Vega takes drastic measures to stem its losses
Article Date: Feb 13 2001IT consultancy group Vega has taken the dramatic action of scrapping its 2.33p interim dividend just six days prior to payment in a bid to reduce losses for the full year. Elliott Davis reports.
In its interim statement the group blamed pre-tax loss of £1.33 million (£1.93 million profit) on a slow-down in the defence sector but with a £1.3 million deal signed with the European Space Agency the board had predicted a significant second half recovery. Today's news that the 2.33p divided has been dumped to conserve cash reserves, however, comes with the acknowledgement that Vega now expects 'a significant loss for the current financial year'.
Chairman Andy Roberts admits that 'continued slippage' in contracts and a failure to secure shorter-term orders is to blame for Vega's problems acknowledging that he expects the slippage to continue into the next financial year.
Today's statement also disclosed the resignations of both chief executive Roger Gilbert and operations director Paul Martin. Roberts, who will now take over the day-to-day running of the group, notes 'they did a good job on the order book but a bloody awful job on profits' with regard to his outgoing colleagues.
Despite its current problems, the long-term future looks brighter for Vega. House broker Beeson Gregory predicts a return to profits in 2002 and the company's order book continues to grow - currently standing at a record £40.4 million.
Investors took the opportunity to punish Vega today, with shares crashing by over 50 per cent at one stage. They recovered slightly to rest at 225p.
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