IT solution company Sevak, which has been on the Singapore Exchange's (SGX) watch list since  March 4, 2015, has seen a 32.9 per cent drop in net profit for the fourth quarter ending Dec 31, 2018 to S$280,000 from the year-ago period's S$417,000. Earnings per share (EPS) was at 2.28 Singapore cents for the quarter, down from 3.13 cents the year before.

For fiscal 2018, the company saw a full-year net profit of S$3.7 million, up from S$772,000 the year before. EPS for the year was at 30.66 Singapore cents, down from 5.77 cents the year before.

The group recorded a 14.7 per cent decrease in turnover to S$69.8 million during the fourth quarter, compared with S$81.8 million the previous year. For the financial year 2018, Sevak declined 19.5 per cent in turnover to S$281.1 million, from S$349.2 million the year before.

There was a 20.5 per cent decline in distribution of operator products and services in Indonesia during the fourth quarter to S$53.6 million, from S$67.4 million the year before. This also fell 22 per cent for the financial year ending Dec 31, 2018 to S$225.7 million from S$289.1 million the year before.

The company said that as anticipated with intense competition, all telecom operators in Indonesia had been resorting to competitive pricing to increase customers. This comes as the voice business continues to shrink and a shift towards data driven strategy is being implemented. "The group continues to be diligent and is working with the operators to align with this strategy," Sevak added.

For the fourth quarter, Sevak also recorded a 20.1 per cent increase in revenue for its ICT distribution and managed services business to S$12.8 million, from S$10.6 million the year before. For the financial year 2018, the group saw a 10.2 per cent dip to S$41.3 million, from S$46.1 million the year before.

To retain and grow margins, the subsidiaries engaged in this business have also been focusing more on services-led business. The statement also added that the weakening of the rupiah and the rupee against Singapore dollar also resulted in "visibly higher reduction in revenue" over corresponding periods.

Moving forward, the group will continue to focus on a multi-brand, MNC mobile retail business through its own retail shops in Indonesia. This looks to aid in its distribution of operator products and services businesses.

On outlook, the group said it "continues to face challenges" at the Indonesia operator business on the revenue side due to a change in business mix from voice to data. However, it is keeping its focus on operator-driven plans at the cluster levels as required by the operators and their strategic plans.

Gross margins remains under pressure in its Indonesia business, as the voice business continues to shrink and a shift towards data driven strategy is being implemented.

It added that its ICT distribution and managed business is a highly public sector-oriented business for the Cavu group, which is now moving towards commercial and SME enterprise with new products to gain gross margin as margins continue to be under pressure. This sees Cavu continuing to move towards new services based offerings such as cloud, IOT (Internet of Things) and server consolidation.

For its battery electric fleet (BEV) business, the group said it had aligned with a particular ride-hailing app company. Thus, the recent merger/acquisition of two large ride-hailing app companies created a disruption in the market and the group's EV (electric vehicle) fleet business was affected as a result.

"The transition still has its challenges and this has created hurdles for the company in achieving its pre set goals," the statement added.

Earlier this month, Sevak's controlling shareholder Smart Co Holding expressed intentions to make a partial offer for the shares of the company directly or through its concert parties, which will result in Smart Co Holding and its concert parties holding about 51 per cent of the shares of Sevak.

In a separate SGX filing, Sevak said it was notified by Smart Co Holding of its intention, with the latter emphasising there is no assurance any transaction will eventually materialise, and no definitive or binding agreements have been reached in relation to the possible transaction.