South African information technology company Intervid extended its losses in the year to June 30, with a headline loss per share of 123,5c from a loss of 44,8c a year ago. No dividend was declared.
Intervid operates in the UK, USA, Africa, Australia and the Middle East as a provider of integrated solutions in the electronic security and business process monitoring industry.
Revenue increased by 216% to R454,8-million largely due to an acquisition in the UK, effected late in the financial year before and regional expansion in Africa, North America, the Middle East and Australia.
The vast majority of turnover continues to be generated from outside of South Africa.
Commenting on the results, CEO Mark Taylor said: “It has been a tough year for Intervid as we have not only effected necessary internal changes, but are also positioned within an industry undergoing significant change. The operating losses are largely as a result of a substantial overhead burden, which we have started to address.
“In the past few months, numerous steps have been taken in all regions to reduce overhead levels. The Group has been restructured into two clearly defined businesses with a decentralised management model, devolving operational authority and accountability upon the operating units and rationalising resources at the centre.”
“Although we are not happy with these results, we believe a positive cash balance, together with strong institutional support from VenFin and our restructuring programme, will put us in a solid position going forward.
“In the forthcoming year, we will focus strongly on cash preservation. Each operating unit within the Group will be monitored on an individual basis to ensure that its cash position is tracking according to budget,” Taylor added.
The company said turnover in the two major markets — the United Kingdom and Africa — increased five-fold to R262-million and doubled to R132-million respectively, as it began to establish a firm market presence.
However, despite the increase in turnover, the operating loss before exchange gains, depreciation, amortisation, impairments, interest and taxation increased from a loss of R89,2-million to a loss of R107,2-million.
This was primarily due to a significant overhead burden resulting from increased globalisation of the group.
During the year, the original European head office in Duns, Scotland, was closed as part of a rationalisation process. The management of ID Technology Group now has responsibility for the UK region.
This rationalisation has reduced materially the overheads in this region and, with a new management team at ID Technology, significant operating improvements have started to take effect towards the end of the financial year, the company said.
Operating losses in North America grew as the initial regional expansion was completed. This expansion saw expenses being incurred as staff was employed and infrastructure developed.
Sales only began to flow once the necessary training of employees had taken place. By the year end a stronger sales pipeline of proposals and orders existed.
The African operations had a strong year, with turnover improving from R60,3-million to R132,3-million and the net loss reducing from R20,5-million to R5,8-million.
Foreign exchange gains of R24,8-million were realised during the year, largely due to the restatement of euro-denominated investments in Intervid International to its measurement currency of US dollars.
Looking ahead, Taylor said: “The next year will continue to be challenging and we anticipate a further loss in 2004, although this should be less than the loss incurred in the current year as the restructuring benefits initiated late in the financial year under review will start to flow through.
This restructuring, increasing crime and terrorism and a growth in corporate outsourcing of electronic security and business process monitoring needs, will position Intervid for long-term sustainable growth.”
Intervid said negotiations with its principal loan creditor RFS Holdings regarding the possible restructure of the terms and conditions of the compulsorily convertible loan advanced to Intervid International are ongoing. — I-Net Bridge