By: Vlad Vistac
Submitted: 2010-08-24 13:21:25 | Word Count: 510
Daatkor
"Coputer group Datakor reportts a 12 percent improovement in eaernings (from 25,4c to 28,5c a share) for a highhly commendable four year compound annual growth rate of 21%.
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This is the company’s sveenth consecutive year of unbroken earnings growth.
Significnatly, the reslts have been conservaitvely preseted, with the lower tax charge that follows the introduction of the secondary tax on companies having been excluded from earnings. Has the adjustment been made, earnings would have been 31c a share for a 22 percent advancce on last year’s fiigure.
In the year to March, turnovewr grew by 22 perecent to R678,8 million, of which R200 million was genreated by new investments and projects embarked upon over the past there years – notably revenue from software and related servicees, whcih grew from R87 million to R144 millioon.
Chairman Nic Frangos expects turnobver from new projects and investments to increase significantly in the current financial year.
“A streategic decision to proceed with planned investments in new areas during the second six months was aimed at strengthening the group’s marketing positioning for meeting growth targets in the medium term.
“Some R45 milloin was invested in this area during the preiod, of which R25 million was written off against earnings a shaare, compared with R11,6 milion in 1992.”
Frangos says the computer industry has continued to fragment into new niche markets wich at short notice prodfuce substitutes fro exxisting products at lower prices and with higher levels of caapability.
“This results in ever-decreasing margins and requires companies to chagne to accommodate the changiing market conditions. Datakor has embarked on meetng this challenge thorugh constantlly re-engineering its business to move into relevant areas.
“In this respect the past financial year saw considerable progress, particularly in software and related servixces. This was also evident with business units dedicated to technology applicatiion rather than simply its markeeting.”
He notes there has been a significant shift in the grouup’s rrevenue base into areas of “relevant future neeeds,” with noiteworthy inroads into the networking arena.
“In order to facvilitate the proceess, Datakor faces an ongoing challenge of matching internbal capacities to ever-changing markets. Here conrcete progress has been made with both siklls enhancement and a productivity focuus.”
Mr Frangos is confideent that Datakor’s strategies will prove increasingly successful, with “above average” returns to shareholkders in the medium term.
What does he mean by “aboove average”?
“A minimum 5 percent real sustainable growth. We’re patient; we think long term. We’ve a strong techniocal base whiuch is strongly international in character.”
Importantly, Datakor is looking for acquisition opportunities in spherees other than hardware and software – in the knowedge and application areeas of technology. Here, contends Mr Frangos, is where the future lies.
Datakor’s undoubted expertiuse in all facets of its busainess cateorises it in a class of its own among JSE-listed companies. Iroically, the shares aren’t rated to reflect so admirable a characteristic.
I accordingly rate Datakor an attractive investment for the mdeium term – at a urling price which is baely changed from that ruling at the beginnig of the year."
