ConvergeNet widens losses
ConvergeNet has reported an operating loss from continuing operations of R98.7 million for the year ended August 2013, compared to an operating loss of R68.1 million in 2012.
The ICT firm pointed to an increase in operating expenses as the reason for its wider loss, while the group also looked to offload several subsidiaries during the reporting period.
During the year revenue from continuing operations increased by 13.5% from R238.5 million to R270.6 million, whilst the gross profit margin increased from 19.7% to 21.3% compared to the corresponding period, primarily as a result of a change in the business mix.
Operating expenditure from continuing operations increased from R135 million to R168.8 million. Included in operating expenditure are impairments of goodwill and other financial asset to the amount of R58.7 million, Convergenet said.
This, the group added, resulted primarily due to the restructuring of the group and sale of subsidiaries including Sizwe.
The Group loss from continuing operations for the year ended August 2013 was R105.0 million, from R69.4 million in 2012, while an attributable loss from continuing operations was R101.4 million (2012: R68.6 million) resulting in a headline loss of 4.97 cents per share.
The ICT firm said that an impairment of discontinued operations related to the impairment of the goodwill of Telesto amounting to R16.5 million and Sizwe Africa IT Group in the amount of R 50.8 million. In addition, Sizwe has impaired goodwill to the amount of R5.0 million.
Looking ahead, ConvergeNet said that following a financial year of change, the disposal of non-core and loss-making subsidiaries and a rationalisation of the capital structure of the group, the key mandate will be to return the group to profitability in a cost-controlled manner.
“The key subsidiaries, Structured Connectivity Solutions and CK Solutions, are well positioned to capitalise on strong domestic demand for ICT infrastructure products and services, which is expected to continue into the 2014 financial year,” ConvergeNet said.
“The group will look to expand on its pan-African base station management opportunities and diversify its cabling and power supply product offering to the rail and mining industries,” it said.
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