UCS Solutions, a 70%-held subsidiary of JSE-listed technology services company Business Connexion (BCX), has acquired IT management specialist Integr8 IT, part of the Integr8 Group, for a maximum purchase price of R126m.
The deal will be funded through an initial cash payment of R56m, with the balance of the R70m payable as earn-out payments over a period of three years, BCX says in a statement.
Integr8 was established in 2001 and offers cloud computing services as well as virtualisation, storage and networking products and solutions. It has 300 permanent employees and 250 contractors on its payroll.
News of the deal follows the publication on Monday morning of BCX’s full-year financial results for the 12 months ended 31 August. The company turned in a robust performance, helped by its recent acquisitions of UCS and Canoa.
Revenue climbed by 35,1% to R5,8bn, from R4,3bn previously. Diluted headline earnings per share soared by 125,6% to 38,8c, or by 23,3% when the effect of the acquisitions is not included.
Normalised operating profit margin jumped from 4,3% to 6,3%, with Business Connexion CEO Benjamin Mophatlane saying the company is in its strongest financial position in eight years. “Every one of our key businesses has delivered profits.”
The only area that underperformed was its products-focused technology division, where revenues declined by 25,6% due to a drop in what Mophatlane calls discretionary IT spending by companies.
On the back of the solid financial performance, Business Connexion has raised its dividend by 42,9% to 20c/share, from 14c/share a year ago. This represents a 3,9% dividend yield based on BCX’s 30-day volume-weighted average share price, the company says.
BCX generated R520,8m from operations and is now considering a share buyback plan. “This is an attractive option given the current share price,” Mophatlane says.
Despite the higher dividend and buyback plan, he says the company will “continue to protect its cash resources in these uncertain economic times.” — (c) 2012 NewsCentral Media
