Riva slips on warning of substantial 1993 losses: Electronics group shocks investors with unenviable 'first'

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The Independent Online
THE first trading warning of 1994 was released yesterday on unsuspecting investors by Riva Group, the supplier of electronic point of sale systems used in shops.

Riva's shares, which have performed dismally since the company floated in 1988, fell 10p to 15p on the news and closed at 18p.

They were floated on the USM at 110p, and have declined steadily since peaking at 140p in early 1989.

Peter Giles, who yesterday replaced David Dace as chairman, said a substantial pre-tax loss for 1993 was likely. Mr Dace remains a non-executive director.

Riva's shares shed 6p to 27p last August when the company reported a sharp swing from profits of pounds 314,000 to losses of pounds 425,000 for the first half of 1993. The result for the whole of 1993 will almost certainly be struck after write-offs on European subsidiaries. 'We don't know the size of the loss. And it will be months before we have a clear figure,' Mr Giles said.

One company observer said the loss could match the pounds 2m trading deficit in 1991. That would significantly dent already depleted shareholders' funds of about pounds 3.5m.

The trading warning comes two days after Riva renegotiated lending facilities with Lloyds and a syndicate of four banks headed by Co- Op. Net debt was last stated at pounds 7m.

Riva said trading had been hit by the recession on the Continent, particularly in Spain. Operations in the UK had maintained their profitability.

Despite the setback, Mr Giles remains confident about Riva's potential: 'I think this is still a good long-term business, but some operational and financial issues have to be resolved.'

He does not envisage that the problems will be solved by a radical change of the group's make-up.

Disposals, he said, were unlikely because Riva wanted to retain its European distribution network, stretching from Scandinavia to the Mediterranean and taking in operations in Denmark, Belgium, Holland, France, Switzerland and Spain.

Mr Giles also thinks the way forward can be achieved without significant job cuts.

Riva employs 800, almost equally split between operations in the UK and Continental Europe.