Beget Pins Hopes On Schools Business in South Africa
Beget is pinning its recovery hopes on a deal to serve as a sub-contractor on a much-delayed tender to supply internet access to schools in Gauteng.
The technology developer produces applications that work over the cellular airwaves, and has been recruited by SMMT Online, which won the Gauteng Online tender.
The tender involves supplying a private telecoms network to more than 2000 schools for e-learning purposes. Beget (BEE) will provide biometric log-on systems and power supply units for each computer and anti-theft alarm systems with monitoring software.
The Gauteng Online project was first announced in 2001 with an expected budget of R500m. Little progress was made by last year, and it was readvertised as a R2bn tender and awarded to relatively unknown SMMT. Beget's directors expect the deal to provide a significant boost to its own performance, pulling it further out of its previous insolvency.
Its auditors qualified its last two sets of results due to cash-flow problems caused by technical delays in the launching of a new product. That saw it fall behind in tax and loan repayments, although it has now begun to clear that backlog.
Beget then became insolvent when the auditors wrote off goodwill and intangibles caused by an acquisition as no positive cash flow was generated by those assets.
Beget has now appointed a chartered accountant as its financial manager to improve its financial management and reporting. The directors also plan to appoint a chartered accountant to make its audit committee more active.
Results for the nine months to January show revenue of R17,7m and attributable earnings of R12,2m, up from a loss of R19,9m on a revenue of R13,2m for the previous full year to April last year. Headline earnings per share of 1,45c reversed a previous loss of 1,68c, while current liabilities stand at R11,5m.
The latest results are stronger due partly to the reversal of intangible assets impaired in the prior year to the value of R5,9m.
In response to the new contract , Beget has issued forward-looking statements predicting a net profit of R12,8m on revenue of R25m for the year to this month. By next April it expects revenue of R78,5m, but a far lower net profit of R6,4m as the previous benefit from the reversed impairments is lost.