Datacentrix on acquisition trail
DATACENTRIX is reversing its enduring strategy of focusing on organic growth by planning to take over some boutique hi tech players in the coming months.
Its cash pile of R207m could be augmented by issuing shares to grow the business through “small pockets of acquisitions”, chairman Gary Morolo said yesterday.
“This is the first time you have heard us in a number of years say we are going to look at some form of acquisitions in key areas that we need to fast-track into,” Morolo told analysts yesterday.
It would look for boutique players that could be bolted onto its existing operations and the skills it already had, he said.
Datacentrix has issued solid figures for the six months to August, showing that its policy of organic growth has been working well so far. Attributable earnings of R43,4m were up from R27,6m, and
The need for acquisitions has arisen partly from the skills shortage, making it impossible for some of its units to gain critical mass purely by hiring more technicians in the open market.
“The competition for good people has increased. We are battling to find people in certain instances,” said CEO Gerhard Uys. A priority in the coming year was to attract and retain top-notch staff, he said.
The directors said a reorganisation of the group’s shareholding to reward staff and managers with a greater stake in the business was still being discussed.
“Our approach historically has been organic growth,” agreed chief operations officer Ahmed Mahomed. “However, we are looking at the market for acquisitions, and have identified some opportunities in that space. We will target those opportunities in the months to come.”
The idea was to bolster its offerings in the niches where it already played, and to let it enter new market segments that looked ripe for growth, he said.
Datacentrix had been working to move up the value chain by providing higher-margin services around the hardware infrastructure it supplied.
Services activities were growing faster than the product side, and that was benefiting the bottom line, Morolo said. Its infrastructure and related services division contributed R658m of revenue and R52m of profit.
The Solutions division had won major contracts for its work flow, business intelligence and data-mining services, and had improved its profitability to R9,7m on revenue of R35m.
Datacentrix had set up a new division to supply technology staff, while a unit supplying data security services had won two substantial government tenders in the past few weeks. Uys said its profit margins had been maintained through the improving mix of services.
Frost & Sullivan analyst Letticia Nkumbula said the group was well positioned to continue its good performance thanks to strong relationships with its clients and its superior service.
Its empowerment status was also a significant contributor to its current and future success, she said, and would work in its favour to win some of the growing number of government tenders.
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