On 19 February, Crimsonwing plc published its Interim Directors’ Statement explaining the difficult trading conditions it faced during the third quarter of their financial year from 1 October to 31 December 2008. These challenging conditions also continued in 2009 as a result of the financial markets turmoil. The IT Company is forecasting a 30% increase in consolidated revenues to circa €12.5 million for the twelve months ended 31 March 2009. Moreover, the Company expects its business units, after allowing for losses of circa €400,000 at VDA (acquired in July 2008), to show a combined operating profit of around €100,000.
Crimsonwing stated that the further weakening of the Sterling against the euro also adversely impacted the Group’s profitability. In fact, unless a significant recovery in the exchange rate scenario takes place until the end of their financial year up to 31 March, Crimsonwing is expected to suffer an exchange loss of €400,000. As a result the Company is predicting a loss for the year of €300,000.
Crimsonwing has gone through a restructuring process in order reduce its cost base by around €650,000. This restructuring exercise, the costs of which were incurred during the current financial, will aid the Company in achieving a speedy recovery during the next financial year which will commence on 1 April 2009. The Company also noted that the savings made will in no way impact its ability to perform and meet clients’ needs.
Despite the financial turmoil, all Crimsonwing’s business units are profitable except for VDA which is expected to break-even in April 2009. Moreover, demand for the Company’s e-business and Dynamics ERP solutions remains strong and Crimsonwing expects to initiate a number of sizeable projects in the UK, Netherlands and Italy in the coming months. The recently acquired VDA has been re-sized as a €2 million revenue business with overhead costs adjusted to match this level of revenue. Furthermore, Crimsonwing VDA has managed to reclaim some of its old clients and expects to maintain a very good flow of recurring revenues across a large client base.
Crimsonwing’s statement concluded that as a result of the rapid actions to reduce its costs whilst maintaining its level of performance, the Company is well placed to face the difficult times ahead.