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Procurri warns of Q4, full-year 2017 loss

MAINBOARD-listed Procurri Corp is expecting to report a net loss for the fourth quarter of 2017 and full-year 2017, mainly due to foreign exchange differences and write-offs arising from the group's approach towards stock obsolescence and bad debts.

In its profit guidance issued on Tuesday, the group said that further details of its financial performance will be disclosed when the company releases its unaudited financial results for Q4 2017 and FY2017 by Feb 28.

Due to maiden operating expenses from acquiring EAF Supply Chain Holdings and forming a joint venture Rockland Congruity LLC, as well as depreciation charges, the group's administrative expenses rose progressively from S$5.8 million for the first quarter of 2016.

"This was the result of a deliberate strategy to build a strong foundation to better capture opportunities in the lifecycle services market," the group said.

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For Q3 2017, administrative expenses amounted to S$12.7 million, up 3.2 per cent from the previous quarter.

While the group's bottom line was negatively affected, revenue for the nine months ended Sept 30, 2017 grew 41.9 per cent to S$133.2 million from the year-ago period. Procurri recorded a revenue of S$51.3 million for Q3 2017, with both its IT Distribution and Lifecycle Services business segments contributing to higher revenue.

Over the past year, the group has significantly extended its lead in the higher-margin US$59.1 billion IT services industry, with a boost in its in-house service capabilities to include storage maintenance and inventory-as-a-service.

As at Sept 30, its order book also rose significantly to S$21.9 million from S$5.9 million a year ago, keeping the group on track to achieve a more predictable stream of recurring income from the Lifecycle Services business segment, Procurri said.

The group expects an improvement in gross profit margin for this business segment for FY2018, from 45.2 per cent as at Sept 30.

In addition, Procurri is aiming to increase the contribution of its Lifecycle Services business segment to half of the group's total gross profit in five years' time, from 29.8 per cent as at nine-months 2017.

On IT distribution, the group recently secured partnerships with global original equipment manufacturers (OEMs) such as IBM and Hewlett Packard Enterprise.

"Procurri believes that it is poised to position itself as a Tier-1 player in this secondary market dealing with new-in-box, pre-owned and refurbished equipment, as it continues to garner more of such channel-endorsed partnerships," the group said.

Looking ahead, the group remains on the lookout for potential earnings-accretive acquisitions to deepen its presence in major markets, such as Western Europe, which represents about 20 per cent of the global IT spend.

Among other things, Procurri's outlook for FY2018 includes: reducing administrative expenses, improving the Lifecycle Services' gross profit margin, securing more partnerships with OEMs, and returning the group to profitability.

Procurri is a Singapore-listed provider of data centre equipment and maintenance services.

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