Business Connexion’s results for the year ended 21 August 2013 show an overall improvement on the past year, and the ICR services provider focuses on sustainable, organic growth; expansion into the rest of Africa; strategic acquisitions; and cost containment.
Benjamin Mophatlane, CEO of Business Connexion (BCX), comments: “2013 was a year of acceleration for the Group and we have made excellent progress in consolidating our position to deliver the best possible service and solutions to clients both locally and in Africa. In particular, we are pleased by the significant new client wins and the growth achieved in the retail market sector.”
Revenue grew by 5,9% to R6 173,3-million for the year on the back of good growth across most divisions. The growth was mostly organic with only 2,1% attributable to the acquisition of Integr8 IT. The group’s annuity revenue base remained intact with annuity revenue accounting for 53,6% of total revenue.
Business Connexion continued to pursue its objectives of growing sustainable earnings and generated diluted earnings per share (EPS) of 44,5 cents (2012: 37,2 cents) with normalised diluted headline EPS growing 4% to 52,6 cents (2012: 50,6 cents). Return on equity increased to 8,0% (2012: 7,1%) as a result of the improved profitability. Healthy cash flows were maintained with cash from operations of R527,6-million.
“We remain focused on achieving solid organic growth in line with our seven years growth strategy and many of our initiatives to support long-term sustainability are starting to pay off,” Mophatlane adds. “We are confident that our drive for continuous productivity improvements and costs containment will enable us to achieve our target return on equity of 17% in the medium term.”
The Services division performed well in spite of client project delays on a number of new contracts in the earlier part of the year. The division’s performance was helped by its application development business, especially in the public sector. The group continued to make significant investments in its data centres and cloud solutions as cost pressures continue to drive cloud adoption by clients.
“The public sector market also offers great growth opportunities for BCX both locally and across Africa. We are particularly pleased with the traction that the five-year outsourcing contract with the Department of Water Affairs has provided us and we will continue work to securing more significant contracts in this sector,” says Mophatlane.
Despite difficult trading conditions within the retail industry the UCS division continued to show pleasing growth. In addition, the expansion of the group’s retail offerings into Africa is starting to gain traction and will further materialise in the year ahead as it entrenches its position as the dominant IT services player in the retail industry sector in sub-Saharan Africa.
BCX’s entry into the highly competitive Managed Print Solutions industry together with Canon proved successful. The Canoa division performed well, driven by an increase in the volume of machines sold and traction in Managed Print Solutions, especially in the large corporate market.
The Technology division produced positive results driven by the delivery of innovative technology solutions to both private enterprise and the public sector in conjunction with the world’s leading vendors and partners.
The International division exceeded expectation with the Nigerian operations the biggest profit contributor in the division following the launch of the data centre solutions in that country. Both Nigeria and Kenya’s sales pipelines are looking very healthy whilst successful service deployments in countries where the group has no existing physical presence is expected to drive business flow.
Mophatlane comments: “Our group wide cross-selling initiative is unlocking value and has resulted in number of significant client wins. Our investments in key African countries have also created new opportunities and we will continue to explore strategic deal opportunities to develop our footprint, especially in Nigeria which is a key growth market for the group.“
The Innovation division performed well with the sale of the QLINK business at a significant premium (R187,5 million) providing further evidence of the quality and growth of BCX owned intellectual property businesses within the group.
“Leveraging off the key achievements of 2013, the group is confident that it will achieve further revenue and earnings growth in the next financial year. Whilst much more remains to be achieved with regards to our strategy, the growth of our footprint and capabilities both at home and abroad position us well to take advantage of key opportunities,” Mophatlane says.