Business Connexion (BCX), the IT services group currently the subject of a R2,7bn takeover by Telkom, has turned in a robust performance in the six months ended 28 February 2015, with diluted headline earning per share rising by 23,6% on the back of a 16% growth in revenue to R3,6bn.
Normalised profit for the period was up by 25,7% to R199,4m. However, gross profit margins come under some pressure, falling to 27,4% from 30% in the same period a year ago. Normalised operating profit climbed to 5,6% from 5,2%. The group has maintained its interim dividend at 20c/share.
Operating cash flows were strong at R282m, from R259m before.
Revenue growth was mostly organic, the result of new client wins, BCX said.
Telkom’s bid to acquire the group is still waiting for final regulatory approvals, it said. This includes approval from South Africa’s Competition Commission, which is considering a number of merger and acquisition deals in South Africa’s information and communications technology sector.
“Upon receipt of the above approvals, final approval will be sought from the Takeover Regulations Panel and the JSE,” BCX said.
Last August, BCX shareholders voted overwhelmingly in favour of the R2,7bn all-cash offer from Telkom, paving the way for the review by competition and telecommunications regulators.
Telkom is offering BCX shareholders R6,60/share to buy 100% of the company. The deal is seen as important for Telkom, which is keen to expand into higher value – and possibly higher margin – IT services to complement its telecoms business.
It’s the second time in eight years that Telkom has made an offer to buy BCX. The first time around, the competition authorities blocked the transaction fearing the impact it would have on competition in South Africa’s information and communications technology industry. — © 2015 NewsCentral Media