- Full Year Results

On 17 July, Crimsonwing plc published its financial statements for the year ended 31 March 2014. The Crimsonwing Group reported a 70% increase in profits after tax to €1.4 million.

Performance Outlook

During the financial year ended 31 March 2014, the Crimsonwing Group generated a record revenue figure of €20.1 million, representing a 13.1% increase over the previous year’s comparable figure solely on the back of organic growth. This is exactly in line with the company’s targets. Given the increased business activity, direct costs also grew by 13.8% to €12.9 million, whilst the gross profit grew by 11.8% to €7.2 million. Consequently the gross profit margin slipped marginally lower to 36% from 36.4% in the previous financial year.

Administrative expenses increased by 4.2% to just above €5 million as the company increased its headcount by 8% to be in a better position to assist its growing operations and servicing commitments. Notwithstanding this increase, the Crimsonwing Group reported a substantial improvement in earnings before interest, tax, depreciation and amortisation (EBITDA) to a record €2.2 million compared to €1.6 million in the previous financial year. Consequently, the EBITDA margin improved from 9.3% to 11%.

It is noteworthy to highlight that all the business units of the Group, with the exception of the Promentum business in the Netherlands, registered an improvement in the respective EBITDA levels.

• Crimsonwing UK – This business unit registered a 45% increase in sales related to the ERP (Dynamics) business coupled with important new client wins as well as a growing level of annuity revenues. EBITDA increased nearly two-fold (94%) to €0.7 million compared to €0.36 million in the previous financial year. The company reported that the outlook for this segment looks promising as a result of a portfolio of new projects contracted for this current financial period.

• Crimsonwing NL (BV & VDA) –During the financial period under review, the business in the Netherlands disposed of its software assets for just under €1 million. Notwithstanding this one-off benefit, the unit’s EBITDA improved substantially, from €0.09 million for the year ended 31 March 2013 to €1.3 million during the year ended 31 March 2014. The unit’s strong growth in annuity sustained the growth in profitability of this segment, and combined with excellent eCommerce growth, generated an overall good year.

• Crimsonwing NL (Promentum) – This subsidiary faced a challenging year in 2013/14 as overall revenues declined by 10% to €5.6 million, as one large client contract required the company to provide additional resources at the unit’s own expense in order to meet its commitments. This resulted in less resources being available to continue to explore growth opportunities. Notwithstanding this incident, the situation has been resolved and is now running live on the platform enabling this subsidiary to once again focus on its new projects already in the pipeline. EBITDA for this unit declined from €0.5 million in 2012/13 to €0.3 million in 2013/14.

• Crimsonwing Malta – As sales increased by 19% during the period under review, this unit undertook a significant investment in human resources by increasing its staff complement and benefitting from investment tax credits which have reduced the Group’s tax burden by 94% during the last financial year. Notwithstanding the increase in staff costs, this unit generated an EBITDA of €1.6 million, up by 12% from approximately €1.5 million the previous year. The company disclosed that in the current financial year it will be launching a new Intellectual Property asset.

After accounting for a depreciation and amortisation charge of €0.7 million (FY 2013: €0.55 million), the Group’s operating profit amounted to €1.5 million compared to the operating profit generated in the previous financial year of €1.1 million.

The Crimsowning Group incurred €0.09 million in net finance costs representing a 23% decrease over the previous financial year.

Overall, the Crimsonwing Group reported a record pre-tax profit of €1.4 million compared to the pre-tax profit of €0.98 million generated in the previous financial year. After accounting for a tax charge of €0.09 million, the net profit attributable to shareholders amounted to €1.4 million compared to a net profit of €0.77 million in the previous financial year.

The balance sheet as at 31 March 2014 show total assets at €9.5 million whilst total liabilities dropped by 7.3% to €4.6 million mainly reflecting the reduction in payables and shareholders’ loans. Given the profit registered during the period under review and the new equity created in lieu of the cash dividend in December 2013, equity attributable to shareholders increased by 43.8% to €4.9 million.

Dividend

The Directors did not recommend a final dividend for the year ending 31 March 2014.

Outlook

After successfully achieving the important benchmark of €20 million in revenues during the financial year ending 31 March 2014, Crimsonwing’s aim is to grow further its annuity revenues which aid the Group’s regular income flow, successfully launch its Intellectual Property solutions, and improve margins with a continuing focus on costings.

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Crimsonwing plc – Annual Report for the financial year ended 31 March 2014