DataPro has R1bn in sights

By Nicola Mawson for DataPro
Johannesburg, 21 Nov 2006

DataPro aims to hit R1 billion in turnover due, in part, to its recent bid for Orion Telecom.

The company yesterday morning published its annual results to end-August and said revenue had gone up 103%, to R196 million, while net profit after tax moved up 227%, to R12.9 million.

Shares traded up on the news of the company's results and by 11.10am were 3.85% higher, at 81c. On Friday, the company's shares closed at 78c.

Executive chairman Tony van Marken says - while the company has stretched targets for the future - looking at annualised revenue off the back of the Orion takeover, the group should hit R1 billion.

In addition, incorporating Orion into the fold should see margin gains of between 6% and 7%, as well as cost-efficiencies.

DataPro, the fourth-largest player in its field, after Telkom, Internet Solutions and Verizion, saw organic growth of 38%. The company serves 6 500 businesses with 256 staff and has seen its monthly contracted annuity base go from R9.5 million in the last year to R24.1 million.

Orion's last financials, to the end of February, showed revenue of R680 million and net profit of R47 million, says CFO Mike von Holdt. DataPro hopes that final sign off on the deal by the Competition Tribunal will happen in March or April.

Quantum shift

Van Marken says the company looks completely different to what it did a year ago. Counting Orion, it now serves everyone from consumer through to large corporations.

In the past year, it integrated @lantic Internet into the group, as well as acquired and integrated Netralink, BizCall and Definity Telecom.

DataPro contributed the biggest chunk to revenue, hitting R114 million with gross profit margins up. @lantic, which recorded a gross profit improvement from 18% to 28%, contributed R45 million to revenue. VoxTelecom contributed R37 million to revenue. This figure includes R21 million from Definity, which could be included for two months.

Its intention to buy out Orion, announced last week, will add to its service offerings significantly and aid it in its goal of becoming "the leading alternative independent provider of voice and data services to the southern African market".

CEO Douglas Reed says voice over Internet Protocol will become the de-facto standard over the next five years. DataPro's strategy going forward is to grow its core offerings organically, take over other companies to accelerate its strategy, and improve its financial performance.

However, there are risks inherent in operating in the telecoms environment, says Van Marken. These include the competitive nature of the marketplace, margin pressure and the size of its competitors.

However, he says DataPro has a good degree of transparency in terms of looking at revenue growth going forward. In addition, it believes it is now ahead of its competitors.

"The cost to create a similar company from scratch is prohibitive," says Van Marken.

Once the Orion deal is bedded down, the company will seek an EmpowerDEX rating across its operations. At listing, two years ago, it was 20% empowered. However, this has since been diluted, but the firm hopes the need to raise cash for the Orion deal may entice black investors.