Dermot Desmond ups support for Datalex as Covid-19 crisis bites
Company says it is in advanced discussions with Central Bank and Euronext over resuming share trading.
Datalex’s chief executive, Sean Corkery, says they are “well placed to benefit from a recovery in travel and with our new strategic plan already in motion, we are ready for a return to consistent growth and profitability”.
Datalex, the travel retail software provider to airlines, said on Tuesday that its main shareholder, Dermot Desmond, has eased terms on $12.4 million (€11 million) of loans and committed to providing a further lifeline, if needed, to deal with the fallout from the Covid-19 crisis.
The Dublin-listed company revealed details of the support from Mr Desmond in its delayed 2019 annual report that posted a net loss of $12.1 million for the year, down from a shortfall of $47.2 million for the previous year.
The result for the previous year had been hit by large impairment charges, after the business was the subject of an accounting scandal. Still, it swung into $500,000 of adjusted earnings before interest, tax, depreciation and amortisation (Ebitda), compared to a loss of $1.9 million loss for 2018.
As Datalex’s previous auditors EY had refused to sign off on Datalex’s 2018 report, its new auditors, Deloitte, were not able to express an opening opinion on the company’s opening financial position.
Deloitte said it had “nothing to report” under a number of headlines in the report represents “a very significant improvement on the prior year”, Datalex said.
Mr Desmond’s granting of a 12-month repayment extension and the waiving of covenants attached to existing debt that was due to be repaid in November have allowed the directors of Datalex to prepare the accounts on a going-concern basis.
In addition, he has given a commitment to provide up to a further €10 million of funding to the group, if needed, through his Tireragh vehicle.
Datalex, whose shares were suspended from trading in May last year after it missed a deadline to file 2018 results, said on Tuesday it is in “advanced discussions” with the Central Bank and Euronext Dublin, the stock exchange, regarding the resumption of trading.
Datalex reiterated that it plans to raise equity to repay loans from Tireragh and fund working capital needs in 2021 and beyond.
“The group continues to operate in a very competitive environment and Covid-19 has brought unprecedented challenges to the aviation industry,” Datalex said.
“Covid-19 has had a significant adverse impact on the aviation industry to date and there remains uncertainty as to when the industry will recover from it.”
Datalex estimates its transaction volumes fell to 15 per cent of 2019 levels in the second quarter, but forecasts that this will improve to 60 per cent in the final quarter of the year and remain at this level for the first half of 2021.
It sees services revenue from projects for airline customers just after they go live falling 33 per cent for 2020 as a whole.
Group chief executive Sean Corkery said: “Notwithstanding the effects of Covid-19, we are well placed to benefit from a recovery in travel and with our new strategic plan already in motion, we are ready for a return to consistent growth and profitability.”
Datalex cut more than 100 jobs last year to end December at a cost of $2.57 million in severance payments. Its use of contractors and consultants is understood to have fallen by a similar level.
German airline Lufthansa last year cancelled a key contract for Datalex to overhaul its e-commerce offering. Much of the company’s 2018 accounting issues related to its premature booking of service revenue on the project, agreed in 2016, but which had gone over budget and missed key deadlines.
Datalex reiterated in its latest report that it strongly disputes Lufthansa’s termination of the contract and is currently involved in an arbitration process. But it has taken a 100 per cent provision against the $2.9 million of invoiced balances due by Lufthansa.