Yes, but how’s busi­ness?

Finweek English Edition - - Companies & Markets - BUSI­NESS CON­NEX­ION SHAUN HAR­RIS

THE RE­CENT TRAD­ING state­ment from Busi­ness Con­nex­ion (BCX) was ed­i­fy­ing – up to a point. For ex­am­ple, we’re told that ba­sic earn­ings per share are ex­pected to be up to 10% higher. That’s prob­a­bly not bad in the cur­rent tight busi­ness cli­mate. But then the in­for­ma­tion com­mu­ni­ca­tion tech­nol­ogy (ICT) group tells us that head­line earn­ings per share are an­tic­i­pated to be 30% to 40% lower. Whoa – that doesn’t look so good.

How­ever, BCX goes on to ex­plain the de­cline in HEPS is at­trib­ut­able to a R15,7m spe­cial tax on com­pa­nies pay­ment in re­la­tion to the spe­cial div­i­dend of 60c/share it de­clared at the end of its pre­vi­ous fi­nan­cial year, as well as R24m “re­lat­ing to the group’s re­vi­tal­i­sa­tion pro­gramme”.

Okay, that’s un­der­stand­able. But here’s the clincher. Ex­plain­ing the dif­fer­ence be­tween ba­sic earn­ings and HEPS, BCX goes on to say there’s a profit of R14,4m from the sale of a prop­erty in­cluded in its ba­sic earn­ings but not HEPS.

Well, at least we have an idea of where the money is com­ing from and where it’s go­ing. But what in­vestors re­ally want to know is how is the ICT busi­ness do­ing, at which BCX claims to be the lead­ing “in­te­gra­tor” in Africa. Its trad­ing state­ment doesn’t help much in that re­gard.

Like many com­puter groups, BCX’s share price has been un­der pres­sure, fall­ing roughly in line with the mar­ket (26,5%) over the past year. The big slump came in Oc­to­ber, tak­ing the price from its high for the year to near its low.

That was a month be­fore the end of the in­terim pe­riod, so the mar­ket might have gauged what would be in the num­bers – and didn’t like it. But the slump also co­in­cides with the an­nounce­ment on 23 Oc­to­ber that in­dus­try stal­wart Peter Watt, for­mer CEO, had re­signed as a non-ex­ec­u­tive di­rec­tor.

In­vestors will have to wait for the release of in­terim re­sults on Thurs­day, 12 Fe­bru­ary to de­cide if BCX is be­ing “re­vi­talised”.

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