26 February 2010
	TECHNOLOGY Leaner and looking good By Larry Claasen

At first glance, it looks like Simeka BSG is in the process of reinventing itself. A sharp drop in sales volumes has driven the technology group to shut down its plant, which assembled computers on behalf of Hewlett Packard (HP), at a cost of R178m and to retrench 135 staff members. The company, which distributes computer hardware and serves the technology industry, is also disposing of its investments in Equitemps and SAB&T, which came with its acquisition of SAB&T Ubuntu Holdings (SUHL) for R123m in shares, just two years ago. The disposal of these businesses follows its exit from Virtually HR and Timestalent. It also plans to get rid of Cortell before the end of the financial year. But the changes at the group are not as drastic as they seem, because the operations being shut down are small parts of the business, says Kaplan Equity Analysts MD Irnest Kaplan. "It's not a case of rebooting the whole company," he says. When it bought SUHL there was a warranty in place that prevented it from selling its loss-making subsidiaries, says Simeka BSG CEO Mohammed Varachia. The warranty expired in June and the group was free to dispose of them. Kaplan says that for the most part, the businesses that came with SUHL are still intact - it still has a three-year R400m contract with the education department - and despite the economic slowdown, Simeka BSG's core operations are still performing reasonably well. Even so, revenue for the six months to end-November gre w only 5,2% to R372,3m and operating profit fell 37% to R50,3m. Varachia says it's not as bad as it seems. The niche technology operations have started to see an upswing in business since the end of November and noncore companies are gone. The group's structure is also settled, as no further acquisitions are planned and there are no plans to issue further shares. At a share price of 16c and a p:e of 2,62 Simeka BSG is a giveaway. For a company that has a habit of producing good results, it looks like a good buy.