- Interim Results

On 29 November, Crimsonwing plc published its half-year results covering the six months ended 30 September 2012. The financial statements reveal a record first half revenue figure of €8.68 million representing a 12.1% increase over the previous comparable period on the back of new licence sales particularly related to the Microsoft Dynamics solutions across the business units in the UK and Netherlands (Promentum). On the other hand, direct costs and administrative expenses only rose by 5.3% to €7.8 million reflecting the increased business activity and the cost savings achieved following the restructuring undertaken in Crimsonwing NL in the previous year. As a result, the EBITDA of the Group surged to €0.86 million from €0.31 million in the comparative period.

The Group’s pre-tax profit amounted to €0.55 million, after accounting for a net interest expense of €51,883. The tax expense amounted to €38,146 (after also taking into consideration a tax refund of €150,966 related to a dividend payment between Crimsonwing (Malta) and Crimsonwing PLC) and minority interest totalled €37,091 leading to a net profit of €0.48 million.

It is important to highlight that after the end of the period under review, the Crimsonwing Group acquired the remaining 49% shareholding in Promentum to which the minority interest figure of €37,091 is related to. As such, the Crimsonwing Group now owns 100% of Promentum and therefore the Group will no longer need to account for any minority interests. Moreover, the Directors have reiterated their intention to restructure Crimsonwing Promentum and Crimsonwing NL into one cohesive unit.

The Interim report also provides an overview of the performance of each business unit of the Crimsonwing Group during the period under review as detailed below.

Crimsonwing UK

The UK unit reported a 35% increase in revenue to €4.6 million which led to a significant improvement in EBITDA to €336,277 (2011: €39,107). This improvement reflects the high performing Dynamics business which secured new and long-term contracts with a number of international clients. Moreover, the UK unit secured a strategic contract with Mothercare plc to provide a global e-commerce solution for its international division across 50 countries. The real financial benefits from this project will start flowing as from 2013 which will deliver a strong build-up of annuity revenues.

Crimsonwing Promentum

This business unit also registered a strong first half performance with revenues rising by 35% to €3.3 million and EBITDA improving to €0.2 million from €44,677 in the previous comparable period. Similar to the UK unit, this Dutch business was fuelled by Dynamics-related licences and project work including large contracts which will generate benefits to the Group in the second half of the current financial year as well as throughout the remainder of 2013. One such contract is that Dutch company Mastermate, a wholesaler for construction-related businesses. This contract only started in September and is for a value of €2 million spanning over 24 months.

Crimsowning NL

This business unit turned profitable in the first half of the 2012/13 financial year with an EBITDA of €25,910 (2011: loss of €220,242) despite a 20% drop in revenues to €0.83 million. The Directors explained that the reduction In income reflects the focus on profitable lines of sales and in some cases client revenues are passing directly to Crimsonwing Malta. During the period under review, Crimsonwing NL was awarded a major new and long-term contract with the Rezidor Group with benefits flowing from 2013 onwards. Moreover, the NL business unit undertook the first enterprise Intershop 7 projects whilst making good progress in securing good quality ecommerce business.

Crimsonwing Malta

Crimsonwing Malta’s revenues remained static at €3.2 million but this does not reflect the investments undertaken during the period under review as some of the activities were not immediately eligible for revenue recognition. In fact, the Malta unit is on a major recruitment drive in anticipation of the contracts that are expected to come on stream in the second half of the year including some major ones with local companies relating to both Dynamics and ecommerce.

Outlook

In conclusion, the Directors noted their satisfaction with the overall progress achieved in the first half especially in view of the prevailing economic hardship. The Directors also explained that the client portfolio and profile of the Group has increased to the extent that Crimsonwing is often researched and approached directly by prospective clients. Moreover, the Directors feel that they have now addressed some structural barriers and as such they are confident on building on the progress already achieved during the second half of the financial year which comes to an end on 31 March 2013.

Downloads

Crimsonwing plc – Half-Year Report for the six months ended 30 September 2012