ConvergeNet mired in red

ICT infrastructure supplier ConvergeNet has on Friday reported an operating loss of R28.6 million for the six months ended 28 February 2013, compared to an operating loss of R8.3 million for the corresponding period before.

The group pointed to a headline loss per share down 28% to 1.70 cents; however, revenue increased by 16% to R483.3 million for the period under review.

The IT infrastructure segment reported an operating loss of R16.0 million (2012: R11.5 million) primarily as a result of a once off cost of R13.9 million, relating to a guarantee provided in favour of a subcontractor who subsequently went into business rescue.

The Telecom infrastructure segment recovered well in line with expectations, ConvergeNet said, generating an operating profit of R4.6 million compared to an operating loss of R5.0 million in 2011.

The African operations incurred an operating loss of R8.7 million (2012: Not operational) as a result of higher than anticipated start-up costs, the group said.

Outlook

ConvergeNet said it has progressed its strategy for the next five years and increased revenues.

“The group is streamlining its operations into key technologies and vertical markets. We have adopted a more cautious approach in expanding our African operations in order to reduce our risks and ensuring acceptable and sustainable returns on our investments,” it said.

It highlighted that an aggressive approach is also being formulated to enhance its annuity revenue base, as well as a review of our sub-contracting and supply chain procedures to reduce our risks and increase efficiencies.

“We are also strengthening our position in the optic fibre rollout space to grow sustainable infrastructure business over the next two to three years. 80% of our subsidiaries are showing very promising results going into the second half of 2013 while the balance is subject to robust management initiatives,” ConvergeNet said.

ConvergeNet said it will also continue to prudently invest in identified strategic growth areas in the next six months and beyond.

More on ConvergeNet

ConvergeNet updates on expected earnings 

ConvergeNet sees extended loss

ConvergeNet swings to a loss

ConvergeNet anticipates big earnings fall

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ConvergeNet mired in red