HST managed to meet its budget expectations for the 2021 financial year, which is a tremendous achievement under very trying and challenging circumstances.

The public healthcare sector has been seriously impacted by the recurrent COVID-19 infection rates and while the department has seen muchneeded budget increases in the last year, the additional funds were, understandably, allocated to rolling out vaccinations and strengthening the staff compliment of stretched facilities, rather than investment in ICT infrastructure. As a result, retention of existing service contracts and customers remains a challenge, while attracting new clients and upselling current ones to new services is proving difficult. A major customer, whose contract came to maturity during the reporting period did not renew the service agreement, which negatively impacts on our 2022 performance outlook.

Although the subdued economic climate is expected to continue restricting HST’s performance and revenue in the short and medium term, the company is updating its portfolio of advanced health information systems that add real value to healthcare enterprises at both administrative and clinical levels and is cautiously optimistic that it will manage to mitigate the challenging external factors. We continue to pursue opportunities to onboard new clients both locally and throughout the African continent, leveraging our existing Kenyan operations.

Key development during the financial year is signing a distribution partnership agreement with AGFA Healthcare, as a result of which, HST is authorised to sell and service the brand’s world-renowned radiology equipment and tools across South Africa. Despite this being a highly competitive field, we have already managed to establish a client relationship with Cape Radiology for this new division and are positive that the unit will see growth in both customers and revenues over the next six to twelve months. Both enterprise and diagnostic imaging solutions have a relatively long lifecycle and thus, business development through the division will lead to sustainable annuity revenue in the medium term.

On the human resources side of the business, I am proud to announce the new management team for HST, led by myself as the chief operating officer and supported by a talented crew of strong professionals – Dilshaad Mohamed, heading the finance team, Anzelem Sanyatwe, as the IT operations manager, and Angie Mkhize, leading business development. Together with Craig Braaf and Robert Swart, who have proven their worth to the company, so to speak, many a time over the years, I am confident that this dedicated team will rise to meet any challenge 2022 may have in store for us.

Adam Abdurahman 

Chief Operating Officer 

Health System Technologies

Despite the residual and recurring effects of COVID-19 waves and lockdowns, Headsets Solutions had a bumper 2021 financial year, increasing revenues by 3% and gross profit margins by nearly 12%. In absolute terms, this translated to an increase of gross profit by R4 million. Net profit before tax also saw a sharp rise by R9.5 million compared to the prior period.

With 2021 being the second year since the initial COVID outbreak, many large corporate clients continued to implement remote working protocols, which negatively impacted our contact centre unit sales. Despite that, we managed to grow video sales to make up the difference as the numbers above indicate. Inventory, which has traditionally been a large cash flow restriction for the company, reduced from R29 million in August 2020 to R19.1 million at the end of the reporting period. By end of September 2021, we have managed to further reduce stockholding to R14.9 million – a R14.1 million and nearly 50% drop overall. This lower stock holding has been a major contributor to our gross profit achievement.

Supply chain disruptions continued to pose challenges for us throughout the year. The initial global shortages we experienced in 2020 are now largely resolved and most products are available on demand once again. However, video products are currently in short supply due to component shortages, which affect the entire industry. The scarcity of semiconductor chips and integrated circuits is impacting some 170 industries from car manufacturers to any consumer product category utilising graphic cards and is expected to persist and drive up prices of video equipment in 2022 as well.

Notwithstanding this challenge, Headset Solutions added Hisense touch screens as a new product line towards the end of the financial year and we are very excited to grow this market segment. We also exponentially extended our footprint, signing up 163 new channel partners in 2021, bringing our channel partner count to well over 800 and catapulting Headset Solutions into undisputed domination across the African continent.

With such strong base and exciting new opportunities, we look forward to a bumper 2022 and to sharing more of our successes with you.

Nielle Truter 

Chief Operations Officer 

Headset Solutions

Kathea is a technology distribution business that represents leading brands including Jabra, Poly, Yealink, Logitech, CTouch, Condeco, FM:Systems and imports and offers these products to the Southern African market through a partner community of over 800 resellers and system integrators. Kathea also offers partner enablement services to go with these technologies.

These brands position the business to operate in 3 main technology areas: equipping boardrooms for collaboration, providing personal devices for business use (such as headsets) and supplying solutions that help businesses manage the booking and utilisation of their workspaces. COVID impacts were key to understanding the revenue mix over the last year: personal devices experienced increased demand, whereas the demand for both devices and services related to boardroom utilisation and workspace management was muted.

On balance, Kathea enjoyed a 7% increase in revenues for the period ending Aug 2021. The change in revenue mix did result in lower margin percentages and, consequently, gross margins from trading were flat year on year. Costs remained under control and some cost savings enabled bottom line improvement.

Kathea further cemented its positioning in the collaboration space when it was appointed as the only African-based Microsoft Teams Room Distribution Champ (one of 25 world-wide) and by signing a new agency for marketing a leading brand of large form factor LED screens known as Absen.

As workplaces start to tend more in the direction of returning people to work the spend on collaboration and workspaces is expected to grow and Kathea is well positioned for this shift as the widely recognised leading distributor in this space. This should drive growth in the business in the year to come.

Peter Cowen 

Chief Executive Officer 

Kathea Communications

SGT Solutions has been able to deliver strong financial results during yet another year dominated by COVID-19. The pandemic and social riots that wreaked havoc in Kwazulu Natal and Gauteng in July have had major ripple effects, but SGT is fortunate to be part of the telecommunications industry, which experienced a positive upturn due to the increased communication requirements, triggered by lockdowns and work-from-home protocols. However, the market did not escape the effects of reduced economic activity, leading to careful spending by the network operators. In this environment, SGT was able to maintain its top line revenue, and through deliberate cost reduction and tight project execution, the company has increased its profits substantially during this period.

SGT has been able to gain market share in most of its business segments during this tough time, which has positioned it well for the upcoming recovery period. This is evidenced by deeper penetration of its synchronisation solution into MTN Group and continuing its expansion of its voice and data monitoring solution in Vodacom. Our field services have similarly been able to show an improvement in market share for installation services for the telecoms network operators.

For the year ahead, we believe that the recovery of the SA economy, as a whole, will lead to opportunities for expansion into more areas of business, assisting in the growth path for SGT. The company has identified the following key focus areas with strongly positive prospects:

• Expansion of field services into 5G installations for MTN 
• Network built-in specialised technologies, such as satellite networks and secure radio communication 
• Providing point-to-multipoint microwave solutions to telco’s for cost effective fixed wireless broadband connections, augmenting their fibre roll-out 
• Extension of its contracts to supply power management solutions to Telkom’s exchanges and base stations

Our overall outlook for 2021/2022 is quietly optimistic, despite very competitive and turbulent market conditions and concerns about the knock-on impact of the current semiconductor shortages, which is causing significant manufacturing delays at our OEM partners.

Dr Vincent Scholtz 

Chief Executive Officer 

SGT Solutions

2021 financial year has been very positive for GC²T in terms of both augmenting growth and reducing liabilities. Cashflow position has improved substantially, following a section 189 event and the implementation of cost reduction measures, such as facilities consolidation and renegotiations throughout the supply chain. A major contract with the African Union was delivered successfully and has moved into support phase.

GC²T is still facing some local defence budget cuts, which are affecting domestic revenues. However, with the DoD support to South African Airforce transferring to Armscor towards the end of the reporting period, an opportunity for long term annuity-based contract in the future is opening. There are strong indications of a significant upswing in local defence requirements, as events like the social unrest on July 2021 and SAMIM mission to Mozambique pointed out shortcomings in military capabilities and readiness.

More export opportunities were pursued in the year in an effort to increase market diversification. This resulted in securing a contract from ETION Create for navigation capability to a foreign customer. The potential for additional contracts through the EATON Create market channel partnership remains high. There is also a significant increase in interest and activity in West Africa. Another strategic market partner, DCD Mobility, is proving highly instrumental in unlocking opportunities in Ghana, Cote D’Ivoire and Uganda. Locally, the planned Border Management Agency, which should be fully operational within the next two calendar years, also creates opportunities for synergy and value creation.

The roll out of another non-defence product, DAID, is also gathering traction in the automotive development zone facilities and in other commercial locations. GC²T continues to drive distribution of non-defence products into other market segments, including fisheries, ports, manufacturing and agricultural facilities. Focus going forward would be on further enhancing the adoption of this product range through market partnerships and public-private initiatives.

The remodelling of the organisation is beginning to show positive results as efficiency of execution has increased substantially over the period. Significant improvements are also observed in compliance and governance and we have made steady progress towards ISO certification. With that context, I am thoughtfully optimistic in GC²T’s outlook for the upcoming financial year as well.

Ratilal Rowji 

Chief Executive Officer 

GC²T

In 2021 Afrozaar experienced a large decline in revenue and fell short of annual revenue targets by 10%. Wedged between the struggling global publishing and lockdown-slayed sports industries, the company had a very tough year of transition, as is visible in our financial reports.

The main event driving this subdued performance was the loss of a major customer, namely Independent Media. Devoid of this important account, which historically contributed to approximately 65% of Afrozaar’s income, revenues were reduced by 30% to R19 million, compared to R32 million in 2020. Gross profit also took a knock to R2.5 million from R12.5 million in the prior year and net profit swung into a negative to a loss of R4.4 million, compared to net profit of R2.1 million a year ago.

We did gain half dozen small revenue generating new accounts and projects, which helped us reduce the budget shortfall to just 10%, which is an extraordinary achievement in the current environment. However, we still have a way to go to close the gap in the portfolio left by Independent Media.

Despite cash flow remaining thin, investments made to date into opportunities to penetrate more global markets are showing early positive signs. Our partnership with Bristol Sports pro teams in the UK (PT SportSuite), which saw the complete overhaul of their digital processes and capabilities, won us the prestigious Best Sports Technology Partnership of the Year 2021 award from the STA Group. The awards, founded in 2014, celebrate tech-led innovation in sports globally and attracts entries from over 30 countries and over 50 sports. We trust that this celebrated recognition will enable us to market our services more competitively in the global environment and unlock a world of possibilities for our customers through e-commerce, content and sponsorship.

Afrozaar’s financial risk and future are dependent on successful strategic pivot and partner realignment. We have managed to mitigate some of the negative impacts through aggressive cash flow management and cost reduction. All our personnel continues to work on reduced remuneration packages to help manage the risk operationally. I am humbled and grateful for their commitment and dedication in this difficult period.

Richard Cheary

Chief Executive Officer 

Afrozaar

While both the South African and international economies have started to come to terms with the reality of COVID-19, the effect of the worldwide pandemic continued to significantly impact Digital Matter in the last financial year. Despite this, we managed to perform in line with budget and expectations – a fact that makes me particularly proud.

Sasol is a key client for Digital Matter. Following a year of severe cost cutting, the outlook at Sasol has begun to improve and our contracts and new orders for the year reflect this. While not yet at pre-pandemic levels, revenues and orders across the operation are starting to improve.

Logistics operation have been severely impacted as well and this is reflected in tracking projects for both road and rail customers. The outlook for 2022, however, is looking much more optimistic and we will be focusing a lot of effort and resources in new opportunities in this sector.

With all key accounts and customers having limited or reduced spending, Digital Matter managed to meet revenue budgets through aggressive cost management, tight overheads control and successful commercial negotiations with suppliers. As a result, we managed to not just meet, but exceed our PBT target.

Building on this positive sentiment, particularly driven by performance in the last quarter of the 2021 financial year, we have set aggressive revenue and PBT targets for 2022. Given the uncertainty around the pandemic internationally and local economic concerns, these targets will be a challenge to achieve. Despite this, the company is confident that with the support of our partners and staff, we will be able to report positive results at the end of 2022.

Jeremy Williams 

Managing Director 

Digital Matter