Alphyra shares fell 36 per cent to a 2002 low of €1.40 as the market reacted negatively to its latest results, which included large write-offs, operating losses on continuing operations and disappointing growth in Britain.
The electronic transactions services and pay phone company, formerly known as ITG, reported a loss before tax of €31.5 million (£24.8 million) for the eight months to end-December compared with a profit of €479,000 for the previous 12-month period. The loss per share jumped to €1.06 from 5.7 cents.
These results include a goodwill writedown of €10.1 million on the payphone business, which the company said was considered prudent because of difficult trading conditions since September 11th and a loss of €13 million on the sale of its telecommunications and computers businesses.
These businesses were sold for €12 million as Alphyra refocused on its core transactions business.
Stripping out these once-off items, the group's consolidated profit and loss account showed an operating loss before goodwill of €4.4 million for the eight-month period compared with a profit of €2.4 million for the 12 months to end-April 2001.
This result includes the telecommunications and computers businesses since sold, which accounted for €20.5 million of the €55.5 million group turnover and contributed profits of €176,000 over the period.
Results from continuing operations show a loss of €4.55 million on turnover of €31.9 million, because of continued investment in the developing French and German operations. Operating results improved at the core Irish and British transactions operations.
Chief executive Mr John Nagle said he was "shocked at the ferocity of the market reaction" when the Irish and UK transactions businesses were performing well.
The market had overreacted to "the €25 million hit which was taken to put the company in a position to go forward as a profitable transactions business", he said.
"The reality is that we will make annual profits in Ireland of €3 million over the next two to three years, €3 million in the UK this year and €3 to €10 million in Germany and France over the next two years", he maintained.
Admitting growth last year in the UK was slower to take off than he had expected, he expressed confidence that growth would move strongly this year. "The infrastructure is in place, the investment is done, we just have to wait for the operators to penetrate the market," he said.
In summary financial information produced with the results, Alphyra reported a profit before interest, tax, depreciation and amortisation (EBIDTA) of €400,000 for the eight-month period, down from €7.5 million for the 12 months to end-April 2001. The fall was attributed to "the significant downturn" in the telecommunications and computers businesses with reported EBIDTA for the voice and data division of €1.6 million, down from €7.1 million on turnover which dropped to €28.2 million from €64.4 million. The sold businesses were part of the voice and data division, of which only the payphone business has been retained.
At the other division - the core electronics transactions operation - continuing investment in France and Germany led to a loss before EBIDTA of €1.1 million from a previous profit of €300,000. Within this division, the European operation reported a rising loss to €4.8 million from €1.6 million.
The positive news was good growth in EBIDTA at the Irish operation, up to €3.1 million for the eight months against €2.4 million for the preceeding 12 months. And the UK transactions business turned EBITDA positive with earnings of €500,000 from a previous loss of €400,000.
The company accepted the UK business had been slow to "gain traction" because of consumer resistance but said it expected growth rates to pick up this year.
Alphyra, which raised €36 million in a placing last August at €5 per share, has net cash of €30.6 million at the end of December, which Mr Nagle said would be used to invest further in the French and German businesses.
