Integrated information and communications technology (ICT) systems provider Datacentrix has lifted earnings attributable to shareholders for the six months ended August 31, by 15.4% to R54.5-million and headline earnings per share (HEPS) by 14% to 27.7c, benefiting from robust demand in the domestic and African information technology (IT) market, it reported on Tuesday.

The group increased its revenue by 11.3% to R1.23-billion in the first half of the year, generating cash from operations of R107-million, converting 196% of earnings into cash and allowing it to close the period with a cash balance of R261-million.

The board declared a gross cash dividend of 9.23c a share.

“Datacentrix achieved both revenue and earnings growth for the reporting period and was cash generative, with a healthy cash balance.

“We’ve performed well and remain positive about the long-term prospects of the group, as the key drivers of IT remain robust. This, combined with our financial and market position, will drive growth. The group is [also] in a healthy cash position, which will enable us to pursue suitable acquisitions,” CEO Ahmed Mahomed told investors during a presentation of the group’s results, in Johannesburg.

Of its three divisions, managed services contributed 35% to the group’s earnings, with technology responsible for 46% and business solutions 10%.

The managed services division grew revenue by 9.5% to R277.52-million and earnings by 18% to R34.3-million for the reporting period. Operating margin was maintained at 9.4%.

“The Internet and network service provider and communications business, eNetworks performed well and, in particular, the division’s managed talent solutions and managed print and document solutions businesses produced good growth,” he remarked.

Revenue from the group’s technology division grew 14% to R871.86-million, with good revenue growth achieved in the data centre, storage, security and networking areas.

This business grew earnings by 6.4%, with an operating margin of 4.1%.

The business solutions division achieved an operating margin of 10.3% and contributed 10% to total earnings for the period.

Good growth was achieved within the enterprise information management business, to which experienced management resources were appointed during the period.

During the prior six-month period, Datacentrix noted that, while it had secured new multiyear contracts outside of the renewal contracts, revenue realised from these new contracts was limited over the reporting period, with the bulk expected to flow in the next 12 months.

AFRICAN PROSPECTS
Looking ahead, Mahomed said the group remained encouraged by opportunities in Africa and Datacentrix’s strategy was to follow customers further north into the continent, confirming to shareholders that it was currently engaging in opportunities across these areas.

“We’ve already engaged two major banks and are discussing employing banking options in Africa. We know that lots of guys have gone into Africa and come out with bloody noses, so we’re being cautious, but we’re essentially following our customers in Africa,” he held.

Mahomed added that the acquisition of ICT infrastructure provider Infrasol in July would complement the group’s existing capabilities and contribute to driving economies of scale within the managed services division.

“Synergies, including integration into Datacentrix’s premises, financial, logistical and operational systems, are being leveraged. The combined capabilities of these entities will drive growth and, at this early stage, have resulted in the group securing new business,” he concluded.