JSE-listed information technology company SecureData Holdings says a lacklustre performance from its Africa unit weighed on margins and profitability in the year to July.
The company saw revenue decline from R458.9 million to R406.6 million as a result of weak performance from SecureData Africa, which posted a loss in the second six months of the financial year. The group also reversed the profit it made a year ago.
Lower profits and problems with debtor collections in SecureData Africa resulted in the group breaching a “financial covenant” implemented by the long-term financier at the end of the year.
SecureData has paid all the installments on the loan when they became due and does not expect the financier to recall the entire financed amount as it is up to date. However, it may end up paying penalty interest of 2% on top of the normal interest rate for the breach period.
“The directors are confident the group will continue to meet all payments when they become due over the remainder of the term of the loan.” The company ended the year with R27 million in cash and total borrowings of R46.9 million.
Mixed bag
SecureData conducts operations through SecureData Africa, SecureData Europe (previously MIS-CDS) and SensePost. SecureData Africa operates in SA and some sub-Saharan African countries.
SensePost performed according to expectation, while SecureData Europe performed better than expected despite the continued uncertainty in the markets in which both entities operate, says SecureData.
Group earnings before interest, tax, depreciation and ammortisation (EBITDA) declined to R17.6 million, from R57.2 million. The EBITDA margin dropped from 12.5% to 4.3% and it reported a net loss of R3.923 million, compared with a R17 million profit a year ago.
SecureData says the stronger rand during the period negatively impacted its group's revenues and earnings. It explains the conversion from sterling into rand was affected, and its per unit selling cost also declined as these are foreign currency denominated.
The company has started a strategic review, which should be complete before it announces its interim results. “There is early evidence that the management changes and corrective measures taken to restore SecureData Africa to profitability will bear fruit.”
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