Despite tough conditions, Alviva Holdings posted improved revenue and earnings for the six months ended 31 December 2017, and invested in new acquisitions that should boost the group going forward.
The acquisition of the balance of Datacentrix Holdings, along with the group’s share repurchase programme both helped to deliver healthy returns to shareholders, while new acquisitions made during the period should also contribute in the future.
Gross profit across the group was up, although expenses relating to acquisition meant that operating profit was marginally down at R350-million. Headline earnings per share was up 25% to 133 cents.
The ICT Distribution business increased revenue by 4% and EBITDA by 7%.
In the Services and Solutions segment, a number of delayed projects meant it was unable to repeat some of the large projects executed in the comparable period. However, activity levels and quote registers have increased ahead of expectation over the period, although corporate and government awards have been delayed.
Centrafin, the Financial Services segment, has undergone a refresh of its brand and moved to new premises in Waterfall City, Midrand. This is expecdt to result in a short-term diminution in the return of the entity, but management is confident it is well positioned for growth in the longer term.
Cash generated by operating activities in the six months to 31 December 2017 was healthy at R352-million, which allowed the group in invest R151-million in new businesses, repurchase a further R96-million of Alviva shares, and pay the annual dividend of R40-million.
During the period, Alviva acquitted Sintrex Integration Services, Gridcars and VH Fibre Optics.
Effective 31 October 2017, Alviva’s subsidiary company DCT Holdings agreed to acquire 51% of the shareholding in Sintrex for R102-million, with an option to acquire a further 24% within a two-year period.
Sintrex is an infrastructure management company, based in South Africa, providing end-to-end IT solutions and services. It develops IT products, services and solutions that, along with global partnerships, provide clients with the visibility and performance insight into IT infrastructure management, network management and monitoring solutions.
On 31 August 2017, Alviva’s 51%-held subsidiary Solareff subscribed for shares in Gridcars to the value of R3-million, representing 75% of the total issued equity.
Gridcars is a Pretoria-based developer of electric vehicle charge-point software management systems and a supplier of charge points.
The acquisition forms part of the group’s renewable energy business strategy.
Effective 30 November 2017, Alviva’s subsidiary company DCT acquired 100% of the equity of VH Fibre for a total purchase consideration of R110-million.
VH Fibre specialises in supplying fibre-to-the-home and fibre-to-the-building passive network solutions to its customers and has the exclusive Prysmian Group distribution agreement for South Africa.
This acquisition will give the group access to the fibre infrastructure business.
Since the end of the reporting period, Alviva has continued its acquisition activity.
With effect 31 January 2018, Alviva subsidiary DCT Holdings acquired a 72% shareholding in Obscure Enterprises Proprietary.
Obscure provides innovative information cyber security technology and solutions to system integrators, giving the group gains access to prominent cyber security vendors, scarce cyber security skills and existing customers. The transaction is now unconditional.
Alviva subsidiary Datacentrix Holdings has acquired a 70% shareholding in DG Store, which provides hardware and software procurement and consulting solutions to its clients, including specialised services such as product lifecycle management, secure cloud and hybrid data storage solutions as an on-demand backup service and cloud computing.
The transaction is subject to a number of conditions precedent that are expected to be fulfilled during March 2018, including the approval of the competition commission.
The outlook for the year to 30 June 2018 is positive with earnings per share expected to be above those of June 2017.