ConvergeNet Holdings has reported increased revenue and profit for the six months ended 28 February 2011.
Unaudited interim results for the period show revenue up 20%, operating profit up 63%, EPS up 30% and tangible NAV up 62%.
During the period, David Braine resigned from the board with effect from 13 January 2011.
In addition, trading conditions improved slightly and, although not reflected in the latest results, the group concluded a long-awaited contract.
During the six months, revenue increased by 20% to R497-million, while the gross profit margin decreased slightly from 29% to 25% compared to the corresponding period, as a result of the business mix.
The operating profit from continuing operations increased by 63% to R19-million compared to the corresponding period primarily as a result of the increase in revenue and an improved cost to income ratio. As a result of the increase in revenue and operating profits from continuing operations, earnings per share from continuing operations increased by 30% and headline earnings per share from continuing operations increased by 30% compared to the corresponding period.
Following the sale of a controlling interest in FutureCell in the previous financial period, the corresponding period`s results are restated by disclosing the net results relating to FutureCell as profit from discontinued operations. The profit for the period attributable to ConvergeNet’s remaining 20% interest has been included in share of profits from associates.
The financial position of the group remains strong with the only interest-bearing debt being those relating to mortgage bonds on certain properties and, primarily as the result of the FutureCell sale in the previous financial period, the net tangible asset value per share increased by 61% to 29 cents per share compared to the corresponding period.
The cash used in operations was primarily due to an increased investment in net working capital of R61m, the majority of which have been recovered subsequent to the end of the reporting period.
Effective 1 September 2010, ConvergeNet acquired an additional 20% interest in Structured Connectivity Solutions (Pty) Ltd (SCS) for a purchase consideration of R300 000 and an additional 15% in Xdsl Networking (Xdsl) for a purchase consideration of R667 771. These purchase considerations were settled in cash.
ConvergeNet now has a 90% interest in SCS and a 66% interest in Xdsl.