As JSE-listed Datacentrix’s years-long organic growth strategy comes to term, the integrated information and communication technology (ICT) group planned to accelerate its acquisitive growth strategy.

Discussions with several undisclosed parties were under way to complement the organic growth strategy and broaden the company’s reach and further grow its capabilities, CEO Ahmed Mahomed said on Tuesday.

The benefits of the internal investments over the years had started bearing fruit, but organic growth had its drawbacks and the aggressive pursuance of acquisitions and bolt-on divisions would balance the group’s growth strategy, he explained.

The group had kicked off its acquisition strategy last year with the R45-million buy-out of Nokusa Engineering Informatics, which was integrated into the enterprise information management (EIM) business unit, under the business solutions division.

It had also bought out Cape Town-based Internet service and networks specialist eNetworks for R30-million in May.

Datacentrix said it would continue to assess and consider acquisitions, particularly within business process outsourcing sectors and companies of a particular critical mass that Datacentrix did not have, in line with its strategy to position the company as an integrated, cohesive services and solutions provider.

“We have seen an improvement in performance from our strategic investment areas. Our continued focus on intelligent, complex solutions is contributing positively to group performance on both profitability and margins,” Mahomed said.

Total comprehensive income for the six months to August reached R40.9-million, up from the R37.5-million reported in the interim period to August last year, while earnings before interest, tax, depreciation and amortisation increased 22%, to R70-million, with margins increasing from 5.9% to 6.9%.

Headline earnings a share increased from 19.2c in the comparative period last year, to 21c for the six months ended August. Earnings a share rose to 20.9c in the first half of this year, from 19.1c a share in the corresponding six-month period the year before.

The group generated revenue of R1-billion for the six months to August, up from the R976-million generated in the six months to August 2012.

The managed services division had achieved a 21% rise in revenue during the six months under review, reaching R234-million, compared with the R193-million recorded in the corresponding period the year before, with earnings rising 23%, from R15-million in the interim period last year, to R18.4-million during the period under review.

The infrastructure unit delivered a 25% increase in earnings despite a 3% contraction in revenue. Revenue fell to R719-million during the six months under review, while earnings jumped to R17.2-million. The improved performance of the division was aided by the acquisition of eNetworks.

The business solutions division achieved earnings of R1.4-million in the six-month period under review – a 74% decline on the R5.7-million in the corresponding period in the prior year. Revenue for this unit increased 15%, from R63.7-million in the interim period in 2012, to the R73.2-million registered in the half-year to August.
The Nokusa acquisition had improved the performance of the EIM unit within this division.

However, despite this, the business solutions division’s performance was disappointing, mainly on the back of the Gauteng-based unit’s reversal of the previous year’s exceptional gains.

The group had undertaken “management action” to counteract this trend and expected recovery during the second half.

Meanwhile, despite a level 2 broad-based black economic-empowerment accreditation, with a procurement recognition of 125%, Datacentrix had faltered in regaining its dwindling share of public-sector contracts. A significant portion of group revenue was generated in the private sector, while public-sector revenue growth remained a significant challenge.

However, Datacentrix would narrow its focus to increase its current public sector revenue from the current 10%, to the historical 30% or 40% it had previously enjoyed.

The group declared a dividend of 12.32c, a 9.5% increase on the comparative period last year.