DVT, one of South Africa's fastest growing software and services companies, is to list on the JSE's AltX on 6 November. The company will raise R15,8-million by way of a private placement of 12,5-million ordinary shares and 3,3-million vendor shares at R1 each. Demand for its shares has been strong, with the private placement being over-subscribed by 150%.
The company is listing to raise funds for product development; to fund acquisition; for working capital to drive growth; and to assist in attracting and retaining quality staff, an important consideration given that the company operates in a market constrained by a skills shortage.
DVT was formed in Cape Town in 1999 by CEO Chris Wilkins and Clive Hubbard to address an identified need in the market for consistent delivery of software development. It has grown from two people to more than 100 today, with equal representation in Cape Town and Gauteng. Despite facing some of the most challenging times for IT businesses, DVT has been profitable in every year since inception.
The company, a Microsoft Gold Partner, has primarily grown organically, building a reputation for hiring the best. In 2005 it acquired Solutional, the developer of the Microsoft-based Radical, a suite of helpdesk and CRM software products, which has more than 80 clients nationwide. It is also a major supplier of software development skills into the corporate market, providing both professional and specialist services. In 2006 black-owned Cornastone acquired 28,7% of the company for R4,5 million in cash, making it DVT's largest shareholder and helping DVT to become BEE-compliant.
The company has always been owner-managed with senior management integrally involved in all key aspects of running the business. DVT has an experienced board comprising executives Wilkins and financial director Graham Fowler; chaired by IT veteran and personality, Hamilton Ratshefola, who is also CEO of Cornastone Consulting; supported by non-executive Derek Hughes, who joined the company in 2004 to drive expansion; and non-executive Jackson Mamogale, also from Cornastone.
"Our core values in 1999 were a focus on service delivery rather than on technology; competitive pricing; and self-confidence in our ability to deliver," says Wilkins. "In the eight years since then, these values have stood us in good stead, and we have built a strong track record in delivering projects. Of the hundreds of bespoke development projects we have undertaken since 1999, we have delivered more than 95% on time, within budget and according to requirements, compared to the industry average of 30%. This track record, along with our capacity, depth of management and market demand, will allow us to sustain our organic growth for several years."
DVT has also set its sights firmly on growth through acquisition, and targeted a number of candidate companies, says Wilkins. "There is a clear trend to consolidation in the market, and we believe many like-minded companies will buy into our strategy, which is to be a leading provider of business tailor-made software applications and related services."
Other future strategies include:
* Diversification into related and complementary technology and service areas, along with a move from project- and engagement-based revenue to long-term service level agreements and outsourcing.
* Development of new and exploiting of existing intellectual property (IP), an aspect of the business that has significant scope for growth. This will be important in driving recurring and annuity revenue.
* Over time, to compete in the global market for offshoring and outsourcing services.
The company has reported revenues of R44,47-million for the 2007 financial year, the last set of results before listing, and projected revenues, excluding the effects of any acquisitions, of R58,48-million for 2008 and R76,03-million for 2009. Attributable profit for 2007 was R2,88-million, and for the next two years is expected to be R5,87-million and R8,57-million respectively