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Johannesburg - Global IT solutions and services group Dimension Data's (Didata's) latest financial report made a sound impression on the markets on Wednesday, earning it a share price surge of more than 5%.
Releasing its annual results for the year to end-September, Didata announced that its operating profit rose by 6% to $192m despite an 11.9% decline in turnover, a feat accomplished by what the group termed a "concerted cost-cutting effort". Diluted earnings per share were 7.7 US cents, compared to 7.3c the previous year. The declared dividend was 1.9c per share.
The group is also sitting on a sizeable war chest of cash - $599m - but said there are no acquisitions on the table for the coming year.
Spiwe Chireka, ICT industry analyst at Frost & Sullivan, praised the group's performance, saying its foresight has paid off.
"The company decided to focus on the public sector two to three years ago and now that we are seeing a decline in private sector spend, this move is paying dividends," Chireka said.
Subsidiary Internet Solutions, which contributes 6% to total turnover, reported revenue growth of 27.9% to $255m for the period.
Didata also said its telecommunications infrastructure subsidiary Plessey is well placed to cash in on South Africa's anticipated bandwidth explosion.
"It's a big opportunity, with all these cable systems coming," said Didata's Middle East and Africa CEO Allan Cawood. "The amount of bandwidth coming into Africa is going up twentyfold," he said, "Plessey will be very well placed; our opportunities are vast."
Cawood said increased bandwidth will result in a demand boom for fixed line and wireless infrastructure, as well as a service need to maintain and manage these products. He added the firm's focus would also be on developing infrastructure to host visual communication.
"There's nothing like face-to-face," he said. "Plessey is moving aggressively into this space, and is well positioned to take advantage."
Didata shares were up 5.01% during late trade on Wednesday at 985c/share.
- Fin24.com
