Idion returns to profitability

Idion Technology Holdings has fulfilled its promises of achieving a return to headline profitability in the year to 31 December.

Group CEO Nicolaas Vlok says this is in line with the forecast made at the time of the hostile takeover attempt by Canada`s DataMirror Corporation last year.

US-based Vision Solutions, the group`s only operating asset following the sale of SA-based Idion Solutions to CS Holdings, saw a marked improvement as evidenced by strong revenue and cash generation after the company added another 291 customers to the 1 800-strong base.

Vlok says Vision has been taking market share from its competitors. A significant focus on cost containment also helped achieve profitability during the period.

He says this was achieved against the backdrop of the sale of Idion Solutions, with net assets of R13.4 million, for R6.7 million. The closure also incurred discontinuance costs of R5.3 million, made up mainly of severance packages.

Financial director Willem Richard says that under the circumstances and the hardships suffered by the company, the Idion Solutions sale was a good deal for shareholders.

The holding company now has only six staff at its Sunninghill head office. The building is shared with the United Nations and an IT training company.

The group also lost almost R4.5 million in costs related to fending off the DataMirror bid.

Vlok says Vision achieved revenue growth from all sources of its business. Licence revenue in Europe, the Middle East and Africa, and Asia-Pacific was particularly strong. North American licence revenue was soft, in line with market conditions and expectations.

Maintenance and services revenue grew strongly in all three geographical areas.

The revenue performance was helped by the enhancement of the distribution channel, with a number of channel programmes and initiatives launched during the period.

Vision chief financial officer Tim Keithahn says the company would like to see annuity streams accounting for 50% of its revenue, and it is on track to achieving that.

The company has made a transition to a solutions-oriented business that becomes involved with its customers, not simply a products company, he says.

Research and development has been maintained at 20% of revenue, and this has helped the development of Orion, the group`s multi-platform managed availability solution.

Vision president and chief operating officer Alan Arnold says the new solution will be rolled out in a controlled fashion this year. Consisting of several components, Orion operates across multiple platforms and databases, with just a single navigation screen. "It`s not a matter of Orion or die, but it is a differentiator," Arnold says.

Keithahn says the group is approaching 2003 conservatively. The economic outlook remains challenging although the long-term outlook appears positive in Vision`s market.

Vision will remain focused on profitability and cash flow as well as gaining market share from competitors.

It does expect to generate positive cash flows from operations and to be profitable on a full-year basis in its current financial year.

The group has also announced the retirement of non-executive chairman Phillip MacDonald with effect from the end of this month. He is to be replaced by current non-executive director Dave de Beer.