Alviva's full year results saw a positive impact from the acquisition of Datacentrix earlier this year.
This as the group, formally known as Pinnacle Holdings, reported a rise in headline earnings per share (HEPS) of 23%, for the year ended 30 June, to 243.9cps.
The ICT products and services provider also saw core earnings per share rise by almost 25% to 256.3cps. Revenue increased by 16.8% to R12.8 billion and gross profit increased 36.6% to R2.3 billion.
Datacentrix was accounted for as a 100%-owned subsidiary with effect from February after Alviva finalised the acquisition of the remainder of shares of Datacentrix that it did not already own in January. Alviva says it paid out R563 million for the acquisition, although the original amount reported when the deal was first announced was R541 million.
Datacentrix is a complete ICT systems integrator that provides solutions and services across the full information value chain. It listed on the main board of the JSE in 1998 and delisted on 14 February 2017, after being acquired by Alviva.
Datacentrix now forms part of Alviva's services and solutions division which also includes renewable energy company Solareff. The division saw its revenue grow by 120% year-on-year, to R3.5 billion. The ICT distribution division added R9.5 billion in revenue, a 1.4% increase on a year ago.
"The strategy to diversify the group's business from that of predominantly distribution is bearing fruit with the contribution from the services and solutions cluster becoming more significant," the group says in a statement.
Alviva says the overall results were satisfactory, with all of its operating divisions performing well, despite difficult market conditions. It says Datacentrix "had a great year" and executed several big contracts during the period. This included the upgrade of 3 200 court rooms for the Department of Justice and technology upgrades in several countries for Barclays Africa.
"The acquisition of Solareff some 17 months ago has brought the group into the exciting renewable energy domain. With the management of this entity as the driving force, we are now looking to add further renewable energy entities into the cluster and we remain optimistic about the possibilities that this young, energetic team can deliver within this segment in the future," it says.
Acquisitions
The group's ambitions to add to its renewable energy portfolio were boosted by Solareff's acquisition of a 75% stake in Gridcars "for a nominal amount". Gridcars is a Pretoria-based developer of electric vehicle charge point software management systems and supplier of charge points.
"Alviva believes that growing a network of charge points in SA will be the enabler of a carbon-free transport system. The real-time interactive eMobility software system allows users to find available charge points and to manage the rates and billing for energy consumed.
"The acquisition of Gridcars forms a key element of our renewable energy business strategy. This transaction is now unconditional," Alviva says.
Alviva today also announced its subsidiary, DCT Holdings, had entered into an agreement to acquire 51% of the shareholding in Sintrex, and has an option to acquire a further 24% within a two-year period following the effective date of the transaction. Sintrex is an infrastructure management company based in SA, providing end-to-end IT solutions and services.
"The Sintrex acquisition will not only add a specialised products and services offering but also a higher margin business to the group. The transaction is inter alia conditional on clearance from the relevant competition authorities," Alviva says.
Censures and sentiments
The JSE on 1 September announced it had imposed a censure on Alviva director Bhekokuhle Sibiya for breaching its listings requirements. This after he sold shares during a closed period and did not disclose the sale within three business days of the dealing, as per JSE rules. He also did not get approval from Alviva's chairman for the trades.
The 38 925 shares were sold on 17 and 18 January but were only disclosed on SENS on 14 June. The closed period had begun on 1 January ahead of Alviva's interim financial results for the year ended 31 December 2016, which were released on 3 March 2017.
Alviva, however, made no mention of the censure in its full year results announcement.
When considering the outlook for the future, the group believes the overall economy "faces challenging times ahead".
"It is evident that, following the cabinet re-shuffle in March 2017, households have been actively shoring up their balance sheets, reverting to a culture of saving and living more within their means. Businesses too have curtailed investment and are not as yet utilising the low interest rate environment to leverage up their balance sheets, meaning that conservatism is dominating economic behaviour at the moment.
"There is simply no confidence to encourage investment," Alviva says.
The group believes this to be temporary in nature but anticipates "a tough six to nine months ahead".
"To some extent, the IT sector will cushion this effect but much will depend on the elective conference in December," it says.
Alviva says after a year of strategic alignment, it is now "keen to rigorously pursue commercial opportunities to take advantage of its efficient infrastructure and broad offerings in the distribution and services cluster". It is also looking to expand its offering through acquisition opportunities of suitable targets.
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