The IE Domain Registry, which has been rocked by controversy surrounding its financial affairs and the resignation last week of its chief executive Mike Fagan, has for the first time in two years revealed its financial results, showing an operating loss of €1.2m during 2002.
The brief results statement circulated to the press this evening showed that the company recorded a turnover of €1.5m for the year ended 31 December 2002. Domain name registrations during the period were up 25pc on the previous year.
IEDR chairman Sean Scanlan commented: “2002 was a very difficult year for IE Domain Registry. Following the suspension of the then chief executive an investigation into the management of the financial affairs of the company was undertaken. A number of serious issues arose affecting the finances, accounting and financial control of the company. This led to significant once-off exceptional items being charged to the 2002 accounts and the company reporting an operating loss of €1.2m.”
He added: “Since the end of 2002, however, there has been a strong turnaround with the company reporting a profit for the first six months of €160,000. Annualised costs have been reduced by 42pc and revenue is up by 25pc. The outlook for the remainder of 2003 and beyond is very positive with registered domains growing at 25pc a year and the company is in a strong position to benefit from the substantial potential for continued growth.”
The former CEO Mike Fagan resigned last week, more than a year after being suspended amid claims that he was bringing a lawsuit against the organisation for harassment. It is understood a standoff ensued when appointed executives from KPMG came to inspect the not-for-profit company’s books. It is understood the two parties reached a legal settlement that included a financial package. David Curtin, previously chief financial officer of the IEDR, has been appointed the registry’s new CEO.
The long-running dispute has been seen as damaging to the Irish internet industry and the country’s ambitions of becoming an e-commerce hub. This has been compounded by complaints from the industry that the IEDR is too bureaucratic, not transparent enough and too restrictive in terms of the criteria it applies when judging domain name applications.
In its statement, the IEDR said that the financial review that followed Fagan’s suspension in October last year was the chief reason for the delay in publishing its financial results for 2002.
The financial review led to a number of once-off exceptional items having to be charged in the accounts, including €371,369 in respect of write-offs and bad debts provision and €710,378 in respect of changes in accounting policies. The latter figure mainly involved crediting revenue on an earned basis rather than as it had been invoiced. These figures also included costs associated with the investigation and review.
The IEDR said that it was necessary to make substantial ‘prior year’ adjustment to the 2001 accounts, which transformed the reported profit of €71,686 into a loss of €460,083. The organisation claimed in its statement that it is currently cash flow positive and trading profitably.
For 2003, the outlook was good so far and that the financial results for the six months to 30 June show that the registry recorded a profit of €160,000 on revenues of €950,000. It said that the financial turnaround that was achieved was due to business development initiatives, tighter credit control and an aggressive cost reduction programme.
As a result of these measures, the IEDR said that the return to profitability will result in a reduction of net liabilities of some €1.4m.
In a concluding statement, the IEDR’s board said: “The number of registered domains is continuing to grow at a rate of 25pc a year and there is substantial potential for continued growth. As the business grows, price reduction and service improvements, in consultation with our customers, will be priorities.”
By John Kennedy