Courtesy: http://allafrica.com/
BLACK-empowered technology company Simeka Business Group has reported headline earnings per share unchanged from the 8,8c achieved a year ago, despite a 27% rise in revenue for the first half of its financial year.
CEO Mohammed Varachia said the group had seen solid growth during difficult market conditions, and its stock gained 1c to trade at 31c yesterday.
For the six months to November 30 its revenue rose from R309m to R393m and earnings before interest, tax, depreciation and amortization (Ebitda) grew a healthy 37% from R58,4m to R80m. A similar rise in net profit saw it retain R47,5m, and headline earnings per share were only eroded because the number of issued shares rose by almost 100-million.
The fact that its Ebitda outperformed the growth in turnover showed it could maintain healthy margins and keep its costs under strict control, Varachia said. Part of its success came from capitalizing on the demand for technology outsourcing, which is flourishing as companies cut back on their in-house technology staff to cope with the economic slowdown. The full effect of the economic meltdown may not have been felt yet, Varachia warned, but outsourcing offered Simeka good potential as more organizations began outsourcing to cut their costs.
Its performance was also boosted by acquiring the business services group SAB&T Ubuntu Holdings for R123m last June. That deal broadened Simeka's technology services to include general management consulting, and the two operations were now cross-selling to each others' customers.
Simeka's cash reserves stand at R94m, and although no interim dividend was declared a maiden dividend may be paid for the full financial year. Simeka won new deals worth more than R150m in the past six months, Varachia said, and would earn annuity income topping R2bn in the next four years.
The group offers technology outsourcing and business support services with offices across SA, in 21 other African countries, and in the Middle East and the UK. Its most recent foray was into Nigeria, and that branch was delivering profits ahead of target, justifying a further investment of R10m to tackle new opportunities.
AltX-listed Simeka is majority black-owned and managed, which it says is a competitive advantage and a key to growth.
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Its goal in the coming 12 to 18 months is to chase more government tenders in anticipation of a rise in public sector spending.
That would be helped by its black empowerment profile, Varachia said. It would also make a concerted effort to grow internationally in the next six months, mainly by taking its Microsoft solutions to high growth areas in the Middle East.
"We are looking to increase turnover from outside SA to around 30% of total turnover by year-end in May 2011, compared to the current 10%," Varachia said.
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