Intellect future under a cloud.
The future of former stock market darling, Intellect Holdings Ltd, appears under a cloud after it posted a $5.1 million net loss for the half year and received a ‘please explain’ notice from the Australian Securities Exchange over its negative cash flows.
While the company has worked towards cutting costs and improving its margins, sales revenues almost halved from the previous corresponding period as the company halted working capital spending and manufacturers refused to finance orders.
According to its half-year report, sales revenues to December 31 2007 were $5.3 million, with European market providing the majority of these sales, compared with $10.4 previous corresponding period.
But margins were higher at 49 per cent compared with 35 per cent reported in the previous corresponding period.
In a statement to the ASX, the company said it was pursuing a number of cost-cutting measures to reduce expenditure, and was eyeing prospective revenue generating opportunities after registering negative cash flows of $5.5 million for the half year.
With financing facilities of $22 million, all of which has been drawn, Intellect says it has the continued support of its financiers and is currently in negotiations for an additional loan facility.
A proposed merger between the European-based Intellect International terminal operations and New Zealand-based CADMUS Technology Ltd is reportedly still on the cards, but has been delayed while CADMUS undergoes its own restructuring.
Similarities have been drawn between the Technology Park-based point-of-sale technology developer and another Perth-based technology developer, ERG.
While developing different products – ERG is focused on multi-application smart card systems – both companies were seen as breakthrough technology companies but have since failed to deliver on their promises.
Former ERG boss Peter Fogarty’s Pendulum Capital, which has acted as adviser to Intellect, remains a major shareholder in Intellect.