Datalex, the Irish travel software group in which businessmen Mr Dermot Desmond and Mr Paschal Taggart have a stake, is in dispute with one of its customers over sales worth $1.6 million (€1.3 million).
In a note accompanying its results for the first six months of the year, published yesterday, the company said that a customer with a five-year contract had told Datalex that it would stop paying the company. The note indicates that the dispute relates to Datalex's performance obligations.
"Turnover for the six months to June 30th 2004 includes $1.2 million of billings issued under this contract in the period as the board is satisfied that the group has met and continues to meet its performance obligations under the contract," the note says.
The figure of $1.2 million comes to almost 8 per cent of its sales for the first half of the year.
"At June 30th 2004 the group was owed circa $1.6 million by the customer and future revenue to be recognised under the contract in the period to October 2006 amounts to $3.5 million."
Datalex adds that the board has begun arbitration proceedings to recover all the amounts due, while the other party has filed a response and counterclaim with the arbitrators.
The company states that the arbitration is due to begin shortly and says the board is confident of a successful outcome.
Datalex cut its losses by almost 90 per cent in the first six months of the year, according to the figures it released yesterday.
The company reported that revenues for the six months ended on June 30th grew by 7.5 per cent to $15.4 million (€12.7 million) from $14.5 million in the same period in 2003.
A $3.5 million fall in operating expenses, from $9.9 million in 2003 to $6.4 million this year, helped cut its 2004 interim operating losses to $617,000 from $5.8 million at the half-year stage in 2003.
Interest income helped cut its pre-tax losses for the period to $412,000, compared with $5.6 million last year. Losses per share for the first six months of the year dropped to 1 cent from 8 cent in 2003.
Datalex's net cash outflow from operations during the period was $953,000, compared with $2.7 million in the first half of 2003. Shareholders' funds dipped to $38.2 million from $43.5 million at the beginning of the year. This was due to a $51,000 loss on foreign currency translation and an overall decrease in cash of over $972,000.
Mr Gerry Hennigan, analyst with the company's stockbroker, Goodbody, said the results were marginally below its expectations. However, he suggested that the outlook indicated that Datalex would break even at an adjusted earnings per share level by the end of the second half.
The company is listed on the Irish Stock Exchange and has its headquarters in Dublin. One of its largest shareholders includes Mr Desmond's vehicle, Bottin Investments, which has a 13 per cent stake.
Mr Taggart, who is current chairman of the State greyhound racing body, Bórd na gConn, holds 0.24 per cent of the company, while members of his family also have a small holding in the business. Its shares added 3 cents to close at €1.18 yesterday.
