Publications
Partners
When considered in the broader context of the ICT sector over the past two years, Business Connexion Group [JSE:BCX] has actually weathered economic storms better than most.
However, the company isn’t bouncing back as quickly as investors would have hoped but is showing promising signs for the medium term.
The group posted results for the six months ended February 2011 last week, showing it’s treading water in many regards.
At the results announcement, executives said BCX’s trading conditions over the period remained tough – of particular concern being its inability to win tenders in the public sector.
Revenue for the six-month period dropped to R1,8bn from just more than R2bn over the same period in 2009. The group’s gross margin held steady at 29%.
But a closer inspection of its results reveals margin pressure within its technology division. That’s to be expected, as market trends move away from that nature of business towards business services – something BCX should be well geared for. BCX said its operating expenses continue to be tightly managed and increased by almost 7% up to 28 February this year, which include the acquisition of specialist software group UCS and “other opportunities” totalling R10,6m.
There was also an IFRS2 charge of R6,1m in respect of the “A” share option scheme BCX introduced to increase black empowerment equity ownership of the group.
Fundamental shifts in the ICT market, as suggested above, are the key to how BCX will fair in the future. It will either become a relevant player in the services arena or fall by the wayside with integration firms that didn’t match the trend.
The latter scenario is unlikely.
BCX is making the right moves in terms of investing and positioning itself for the evolved services market but has to win those major contracts if it’s going to pull itself upwards by this time next year. If you’re in, hang on.
However, the company isn’t bouncing back as quickly as investors would have hoped but is showing promising signs for the medium term.
The group posted results for the six months ended February 2011 last week, showing it’s treading water in many regards.
At the results announcement, executives said BCX’s trading conditions over the period remained tough – of particular concern being its inability to win tenders in the public sector.
Revenue for the six-month period dropped to R1,8bn from just more than R2bn over the same period in 2009. The group’s gross margin held steady at 29%.
But a closer inspection of its results reveals margin pressure within its technology division. That’s to be expected, as market trends move away from that nature of business towards business services – something BCX should be well geared for. BCX said its operating expenses continue to be tightly managed and increased by almost 7% up to 28 February this year, which include the acquisition of specialist software group UCS and “other opportunities” totalling R10,6m.
There was also an IFRS2 charge of R6,1m in respect of the “A” share option scheme BCX introduced to increase black empowerment equity ownership of the group.
Fundamental shifts in the ICT market, as suggested above, are the key to how BCX will fair in the future. It will either become a relevant player in the services arena or fall by the wayside with integration firms that didn’t match the trend.
The latter scenario is unlikely.
BCX is making the right moves in terms of investing and positioning itself for the evolved services market but has to win those major contracts if it’s going to pull itself upwards by this time next year. If you’re in, hang on.
