The performance of the first six months, which saw revenue grow by 25% to R1,7bn, slowed in the second half, in the face of a relatively flat local outsourced ICT services market devoid of any major contracts.
 
A continuing investment in the companys new R143m data centre, the implementation of SAP within the business and internal restructuring, also took its toll on operating expenses, which rose by 16% to R767,3m, compared with R663,4 the previous year. As a result, operating profit fell to R143,8m, compared with R185,1m in 2005.
 
This held headline earnings per share (HEPS) to 45,6c, down by 12% on 2005 on a like-for-like basis. HEPS in 2005 of 70,6c was not strictly comparable with 2006, as it included income from associates which were sold during the past year and the financial effects of the SARS trademark settlement.

Cash generation remained positive for the year, with R106,3m being forthcoming from group operations, contributing to robust cash reserves of R743,3m (2005: R776,3m). This was despite significant capital expenditure of R196m during the period.
 
As a result, the Business Connexion Board has followed its maiden 2005 dividend with the declaration of a 2006 dividend of 15c a share.
 
Commenting on the past years results, chief executive, Peter Watt, says that they are satisfactory under the circumstances, but the second half was slower compared to a promising first half.
 
We continued to benefit from the major 2005 new business gains in the first half, and responded to several major new tenders in the second six months, none of which were awarded. These high profile tenders absorbed enormous financial and technical resources and it was disappointing to see them recalled, he notes.
 
The skills shortage in the local ICT sector continued to worsen and we had to compete in an increasingly competitive local market for technical expertise. This also put pressure on our operating expenses, he adds.
 
Watt says the R39m acquisition of Bidvest Networking Solutions, subsequently renamed Business Connexion Communications, has bedded down well and is already beginning to deliver the envisaged benefits. We are excited to be establishing a solid foothold in this lucrative R70bn a year market.