AltX-listed Ansys celebrated a successful turnaround, its thirtieth year in operation and its tenth year as a listed company with a surge in earnings in what CEO Teddy Daka described as an exceptional 12 months to March 31.
The technology-based solutions company had registered a second consecutive year of growth, achieving double- or triple-digit growth across the board during the 2017 financial year, following its breakthrough two years ago when the company bounced back into the black after persistent losses.
“These results reflect the group’s resilience despite tough operating conditions. They also reflect its clear strategic focus, successful efforts to improve margins and stringent cost management measures, as well as its determination to create meaningful value for its clients through its products and services,” Daka said at the group’s financial results presentation in Sandton.
Headline earnings a share surged 203% to 14.71c for the year under review, supported by a 239.2% jump in net profit to R67.8-million, owing to strong market access and delivery capability verticals achieved organically and through historical acquisitions.
Basic earnings a share reached 14.72c in the 2017 financial year, an increase on the 4.86c achieved in the prior year.
During the year under review, the Ansys group achieved a 70% improvement in revenue to R806-million driven by growth in the defence and cybersecurity, mining and industrial, and telecommunications segments. The rail division lagged significantly during the year.
Earnings before interest, taxes, depreciation and amortisation rose 164% from R42.8-million in 2016 to R113.1-million, while operating profit increased by 212.4% to R100.2-million.
“The improved profitability was mainly attributable to robust growth in our telecommunications and mining and industrial segments, but was offset by the impact of tougher economic conditions on our local defence and rail segments,” Daka told investors and analysts.
The improvements to Ansys’s bottom line were also attributed to the outcome of the group’s intensive diversification strategy, which resulted in a shift change in sector contributions.
In 2013, defence and cybersecurity, rail, and mining and industrial contributed a respective 22%, 72% and 6% to group revenue, while the telecommunications segment did not yet exist.
By 2017, the segment ratio had shifted significantly, with defence and cybersecurity contributing 23%, rail only 13%, mining and industrial 11% and telecommunications a staggering 53%.
While international revenue was nonexistent in 2015, it now accounted for 20% of group revenue, mostly from mining and defence and cybersecurity, a trend Daka assured shareholders would continue to ensure sufficient diversification.
Ansys’s telecommunications business – the star performer of the group – had reported a 109.8% increase in revenue to R428.8-million and an increase in profit from R6.1-million in 2016 to R82.2-million in 2017, owing to the accelerated roll-out of fibre-optic networks by major operators and continued growth in data and fibre technology demand.
Defence and cybersecurity registered revenue growth of 108.1% to R187.6-million on the back of higher-than-expected sales volumes outside South Africa and the recognition of the full benefit of the acquisition of Parsec that was concluded during 2016.
Locally, the impact of budget constraints led to fewer opportunities, changes in product mix and reduced margins, he added.
The mining and industrial business also recorded solid growth during the year under review, with revenue up by 109.9% to R89.3-million and profit nearly doubling to R7.7-million, attributed to mine safety and health obligations and the need to improve operational efficiencies at mines through automation.
The rail segment, which was the core of the company just two years ago, had emerged as the worst performer, with revenue and profit declining in tough trading conditions.
The rail division reported a 26.8% decrease in revenue to R100.2-million, while profit plunged from R15.8-million in 2016 to R5.5-million in 2017.
Meanwhile, the company expected a rough trading environment in 2018; however, Daka believed the company was well positioned for further growth and would exploit all opportunities going forward to reposition as a digital technology solutions provider of four broad capabilities, namely safety and productivity, digital network connectivity, cybersecurity and original design manufacturing.
“This will enable us to leverage existing technologies, capabilities and processes and offer solutions beyond the existing business segments providing opportunities to broaden our revenue base and provide economies of scale,” he said.
Ansys, while focusing on continued operational efficiencies, will work to maintain its upward growth trend – organically and through the acquisition of aligned companies.