Embattled travel software firm Datalex has taken a significant step in its efforts to have its shares relisted on the stock exchange following a tumultuous year that followed an accounting scandal at the Dublin-based firm.
The company this evening released a flurry of filings including restated first-half accounts for 2018, first-half accounts for 2019, and an update on its outlook for 2019.
Chief executive Sean Corkery said the publication of the financial statements today represents “an important milestone” for the group.
“New internal control and reporting procedures have been implemented and the finance function has been strengthened to prevent a recurrence of accounting irregularities such as occurred in 2018,” he said. “The publication of the financial statements means that the group is now up to date in terms of its financial reporting obligations.”
He added: “The group can now focus more fully on the medium to longer term growth of the business. We are already seeing the benefits of an improved delivery model, with greater focus on execution.”
Mr Corkery said Datalex is pursuing a “pipeline of new opportunities”.
Datalex has been bankrolled by billionaire Dermot Desmond, who was already its single biggest shareholder, in the wake of the accounting revelations that saw the firm plunged into crisis mode. Trading in its shares was suspended earlier this year.
About 100 people lost their jobs at the company as a result of the accounting irregularities that were unearthed. Its then chief executive, Aidan Brogan resigned, as did long-time chairman Paschal Taggart.
The company posted a $50m loss in respect of 2018. Its first-half results for 2019 show it made a loss of $6.9m compared to a restated loss of $33.1m in the first half of 2018. The original accounts for the first half of 2018 had shown the company made a $2m profit in the period.
The company said this evening that it still expects to post adjusted earnings before interest, tax, depreciation and amortisation of between minus $1m and plus $1m for the current financial year, on flat revenues of $45m.
The software company, whose main platform helps customers, primarily airlines, to boost sales of ancillary items to passengers, plans to raise additional equity in order to further bolster its balance sheet.
Mr Desmond has already given Datalex a €10m debt and equity injection, and made an additional €5m available that gave the company cash to keep operating into next year.
Datalex had hoped to have its shares relisted before starting road shows to raise fresh equity. However, last month the company conceded it may pursue a rights issue even if the shares are not relisted in time. But management also admitted that such a process would be “difficult” or “impossible” without the shares being relisted.
The company has also been in talks with the Central Bank as a prerequisite for relisting its shares.
“It is the company’s intention to arrange an equity fundraising in the coming months to raise, net of expenses, sufficient proceeds for the repayment of the increased facility [funding from Mr Desmond] and the funding of the group’s working capital needs,” Datalex noted in its first-half 2019 results today.
It added: “Mr Desmond has informed the company that he will support the equity fundraising and procure the participation of IIU [Mr Desmond’s investment firm] in its pro rata entitlement and will also work with the company to secure underwriting of the equity fundraising.”
One of the biggest drags for Datalex was a contract for Lufthansa, where costs spiralled. Lufthansa has terminated its contract with the Irish firm, a move disputed by Datalex. The pair remain in talks.
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