JSE-listed Simeka is taking a conservative view for the year ahead after restructuring, the global economic downturn and the SIM card registration act knocked revenue.
The group, which is involved in outsourcing, business support services and technology, yesterday published its results for the year to May. It says revenue dropped 8.8% to R685.7 million, while net profit almost halved, going from R57.7 million to R30.3 million.
Simeka's restructuring also resulted in a goodwill impairment of R230.3 million, compared with last year's write-off of R10.1 million, and intangibles were written down by R40.7 million. As a result of the lower revenue and profit, Simeka has not declared a dividend, it says.
Its South African operations, which account for 91% of revenue, were hampered by slower orders at its process division, because of the implementation of Regulation of Interception of Communications and Provision of Communication-Related Information Act, says Simeka.
In addition, the move away from the use of consultants in the private and public sector impacted badly on the division, as the use of its consultants was trimmed, the company says.
During the year, Simeka also implemented a restructuring plan that resulted in it selling out of non-core businesses and retrenching 140 staff. It now has 1 049 employees, including contractors.
The company, which has been listed on the JSE's Alternative Exchange since 2004, has a presence in SA, Africa, the Middle East and the UK. During the year, Simeka established a wholly owned subsidiary in Nigeria, INGR Technologies. The new unit expects to see demand from the power, process and marine sectors as well as for geospatial technology.
Simeka is also in the process of finalising its subsidiary in India and establishing a joint venture in India, which will provide additional capacity, alternative products and serve as a disaster recovery site, it says.
Simeka's share closed flat at 15c yesterday after hitting an intra-day high of 16c before dropping back down to a 52-week low. Its 52-week high is 30c, which it hit almost a year ago on 10 August.
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