EDS posts $2m loss after better results

11.00am - by ADAM GIFFORD

IT services company EDS New Zealand has reported a $2 million loss on revenue of $349 million for the year to December 31 last year.

The company made a pre-tax profit of $497,000, which managing director Robert Gray called "the best result for a number of years".

Operating profit of $30 million was swallowed up by $15.2 million in goodwill and royalty payments and $14.3 million in interest payments to its parent, global IT giant Electronic Data Services.

The company paid just under $2.5 million in tax.

Gray said the result was hit by the receivership of state-owned mapping company Terralink, which EDS was subcontracting to do work imaging land records for the $150 million Landonline system.

"We had to take up responsibility for Terralink's work, which meant we had to recruit people and work fell behind," Gray said. He said EDS was no longer incurring penalty payments on that contract.

In 2000 EDS made a $3.4 million pre-tax loss on revenue of $405 million. Gray said the $56 million drop in revenue was not significant, because the 2000 result was affected by large one-off transactions, which he refused to specify.

That was the year Telecom New Zealand bought a 10 per cent stake in EDS as part of the deal surrounding its IT outsourcing contract.

"The important thing about these results is we are an IT services company, and services revenue grew 8.6 per cent in 2001," he said. "We did that in a very flat economy."

Gray refused to answer questions on the detail of the accounts. He said EDS worldwide has a policy of not reporting results by country, and the only reason the New Zealand results emerged was because of company law here.

Those accounts show payments to the parent organisation can keep EDS from showing big profits here.

During the year it incurred a $10.5 million royalty charge from another EDS group company. Some $4.6 million in goodwill was written off, dating back to the 1994 acquisitions by EDS of Databank and GCS (Government Computer Service).

Cash for operational requirements and capital spending comes from EDS Finance loans.

During the year EDS New Zealand's debt increased from $206.6 million to $242.9 million, leading to higher interest repayments.

Fixed assets stand at $157 million, including $79 million in plant and equipment and $53 million in software. Direct remuneration or payments to staff totalled $147 million, up $14 million on 2000.

NZ Companies Office