Investments dampen Idion interims

By Iain Scott for Idion Technology Holdings
Johannesburg, 24 Aug 2005

Idion Technology Holdings has turned in interim results dampened by spending on investment initiatives CEO Nicolaas Vlok says will improve the group`s long-term growth prospects.

Idion`s sole operating subsidiary is US-headquartered Vision Solutions, which operates in the high availability software market for the IBM eServer.

Revenue rose 2% to $14.39 million in the six months to end-June, from $14.15 million for the same period a year before, while the group incurred a net loss of $1.11 million (2004: $0.84 million loss).

A headline loss of 1 US cent per share compares with previous headline earnings per share of 0.2c US.

"The first half is typically our slower half," says Vlok. "The major difference from the past three years is that this year the board approved an investment plan, which has been implemented and is well on track."

He says the investment initiatives, which relate to sales and marketing and new products, form part of the group`s multiyear growth strategy.

Vlok says the $1.1 million loss is in line with the group`s plan for its investment phase, but some of the investments are expected to yield positive results in the second half.

"We expect a growth year this year," he adds, noting that with the launch of its Orion for AIX, this is the first time Idion is going to market with a complete suite of products.

The results include a three-month contribution from UK-based OS Solutions, which was acquired for $2.6 million with effect from 1 April. Vlok says OS is expected to contribute meaningfully - 5% or more - to revenue in future years.

CFO Tim Keithahn says the balance sheet remains strong, despite the acquisition of OS Solutions. The group still had cash of $8.8 million at the end of the period, compared with $10.21 million a year before, and the balance sheet reflects almost zero third-party debt.

The group`s current ratio (current assets to current liabilities) narrowed from 1.21 to 1.01, but Keithahn says this is mainly because of an $837 000 provision relating to the OS Solutions deal. As this is paid over time, the ratio should normalise, he adds.

The Idion share price was unchanged at 155c late this morning.