The Idion Technology Holdings share price dipped 3c or 7.89% in morning trade on the JSE today after the group reported a headline loss of 31.8c a share for the year to 31 December 2001.
While total revenue for the period increased 11.7%, revenue from licences (the biggest revenue contributor) dropped 7.69%, which the group attributes mainly to delays in IT spending, influenced by the 11 September terrorist attacks in the US.
<B>Salient figures</B>
Idion Technology Holdings results for the year to 31 December 2001
Pro-forma figures for the previous year in parentheses:
Revenue: R249.79m (R223.41m)
Cost of sales: R67.3m (R34.44m)
Operating profit before interest: -R62.36m (R5.03m)
Operating profit: -R50.3m (R7.75m)
Impairment of goodwill: R192.99m (--)
Net profit: -R306.82m (-R105.61m)
HEPS: -31.8c (4.5c)
Current assets: R154.96m (R151.07m)
Current liabilities: R179.32m (93.69m)
NTAV per share: 19.8c (36.8c)
Cash generated by operations: R16.17m (-R10.95m)
The Americas contributed 61.3% of total revenue during the year.
Maintenance revenues rose 71%, while services revenues fell 17%, mainly as a result of weaker service sales within the South African operation.
Excluding currency differentials, revenue decreased by 8% to R205.4 million, while the headline loss would be 27.9c a share.
US subsidiary Vision Solutions, which had seen an improvement in the second and third quarters of last year, is a seasonal business, which usually sees increased sales in the fourth quarter.
However, Idion CEO Nicolaas Vlok says that with poor economic conditions and the aftermath of 11 September, the company`s market delayed buying decisions and postponed capital expenditure.
The group`s income statement records a figure of R193 million relating to impairment of goodwill.
Group financial director Willem Richard says that with the prolonged decline in market conditions in the technology industry, the board decided to assess the carrying value of goodwill. The impairment figure was decided on after an independent valuation.
Ken Jarvis, CEO of the group`s South African arm, Idion Solutions, says the local operations experienced a very disappointing period, experiencing weak sales and delayed deals in the second half.
The local operation has been reorganised, its staff have been reskilled, and several new initiatives have been launched.
The thorny issue of project management difficulties has also been resolved, he adds. The appointment of key management staff has been completed and the alignment with Microsoft`s .Net has begun paying dividends.
Jarvis says he is also pleased with the value-added partnerships the operation has forged.
Vision Solutions CFO Tim Keithahn says that despite the fact that the US company`s sales force was frozen for two or three weeks after the terrorists attacks, in a period which usually sees a marked increase in revenue, the fourth quarter was profitable.
Both Keithahn and Jarvis say they are focused on a return to profitability for the year, and add that they have implemented cost-savings measures.
Costs have been trimmed across the group, with cost containment to remain a key focus during the year. Richard says there has been a small number of staff cuts.
Vlok says the results are better than the market expected, as the consensus forecast was for a 33c loss per share and no cash. Cash increased to R43.4 million from a previous R29.6 million.
He says annuity-based income has risen 71% to R88.7 million, and for the first time debtors` days have fallen to below 100.
Idion has made good progress in its business and has laid a solid foundation for the future, he adds.
The board is taking a conservative approach for the future. Vlok says the group is not assuming a rapid economic recovery and is expecting a loss at the half year, due to the business`s seasonality, with cash utilisation in operations expected to be lower.
Demand for the group`s solutions remains promising and he says Idion is well positioned for long-term profitability and growth.
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