The Riva Group Plc has announced results for the six months to December 31 and reported a disappointing loss of UKP697,000 on turnover of UKP21.0m. The six month period is not comparable to the same period last year since Riva changed its financial year from June to December to bring it in line with its UKP4.06m Hugin Sweda acquisition (CI No 1,263). Of the UKP21.0m, Hugin Sweda contributed UKP14.5m in two months, but a review of the Hugin Sweda business resulted in the sale of Canadian, Mexican, and Venezuelan operations for UKP4.9m (CI No 1,339). Riva says that this has enabled the group to contain borrowings to anticipated limits and it is now operating within its banking facilities. Overheads were also reduced by the closure of UK and Swedish head offices, and a substantial number of redundancies. However, Riva acknowledges that that the reduction in Hugin Sweda’s asset values and provisions for closure costs were higher than anticipated, and the company has provided UKP7.6m for the reduced values in considering the fair value of Hugin Sweda at the time of acquisition. Riva says that it is now taking legal advice on this situation. An additional UKP6.2m was provided for restructuring and rationalisation of Hugin Sweda, and this has been written off to reserves. Riva says that the costs of rationalisation have now been provided for, and is confident that the group will be in profit by the end of 1990. Riva says that demand in retail systems has remained fairly strong, and since the Hugin Sweda acquisition, now operates in nine European countries. The company claims that the general merchandise marketplace has different characteristics in the UK from the rest of Europe, and it has altered it traditional strategy of targeting national high-street chains to smaller regional groups. Riva is looking for the launch European-wide of its Custom Till will generate significant revenues in 1991. Hugin Sweda was involved in the food retailing sector, and it has remained stable over the past two months. Riva says that many traditional customers are reviewing their existing systems, and it hopes to capitalise on the demand for updates and new products. However, the hotel and restaurant market in Europe is highly fragmented, and the localised nature of the industry requires highly specific products. But Riva says that the UK wholesale sector continues to be successful, especially cash and carry companies, and the company hopes to offer these systems in the rest of Europe. Maintenance now represents around 50% of revenue, and 70% of this is on an annual recurring basis. The Hugin Sweda acquisition, has obviously been more fraught than Riva expected, but it has provided the group with a worldwide distribution network, and Riva describes the outlook for electronic point of sale systems as encouraging.
