ConvergeNet suffers H1 operating loss

ICT group, ConvergeNet Holdings (CVN) on Monday (30 April 2012) reported a decline in revenue for the six months ended February 2012, along with an operating loss, primarily as a result of the delays in awarding and implementation of some major contracts.

Revenue slipped to R416.52 million, from R496.57 million in 2011; while the group noted an operating loss of R24.702 million compared to an operating profit of R19.192 million in the corresponding period before.

It also reported a diluted headline loss per share of 1.82 cents from diluted headline earnings of 1.34 cents before.

ConvergeNet said that most of the major contracts have been awarded, “and the recent implementation of a major contract has commenced in February 2012, which will lead to improved results in the second half of the financial year”.

However, the group did point out that some of its subsidiaries have incurred substantial expenses to gear up for the contracts, leading to a loss.

Companies within ConvergeNet’s stable include Sizwe IT Group, Navix Distribution, Telesto, Northbound Communications Solutions, and NetXCom.

Looking ahead, ConvergeNet said that the balance sheet of the group remains sound with very little gearing carried on the balance sheet. “This leaves the company well positioned in difficult times and for future opportunities.”

It added that there continues to be a demand for its products, solutions and services.

“Whilst many opportunities were delayed as a result of the current economic situation, these needs will be fulfilled in the short to medium term. We therefore expect the market conditions to improve in the next six months and beyond. The pipeline of business in most of the underlying subsidiaries is large with solid prospects,” it said.

“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,” it concluded.

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ConvergeNet suffers H1 operating loss