By a Special Correspondent
Higher revenue, no dividend, a first time profit and drastically reduced losses characterise the financial statements published by Datatrak Holdings plc on Monday through a company announcement on the Malta Stock Exchange.
Covering the year ending 31 December 2005, the board of directors decided not to declare a dividend. The consolidated income statement shows that Datratrak Holdings plc generated revenue of Lm1.4 million against the Lm1.2 registered in 2004. This represents an increase of 17 per cent.
Losses for the year were Lm8,000, a drastic reduction from the previous year’s loss of Lm359,000. The review mentions that costs decreased by 3 per cent and after the registration of a tax income, the profit for the year stood at Lm3,000 against a loss of Lm241,000 registered in the previous year.
It is the first time that the group made a profit since its inception. However, the improvement also includes a number of one time restructuring costs which will not be repeated in 2006.
The loss per share in 2004 was 1c5 and this year’s loss is 5m on basic shares and 3m on diluted shares.
The preliminary statement of operations also includes the consolidated condensed balance sheet which shows that total assets stand at Lm4.9 million, just around Lm100,000 or 2.1 per cent less than the 2004 figure.
Total equity attributable to the shareholders of the parent company has decreased but when one includes the minority interest of Lm110,000, total equity neared Lm3.3 million. This represents a higher amount than the Lm3.2 million registered in 2004. Analysing the liabilities one notes that these are also decreasing.
The simple format condensed cash flow shows that more cash was generated from operating and financing activities but more was used for investing activities. Therefore cash increased in 2005, reducing the negative cash flow position compared to the previous year.
The announcement also includes an explanation of the equity of the holders of the parent company which also includes an explanation of Datatrak’s disposal of subsidiary undertakings which left it a positive figure of Lm20,000 and settled equity transactions for another positive Lm20,000.
Within the same statement there is an explanation of the movement of minority interest equity, which shows that this entity contributed Lm77,000 as profit to the group and also disposed of subsidiary undertakings for a positive figure of Lm18,000. The subsidiary increased share capital and paid a dividend. The minority interest and the parent’s equity figures point towards an increase in total equity.
The company announcement other than including two pages of figures also includes another two pages of written text that assist any analyst to understand the financial results.
Under a heading of other explanatory notes, there is an explanation on the adoption of financial reporting standards. The notes explain that there was a change in the accounting policy on goodwill. Whereas up to 2004, Datratrak was amortising goodwill over 20 years, for the reported financial year 2005, an impairments test for goodwill was carried out. In line with IAS38 (as revised) the Group reassessed the useful life of the other intangible asset and no adjustment resulted from the reassessment. The changes in the accounting policy were made in accordance with the transitory provisions of the respective standards.
IFRSs require management to make judgements, estimates and assumptions that would effect the application of policies and reported amounts of the assets, liabilities, income and expenses. Assumptions are based on various reasonable factors which are not apparent from other sources and actual results may differ from these estimates.
The Board believes that the going concern basis is appropriate since in their opinion, the profits and cash flow expected from the successful outcome of the projects are sufficient to meet present and future commitments. Moreover, in the company announcement there is a statement on a post balance sheet event wherein Datatrak MENA, a subsidiary of Datatrak Holdings plc, has successfully closed an in-country survey in Africa with Siemens and before the end of the financial year was paid for its services.
Moreover, currently Datatrak Mena is negotiating with the client on the supply and licence agreement for the provision of the Datatrak network in a number of regions of an African client.
The company announcement concluded with an extract of the independent auditors’ report. Although the Auditors state that they do not qualify their opinion, they draw the attention of the shareholders, to whom they report, to take note on the appropriateness of the going concern basis of the company which is dependent on the successful outcome of projects referred to and the basis of recognition and measurement of non-current assets.
Currently, Datratrak is trading at a price of 30cents which is 1.45 times the book value and each share has a net asset value of 20c7.