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Solid growth for Datacentrix

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Datacentrix has announced positive annual financial results for the year ended 28 February 2011, showing solid organic growth across all operating divisions.

According to Datacentrix CEO, Ahmed Mahomed, the group saw a shift in profit mix in favour of the Managed Services and Business Solutions businesses.
"We are pleased with the overall performance of all of our divisions," he says. "Datacentrix’ primary earner, the Infrastructure division contributed 51% to group profit before taxation (PBT) while the Managed Services and Business Solutions divisions contributed 25% and 14% respectively.
"It is clear that the market profile of Datacentrix has migrated from a principally commodity based player to a credible total services and solutions provider, as evidenced by the number of invitations to participate in closed outsourcing tenders received, that were historically not within grasp of the group," Mahomed explains.
"This positioning has allowed us to participate in key strategic opportunities in a heavily contested managed services market. Our recent wins in the outsourcing business have also substantially strengthened the group’s position and place it in good stead for future growth."
The group continues to maintain diligent financial and operational discipline, evident in the strong operating cash flow generation of R163-million, resulting in a cash on hand of R321-million with no interest-bearing debt. Tangible net asset value improved by 10 percent to 205 cents per share.
Gross revenue grew organically from R1,3-billion to R1,6-billion, a growth of 22%, while EBITDA showed a growth of 19%, from R127-million to R150-million. Headline earnings per share increased from 41 cents to 46 cents, a growth of 13%.
"The infrastructure division reflected a marginal increase for the year under review. When contextualised against the backdrop of the continued subdued public sector expenditure, the performance of this part of the business was commendable, more than offsetting the poor public sector performance. While public sector tender activity is still robust, the finalisation of these tenders remains inhibited," Mahomed adds.
He says the strong performance delivered by the Managed Services division was supported by its involvement in the managed print services (MPS) project relating to the 2010 FIFA World Cup South Africa – an area where Datacentrix has gained recognition as a leading solutions provider. Recent wins in the managed services division include the signing of a three year infrastructure outsourcing term contract with a large mining house and a long-term MPS term contract.
The business solutions division has shown excellent growth for the year in review, in particular within the enterprise content management (ECM) business unit, which has one of the largest services capabilities in the market and delivers primarily on the ECM, business process management (BPM) and information lifecycle management spaces. The business intelligence (BI) business unit saw a resurgence after a skills injection, resulting in a positive contribution to the division’s overall performance. With regards to its enterprise resource planning (ERP) offering, the group is investing in Softline’s SAGE X3 ERP solution skills in order to increase Datacentrix’s presence in the ERP market and complement its current Microsoft solution.
Targeted strategic growth areas have performed well, showing significant new client wins. Good performances were noted within both newly established and existing competencies, in particular storage, security, data centres, outsourcing and MPS. The company has invested in the basic constructs of a cloud solution and has already started engaging clients.
"Datacentrix’s strategy to grow its total solutions portfolio will continue, with focus this year turning to fortifying our storage, security, outsourcing, MPS, BI and data centre capabilities with specific focus on building cloud capability," says Mahomed.
While the retention of key talent and competencies remains one of the biggest challenges in the face of a skills shortage, Datacentrix continues to attract and develop the best talent in the industry.
"Management is committed to its strategy to move the group’s operation higher up the value curve. While the company’s hopeful expectations this year regarding government related business did not come to fruition, we remain focused on this segment in order to optimise opportunities as they may arise.
"Although Datacentrix has shown solid organic growth and continues to prefer this strategy, we are contemplating acquisition opportunities. We anticipate making a definite announcement around the enhancement of our BEE shareholding. This topic is one that Datacentrix has marked as critical for the past three years, particularly in terms of the challenge we have experienced in augmenting our black shareholding in line with anticipated ICT Charter requirements," Mahomed adds.