This headline profit jump is a classic accounting trick.
- Revenue is completely flat. Revenue grew by a pathetic 3% (R5.58B to R5.73B), which doesn't even keep pace with tech inflation or SLA cost increases.
- Operating Cash Flow fell 44%. Go read the actual financial statements behind this press release, net cash generated from operating activities actually dropped by 44% (down to R239M).
- Where did the "profit" come from? If your revenue is flat and cash flow is cratering, how do you show a 39% profit jump? Simple: you slash payroll, retrench core teams, cut leave coverage, and strip operational redundancy.
They didn't grow the business by 39%. They squeezed R99 million out of ground level staff expenses to make the balance sheet look pretty for buybacks and M&A announcements. When you cut 3 person operational teams down to 2 and force remaining staff to absorb burnout, that salary saving shows up instantly as "profit margin" until the system outages hit.
Rhys Summerton isn't a tech guy. He isn't a software architect, a systems engineer, or an IT operator. He is an ex Citigroup investment banker, a UK hedge fund manager (Milkwood Capital), and a classic financial engineer who works for zero salary because his entire payout is tied 100% to stock options and performance metrics.
When a hedge fund guy running a tech firm talks about "intentional investment" and "improving profitability," understand what that actually means:
He doesn't build software; he cuts wage bills.
He doesn't innovate; he strips operational engineering teams down to bare minimum, axes leave coverage, and forces remaining staff to absorb burnout under threat of retrenchment.
He parades a "39% profit jump" while quietly hiding the fact that revenue was flat at 3% and operating cash flow cratered by 44%.
Rhys Summerton is not here to build a 10 year sustainable South African technology champion. He is here to trim the core to the absolute bone, engineer short term Earnings Per Share metrics to trigger his equity options, buy back cheap stock, and dress up the pig for an eventual sale.
When the inevitable SLA breaches, client churn, and system meltdowns happen down the road, the people who actually keep the lights on will be burnt out or retrenched, and the hedge fund manager will be cashing his equity checks on a beach somewhere. Don't buy the hype. This guy bought cheap shares and is trying to polish this turd to get the share price to swing so he can sell his shares for a profit and head for the door.
