Business Connexion reports decrease in headline earnings
However, the group said the results had been influenced by several factors, including the sale of investments in the prior year which had reduced the income from associates.
Other factors impacting on the results included a settlement with the South Africa Revenue Service the prior year in respect of a trademark dispute and payment of Secondary Tax on Companies (STC).
On a comparable basis HEPS decreased by 11%, it said.
The group declared a total dividend per share for the year of 37 cents compared to nothing the previous year.
Revenue growth in the second half of the year was lower compared to the first half, however revenue growth year on year was 14%.
“The group has experienced a significant increase in cost levels, both operating costs and those included in cost of sales. In addition margins have been diluted by pricing pressure from clients. The reduction in operating profit (excluding exceptional items) of 15% is a result of the high cost of tendering for long term contracts and costs associated with internally focused projects, which include internal restructuring, the implementation of SAP and the construction of the new data centres. Certain of the costs incurred are not expected to be repeated in future,” the company said.
It added that revenue from the "Rest of Africa" had increased by 20% but the various operations collectively remained unprofitable. Cost savings were identified and implemented at year end, which would have a beneficial effect in the new year, it said.
The group remained cash positive with cash generated from operations amounting to 106 million rand.
“As a result the group’s balance sheet remains robust with cash reserves of 743 million rand. Capital expenditure amounted to 196 million rand, which included 109 million rand in respect of the data centres and 34 million rand for the implementation of SAP.”
Looking ahead, the group said the completion of a new data centre facility and the expansion of Business Connexion Communications network allowed the group to aggressively pursue new revenue opportunities.
“The implementation of SAP will provide management with meaningful management information to sustain the growth and to identify cost saving opportunities. The group is well placed to take advantage of the new legal and regulatory environment and globalisation in the ICT sector, which will increase the prospects for future growth especially in regard to ‘on demand’ services,” the group added.
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