys swung into the black in the  first half of the year, improving headline profit to R4.3-million in the first six months of the year from the loss of R391 000 in the first half of the prior year.

Speaking to Engineering News Online on Monday, CEO Teddy Daka said the inclusion of Parsec, coupled with the acquisition of transmission and networking products distributor Tedaka Technologies and the implementation of the company’s new growth strategy, had strengthened the company’s position in the mining and industrial, telecommunications, defence and information security sectors.

Rail and telecommunications remained the two highest-earning sectors for Ansys, delivering revenue of R60.2-million and R53.9-million respectively over the half-year.

The company’s turnaround strategy had, meanwhile, driven an expansion of Ansys’ asset base from R151.8-million to R327.9-million over the six months.

“These are very, very positive results. When I first became CEO, we had the worst results [we had ever had], after which we broke even last year and now we are pushing a very good turnaround, in terms of profits.

“I’m excited that the team has managed to pull through and reverse the 16c loss a share to the R1.32 earnings a share we have now. Our growth strategy is paying off,” he commented.

DIVISIONAL SHOWING
Ansys lifted revenue from its rail division by 188% to R60.2-million for the first six months of the year, while the execution of long-term contracts raised profit from this business 19% to R6.8-million.

Defence revenue grew by 168% to R24.2-million, achieving a profit increase of 81% to R6.5-million; primarily as a result of the amalgamation of the Parsec defence and Ansys defence businesses.

The group’s mining and industrial division also improved its performance following the Parsec acquisition, lifting revenue from R2.1-million in the first half of the prior year to R16.8-million in the year under review.

The earnings boost was, however, unable to shift this business out of the red, and it posted a loss of R600 000 for the period.

Ansys’ telecommunications division showed a notable improvement in the first half of the year, lifting revenue 11% to R53.9-million and driving an increase in profit to R3.4-million.

OUTLOOK
Daka expected continued and improved performance by the JSE-listed group in the second half of the year, citing a growing local telecommunications sector owing to wireless and fibre network roll-outs, as well as general network upgrades to meet increased demand for bandwidth.

Ansys planned to shortly launch its optical wireless broadband product locally and in East Africa, having already kicked off distribution in Europe.

While the mining and industrial sector outlook remained subdued, Daka pointed to the group’s “cautious optimism” in this sector, in which it was a supplier of safety and productivity-enhancing products.

The amalgamation of the Ansys and Parsec defence and information security businesses into a single division had, he added, resulted in the creation of the critical mass required to be a player in the sector both locally and internationally.

“The local defence market continues to show signs of growth which the group is well positioned to exploit . . . [while] our opportunities in the international defence business remain strong,” said Daka.

Moreover, given the persistent cybersecurity challenges experienced worldwide and the robust growth and demand for innovation in the telecommunications sector, Ansys’ telecommunications and information security products were expected to accelerate local and international growth within these sectors.

“We are looking at the defence side of cybersecurity and I can comfortably say that we’re looking at opportunities [in this industry] in the Middle East and elsewhere on the continent,” he remarked.

On the rail side, Daka revealed that the group was looking to the Australian market, in which it believed the products it was currently supplying to rail parastatal Transnet had application.

“It’s early days but we plan to go back to that market and strengthen our discussions,” he said, adding that the group was also in advanced discussions with State-owned defence group Denel over advancing a partnership that could see it becoming a contractor or subcontractor for the company.

Ansys closed the period with an order book of R660-million.