Spain has cost Riva Group Plc a lot of money over the last few years, but chairman Peter Giles is now happy with the way things are going and is prepared to stick with it. Spain, along with France and Denmark, was seen as a lucrative distribution channel, and while the last two have reduced their losses again, Spain was something of a black hole for Riva. The Westhoughton, Lancashire electronic point of sale systems manufacturer returned to the black – just – with pre-tax profits to June 30 of ú58,000, against ú629,000 losses last time. Turnover rose a more healthy 28% to ú34.7m. Over the years the company stacked up hefty Value Added Tax and Pay As You Earn – where the employer pays the employee net and passes the tax due straight to the government – arrear s, which is guaranteed to put local tax authorities’ backs up and threaten the company’s presence in the country. It is perhaps a measure of Giles’s faith in the Spanish market that the company negotiated with the Madrid and Basque governments to spread the overdue repayments over a number of years, and the Spanish operations are now self-financing. Sorting out Spain and maintaining the current level of progress were Giles’s two pre-requisites for a continued improvement at the full-year stage. At home in the profitable UK, things fared better in the half, with Riva Systems completing its installations at British Telecommunications Plc and British Gas Plc, as well as taking new orders with its Windows-based software. Riva Electronics improved its profits with its personal computer-based tills, 5480 and 54KB. The effect of Riva’s re-financing at the start of the year is very apparent. Gearing is some 207%, still extremely high for the nature of the business, but down from an astronomical figure of more than 600% a year ago. Cash balances stood at ú2.4m at the half-way stage. Riva has whittled its banks in the UK down to one, the Co-Operative Bank, having taken Lloyds Bank out of the loop, as Giles put it. The other continental markets, Belgium, Switzerland and the Netherlands were profitable, according to the company. Riva will pay no dividend this time.
