JSE-listed Business Connexion (BCX) on Tuesday said it planned to reach a sustainable return on total equity of 17% as it targeted an African expansion and continued merger and acquisition activity, while advising shareholders that its board of directors had “entered into discussions”.

BCX shareholders were advised to exercise caution when dealing in BCX's securities until a further announcement was made.

The group reported increased return on total equity – from 7.5% during the interim period last year to 18% during the six months to February – a result of the sale of Q Link and a share buy-back programme initiated in November 2013.

BCX aimed to improve divisional profitability, maintain dividend cover, enable a more efficient debt profile and continue share buy-backs over the medium term as it clustered all its delivery entities into three “centres of excellence”, namely converged infrastructure solutions, business solutions and investments and alliances.

JSE-listed Business Connexion (BCX) on Tuesday said it planned to reach a sustainable return on total equity of 17% as it targeted an African expansion and continued merger and acquisition activity, while advising shareholders that its board of directors had “entered into discussions”.

BCX shareholders were advised to exercise caution when dealing in BCX's securities until a further announcement was made.

The group reported increased return on total equity – from 7.5% during the interim period last year to 18% during the six months to February – a result of the sale of Q Link and a share buy-back programme initiated in November 2013.

BCX aimed to improve divisional profitability, maintain dividend cover, enable a more efficient debt profile and continue share buy-backs over the medium term as it clustered all its delivery entities into three “centres of excellence”, namely converged infrastructure solutions, business solutions and investments and alliances.

“The new structure will provide the platform to put our customers at the centre of everything we do by clustering associated services, improving efficiencies and enabling the group to grow key regions across the continent,” BCX CEO Benjamin Mophatlane said.

The reorganisation and transition, which started in March, was expected to be completed in the last quarter of the financial year and teams of senior executives had been put in place to ensure business continuity and the delivery of current targets.

“This is expected to enable the group's significant capabilities to be deployed across Africa to support emerging growth opportunities,” BCX said.

This came as the group concluded a transaction to acquire the assets and contracts of Nigeria-based managed print services (MPS) company and well-established Canon distributor Panabiz Nigeria, as well as a 100% shareholding in Botswana-based point-of-sale solutions group Ultimate Solutions.

BCX had also entered into an agreement to acquire a 30% stake in small and medium-sized enterprise-focused services solutions business African Arete, which would complement BCX's existing portfolio in KwaZulu-Natal.

Mophatlane said, while the conditions were expected to remain tough, he was confident that the benefits from group-wide cross selling, combined with an improved performance from Nigeria, would result in BCX achieving its targets for the full year.

“BCX’s strategy should be to focus on niche acquisitions, African expansion and organic growth to maintain a sustainable competitive advantage,” added Frost & Sullivan information and communications technologies research associate Ankit Trivedi.

The company was now well positioned for growth in Nigeria after the acquisition of Panabiz Nigeria.

“The potential market for managed print services in Nigeria is enormous owing to the presence of the growing financial services and telecommunications sectors,” explained Trivedi, adding that Nigerian enterprise customers found it “more cost effective” to pay for print services, as opposed to infrastructure, as it allowed them to pay per use and save on maintenance.

“BCX's entry into the Nigerian MPS market during the period [to February] offers very exciting prospects for the group,” BCX commented.

The group’s international division, which was responsible for growth in West Africa, East Africa and Southern Africa, excluding South Africa, delivered revenue of R314-million during the six months to February – a 30.9% rise on the R239.8-million revenue generated in the corresponding period the year before – supported by a growing presence in Nigeria.

However, “timing issues” on stock deliveries in Nigeria, in addition to a once-off project in Ghana in the previous financial year, contributed to an operating loss of R12.7-million for the period under review.

“The issues in Nigeria have been addressed and the group expects the division to return to profitability in the second half of the year,” the company pointed out.

The BCX group posted stable gross profit margins at 30% despite continuous market pressure, with revenue increasing 5.5% to R3-billion for the period ended February.

Excluding the sale of Q Link, revenue increased 6.3% on the back of new business secured during the period.

BCX generated diluted earnings per share and diluted headline earnings per share (HEPS) of 52c and 156c respectively for the six months under review, a jump from the 19.5c and 19c respectively recorded during the prior interim period.

On a normalised basis, the diluted HEPS dropped from 21.3c in the interim period to February 2013 to 20.7c during the six months under review.

“This is expected to enable the group's significant capabilities to be deployed across Africa to support emerging growth opportunities,” BCX said.

This came as the group concluded a transaction to acquire the assets and contracts of Nigeria-based managed print services (MPS) company and well-established Canon distributor Panabiz Nigeria, as well as a 100% shareholding in Botswana-based point-of-sale solutions group Ultimate Solutions.

BCX had also entered into an agreement to acquire a 30% stake in small and medium-sized enterprise-focused services solutions business African Arete, which would complement BCX's existing portfolio in KwaZulu-Natal.

The group said it remained confident that the benefits from group-wide cross selling, combined with an improved performance from Nigeria, would result in BCX achieving its targets for the full year.

“BCX's entry into the Nigerian MPS market during the period [to February] offers very exciting prospects for the group,” BCX commented.

The group’s international division, which was responsible for growth in West Africa, East Africa and Southern Africa, excluding South Africa, delivered revenue of R314-million during the six months to February – a 30.9% rise on the R239.8-million revenue generated in the corresponding period the year before – supported by a growing presence in Nigeria.

However, “timing issues” on stock deliveries in Nigeria, in addition to a once-off project in Ghana in the previous financial year, contributed to an operating loss of R12.7-million for the period under review.

“The issues in Nigeria have been addressed and the group expects the division to return to profitability in the second half of the year,” the company pointed out.

The BCX group posted stable gross profit margins at 30% despite continuous market pressure, with revenue increasing 5.5% to R3-billion for the period ended February.

Excluding the sale of Q Link, revenue increased 6.3% on the back of new business secured during the period.

BCX generated diluted earnings per share and diluted headline earnings per share (HEPS) of 52c and 156c respectively for the six months under review, a jump from the 19.5c and 19c respectively recorded during the prior interim period.

On a normalised basis, the diluted HEPS dropped from 21.3c in the interim period to February 2013 to 20.7c during the six months under review.