eg solutions announces pre-tax loss as it looks to US investors for growth
STAFFORDSHIRE financial software supplier eg solutions is hoping a new partnership with US investors will enable the firm to prosper and banish memories of a disappointing 2012 which has seen the business declare a pre-tax loss of £458,000.
The company’s annual results statement shows total revenue for 2012 was £4.95m (2011/12: £4.71m). Software licences, maintenance and software services contributed 69% (2011/12: 82%) of total revenue, with the balance coming from implementation and training services.
Overall gross margin for the year was 49.7% (2011/12: 62.8%), reflecting the cost of pilot schemes and delayed roll-outs. This led to the pre-tax loss of £0.46m (2011/12 pre-tax profit: £0.15m). The loss after tax reduced to £0.30m (2011/12 profit after tax: £0.13m).
Net cash as of March 12, 2013 was £1.25m. As of January 31, 2013, following investment in research and development of £0.74m (2011/12: £0.86m) and after the costs associated with pilot schemes and delayed roll-outs, net debt was £0.30m (2011/12: net cash: £0.06m).
In view of the performance the board has decided not to recommend a dividend.
Looking ahead, the firm said it had started the current financial year in an “excellent position” and was looking to achieve strong, profitable growth and become a significant player in the back office optimisation market.
The firm operates in a growing market, with financial institutions around the world continuing their drive to improve operational efficiency, customer service, cost control and risk management. The firm said its technology and products were recognised as market leading in the industry.
To bolster its financial position, in February eg announced it had concluded a three-year strategic partnership and re-seller agreement with Aspect Software Inc, a global provider of customer contact and enterprise workforce optimisation solutions. Aspect has invested £1.25m of new equity in eg and is now a 10.69% shareholder in the company.
Aspect has the right to invest further in eg through warrants to subscribe for up to 400,000 new eg ordinary shares, exercisable over the next two years.
Elizabeth Gooch, eg’s chief executive, said: “Following an encouraging first half, it became apparent that eg would benefit from a partnership with a major player, particularly in winning and executing projects with global enterprise customers.
“Whilst discussions with Aspect were underway, certain roll-outs were delayed, resulting in anticipated revenues from these roll-outs falling into the current financial year. Consequently whilst there was a negative impact on last year’s revenues and profitability, the upside from the Aspect deal is considered to be substantial with the impact starting in the current year.
“Through our relationship with Aspect in addition to strengthening our capabilities for existing customers, we can accelerate the expansion of our customer base and geographic reach. Based on experience since completion of the Aspect deal we are confident that we will see significant benefits, including further contracts with our global enterprise clients, as well as targeting new enterprise customers and new geographic markets.”
