Listed financial services software provider SilverBridge took a knock in the 12 months to February and reversed its previous profitable position.
However, the group has canned loss-making projects and restructured in a bid to lower its cost base, which should aid its next set of results, it says.
SilverBridge's revenue dropped 13%, to R93 million, in the 12 months, but net profit fell 174%, from a gain of R16 million a year ago to a loss of R12 million. The company has changed its year-end from February to June and was reporting its interim results, although the numbers are for a 12-month period.
SilverBridge says increased complexity in implementing projects at “higher-tier” clients negatively affected results, which pushed revenue down and costs up as the group has to invest in projects to “realign deliverables with clients' capacity and expectations”.
In addition, delays in finishing projects resulted in slower software rental and support income. Its recent acquisition of Acczone increased the cost base but didn't deliver on revenue expectations, it says.
Lowering costs
CEO Jaco Swanepoel says the company has exited underperforming projects, which trimmed its cost base and will benefit it in the next period. SilverBridge has also improved its group structure, which has trimmed duplications, says Swanepoel.
“We integrated the group structure into a single operating entity to ensure focus and to further reduce the cost base,” says SilverBridge. Its corrective actions had a negative impact on operating performance during the period, but will aid the group over the medium-term.
Swanepoel is positive about the firm's future prospects as it can now use resources that were tied up in underperforming projects to generate revenue. He says activity in the financial services sector is picking up as companies seek to trim costs.
SliverBridge has also won an implementation deal with Absa. Swanepoel says the project will enhance the group's reputation if implemented successfully.
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