Strong growth fuelled a 46% increase in headline earnings for black-owned and managed Simeka Business Group for the year to May 2008. This marks a milestone for the company, with year-on-year growth of over 20% for the past three years.
Revenue amounted to R597.4 million, well ahead of expectations.
The year saw Simeka make a number of investments to entrench the group's presence in high-growth markets, as well as dispose of businesses that failed to meet to its long-term sustainability criteria.
Headline earnings grew to R66.2 million from R44.7 million in the previous year, translating to 15.5c per share, up from 12c. Net asset value increased to 83c a share from 65c in 2007. Although no dividend was declared, the group has indicated it intends declaring a dividend for the first time during the current financial year.
CEO Mohammed Varachia says a wide client base across a number of industries and a comprehensive range of services positioned the group to withstand the economic downturn. He adds that long-term annuity contracts are another strength in Simeka's arsenal against poor economic conditions.
"Operations, for the most part, performed well during the year to post good growth. Under-performing operations, such as I-CSS and Spec Systems, were discontinued or disposed of to realign the group for long-term growth."
Varachia points out that Premium Ideas, acquired during the year, has integrated well and exceeded performance targets. "We are now able to undertake more of the process related to smart cards, from personalising to packaging. To this end, Premium Ideas complements our existing business of Motoma-Mithratech."
He adds that the group is investigating extending its smart card business to the distribution of virtual airtime for cellphones in the year ahead.
Simeka's other recent acquisition, Adcheck, for R5 million, has launched the group into mobile applications. Adcheck provides a solution for clients' sales teams to access and synchronise real-time data through cellphones.
"There is a growing move globally to more convenient, technologically sophisticated cellphone-based solutions. In light of the growth potential of this market, we believe Adcheck is an appropriate springboard for Simeka into the mobile applications industry," says Varachia.
Simeka's share closed yesterday at 54c.
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