tTech reports 24% decline in six months net profit

August 11, 2020

tTech Limited (tTech), for the six months ended June 30, 2020, booked a 9% increase in revenues to $170.28 million compared to $156.91 million recorded for the prior financial year.  Ttech noted, “During the first half of the year, our revenues grew over the same period last year and we expect this trend to get even better as we head into the second half of the year. Our pipeline is steadily growing, fueled by companies looking to enable a more flexible work environment for their employees, the need to remotely manage their IT environments, and the increasing importance of securing their devices, data and networks.” Revenue for the quarter declined 9% to 82.73 million relative to $90.45 million in 2019.

Cost of sales rose significantly by 55% to $53.68 million from the $34.63 million reported for the six months ended June 30, 2019. Gross profit decreased 5% for the period to $116.60 million (2019: $122.28 million). Gross profit for the quarter amounted to $56.02 million versus $67.65 million for the second quarter ended June 30, 2019.

Other income totaled $7.69 million year to date relative to income of $5.13 million in 2019, while administrative expenses rose 6% year over year to $98.40 million (2019: $92.62 million). Other operating expenses for the period reflected a 31% contraction year over year to $13.03 million compared to $18.88 million recorded in 2019.

Operating profit year to date totaled $12.85 million, down from $15.92 million booked for the same period in 2019. Operating profit for the quarter closed at $8.66 million compared to $15.31 million reported for the three months ended June 30, 2019. TTECH booked finance income for the six months of $1.09 million compared to $723,000 recorded in the prior year’s corresponding quarter. Whereas, finance cost amounted to $1.21 million (2019: nil) for the six months ended June 30, 2020.

​Consequently, no taxes were recorded for the period, thus net profit for the period amounted to $12.73 million versus $16.64 million booked for the same period of 2019. According to tTech, “this was mainly due to several projects put on hold and postponed for later in the year by customers. “ Net profit for the quarter amounted to $8.58 million (2019: $15.72 million), down 45% year over year.

The Company noted, “tTech‘s diversified portfolio of customers spared the company from the worst scenarios projected during the near-lockdown period between March and June. Some projects were put on hold by customers, but new opportunities presented themselves as more organizations realized that they needed assistance to move their IT operations to the cloud or to enable their staff to work remotely from home.”

Management also noted, “Outlook for the 3rd quarter, as restrictions are eased, is positive. We expect a few of the postponed projects to be restarted. Our online marketing activities have contributed to more prospective customers becoming interested in our services which has resulted in a healthy pipeline of real opportunities. We are very excited with the signing of new customers, both locally and regionally, for our managed IT services and looking forward to onboarding them shortly.”

Earnings per share for the six months period amounted to $0.12 (2019: $0.16). The earnings per share (EPS) for the quarter amounted to $0.08 compared to an EPS of $0.15 reported in 2019. The trailing twelve months EPS amounted to $0.20. The number of shares used in our calculations is 106,000,000 units. The Company’s stock price closed the trading period on August 10, 2020 at $6.75.

Balance Sheet Highlights:

As at June 30, 2020, the Company reported total assets of $316.91 million, a 15% increase when compared to $269.09 million in 2019. This was as a result of a 71% increase in ‘Short term Investments’ and ‘Rights of use assets’ which close at $94.67 million (2019: $54.91 million) and $26.84 million (2019: nil). Inventory and Other Receivables also contributed to the increase in the Company’s asset base.

Shareholders’ Equity, as at June 30, 2020, was $229.47 million compared to $208.62 million for the comparable period of 2019. This resulted in a book value per share of $2.16 compared to $1.97 the prior year.


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