Share plunge wipes €112m off Datalex as it warns of loss
Travel software firm says H1 sales and profits may be 'misstated', but company insists business remains strong
Datalex has declined to say if CEO Aidan Brogan continues to have the support of its board and shareholders after the group's shares collapsed yesterday, as it revealed it "may have" misstated its 2018 first-half revenue and profits.
Shares in the Dublin-based travel-software group plunged as much as 63pc.
Ultimately, €112m was wiped off its market capitalisation. The market cap had stood at €190m at the close of trading on Monday.
Shares in Datalex had closed at €2.44 on Monday and hit as low as 90 cent yesterday before closing at €1.
Davy Stockbrokers had expected Datalex to deliver adjusted earnings before interest, tax, depreciation and amortisation (ebitda) for 2018 of $16.2m (€14.1m).
That compared to $14.2m Dalalex generated in 2017.
Datalex said it now expects to report negative adjusted ebitda for 2018 of between -$1m and -$4m.
Those nursing paper losses in the aftermath of yesterday's rout include billionaire financier Dermot Desmond.
Mr Desmond owns a 26.8pc stake in the company via his IIU investment vehicle.
That holding was worth €51m on Monday evening, but had slumped to as low as €18.8m during yesterday's carnage.
Businessman Paschal Taggart, Datalex's chairman, owns 3.2pc of the firm.
The value of his stake fell from €6m to as little as €2.2m.
The software company's products are used by airlines around the world to help generate additional revenue streams from passengers.
The company said that the retreat to negative ebitda for 2018 is "principally due" to a shortfall in services revenue caused a "failure by year-end to recover costs incurred in the delivery of the services revenue component of a significant customer deployment".
It said this failure was because customer negotiations regarding the recovery of the revenue shortfall have not concluded, but are ongoing.
"The board now considers, arising from the preparation of its full-year results for 2018, that the group's revenue, adjusted ebitda and profit for the half-year ended 30 June 2018 may have been misstated principally due to the accelerated recognition of revenue associated with the significant customer deployment," it told shocked shareholders.
It insisted the business remains strong.
Asked by the Irish Independent if Mr Brogan retained the board's support, the company declined to comment.
Datalex has enlisted a "leading accountancy firm", believed to be PWC, to undertake an independent review of the issue.
Mr Brogan said Datalex would post a profit in 2019, but said in a statement that yesterday's announcement was "extremely disappointing for me personally, for the team at Datalex and for our supportive shareholders".