Sekunjalo aims to spin off IT unit

Johannesburg, 10 Jun 2009

Investment holding company Sekunjalo Investment Group is still keen to spin off its IT division within the next year and list it separately on the JSE, depending on market conditions.

Chief financial officer Khalid Abdullah, who is also chairman of the IT division, says the company is in the market for acquisitions, as it is in a strong position to make purchases now that pricing has become more reasonable.

The company has a presence in two areas that Abdullah believes are recession-resistant: healthcare and IT. He says the second half of the year looks promising as some of the company's government tenders are gaining traction. In addition, restructuring benefits should be fully felt next year.

Sekunjalo is the black economic empowerment partner to global telecommunications giant, British Telecom (BT), for its South African operations. Sekunjalo, which has a 30% stake in BTSA, expects to benefit from this deal, says Abdullah.

He says the deal should be earnings-enhancing within three years, once the financing is paid off.

Government tenders

Its IT division, the Sekunjalo Technology Solutions Group, has been focused on the growth of its business units and the start-up of two government healthcare sector projects secured by Health System Technologies (HST) and Amethst.

HST, a hospital information system (HIS) provider, performed well in the half-year as a result of government contracts that were being serviced. HST has formed a joint venture with Amethst, to deliver HIS to the Gauteng region. This joint venture began implementation during this financial year and is expected to have the greatest impact on HST's profitability over the next few years.

Abdullah says the division is seeing growth and has also expanded its Western Cape tender.

At half-year, Synergy Business said it anticipated an expansion of its business intelligence pilot project in the KwaZulu-Natal provincial government towards the end of the year. Fios, which provides Cognos Corporate Performance Management Solutions, saw sales initially down, but sales started improving in early 2009 as a result of a project for the Department of Trade and Industry.

Software development company Saratoga Software secured good medium-term contracts in the insurance industry during early 2008, which continued during the first half-year, which resulted in strong revenue streams that surpassed budget.