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Businesses are warning S.A. is failing


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#1 Bullhunter

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Posted 15 December 2017 - 11:31 AM

Businesses are increasingly reporting difficulties in doing business in S.A. due to mismanagement, incompetence and/or corruption throughout all levels of government.

 

As evidenced In Micromega's  results commentary today: 

 

Our core technology businesses had a curious and frustrating six months. The increased investment in our proprietary
technology has delivered our market leader expectation. We are now the leader in South Africa in the provision of enterprise
management software to local authorities and our smart water technology is also now proving to be the market leader that we
anticipated.

The truly frustrating part is the present inability to take full advantage of this dominant market position. The failure of local
authorities to find budget for essential services and to make payment even when budget is available
has negatively affected
many companies. We are no exception. Our ability to secure business and timeously convert our sales to cash remains
challenging. This resulted in unanticipated delays in delivery pending comfort on payment. We are
working on alternative payment models that will allow this business to generate higher growth levels going forward.

Our major disappointment has been the impact of non-payment on our ability to deliver our smart water meter technology into
a customer base that desperately wants and needs it. This business should have comfortably delivered strong growth to the
end of September. Instead it delivered a decline of 56%.
This decline was exacerbated by our decision, based on non-payment,
to take back smart water technology sold in the last financial year and having to rework it to accommodate alternative client
specifications. This was the correct decision to mitigate loss but cost us R8.3m in earnings. We are actively working on more
creative funding solutions that will allow us to be paid in full while delaying the need for up-front payment from those local
authorities who want our technology but cannot afford it
from present revenue generation.

On a positive note, we can report that the Western Cape has adopted our smart water technology. We are in the process of
expanding our production facilities to accommodate this and orders we are starting to receive from our Africa partners and
agents in Europe and the Middle East. We believe that this business will be the Group’s highest growth asset in the short to
medium term.


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