Disruptive six months put Advtech in the red

By Iain Scott, ITWeb group consulting editor

Johannesburg, 17 Sept 2001

Education, training and placement group Advtech has reported an attributable loss of almost R7 million for the six months to 30 June 2001.

The financial results are worse than expected, even after the group issued a profit warning last month.

Chairman Brian Buckham says the period was marked by several interruptive events.

These included the underperformance of certain acquisitions and "the attentions of several bidding institutions seeking to capitalise on the group`s temporary distress".

The most widely publicised of the potential deals involving the sale of Advtech was the one involving the Calajero Consortium. That deal, which was valued at R300 million, was called off before the due diligence began. Advtech announced later that it was no longer for sale.

Buckham says the subsequent plans to stabilise the shareholder base, strengthen the board, replace and restructure management and focus on restoring operational efficiencies have already had positive effects on operations.

Although turnover increased 23.1% in the education division, the weighted front-end operating costs at certain education institutions and the loss at ieti led to disappointing margins.

The management of the division is focusing on restoring the margins to at least historical levels, he adds.

Commenting on the resourcing division, Buckham says that revenue was affected by the "softening" corporate activity in the IT and staff training areas as well as by "inconsistent focus and attention of vendors responsible for the management of certain resourcing business units".

The group has lodged claims against two vendors relating to what it says are breaches of warranty conditions in acquisition agreements. One of those vendors, the Bryan Hattingh Group, has been sold for R2.5 million.

"Considering the difficulties experienced in the group over the past two years, the decline in profitability in the period under review is considered reasonable in the circumstances," Buckham says.

He adds that although the overall performance is below expectations, the group expects that all business units will show better results in the current six months, thanks to a restructured management and "more recent interventions".