JSE-listed Datacentrix said on Tuesday that it was optimistic of future growth as its strategy to shift from a products-focused company to an integrated information and communication technology (ICT) solutions provider came full circle.
A focus on “complex solutions, execution capability and a customer-centric approach” had positioned the group “favourably” within the market, CEO Ahmed Mahomed told investors at the company’s interim financial results presentation, in Midrand.
He explained that Datacentrix had undergone a “transformation journey” over the past few years to shift away from the price-declining hardware commoditisation and technology market.
“In 2008, product revenue accounted for the largest share of the business. Today, the company predominantly delivers complex infrastructure solutions, with a growing managed service, application and cloud business. Its portfolio includes most of the significant enterprise hardware and software vendors,” Mahomed noted.
The group’s organic growth strategy had also gained traction, building the capability to assist customers in “navigating the ever-changing information technology (IT) landscape".
Mahomed expected IT spend to increase from the current R100-billion a year worldwide to R128-billion in 2018, with the market set to grow at a compound annual growth rate of 5% over the same period.
Datacentrix planned to complement its organic growth strategy with acquisitions, as well as narrow its focus to attract, retain and develop talent within the company.
The group would optimise and enhance its existing capabilities, explore opportunities to expand its markets and customer base, while providing turnkey, aligned solutions to customers and develop or acquire adjacent solutions to bolster the company’s portfolio.
Datacentrix’s improving capability to deliver intelligent, complex solutions contributed positively to group performance during the first half of 2014, with improved year-on-year performance from its three operational divisions, namely managed services, technology and business solutions.
The ICT group posted a 15% rise in earnings a share to 24.1c and a 16% increase in headline earnings a share to 24.3c for the first half of the year.
Operating profit for the six months under review increased 18% to R66-million, with Datacentrix reporting an after-tax profit of R47.2-million, a 15% rise on the prior corresponding period.
The managed services division contributed 35% to the group’s profit after tax, while the technology and business solution divisions were respectively responsible for 50% and 13% of the profit after tax.
Revenue increased 9% to R1.1-billion.
The managed services division boasted an 8% increase in revenue to R253-million and a 10% rise in after-tax profit, while the business solutions unit delivered 17% higher revenue and boosted after-tax profit by 331%.
Revenue from the technology division increased 9% to R763.5-million, with after-tax profit being 13% higher.
“Despite the market remaining under margin pressure, the group’s operating margins improved from 5.5% to 6%, driven by a shift to higher-value complex solutions revenue and focused cost management,” Datacentrix explained.
Datacentrix declared an interim dividend of 8.09c a share.