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SAB&T Business Innovations, a wholly owned subsidiary of SAB&T Ubuntu (SUL), has just been awarded a five year contract worth approximately R350 million to provide project, human resource, procurement and financial management services to the Department of Education’s “Kha Ri Gude” mass literacy campaign. The Department of Education aims to reach 4.7 million people during five years and reduce illiteracy by 50%. The Department has created the ‘Kha Ri Gude’ unit to be responsible all the preparations as well as the implementation of the campaign, including advocacy and the overall co-ordination of implementation. The unit will also be responsible for materials development; identification, appointment and training of coordinators, monitors and volunteers/facilitators, coordinating and evaluating all processes relating to the campaign, through a service provider. So what does this contract mean for SAB&T Ubuntu…? Now assuming that this contract’s revenue is earned evenly over time then SUL should earn around R70 million per year. Given that SUL’s group turnover was only R85 million for the full 2007 financial year the true size of this contract comes into focus. I.e. this contract almost doubles SUL’s revenue. Given SUL’s net profit margin of 9.26% for the latest interim results this major contract win should boost the group’s EPS by around 2c to 2.3c per share (=70 000 000 / 282 300 000 x 9.26%). This rough calculation only takes into account the worth of this single contract and excludes all of the other fast growing businesses of the group. Bashier Adams, the CEO of SAB&T Ubuntu, says that he expects the direct benefits of the contract to begin in the 2009 financial year (i.e. after the end of this month). Further more he feels that the flagship nature of this win against stiff competition helps to boost SAB&T Ubuntu’s professional profile and could have many secondary benefits. Over and above this the awarding of this contract to SUL shows Government’s confidence in them. Bashier goes on to say that "…our service innovation and product differentiation to date has given us the opportunity to prove ourselves yet again in a project that will be in the spotlight for some time to come. Furthermore, we will continue to contribute to the upliftment of South Africa and its people - one of our strategic goals."
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