Dynamic ‘cautiously optimistic’
The depressed economy may pare back its prospects next year, CEO Chris Wilkins said yesterday, but he was “cautiously optimistic” for the year ahead.
Despite the respectable figures its shares took a 17% hit yesterday to trade at 70c, well down from the previous day’s close of 85c. Revenue of R81,7m was up almost 40% from R58,6m and attributable earnings rose 45% from R6m to R8,7m. Headline earnings per share climbed from 14,1c to 17,5c.
Wilkins said it was particularly pleasing that the figures were up despite rising salaries, a significant investment in management capacity and pressure on the profit margins that customers were willing to pay.
During the year Dynamic Technology completed the acquisition of Emerald Consulting, a legal practice management specialist, in a deal that had already paid for itself. Its other recent acquisition, Offline Digital, was performing in line with expectations. Prospects were also good for its staffing and recruitment division Talent Exchange, which supplies technology skills to client companies.
The group’s core business is providing software specifically developed for its customers, using a mixture of off-the-shelf and tailor made components. It also develops customised content through the new Offline Digital subsidiary and software for the legal fraternity from Emerald Consulting.
Its overall operating margin dipped a fraction to 13,1%, partly as it had to reduce its billable rates due to tough market conditions. The margin also fell as salaries rose due to a skills shortage in SA, even though it increased its ratio of contractors compared to staff to cut its costs. It signed up almost 40 more people during the year.
Wilkins said the amount of cash generated was below expectation, and blamed an increase in debtors. The depressed economy would reduce demand for its hi tech products and services as customers economised, so it expected longer lead times and downward pressure on its rates. Its wage bill would continue to rise because of the national shortage of technical and managerial skills.
Despite that, the directors were confident of further growth next year by putting additional effort into retaining existing clients and building new relationships. It may also grow through acquisitions that would extend or complement its existing businesses.
Business Day
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