SilverBridge, which provides turnkey technology solutions to the financial services industry, has positioned itself for strong growth in the next financial year by exiting loss-making projects, cutting costs and restructuring operations.
This follows a challenging financial period to 28 February 2011, where the group’s operating profits dropped 100% to a loss of R30 000.00 on revenues that fell 13% to R92,93-million. Headline earnings per share reflected a loss of four cents, compared to a profit of 39,7 cents in the previous financial year.
SilverBridge’s financial results for the financial period were weighed down by delivery problems at certain loss-making projects that the group has since exited as well as by once-off goodwill impairment and restructuring costs. However, the corrective actions that the group has taken to improve project delivery and reduce costs mean that the outlook for the next financial year is positive.
Jaco Swanepoel, CEO of SilverBridge, comments: “The year under review was a difficult one for SilverBridge, largely because of implementation problems on certain client projects. These projects not only incurred additional costs for the group, but tied up resources that we could have used on other projects.
“In addition, the acquisition of Acczone increased our cost base but did not deliver on revenue expectations. The financial results for the period also reflect the costs of restructuring our three operating subsidiaries into a single operating company called SilverBridge Software Solutions.”
Swanepoel says that the corrective actions that SilverBridge took during the second half of the financial period have positioned it to return to growth and profitability in the months to come. It has reduced its cost base by 16% and has simplified and optimised its operating structure.
In addition, SilverBridge has improved its solution design, implementation and client service methodologies to improve profitability and execution on client projects. “The pain we took during the last financial period means that SilverBridge is in good shape for the new financial year,” says Swanepoel.
Swanepoel says that annuity income from software rental and contracted support showed pleasing growth during the financial period. Rental revenue increased by 4% (excluding a once-off license fee of R4,9-million) and support revenue increased by 38%. The group also made good progress towards the completion of a major project at Absa.
Looking to the next financial year, SilverBridge has a healthy sales pipeline for its flagship insurance administration suite Exergy. Existing clients are looking to convert to the newest version of the software and new clients are also evaluating the solution.
“We are positive about opportunities, especially in life assurance. Financial service providers are increasing their focus on improving relationships with their clients. SilverBridge’s offerings are well positioned to meet these needs,” Swanepoel says.