$7M enterprise solutions revenue shortfall hits CSG financials
- 08 August, 2017 12:57
CSG (ASX:CSV) has highlighted a $7 million shortfall in its enterprise solutions business transactional revenue amid lower than expected revenues for the financial year ending June.
The publicly-listed company told shareholders on 8 August in its preliminary unaudited financials for the year that the shortfall was partly comprised of $4 million transaction equipment revenue from an enterprise managed print contract in the education sector, and $3 million from an IT managed service contract that remains in the pipeline.
Also contributing to the revenue shortfall was lower than planned business solutions sales heads across the period, with an average tally of 114, coming in under the target of 121 – leading to an impact of approximately $3.5 million in transaction revenue.
Hanging over its latest financials is a non-cash charge for an impairment of roughly $55 million in its results for the period, stemming from a substantial goodwill write-down associated with the company’s print assets in Australia and New Zealand, which were acquired by CSG I 2011.
However, the company also reported increased adoption of its Technology as a Subscription product suite, with total subscription seats of around 27,300, as of 30 June.
Overall, the company’s preliminary results point to revenues of $245 million for the year.
During the year, the company also completed the restructure of its New Zealand business, along with parts of the Australian operation, leading to an estimated $1.2 million in cost savings.
Also during the year, CSG amended its shareholder and distribution agreement with Konica Minolta, allowing the company to rename the business in New Zealand and re-brand as CSG – it was previously branded as Konica Minolta.
Following the change, CSG will operate as a non-exclusive distributor of Konica Minolta products in New Zealand.
In June, CSG acquired New Zealand managed IT services provider, pcMedia, which specialises in the education sector.
It was acquired for an upfront fee of NZ$300,000 in cash, and an additional earn-out amount of NZ$1.7 million over three years.
Broadly, the company’s preliminary results revealed pre-tax earnings (EBITDA) of around $30 million, and revenue growth of roughly 10 per cent.