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ISA Holdings - securely focused on high growth IT Security
by Irnest Kaplan - 27 June 2005

We have met several times over the past few months with ISA's founder and CEO, Clifford Katz and financial director, Ryan Price. The group was created by a merger of ISA, iSecure and Y3K. It will be transferring its listing to the AltX today. (Share code - ISA)

Information Security Architects (ISA) is a small, fast growing, focused IT Security company. It represents and sells leading international IT Security products and offers a broad range of specialised consulting and managed services.

What is IT Security? In a nutshell, it encompasses all the measures taken to protect a company’s internal information from the risk of being jeopardised in any way. It includes software and hardware components as well as consulting, monitoring and ongoing specialised services.

In South Africa, IT Security is a relatively small but fast growing part of the overall IT pie. In a previous IT Security thematic report (Dec 04), we estimated the size of the South African IT Security market at ZAR 980 mln and we project a three year compound annual growth of 22%. Obviously, some areas within the segment are growing faster than others, but overall, its fundamentals are good.

In the firewall space, ISA is a reseller of global leader CheckPoint. In the antivirus space, it holds the exclusive distributorship of F-Secure, one of the top 5 international antivirus names. ISA also represents other leading names such as RSA, Sybari, WebSense, ISS and Nokia.

Locally, we believe ISA is well positioned with respect to its competitors and previously rated it amongst the top 3 IT Security players in our thematic report. Competitors include Dimension Data and ERP.com's SecureData.

ISA's annual results to Feb 2005 were good. The numbers are not comparable to the previous year, owing to the merger. Of the ZAR 31 mln turnover, over 10% comes from outside South Africa. A highlight for us is ISA's recent success in winning numerous corporate IT Security contracts in Nigeria with customers in the banking and telecommunications sectors. According to management, around 20% of revenue comes from the initial once-off sale of dollar-priced software licenses. Around 30% is generated from services and consulting. The remaining 50% is annuity income. This is made up of annual software license renewals and IT Security subscription services, such as virus updates. We particularly like the high composition of recurring income.

Profit margin wise, the IT Security segment remains lucrative. ISA's GP margin of 43% and EBITDA margin of 19% is proof of this. While there is some pressure on margins from discounting by smaller competitors, we believe margins will remain well above average for the coming year. HEPS for the year to Feb 2005 was 3.6 cents. The group is not currently paying tax, owing to an assessed tax loss, which will be utilised over the next 2 to 3 years. Cash flows were strong and the balance sheet is healthy with no debt and ZAR 4.9 mln of cash on hand.

ISA's small staff of 33 people is headed by CEO Clifford Katz. He has over 10 years experience in the Internet and IT Security industries, spanning back to the origin of the Internet in South Africa in the early nineties. We are particularly impressed with his insight and understanding of the IT Security industry and we like his approachable manner. In our opinion, management do a good job of running a "tight ship", which bodes well for the future.

Going forward, for the year to Feb 2006, we believe ISA will be able to show HEPS growth of 63% to 5.8 cents per share. We believe turnover growth of 30% is achievable with a small decrease in margins. Our forecasted HEPS growth is boosted considerably by the discontinuation of a software depreciation charge from the previous year of ZAR 1.2 mln. We do not expect any tax to be paid in the coming year.

By our calculations, at 47 cents, ISA is currently on a 12-month rolling historic PE of 11. Given that the average PE for our technology universe is currently 11.8, ISA seems fairly priced. One could argue that because of its smallness and lack of liquidity, it should carry a discount, but we believe this is compensated for by the above-average growth prospects of the IT Security segment. ISA's forward PE is 8.1, which is undemanding.

Our discounted free cash flow model yields a present value of 59 cents per share. We have been fairly conservative, tapering off the growth quite quickly over 4 years. We also assume the group will have to pay tax in 3 years time. We use a high (all equity) WACC of 19% and a terminal growth rate of 7%.

We do however believe that ISA carries certain risks. First, although highly skilled, it is a very small company and time will tell how well it can stand up to its larger competitors. The group also lacks BEE credentials and its liquidity on the market is very low. Around 82.5% of its shares are currently held by management and their families, leaving a very small free float.

That said, we do like the group's focus and its positioning in the high-growth IT Security segment. We also value ISA's recent success outside South Africa, particularly in Nigeria. Also, because of its size, any large contract win could significantly improve performance.

To conclude, we would recommend ISA shares at current levels to the more speculative investor.

ISA has a February year end. Its annual results (to end Feb05) have recently been released. ISA JSE stats (24/06/2005) : Mktcap = ZAR 61 mln, Share Price = ZAR 0.47, PE = 13, DY = 4%



Pinnacle's headquarters in Midrand 		Pinnacle - undervalued growth
by Irnest Kaplan - 1 November 2004

We recently met with Pinnacle's founder and CEO, Arnold Fourie and executive director, Takalani Marago-Tshivhase.

Pinnacle is a fast-growing hardware and software distributor in South Africa.

It started from humble beginnings in 1987 as a computer distributor. Founder and CEO Arnold Fourie built it up the "long and hard way" into what it is today. He is a Chemical Engineer and strikes us a no-nonsense manager who knows his business intimately and how to get the job done.

Pinnacle Micro is by far the largest contributor of its four segments (95% of group revenue). This business imports best-of-breed components mainly from the East and assembles them into PCs under its own well-known Proline brand. It also distributes PC components.

Proline is the 3rd largest PC brand in South Africa with around 8% market share (behind Mustek's Mecer and HP, each with around 20%). Pinnacle has been very active and successful in the government sector with around 40% of Proline revenue (to June 2004) coming from government. Its channel to market has been well thought out. Government business is done direct. Marketing to large corporates is also done directly, but a reseller is taken in to complete the deal. SME's are serviced through 1000 resellers, of which around 600 are active. Pinnacle's retail strategy includes Hi-Fi Corporation and other plans are in progress with the JD Group.

For the year to June 2004, Pinnacle Micro grew unit sales by an impressive 80%. We believe this would make it the fastest growing PC brand in the country. We estimate its market share grew from around 5% to 8%. Despite this, revenue only grew 21% to ZAR 473 mln. It was hampered by the stronger Rand (around 25% year-on-year), a decline in the dollar price of some equipment and a change in the sales mix. Of its revenue, around 90% is from the sale of infrastructure and 10% from support services such as warranty repairs.

Nevertheless, the future looks good for Pinnacle Micro. Demand for new PCs, replacement since Y2K upgrades and consumer strength should continue. There has also been a recent swing towards supporting local PC brands, something which should continue or even increase in the future. The PC market is large at around 1 million units per annum. Pinnacle's small market share bodes well for potential growth.

Pinnacle's other three segments - software & storage, ICT services and Telecommunications are much smaller contributors to the group, yet offer good potential for growth. A business that stands out is Explix (trading as WorkGroup). This is a leading software distributor, which has some key software agencies. Pinnacle is currently increasing its stake in Explix from 35% to 50% for ZAR 9 mln.

The group's recent annual results to June 2004 were strong. Revenue was up 19% and operating margins were stable at around 4%. HEPS was up 85% to 8.9 cents per share. Operating cash flows were ZAR 32 mln. The group's balance sheet is in good shape with ZAR 29 mln of cash on hand and around ZAR 17 mln of debt.

We were duly impressed with our tour of Pinnacle's premises and PC assembly plant in Midrand. The place is spotless. Their semi-automated assembly line is impressive. PC's are made to order. The plant uses clever scanning technology to keep track of each component installed within each PC.

Going forward, we believe Pinnacle can quite comfortably grow HEPS by 30% to 11.6 cents per share for the year to June 2005. We have assumed 20% revenue growth and stable EBIT margins at the 4% level.

Our modelling shows that HEPS growth is very sensitive to the group EBIT margin. Management believe they can increase the EBIT margin to 6% as newer businesses in its other segments are "bedded down". Our modelling suggests that an improvement to 5% would yield HEPS growth of 56%, while an EBIT margin of 6% would yield HEPS growth of 87%!

At 48 cents, Pinnacle trades on a PE of 5.4 and a DY of 3%. Our projections put it on a forward PE of 4, which we believe is very attractive given the growth prospects. Although Pinnacle is small, tightly held and relatively illiquid, it trades on a PE which is less than half of Mustek (11.8). Size aside, the two businesses are similar in nature with similar prospects. We would recommend Pinnacle shares to investors at current levels.

Pinnacle has a June year end. We expect interim results (to end Dec04) to be announced in March 2005. Pinnacle JSE stats (29/10/2004) : Mktcap = ZAR 72 mln, Share Price = ZAR 0.48, PE = 5.4, DY = 3%



Offices of ERP.com's security business, SecureData 		ERP.com results - the margin masters do it again
by Irnest Kaplan - 16 September 2004

Yesterday, we met with ERP.com management to review their results for the year to July 2004.

In a nutshell, it was a solid performance, with the key features being a huge improvement in group margins and good growth from their IT Security business, SecureData.

Group revenue was up by only 2% to ZAR 133 mln. The HEPS growth of 24% to 14.2 cents per share was achieved mainly by an improvement in group EBIT margin from 17% to 23%.

Segmental margins are not disclosed for each of ERP.com's three business segments. Management confirmed that the margin increase came from a bigger contribution by their Security segment, which has a higher margin than the other two segments (Enterprise Applications and Data & Content management). According to management, the individual margins in each of the segments remained fairly constant.

The flat revenue was caused by a slowdown in their enterprise applications segment, which was visible at the interim stage. By our calculations, its revenue declined by 25% to ZAR 44mln. This segment implements large ERP solutions in the enterprise space and focuses on the SAP offering. ERP.com saw reduced spending in this area. Management attributes it mainly to the strong Rand which affected their clients' profitablility this year, leading to "freezes" in IT spend on large projects. Going forward, we believe that growth will be restored here as IT spend picks up. Also, ERP.com has been appointed by SAP as its selected partner in the manufacturing and education verticals to sell and implement mid-range solutions.

Undoubtedly, the star performer in the group was their security business, SecureData. We calculate its revenue grew by 29% to ZAR 66mln. This segment distributes leading IT security software products. During the year it has negotiated further agencies from principals such as RSA and Tipping Point. IT Security is a high growth area and we are confident that SecureData's momentum will continue.

ERP.com's Data & Content management business had a consistent year. We calculate a modest growth of 9% in revenue to ZAR 23 mln. Going forward, management expects growth in the document management area.

ERP.com's progress in Africa was encouraging with sales of around ZAR 6 mln mainly in security products. This should grow in the coming years.

As always, cash flow from operating activities was strong at ZAR 27 mln. It was down however on last year, but was impacted by working capital to the tune of ZAR 7 mln. Management confirmed that debtors days had increased from 46 to 65 days, owing to a few late payments. This should reverse in the coming year. Nevertheless, the group has a strong balance sheet, with no debt and ZAR 70 mln of cash on hand.

Management feels that the IT sector is picking up. They intend taking advantage of this by seeking acqusitions in selected areas. Given their cash pile and stronger share price, ERP.com is well positioned for this.

Going forward, we can expect an improvement in revenue growth and a subsequent decline in group margins to around the 20% level. Without factoring in acqusitions, the decline in margins will put pressure on earnings growth. However, we are confident in management's ability and believe that earnings growth of 20% is achievable for the coming year.

ERP.com shares have risen 34% to 141 cents since we first recommended it in June 2004. It now has a market cap of ZAR 243 mln and is on a PE of 10 and DY of 5.7%. We believe that most of the short-term share appreciation has occured and its unlikely that the same share performance will be repeated in the next few months. Nevertheless, we still believe that ERP.com is a good investment for the longer term and would recommend it to investors on a 1 year view. Our earnings growth projection of 20%, puts it on a forward PE of around 8 and a forward dividend yield of around 4%.

ERP.com has a July year end. ERP.com JSE stats (15/09/2004) : Mktcap = ZAR 243 mln, Share Price = ZAR 1.41, PE = 9.7, DY = 5.7%



Faritec head offices in Woodmead 		Faritec - transformation underway
by Irnest Kaplan - 3 August 2004

We recently met with Faritec founder and CEO, Simon Tomlinson.

Simon started Faritec in 1994, after spending 5 years in the IT industry. The business took off and grew quickly. It had a spectacular listing in 1998. We all know what happened to the sector thereafter. Nevertheless, Faritec survived. Today, it employs 210 people and has an interesting mix of well established product businesses and newer managed service offerings.

At the core of Faritec is still its hardware product reselling operations, which currently contribute around 70% of revenues. In the South African enterprise space, Faritec is a very well entrenched IBM player. It sells high-end IBM servers to many corporates in SA. It commands around 70% of the local IBM pSeries (UNIX based hardware) market and has a strong and growing xSeries (Intel/Linux based hardware) business. While margins here are good, deals are typically large in size and very cyclical. Its listed competitors in this area include Business Connexion and DataCentrix.

Faritec also owns 50% of eBis, an African hardware distribution business. It has exclusivity on IBM hardware in over 20 African countries. Products are sold through agents in each country. The margins here are small - its a volume game. Profits have also been susceptible to currency fluctuations. Faritec may change its African strategy. It may enter fewer markets directly, without agents. eBis contributes around 25% of Faritec's product revenue, or around 17% of total revenue.

On the services side, Faritec has a range of newer managed service offerings, each of which generate annuity type income. Although these are still small (around 30% of revenues), Faritec is focusing its efforts in growing this area.

We like the managed security service offering, backed up by a recently opened 24 hour security operations centre. It offers specialised security services to clients for an ongoing fee. In the last 8 months, this service has gained excellent acceptance by the market, winning 18 customers, including large corporates in the banking and telecommunications sectors. Faritec is also one of the top Symantec partners in South Africa, providing their range of leading security software products. IT Security is a fast growing area. Listed competitors include Y3K, Didata and ERP.com

60% owned FariMed, which is a hosted medical aid administration system also seems to be gaining traction with a current 40,000 medical aid members. Its clients are small medical aid administrators which pay FariMed to use the system on a per member per month basis. Management are confident of reaching 100,000 members on the system by June 2005, at which point they expect a monthly profit of ZAR 0.5 mln.

Faritec has also recently entered the B2B intermediary space, with a managed service in the receivables and payables area. It is currently piloting systems in various industry verticals that make relationships between billers and their payers more efficient and automated. For an ongoing fee, of course.

We like Faritec's strategy of growing their annuity-type service businesses . In particular, we like their managed security offering. In the long term, it will help smooth the group's earnings. However, the transformation costs money, and will initially weigh heavily on the overall results.

This can be seen by the company's recent interim results to Dec03. On a turnover of ZAR 183 mln, an operating loss of ZAR 3 mln was posted. Cash flows from operations were positive, albeit a small ZAR 1.4 mln. The balance sheet looks healthy, with ZAR 9 mln of cash on hand and debt of ZAR 4mln. The company has recently warned investors that losses will be more than 30% worse for the full year to June 2004.

In our tour of Faritec's offices in Woodmead, we were most impressed with the new 18 seat underground managed security operations centre. Faritec takes physical security seriously too, with biometric access control implemented at various stages of entry. The offices were tidy and well organised. We were pleased to see the numerous IBM partner awards that fill the wall of their reception area.

Faritec's stock is very tightly held and not liquid. Staff and management hold around 40%. Peregrine holds around 20% and two other private investors another 20%. This leaves the free float at around 20%. Faritec's BEE partner is the J&J consortium which owns 30% at the unlisted Faritec Pty Ltd level. They are able to convert their holding into a maximum of 30% of the listed entity over the next 3 years.

Overall, we believe Faritec is definitely moving in the right direction. Management appear committed and have set some ambitious goals which include a revenue of ZAR 1 billion in 3 years time. It will take some time though before their new services businesses start contributing more meaningfully.

Faritec has a June year end. We expect full year results (to end Jun04) to be announced in September. Faritec JSE stats (2/08/2004) : Mktcap = ZAR 25 mln, Share Price = ZAR 0.20, PE = 3.9, DY = 0%


FrontRange - poised for growth
by Irnest Kaplan - 13 July 2004

We met recently (prior to closed period) with the company's financial director, Julian Pienaar, who shared some insights.

FrontRange develops and markets midrange customer relationship management (CRM) and customer support software. Although 100% owned by the JSE listed entity, the operation is headquartered in the US, where its software is developed. It sells its software directly and through 600 channel partners to organisations of all sizes throughout the world.

In the CRM space, its main product is GoldMine, which provides contact management and sales force automation functionality. It is used by sales forces to manage and improve customer relationships and win more business. In the customer support software space, the main product is HEAT. It is used in help desk and call centre environments to empower users to improve overall customer service.

HEAT contributes around 60% of revenues; and GoldMine the rest. Geographically, the focus is on the US and Europe, which contribute 63% and 26% of revenues respectively. Asia and South Africa are smaller markets for FrontRange, contributing 7% and 4%.

International software development is tough and very competitive, particularly in FrontRange's spaces. GoldMine competitors include Sage's ACT, Saleslogix, Microsoft and Salesforce.com. HEAT competitors include Intuit's Trackit and BMC's Remedy and Magic solutions. Although Goldmine and HEAT are primarily aimed at the midrange market (small to medium sized companies), they have been successfully sold to divisions of many large organisations that would normally use "gorilla" enterprise software such as Oracle, SAP and Siebel. As a result, FrontRange boasts 50% of the Fortune 100 and 76% of the FTSE100 as clients.

FrontRange's revenue model is attractive. Firstly, there is the once-off high margin license fee from the software sale. Second, there is an ongoing maintenance revenue stream (for telephonic helpdesk support and new upgrades of the software). All new software sales come with a compulsory 1 year maintenance agreement to the value of 20% of the license fees. According to management, around 90% of HEAT customers and 80% of GoldMine customers renew their maintenance agreements after the first year.

Financially, FrontRange has turned itself around over the past two years. From large losses for the year to Jun02, the group broke even at the operating level to Jun03 and made a small operating profit for the 6 months to Dec03. This was achieved mainly through significant cost cutting in conjunction with the appointment of a new experienced American CEO and management team. We estimate operating profits of around USD 5mln for the year to June 2004.

With most of the cost cutting complete, the group's main focus is on growing revenue. Stagnant products contributed to falling license revenues over the past two years. A new ambitious product strategy has been defined. FrontRange plans to develop additional software "modules" inhouse which offer adjacent functionality to the existing HEAT and GoldMine products. The idea is to sell them to new customers and to leverage the existing customer base. The strategy also includes a migration of the original products onto the new .NET distributed technology platform.

FrontRange is currently cash generative and has a healthy balance sheet. The group is debt free and has USD 20mln of cash on hand (March 2004). Notable shareholders include Allan Gray (32%), Dana Buys and Derek Kreunen (23% between them) and more recently, Venfin (10%).

All in all, FrontRange tells a good story. A new experienced management team combined with a return to profitability is good news. The key question is: can the company execute on its new product strategy to grow revenues? In our opinion, it will be very challenging in light of the competitive landscape, but if they pull it off and grow license revenues, then the stock should continue strongly upward.

FrontRange has a June year end. We expect full year results (to end Jun04) to be announced on 17 August. FrontRange JSE stats (12/7/2004) : Mktcap = ZAR 609 mln, Share Price = ZAR 3.80, PE = 21.1, DY = 0%


Jasco - Well established diversity
by Irnest Kaplan - 6 July 2004

Recently we met with JASCO's CEO Dr Stuart Robertson.

JASCO is a well diversified electronics and manufacturing company with good potential. The group has three focus areas, Telecommunications, Security and Manufacturing, each of which are very different.

Within Telecommunications is JASCO's largest and most profitable business unit, Webb Industries. Webb is in the Private/Mobile Radio (PMR) space. It designs and sells its own radio antennas into the local and offshore markets. It also supplies related sockets, connectors and cables. Most of its revenue comes from its own intellectual property, while around 30% comes from selling 3rd party products. It also manufactures radio masts and towers for GSM operators, such as MTN, 65% of which are exported outside SA. Interestingly, Webb has recently been sub-contracted by ALTECH for the tower sites as part of its large ZAR 506 mln Gauteng digital TETRA radio deal win. The deal is worth around ZAR 24 mln to Webb. JASCO also owns about 20 strategic "radio high sites". Space on these towers and in adjacent equipment rooms are rented out to over 60 clients, including the likes of Sentech, ICASA, security companies (e.g. ADT & Chubb) as well as vehicle trackers such as Netstar and Tracker. We like the on-going annuity type revenues that this area generates.

JASCO's Security business is called Multivid. It provides camera-based security surveillance products to a wide variety of large customers. It has been successful in the financial services area, where it has developed unique alarms and monitoring systems for bank branches and ATMs. Roughly 10% of revenues from the once-off sale of systems is in ongoing maintenance contracts. Around a third of Multivid's revenue comes from banks. Another third comes from cities and municipalities. The remainder comes from industry, especially the mines. Multivid competes with Intervid and Siemens in the mining and industrial sectors.

Special Cables is JASCO's manufacturing operation. Around 60% of its revenue comes from the manufacturing of components for domestic appliances. This includes wiring harnesses and plastic injection moulded parts. For example, it makes the light assembly found in Defy fridges, which is a major customer. Other customers are Whirlpool and JSE listed AMAPS. Around 20% of revenues come from components sold to the automotive and medical markets. Toyota, Landrover and Mercedes are major indirect customers in the auto sector, while medical components are exported. The remaining 20% of revenues come from the sale and export of an internally developed automatic pool chlorinator, sold under the Just-Chlor® brand.

JASCO had a tough year to Feb 2004 as reflected in its results. The telecoms segment was the hardest hit. Revenues (from continuing ops) were fairly flat (ZAR 155mln) and margins declined to around 7.8% from 13.5% in the previous year. This was largely a function of: a deferral of telecoms orders; the strong Rand affecting the export areas and the rise in local steel prices, which made the mast and tower manufacturing operation far less competitive. Its security business grew revenues healthily to ZAR 31 mln but margins declined to around 3% from 5.5% in the prior year. JASCO's manufacturing segment continued to be very stable with flat revenues (ZAR 62 mln) and stable margins at around 15%. The group lacks a sizeable portion of annuity-type business. This is one area which management are actively addressing. The business is cash generative with positive operating cash flows. However the group remains in a net debt position of around ZAR 15 mln. (Cash of ZAR 3 mln v.s. Debt of ZAR 18 mln)

In spite of the results, we believe the fundamentals driving each of JASCO's business areas do look promising. Telecommunications continues to be a high growth space, particularly in Africa, as markets are liberalised and mobile operators expand their networks. Security in South Africa remains a buoyant industry with persistent high levels of crime. JASCO's manufacturing operation is sensitive to consumer spend in the lower end of the market. The consumer continues to be strong and should remain so for the next year or two in our opinion.

It is worth noting that JASCO has an active BEE investor, CIH, which currently owns a 31% stake and has 3 board members, one of whom is the Chairperson. According to management, the relationship with CIH is starting to bear fruit, with many doors being opened to potential business that was unavailable before. Other directors and staff own around 20%.

Another point worth mentioning is that all of JASCO's major businesses are very well established. Webb, Multivid and Special Cables have all been in operation for around 20 years.

Dr Stuart Robertson was appointed CEO of JASCO in 2000. He strikes us as an entrepreneur with experience and vision. We like his approachable manner and in-depth knowledge of the industry. Having started his own high tech fibre business, Fibercom in 1991, it was sold to JASCO in 1998. He is an expert in optical fibre technology. He holds a PhD in solid state physics from England. Although he appears a technologist at heart, he also studied an MBA at Wits in the late 1980’s.

Although JASCO's recent results do not paint a perfect portrait, we do believe that management are committed to make things happen. To this end, various initiatives are underway to improve growth and efficiencies. We like the group's diversified nature and undemanding PE ratio (around 2.7). Combined with help from their BEE partner, one should see improved results in the coming year and a possible return to paying dividends on a 3X cover basis.

JASCO has a February year end. We expect interim results (to end Aug04) to be announced in October. JASCO JSE stats (5/7/2004) : Mktcap = ZAR 63 mln, Share Price = ZAR 0.90, PE = 2.7, DY = 0%



AST head offices in Samrand 		AST Group - Turnaround potential
by Irnest Kaplan - 29 June 2004

We met recently with the company's CEO, John Miller and group financial director, Marthinus Erasmus.

AST was listed in 1998 on the back of a large IT contract won with ISCOR. The "IT bubble" that followed saw AST grow far too quickly with bloated cost structures. It reacted too late to the IT slowdown over the past few years. To this end, profits declined for the year to Jun02 and large losses were reported for the year to Jun03. Management have been restructuring the company over the past 18 months. Non-core assets have been sold off and costs have been reduced. Staff numbers have declined by 600 to below 3000 over the past six months.

AST now has three broad IT segments - Infrastructure Services, Solutions and Products. DTS is the key contributor in the Infrastructure Services segment and the single largest business unit within AST. It is a joint venture with ABSA, which owns 30%. This unit enters into long-term service contracts with its clients to manage their distributed technology environments. It includes maintenance and support of PC's, servers, printers and local area networks. We like the annuity type income that this business generates.

The Solutions segment consists primarily of a generic high-end systems integrator (AIS), a SAP implementation business and a mining solutions specialist (GMSI). It is worth noting that GMSI owns much of its own intellectual property and is considered to be a leader in technology related solutions for the mining industry.

AST's product segment sells hardware and software from 3rd party vendors. SABRE and IBM software are sold in the eLearning space. Recently, AST entered the ATM/Kiosk market with the Wincor-Nixdorf products. It will compete against BTG's NDS business in the ATM market and to a lesser extent with UCS in the retail space. Management expects strong growth from this area. Another area focuses on the financial industry (AFS) with products for cheque imaging, archival, retrieval and document management.

AST has recently won large contracts from two big banks. The DTS business renewed its outsourcing contract with ABSA until 2006. It is worth ZAR 140mln per year. AFS has also won a ZAR 40mln cheque imaging deal with FNB. Around 40% of AST's revenues are annuity based, mainly from the DTS unit.

Marthinus Erasmus is definitely one of the most "IT knowledgeable" financial directors we have met. He also strikes us as a very capable manager who gets things done. He has been with AST for 6 years and is a chartered accountant.

AST's recent interim results to Dec03 show an improvement on the results to Jun03. EBITDA margins were up from 0.02% to 5%. The restructuring process is starting to bear fruit. The balance sheet, although somewhat improved, is still not in great shape. Debt has been reduced from ZAR 432 mln to ZAR 327 mln. Cash on hand has remained fairly constant at ZAR 76 mln. Current liabilities still exceed current assets.

Management aims to reduce debt and return to profitability for the year to June 2005. They have not set themselves strict revenue growth targets, but would like to see EBITA margins reaching 10%. The group is not currently black empowered. A suitable BEE deal will only be sought after the restructuring process is completed, towards the end of 2004.

We came away with a very positive impression from our tour of AST's premises in Samrand (north of Jhb). The offices are well organised and clean. There is a definite "buzz" - staff appear busy and motivated. We were very impressed with the DTS remote management centre. From here, staff are able to remotely monitor and manage client IT infrastructure.

Although AST did not weather the IT storm as well as some of its peers, we have to point out that it is indeed a substantial business with good skills and large blue-chip clients. The restructuring process is starting to take effect and management appear committed to see it through. Nevertheless, the group still has a lot of work ahead and must show results. In our opinion, AST will return to profitability but we feel it may take more time than originally anticipated. Based on the success and timing of the turnaround, we believe AST shares could offer huge potential upside from current levels.

AST Group has a June year end. We expect full year results (to end Jun04) to be announced in August. AST JSE stats (28/06/2004) : Mktcap = ZAR 123 mln, Share Price = ZAR 0.67, PE = Negative, DY = 0%



ERP.com head office in Sunninghill 		ERP.com - the margin masters
by Irnest Kaplan - 3 June 2004

We met last week with ERP.com founder and CEO, Peter Forsyth and CFO Andreas Ritzlmayr.

ERP.com was founded in 1999 and has steadily grown to become a strong IT services player. Its core business areas are in Enterprise Applications, IT Security and Data management. The first two contribute around 85% of revenue. Its enterprise application segment primarily implements and integrates SAP and PeopleSoft offerings with a focus on the manufacturing and mining sectors. It boasts large customers such as BHP Billiton and Macsteel. Its fast growing IT security segment is the sole distributor in Africa of the Trend Micro anti-virus and security software. It also represents other leading software names in various sub sectors of the IT security space. Interestingly, ERP.com supplied ABSA Bank with Trend Micro licenses for its 400,000 Internet banking customers.

CEO and founder, Peter Forsyth, has over twenty years of experience in the IT sector, having worked at Siemens Nixdorf and Oracle South Africa. He comes across as a pragmatic manager who intimately understands the space his company is in. We like his conservative approach.

ERP.com is definitely doing things correctly. Its track record is solid. For the full years from 2000 to 2003, revenue has grown at a compound rate of 46% and headline earnings at 49%. What strikes us as remarkable is the consistently high EBIT margin. It has increased from 16% (2000) to around 20% (for the interims to January 2004) and does not show any signs of decline. Its worth pointing out that with one or two exceptions, ERP.com's EBIT margin is at least double any other JSE-listed IT company's margin.

The high margins come from two things. First, ERP.com sticks with higher margin IT services (e.g. SAP implementation and integration) rather than the lower margin type services that many other IT companies offer (e.g. outsourcing of desktop support). Second, ERP.com typically negotiates sole distributorship or limited distributorship agreements with its software principals. This means less competition and consequently higher margins. Management prefers to maintain margins rather than chasing revenues.

Services contribute around 45% of revenues and software product sales make up the rest. Annuity revenues are around 35% of total.

ERP.com's recent interims to January 2004 were good. Although there was a slowdown in the Enterprise Application segment, group EBIT margins accelerated to around 20%. The company is financially sound, cash generative and dividend paying. There is no long-term debt and ZAR59mln of cash on hand.

But can ERP.com continue its growth at these high margins?We think so. Over and above organic growth in its existing business areas, the company has recently embarked on a conservative African strategy. It has signed up local partners in several countries to act as agents for its products and services and this should contribute meaningfully in the medium to long term. Furthermore, ERP.com is cautiously seeking an empowerment partner, which should open up new opportunities in the public sector and strengthen its existing prospects. We believe that HEPS growth for the year to July 2004 of 20% is achievable.

The company's shares are tightly held and fairly illiquid, with management and staff owing around 29%.

To conclude, ERP.com has a solid track record with good growth prospects. Its management team has consistently delivered and has remained intact since inception. In our opinion, at current levels, this is a star investment.

ERP.com has a July year end. We expect full year results (to end Jul04) to be announced in September. ERP.com JSE stats (2/06/2004) : Mktcap = ZAR181mln, Share Price = ZAR1.05, PE = 8.2, DY = 2.2%



EOH head office in Bedfordview 		EOH - a steady pillar throughout the IT storm
by Irnest Kaplan - 28 May 2004

We recently met with Antonio Cocciante, financial director of EOH, who shared some insights on the group with us.

EOH is a leading South African IT services company with three core focus areas; consulting, technology and outsourcing.

Its consulting arm operates under the EOH KPMG brand, following the acquisition of Atos KPMG consulting last year. The acquisition has strengthened EOH's strategic and business consulting capability. The aim is to "own the customer" and build relationships at a strategic business level. It also brings in new existing customers in the financial services and public sectors with good cross selling opportunities for other EOH areas. Its key competitors in this space are PWC, Deloitte & Touche and Accenture.

The technology arm operates through various separately branded business units which predominantly focus on ERP solutions. International software names represented include SAP, Baan, JDEdwards, Syspro and Microsoft.

EOH's outsourcing arm offers a wide range of IT and business process outsourcing services. Most of this activity is SLA based, with long term contracts (3-5 years) in place, generating annuity income.

The group does not report segmentally. We learnt that the consulting, technology and outsourcing areas constitute around 20%, 50% and 30% of revenue respectively. The consulting and technology arms have higher margins than outsourcing, but also have a higher fixed cost base. So should they experience a dip in revenue, their margins would be impacted first. Of group revenue, around 90% is services, while only 10% is product related (mainly software license sales). There is no hardware component and EOH does not intend pursuing any hardware related business. Around 30% of EOH's revenues are annuity based.

What strikes us about this company is its exemplary financial growth track record. For the full years from 1999 to 2003, revenue has grown at a compound growth rate of 52%. HEPS has grown at 27%. While many other IT players have failed over this period, EOH has performed consistently.

We commented recently on EOH's interim results to January 2004. While the Atos KPMG acquisition contributed hugely to the 66% revenue growth, organic growth was a healthy 20%. The acquisition and related integration costs impacted margins negatively (10% to 8%) and we will have to see if management can bring it back to the 10% level for the full year.

EOH has recently announced its intention to pursue an acquisition of CS Holdings. In our opinion, at the right price, it would be a good move. There is a good strategic and operational fit between the two companies. There appears to be good synergies for EOH in the ERP space and in outsourcing.

EOH is tightly held and fairly illiquid, with management owning over 50% of the shares. Nevertheless, we like the company and its almost flawless track record. Being still relatively small, the prospects for growth are good. If management can continue as they've been doing, then this is a star investment in our opinion.

EOH has a July year end. We expect full year results (to end Jul04) to be announced in September. EOH JSE stats (27/05/2004) : Mktcap = ZAR149mln, Share Price = ZAR2.95, PE = 8.4, DY = 2.4%


UCS - a true software pioneer in the retail space
by Irnest Kaplan - 21 May 2004

Its rare in South Africa to find an IT company that has designed its own software and become dominant in a particular space. UCS is such a company. From small beginnings, over 25 years ago, it has become the dominant force in retail software in South Africa.

We recently met with founder and CEO, John Bright and CFO, Dean Sparrow who shared some insights with us. John Bright, an IT veteran, appears a technologist at heart and is undoubtedly passionate about the company. Prior to starting UCS in 1978, he spent 10 years in the IT industry.

UCS develops specialised software for retailers in the FMCG, clothing, furniture, hospitality and pharmaceutical space. Over 15,000 stores in SA use its software. For large chains, the software is customised according to the exact needs of the retailer based on a software framework that has been refined over many years. The software is implemented, supported and managed on an ongoing basis. For small chains and single stores, software packages are sold through a dealer network.

We like the revenue model adopted for most of the large-scale customised deals. Instead of selling the software as a once-off license fee, UCS "rents" the software to the customer on a "per-month per-store" basis. This results in an annuity income stream.

UCS also has a growing solutions business which provides additional IT services to retailers. The recent acquisition of the Affinity Logic group has bolstered this area. Its strengths are in IT outsourcing for retailers and consulting. It also has significant annuity revenues.

Over the past 5 years, a large amount of UCS's top line growth has come from acquisitions. Unfortunately, bottom-line profits have not grown at the same rate with margins declining. The group is currently consolidating its various operations into two areas, namely Software and Solutions. This should focus the group and improve profit growth. The declining margin trend has been reversed in the last 18 months and should continue.

Longer term plans include a drive to internationalise the Software business.

Its recent interim results to March 2004 were strong. Revenue was up 75% to ZAR246mln and HEPS were up 43% to 6.7cents. Its margin recovery is still in tact. Although most of the growth was due to the Affinity Logic acquisition, organic revenue growth was a healthy 21%. Annuity revenues were 58% of total revenue. Cash flows were strong and the balance sheet is healthy with ZAR62mln of cash on hand.

On balance, we like the company and its management. It has a dominant market position with good growth potential. The annuity revenue model is particularly attractive. UCS is cash generative and dividend paying. With the current re-organisation of the business still underway and synergies from the Affinity Logic acquisition still to flow, its margin recovery should continue. This is definitely one to watch.

UCS has a September year end. We expect full year results (to end Sep04) to be announced in November. UCS JSE stats (20/05/2004) : Mktcap = ZAR285mln, Share Price = ZAR1.20, PE = 9.1, DY = 3.6%



Its software is key to freight forwarders 		Compu-Clearing - Consistency, innovation and passion
by Irnest Kaplan - 17 May 2004

We met recently with the company's founder and chief executive, Arnold Garber and financial director, Costa Efthymiades.

From humble beginnings 20 years ago, Compu-Clearing has consistently grown to become the leader in specialised software for the freight forwarding, customs clearing and airline cargo industries in South Africa.

Inspired by difficulties with the "manual process" of importing goods from abroad over 20 years ago, founder Arnold Garber innovated software to simplify this process. He himself programmed the initial version of the software back then.

Today, the software is highly advanced and runs on the IBM i-Series (AS/400) platform. The company has tied up the South African market with around 70% market share. Freight forwarders, customs clearing agents, airlines and ground handlers use the Compu-Clearing software to simplify the business and regulatory processes around the import and export of shipments.

The business model is a good one in our opinion. Compu-Clearing does not sell its software. Rather, it rents it out on a per-transaction basis. So the more shipments, the more you pay. This results in an annuity revenue stream with particularly high margins.

Bidvest owns around 25% of the company. Bidvest subsidiaries contribute around 10% of Compu-Clearing's revenue. Directors and staff hold around 50% and control the company.

We came away from the meeting with a very good impression of management. The passion to succeed is clearly there. We were also impressed with their conservative style.

Although its small in market cap, tightly held and the share is relatively illiquid, we believe that Compu-Clearing is a good story:

- Drivers for growth are there. Internet based ordering continues to increase the number of shipments. Flights into and out of SA are increasing, each of which is trying to fill unused cargo space. The model has recently been expanded into the US market and two customers have successfully been signed up.
- We like the business model. It results in annuity income streams.
- Good track record. The company has consistently grown Revenue and HEPS at a compound growth rate over the past 5 years of 12% and 11% respectively.
- High margins and cash generative.
- Dividend paying. An increasing dividend has been paid each year for the past 5 years.
- We believe management will continue to deliver consistency and growth going forward.

Compu-Clearing has a June year end. We expect full year results (to end Jun04) to be announced in September. Compu-Clearing JSE stats (14/05/2004) : Mktcap = ZAR62mln, Share Price = ZAR1.55, PE = 9.7, DY = 3.9%



Altech's dynamic CEO, Craig Venter 		Altech annual results - UEC hit hard by the strong Rand
by Irnest Kaplan - 6 May 2004

We attended the results presentation in Sandton last night, where we obtained insight into the performance of the various Altech businesses.

On the surface, the group's results look average. Revenue was up 2% to ZAR4.1bln and HEPS was down 12% to 302 cents per share. Nevertheless, the underlying performance and activity in all of ALTECH's core businesses was very good. UEC however was hit hard by the strength in the Rand. In Rand terms, it turned in a result which brought the group down. Cash flows were strong. The balance sheet is healthy - debt free and a huge ZAR1.5bln cash pile. An increased dividend of 143.75 cents per share was declared.

Autopage, Netstar and UEC performance (85% of Altech's revenues):

Autopage, Altech's cellular service provider and main contributor to the group put in a solid performance. Total subscribers grew 22% to 560k (390k contract and 170k prepaid), with an increase in the ratio of prepaid subscribers. We calculate that revenue increased 19% to ZAR2547mln and operating profit was up 40% to ZAR176mln. Operating margins were up from 5.7% to 6.7%. It is encouraging to hear that ALTECH has negotiated long-term "margin locking" agreements with the mobile operators which should preserve margins in this business for the next 5 years. We believe Autopage will continue to perform well in the coming years.

Netstar, ALTECH's vehicle tracking and recovery operation had an excellent year. Market share was improved slightly from 47% to 48%. We calculate that the installed base increased 33% to 307,000. We calculate that revenue was up 36% to ZAR342mln and operating profit up 27% to ZAR57mln. The fundamentals in this business remain strong. Altech plans to expand into Brazil and Nigeria.

UEC, ALTECH's set top box operation had a dismal year in rand terms, however the underlying performance was pleasing. Unit sales were up 39% to 596,000. We calculate that revenue was down around 5% to ZAR598mln. This translates to a Rand revenue per unit sold of ZAR1003 which is significantly down from ZAR1461 last year (the effects of the stronger Rand). We calculate that operating profit was down 77% to ZAR30mln, translating to an operating profit margin of around 5% (compared to 21% last year). According to management this business has been restructured to be competitive at ZAR6.50 per Dollar. They expect margins to increase as a result.

The impact of the UEC rand performance on ALTECH was huge. If the rand had remained fairly stable and even assuming a conservative 10% growth in UEC revenues at the same margins as last year, we calculate that group revenue would have grown by 5% instead of 2%. HEPS would have grown by 11% instead of declining by 12%.

Clarity on ALTECH's proposed venture into the mobile operator space with the Econet Wireless Group should be given within the next month.

We believe the group is well positioned for the coming year to February 2005:
- The underlying performance in its major businesses are strong.
- In the case of UEC, if the Rand remains fairly stable and the restructuring pays off, there should be a healthy turnaround in Rand terms.
- The ZAR506mln tender won by Alcom Matomo for Digital TETRA radios in Gauteng will start flowing through. (Around ZAR170mln per year for 3 years at around 15-17% gross margin)
- The NamITech acquisition will grow the IT division's turnover to around ZAR1bln and increase its margins. The NamITech business is sizable (ZAR700mln revenue and ZAR90-100mln profit)
- BEE deals with Pamodzi in the IT division bode well for the group, going forward.

ALTECH JSE stats (5/05/2004) : Mktcap = ZAR3504mln, Share Price = ZAR33.30, PE = 11, DY = 4.3%


EOH interims - a star performance
by Irnest Kaplan - 22 April 2004

Here's an IT services company that has steadily grown from small beginnings and continues to do so. We attended the results presentation in Sandton yesterday.

Growth for the 6 months to January 2004 was excellent, albeit off a relatively small base and somewhat assisted by an acquisition in October 2003. Revenue was up 66% to ZAR146mln. HEPS was up 23% to 19 cents per share. Cash flows were solid. The group has a healthy balance sheet with very little debt and ZAR44mln in cash.

The key dynamic for the period was the acquisition and digestion of Atos KPMG consulting, purchased for ZAR20mln in cash. It has been integrated into the group, bolstering the existing consulting arm, and almost doubling group staff to around 600. The acquisition and related integration costs did have the effect of reducing group operating margins from around 10% to 8%, but management seemed confident that margins would soon return to the 10% level.

The group has three core business areas: consulting, technology and outsourcing. We learnt from management after the presentation that the revenue split between these three areas is around 15%, 50% and 35% respectively. The technology area is made up of individually branded business units that represent best-of-breed international software vendors, principally in the ERP space. These include names such as SAP, Baan, JDEdwards, Syspro and Microsoft.

In February 2004, three key founding directors resigned from the board. This however is not to be interpreted negatively. These members continue their roles within the company. The change was to streamline the board and allow for "rotation" of its members.

All in all, a very good result. We believe that EOH will continue to show similar headline earnings growth (20-25%) for the full year to July 2004.

EOH JSE stats (21/04/2004) : Mktcap = ZAR126mln, Share Price = ZAR2.49, PE = 7.6, DY = 2.9%



IST's target detection and engagement
system on the SANDF Olifant tank 		IST annual results - encouraging turnaround from the interim stage
by Irnest Kaplan - 22 April 2004

This was an encouraging result from IST, a leading engineering technology player, considering the interim period to August 2003. The presentation held in Sandton yesterday was very well attended. For the year to February 2004, revenue grew 8% to ZAR323mln. HEPS declined slightly to 18.4 cents per share. A dividend of 8 cents per share was declared.

Cash flows from operations (CFO) were turned around from being negative at the interim stage (ZAR-27mln) to a positive ZAR17mln for the year. Although the cash position declined over the year from ZAR80mln to ZAR32mln, two acquisitions were made. The balance sheet remains strong and the group is virtually debt free.

The strength of the Rand had a relatively small effect, impacting revenues negatively by around ZAR15mln or 5%.

IST's business is well diversified and provides engineering technology to large customers. Some solutions are developed in-house and others are sourced internationally. Broadly, the group is involved in energy systems, telecommunications, the defence industry, nuclear power systems and industrial plant solutions.

The group is however disadvantaged from time to time by delays in large projects. An example is the recently awarded Pebble Bed Modular Reactor project which is worth ZAR260mln over 4 years, but only contributed around ZAR19mln in the current period.

IST now faces a period of consolidation. The group appears confident for the year ahead.

IST JSE stats (21/04/2004) : Mktcap = ZAR241mln, Share Price = ZAR1.68, PE = 9.5, DY = 4.3%


Mustek head office in Midrand We meet Mustek's financial director, Hein Engelbrecht
by Irnest Kaplan - 19 April 2004

Mustek is a leading South African PC player, which has over the years become a major force in the market.

Hein Engelbrecht, a chartered accountant, entered the group in 1997 as group financial manager and was appointed financial director in September 2000. He strikes us as a pragmatic financial director and is definitely on the pulse of the financials and activities within the group. He says his strengths are his "hands-on" approach and flexibility.

Mustek's main division, Mecer, imports best-of-breed components from the USA and the East. They are assembled into Mecer branded PC's and notebooks at the company's headquarters in Midrand and are primarily sold through a large dealer network.

The factors that drive the purchasing decisions for companies, when buying PC's in bulk are quality, price, local service and increasingly, whether its made in South Africa and the BEE credentials of the manufacturer. Mustek is well positioned in all these factors. Mustek shares the lead in the SA branded PC market with HP/Compaq. They each have around 20% market share. Next is Dell with around 8% and local manufacturers, Pinnacle and Sahara, each with around 5%. The remaining 40% is a fragmented supply of no-name branded PC's or "white boxes".

Although PC penetration in South Africa has remained relatively low, growth drivers do exist. These include replacement of obsolete equipment bought for Y2K, affordability (with the stronger Rand) and government initiatives to improve computer literacy in schools.

Mustek has also invested prudently offshore and is currently trading in Nigeria, Kenya and Brazil. While these operations are very small at present, indications are that the model has been well received. The group is taking a 3 to 5 year view on them.

In our tour of the company's headquarters in Midrand, we were particularly pleased with how clean and well organised the place is. The assembly line (of Mecer PCs) was smaller and with far less staff than we had thought. For this size of business, we were also impressed with the low quantities of inventory in the warehouse.

Mustek's recent interim results to December 2003 were tainted by losses on forward cover taken on the Rand. However, according to Hein Engelbrecht, unit growth in the first quarter of 2004 was around 40%. This bodes well for the group's full year results to June 2004.

Mustek has a June year end. We expect full year results (to end Jun04) to be announced in August. Mustek JSE stats (16/04/2004) : Mktcap = ZAR809mln, Share Price = ZAR7.80, PE = 15.1, DY = 6.4%


Digicore head office in Centurion Digicore full year results - feedback from analyst presentation
by Irnest Kaplan - 10 September 2003

We attended the results presentation yesterday in Sandton. The numbers speak for themselves. A good result, all in all. Some useful insights gained were as follows:

- Digicore has enhanced the Tracker SA product over the past 12 months
- The company continues to spend on R&D (last fin year - ZAR8mln)
- There is a new drive to benefit from its black empowerment partner
- Digicore is actively involved in certain SABS national standards developments
- Its off-shore markets are Europe (now profitable), Pakistan (going strong) and Australia
- The company intends expanding into Brazil and Mexico
- It also intends following MTN into Nigeria.

Digicore has a June year end. The company has just released its full year results. Digicore JSE stats (10/09/2003) : Mktcap = ZAR78mln, Share Price = ZAR0.33



Corporate offices of Idion in Sunninghill, SA Idion turnaround.
by Irnest Kaplan - 7 August 2003

Idion has turned itself around. It is now making profits and generating cash. Their technology is solid. World trends support the need for it.

In our meeting with management yesterday to discuss their interim results, we discovered that they are making progress with ORION and are due to launch in September 2003 for the Windows platform. The Idion stock should perform well over the next 2 years.

In our opinion, the DataMirror issue is not an issue to worry about.

Idion has a December year end. They have just released interims to June 2003. Idion JSE stats (06/08/2003) : Mktcap = ZAR204mln, Share Price = ZAR1.80


Spescom head office in Midrand Spescom management meeting with Tony Farah (CEO)
by Irnest Kaplan - 23 July 2003

Now here is a visionary IT company. In a management meeting held with CEO and founder, Tony Farah, we found out the broader Spescom strategy. According to Farah, technology is being driven by the need for "rapid access to information in context, anywhere and anytime."

This sounds similar to Microsoft's .NET strategy of any information on any device at any time. Tony explained to us how the various business units within Spescom fit into this vision. He also commented on the various successes the company has had in its eBusiness, call centre and network integrity activities.

Farah is a qualified engineer and holds a MBA. He also completed the Advanced Management Program at Harvard University. He formed the company in 1977 and has built it into a sizeable technology company with many pockets of intellectual property. The company sells its software, hardware and services in South Africa, Europe and the USA.

Spescom has a September year end. We expect its full year results to be announced in November 2003. Spescom JSE stats (23/07/2003) : Mktcap = ZAR46mln, Share Price = ZAR0.80

Digicore head office in Centurion We meet Digicore's group financial director, Frans Britz
by Irnest Kaplan - 23 July 2003

Digicore is a highly focussed technology company that has been listed on the JSE since 1998.

The company's core product enables fleet owners to track the movement of their vehicles. In so doing, Digicore helps them to improve logistical efficiencies and save on fuel costs. Digicore does not provide a "recovery" service like well known consumer products, Netstar and Tracker. Thats not their game. They sell the unit and earn ongoing revenue from commission on cellular revenue (SMS is the communication carrier).

According to Frans Britz, a qualified chartered accountant and group FD, the full product (hardware and software) is locally designed and assembled in Pinetown. Approximately 60% of the components that make up the hardware are imported.

What impressed me most about Digicore is that their product sales into selected European markets is gaining momentum. Britz explained to us that the intellectual property of Digicore's product is protected via patents in many countries, and believes that its product competes successfully on the world scene.

The company works closely with mobile operators, Vodacom and MTN, and service provider, Nashua Mobile, because its product uses SMS as a carrier to communicate with the fleet owner's PC.

Digicore has a June year end. We expect its full year results (to June 2003) to be announced in September. Digicore stats (23/07/2003) : Mktcap = ZAR64mln, Share Price = ZAR0.27.


We meet Glotec's newly appointed MD, Graeme Victor
by Irnest Kaplan - 21 July 2003

Glotec is a company going through major restructuring and consolidation. After exiting the banking software market (through its relationship with offshore software developer, Temenos), newly appointed managing director, Graeme Victor explained to us that the company is now focussed in three areas. The first is an insurance processing outsourcer, Brolink. Second, and the largest contributor currently, is in the Business Intelligence space, with a key product called Hyperion. The third area is in software for manufacturing and distribution.

Victor, a qualified chartered accountant, also holds a Masters of Science in Engineering. This combination is very rare amongst South African technology leaders. The man has to be respected for his track record. He was involved in the success of CompuTicket and the growth of WorldOnline, one of South Africa's largest dial-up ISP's. He strikes us as a pragmatic manager who understands both technology and business. He doesn't beat around the bush.

Glotec has a December year end. We expect its interim results (to June 2003) to be announced by September. Glotec stats (23/07/2003) : Mktcap = ZAR26mln, Share Price = ZAR0.06

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