Slowdown? What slowdown?
If the latest batch of financial results from the IT sector is anything to go by, the industry is taking the economic downturn in its stride. Both GijimaAst and rival Business Connexion (BCX) turned in good results last week.
“We have not seen any slowdown, though some of our large clients are becoming more prudent with their projects,” says GijimaAst CEO Jonas Bogoshi. “So far we have not been able to quantify the impact of that, but the investment coming from the public sector will more than offset the impact of any slowdown in the corporate sector.”
Bogoshi, who took the reins at GijimaAst last year, has delivered his second set of strong results. In the year to June 30, the group grew revenues by 25%, or twice the average growth rate of the IT industry. Operating profit jumped 81% to R171m. But the company experienced difficulty getting paid by clients, with its trade debtors’ book ballooning to R196m. Management is working to reduce this.
Bogoshi says GijimaAst is winning big contracts from its competitors. It recently won significant deals with the department of home affairs, Sanlam and Anglo Platinum. Bogoshi says the company should continue growing at twice the industry growth rate for the foreseeable future.
BCX, meanwhile, confounded sceptics by turning in a robust performance in the year to May 31, turning around a disappointing first half that resulted in its directors — especially CEO Benjamin Mophatlane — being roasted by analysts at the interim results presentation.
Mophatlane says the market remains highly competitive, but there are a “lot of opportunities”. BCX revenues climbed 16% to R4,2bn with operating profit soaring 51% on the back of the fruits of a “revitalisation” programme. The group is targeting an 8% operating margin by 2011, from 4% now.
BCX’s balance sheet is strong, with net cash of R524,3m.
Mophatlane says government is accelerating its technology spend, which will help BCX. “With the change in government next year, we are expecting more and more investment.”
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