ConvergeNet, which currently does not have any operating entities, is set to bow out of ICT, as it aims to convert to an investment holding company and transfer its listing on the bourse.
Its change of sectors brings to an end a company established in 2005 to address the growing need for convergence solutions in the ICT industry. However, ConvergeNet's path has not been without difficulties, as - in the nine years of its existence - it has been through a hostile takeover, fended off legal action, changed top-level management several times, and sold the bulk of its entities.
ConvergeNet's decision to move out of the ICT sector is disclosed in its year-end results for the 12 months to August, published yesterday, in which it says it is seeking to move to the investment companies' sub-sector of the JSE.
During the year, ConvergeNet saw revenue from continuing operations plummet from R19.9 million in 2013, to R755 000, although it narrowed its loss to R86.8 million, from R225.8 million in 2013.
ConvergeNet explains in a statement to shareholders that it currently has one subsidiary - ConvergeNet Management Services - as its other units are either held for sale (such as Andrews Kit) or are dormant. Its new plans include buying 30% of Tellulat, 17.64% of Digicore, and increasing its stakes in Mine Restoration Investments and Goliath Gold Mining.
Major changes
Last July, the listed company went through a restructuring phase: selling off several units, shutting down its head office, and retrenching staff as a result of its "deteriorating financial performance" due to "excessive costs and a lack of strategic focus".
The company has since sold Sizwe IT Group for R110 million, while listed channel player Mustek grabbed a 26% stake of that entity for R15.1 million.
ConvergeNet says it has already received R40 million from Sizwe's sales, and should the balance be paid before the end of the year, Sizwe's holding company Zaloserve will get R20 million off the price.
In addition, notes ConvergeNet in its results, it has wrapped up the sale of Telesto, and received a total of R7.25 million for that deal. It is still owed R100 000 after its sale of X-DSL.
During the year, the group has went through management changes, with CFO and interim CEO Danie Bisschoff resigning in October, and then holding both roles on a contract basis until the end of the year. He was replaced by Peter van Zyl, who has handled both positions.
ConvergeNet says it will soon post a circular to shareholders detailing its plans to change sectors. Its share price yesterday gained 0.82% to 245c, compared with the JSE's all share index's 0.93% drop.
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