ConvergeNet Holdings has reported satisfactory performance for the year, despite difficult trading conditions and economic pressure as well as delays in the publication and awards of the new SITA term contracts.
"Business in the government segment was also slower than expected due in part to the March general election and the widely expected changes in the administration," the group says in a statement. "Additionally, corporate customers have delayed or cancelled technology investments in several instances.
"Therefore trading conditions remained tight and the increased competition caused some margin pressure, while customers are increasingly price sensitive."
In spite of these conditions ConvergeNet experienced a growth in revenue for the period of 11%. The revenue for the last six months declined against the first six months, which is contrary to the normal trend.
ConvergeNet's attributable earnings and attributable headline earnings are 2% and 5% respectively below that of the previous year. This is mainly attributed to the group`s increased investment in resources and skills while the concomitant revenues did not materialise in the period.
"These investments were required in order to extend ConvergeNet's offerings and enhance its competitive position," it states. "We are confident that these investments will yield results. Due to a higher number of shares in issue, mainly as a result of the Chrystalpine Investments acquisition, the earnings per share and headline earnings per share are 19% and 22% below that of the previous year respectively."
During the year, ConvergeNet acquired 74% of Chrystalpine Investments 9, whose only asset is 100% interest in Andrews Kit trading as Contract Kitting for a purchase consideration of R147,104-million.
In addition, Sizwe Africa IT Group acquired 74% of Tswelopele Technological Solutions for a nominal purchase consideration. Tswelopele provides access control and ticketing systems and solutions and the company has secured certain of the new stadium contracts.
Sizwe Africa IT Group also acquired a 65% interest in Mmele Consulting for a nominal purchase consideration. The name of the company was subsequently changed to ConvergeNet Networks and it provides primarily network solutions.