Perth technology firm Vortiv (ASX: VOR) has confirmed the cybersecurity needs of Australia’s government and financial sectors will help it stay on track to deliver revenue and profit growth for the quarter.
With approximately 72% of the company’s current revenue being derived from these markets (24% and 48% respectively), the firm said it is well-positioned to service clients with robust solutions to combat the current spate of cyber threats being reported by the federal government.
“Our focus has proven to be sound as both sectors continue to invest significantly to enhance their cybersecurity technologies, especially in view of recent threats,” the company said.
“Vortiv is on the supplier panel of the federal and all state governments and expects to benefit from this opportunity,” it added.
Last week, Prime Minister Scott Morrison revealed all levels of Australia’s government, critical infrastructure and the private sector were being targeted in a cyber attack by a “state-based actor with significant capabilities”.
The purpose of the attack is suspected to be for strategy purposes and to steal Australia’s intellectual property.
The federal government’s cyber security agency has confirmed the threats had failed to comply with good information security advice.
In its 2018 cyber resilience review, the Australian National Audit Office found the Treasury, National Archives and Geoscience Australia all had “low levels of effectiveness… in managing cyber risks”.
TSI India valuation
Vortiv (formerly known as Transaction Solutions International) has confirmed a valuation of its passive 24.89% shareholding in subsidiary TSI India for the year ended 31 March to be at a mid-point estimate of $7.2 million.
The independent valuation adopted a sum-of-parts methodology, consisting of a discounted cash flow valuation of TSI India’s automatic teller machines and other operating businesses, and considered factors such as historical performance, local market conditions and global uncertainty including potential impacts of COVID-19.
The board has since elected to adopt the lower end valuation estimate of $5.5 million in the company’s 2020 financial year balance sheet, bringing it down from $9.7 million for the previous period.
Although Vortiv’s 2020 financial results were adversely impacted by an upgrade of TSI India’s ATM network and the COVID-19 pandemic, its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) performance benefitted from operational efficiencies with an 11% boost from $1.8 million in 2019 to $2 million.
In June 2018, the Reserve Bank of India issued a directive to enhance ATM security measures throughout the country, meaning all machines had to be upgraded to newer operating systems to address security vulnerabilities.
TSI India invested approximately $28 million in capital expenditure, funded largely by debt, to upgrade its ATM network.
This impacted total revenue for the year, which declined 2.1% on the previous corresponding period to $51.3 million and was due primarily to downtime from the system upgrades.
Approximately $1 million was attributed to one-off ATM logistics costs to decommission and dispose of old machines during the upgrade program.
A nationwide COVID-19 lockdown since 22 March also impacted the year’s results, while a gradual easing of restrictions since last month has seen some recovery in ATM transaction volumes.