Following the completion of its restructuring programme, engineering and electronics firm Ansys expected its performance to significantly improve in 2015, and especially in 2016, in relation to past results, Ansys CEO Teddy Daka said on Thursday.

Speaking to the media following the release of the company’s results for the year ended February 2014, Daka said the company, which had narrowed its loss from R12.5-million to R7-million for the 2014 financial year expected to make a profit during the next year.

“We try and build a recession-proof business, recessions always happen and, therefore, you should structure your business [in such a way] that you stay in business during these periods. Losses are not so much a function of the market, they are a function of management,” Daka said, commenting on the expected results of the company’s restructuring.

Daka pointed out that during the year Ansys’ rail segment had won a R188-million contract from Transnet to install its dashboard system in the rail operator’s entire fleet over the next five years.

This contract brought the company’s order book to R190-million, which was a significant increase as the order book’s highest level was previously R20-million, Ansys CFO Rachelle Grobbelaar pointed out.

Daka added that the company also saw potential to grow its order book even further.

With regard to its rail segment, Ansys was also targeting the supply of technology to Transnet’s customers further downstream such as mining and logistics companies.

The company was also looking outside South Africa’s borders for future growth, “not necessarily as a result of South Africa’s economy contracting but because it makes sense,” he said.

Daka said the company saw significant railway potential in Namibia, specifically, and expected to break into this market during the current financial year.

During the period under review, revenue in the rail segment declined to R37.2-million, from R57.8-million previously; however, profit increased significantly to R9.8-million, up from R5.8-million owing to a focus on higher margin products and services.

The decline in the segment’s revenue was mainly owing to a delay in the release of procurement packages and a longer than expected procurement cycle from the company’s major client Transnet, Grobbelaar said.

Further, Ansys’ defence segment managed to maintain a profit of R8.3-million despite a decline in revenue as a result of the tapering off of the company’s major contract.

In light of government’s 2014 Defence Review, which stated that a higher percentage of the country’s gross domestic product had to be allocated to the defence sector, Ansys expected more work in this segment to come in from 2016 onwards, Daka said.

“There are promising prospects in the sector as parastatals will use private contractors to help meet high delivery demands in light of government’s budgeted spend. We remain cautiously optimistic to see a healthier year ahead in this segment,” he stated.

Meanwhile, Ansys’ mining segment felt the effects of a beleaguered local mining market, exacerbated by weaker European Union demand for platinum.

The segment’s revenue declined to R500 000 during the year under review from R5.2-million previously, with a loss of R4.3-million having been recorded.

However, the company was increasing its mining capacity and investment in anticipation of the expected uptick in 2015.

Daka also noted that the company had seen some interest in its products from international markets such as Canada and Australia.

“If the South African market does not turn around, we are also invested into going into the international market,” he said.

Further, Daka pointed out that the acquisition of telecommunications solutions specialist Tedaka Technologies, in 2013, offered Ansys exposure to the robust telecoms market and balanced the company’s revenue model.

Tedaka achieved revenue of R13.1-million during the three months under review in Ansys and posted a R2.3-million loss in the same period.

“While revenues are satisfactory, margins are squeezed and we have to look internally to boost the bottom line,” Daka remarked.

No dividend was declared for the year, as the group’s dividend policy remained predicated on due regard for its profitability, cash flow position and future capital requirements.