Delays in getting orders signed weighed on its results for the year to August, says listed infrastructure provider ConvergeNet.
However, the company says most of the contracts it had been waiting for have now been awarded, and will benefit results in the second quarter of the new financial year.
ConvergeNet yesterday said revenue had declined 20%, to R784 million, and total income dropped from R62.6 million to R36 million during the year. Yet, despite the “challenging economic environment”, the company managed to increase its gross margin to 31% from 24%.
Operating expenses increased, which resulted in operating profit declining 51%, to R27 million. ConvergeNet also wrote off bad debts to the tune of R6.7 million.
ConvergeNet says it is focusing on controlling costs, and the benefit of the corrective action will also be seen in the new financial year.
The infrastructure company did not declare a dividend, instead opting to put the cash it generates back into growing the business. The company ended the year with R77 million in the bank, a decline on last year's R103.7 million. However, apart from mortgage bonds, ConvergeNet is debt-free.
ConvergeNet's directors see “substantial demand” for its products and expect orders to pick up in the short- to medium-term.
“We expect the market conditions to improve next year and beyond. The directors of ConvergeNet are satisfied that the fundamentals of the businesses remain sound, and the group will continue to cautiously invest in previous identified strategic growth areas.”
The company's shares closed at 22c yesterday, a 2c or 8.33% decline on the day.
Related story:
ConvergeNet earnings slump
Share
