Crimsonwing plc published its full-year results to 31 March 2008 following approval during a Board of Directors’ meeting held on 29 July.
The key highlights are:
• Revenue up 34.7 per cent to €9.6 million;
• Substantial organic growth in the Netherlands;
• Continued client base expansion including leading high profile international companies;
• Gross profit of €5 million (margin of 52%);
• Pre-tax profit of €0.9 million;
• Shareholders’ funds rise to €4.1 million;
• Pre-tax return on equity of 27.7%.
The Directors declared the payment of a net interim dividend of €0.01 per share for the current financial year to March 2009. No final dividend was declared in respect of the full-year to 31 March 2008. The interim dividend is payable on 1 September to those shareholders as at close of trading on Tuesday 5 August with the equity trading ex-dividend as from Wednesday 6 August.
The Crimsonwing Group generated total revenue amounting to €9.6 million during the twelve months ended 31 March 2008, representing a 34.7% increase when compared to the €7.1 million of the previous year but 1.1% lower than the Directors’ projections at the time of the Initial Public Offering in November 2007. The growth in revenue was mainly driven by the substantial organic growth of Crimsonwing BV, which recorded a 46% increase in its revenues. The Company is expanding its customer base and rolling out new services resulting in increasingly diversified revenue streams. In fact, the dependence on Crimsonwing’s top customer, Morrisons, dropped to 30% during the year under review from 39% in the comparative period last year. Moreover, the Group’s top ten clients contributed 78% to total revenues during the year ended 31 March 2008, down from 93% in FY 2007.
Furthermore the company’s investment program in the latest technologies and human resources allowed it to reduce it’s over reliance on income generated from older technologies. In fact, as at March 2008, the company estimates that older technologies now account for only 5% of total revenues compared to 25% in the previous year. This is a very important indicator as it is these new technologies that are expected to drive revenue growth in the future as customers continually update systems and therefore seek the company’s services to implement and service these new technologies.
Direct costs increased by 54.2% to €4.6 million mainly due to a rise in licence sales, additional vendor consultancy and one-time consultancy fees on the acquisition of Peracto (UK). These increased licence sales generate very healthy commissions to the company and are therefore directly related to turnover.
Gross profit amounted to just below €5 million and grew by over 20% compared to year ended 31 March 2007. Gross profit margins remain very healthy at 52% of revenue.
Administrative expenses rose by 34.5% to €4.1 million on increased staff costs as the company’s staff complement continued to increase as business expands. This resulted in an operating profit of €0.9 million (18.4% lower than the comparative period and 25% lower than the Directors’ projections). Earnings before interest, tax, amortisation and goodwill (EBIDTA) dropped 21.8% to €0.9 million.
Crimsonwing plc accounts in euro, however 75% of March 2008 revenues are derived from the United Kingdom in Sterling. With growing euro-denominated expenses and high sterling revenues, the Company is vulnerable to Sterling/euro exchange rate movements. The 14% decline in the value of sterling against the euro (from £0.69 per €1 to £0.80 per €1) negatively impacted the Company’s revenues by €0.5 million and profits by €0.375 million during the period under review. As a result, Crimsonwing’s registered profits, which although very healthy and encouraging, came in lower than IPO expectations solely on account of this exchange rate volatility. In fact, the Company registered a profit before tax of €0.9 million, 23% lower than that forecast.
Crimsonwing accounted for a tax charge of €0.09 million representing a marginal tax rate of 9.4%. After accounting for taxation and profits attributable to minority interests, the Company registered a profit after tax of €0.8 million, a 23.1% decline when compared to last year’s level of €1.1 million. Earnings per share, based on the weighted average number of shares in issue following the increase in share capital, amount to €0.045, compared to €0.044 last year.
From a balance sheet perspective, Shareholders’ funds increased considerably to €4.1 million from the previous year’s level of €2.5 million, signifying a net asset value per share of €0.158. During the year ending 31 March 2008, the Company recorded a strong return on equity of 24.6% and a likewise positive return on assets of 14.6%. The company is debt free and will only be incurring debt as from 1 July 2008 (the current financial year) following the acquisition of a third company (Netherlands based VDA) in the space of one year. This debt will amount to €1.5 million and will finance 79% of this acquisition. The balance will be paid from cash flow and retained earnings.