Investment analysts have heavily criticised JSE-listed Business Connexion (BCX) on its performance for the six months ended 30 November.
This morning, the company revealed it had delivered a 16.1% increase in revenue, to R2 billion, over the period. However, operating profit declined 22.4%, to R41.9 million. Earnings per share (EPS) declined 55%, to 14.8c, while headline EPS (HEPS) dropped 18%, also to 14.8c.
Acknowledging the company was going through tough times, BCX CEO Benjamin Mophatlane said the company had a turnaround strategy that would improve its quality of earnings.
"We have a clear, concise action plan which is supported by a new leadership team and management style. And we are prepared to make the difficult decisions. Our plan is based on five building blocks: alignment for the future, improving quality of earnings, performance excellence, attracting and retaining talent, and absolute accountability," he said.
Under fire
However, investment analysts attending this morning's results presentation were unconvinced by the company's efforts.
The newly-formed management team could not answer several questions regarding the operating costs of the company's new data centres, profit margins on services and where growth was expected to come from in the next six months.
An analyst questioned whether Mophatlane was "the right person to lead the company given his outside interests".
In response, Mophatlane said he had faced the same question from the board.
"In the run up to the leadership change-over, I was asked this question. And it's a fair question. I work 14 hours a day; this business is my life and my passion, and I do believe we have a lot of unrealised potential that we can deliver on."
Coming up
Mophatlane said the company had faced up to some "uncomfortable truths" over the past six months.
However, the implementation of the SAP ERP system has given it the ability to drill down into operational and divisional performance, with focus being placed on addressing those areas in need.
The company is now focusing on getting "buy-in" from its employees on its action plan. Once this has been achieved, BCX will present its vision and strategy to other stakeholders, Mophatlane said.
In terms of improving quality of earnings, the company intends to remove duplication caused by its horizontal and vertical structures, focus on removing or partnering on "low margin" contracts, review its key outsourcing contracts, consolidate its services business, focus on revenue "leakages", and review costing models.
This would enable BCX to deliver headline earnings growth at the full year, said Mophatlane.
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