- Interim Results
On 27 November, Crimsonwing plc published its interim results covering the six months ending 30 September 2014.
Performance
During the period under review, Crimsonwing reported an increased level of revenues (+8.9%) as a result of the better sales performances at the UK and Maltese operations which also offset the decline in revenues experienced by the Dutch operations (further information on the entities’ performance below). The Group reports that in the period April to September 2014, Crimsonwing successfully undertook its first joint Magento project with eBay Enterprise and scored wins on its Intershop platform in the Netherlands. Moreover, the Group embarked on developing its owned intellectual property platform and a mobile-enabling solution for web stores.
These developments resulted in an increase in administration costs incurred during the period of 8.8% as the Directors reported that additional consultancy resources were contracted to service its growing demand particularly for its Microsoft Dynamics solutions. This translated in an EBITDA of €1.1 million, representing a 4.9% increase over the same period a year earlier. After accounting for net finance costs of €0.05 million, the Group’s pre-tax profit amounted to €0.7 million representing an 11.2% drop from the previous comparable figure. The Group incurred an income tax expense of €0.08 million, which led to a net profit of €0.6 million which is practically unchanged from the profit figure for the previous comparable period.
The Group’s total asset base increased by 10.7% to €10.5 million since the beginning of the financial year, as the increased sales volumes resulted in an uplift of 14.5% in trade receivables to €5.5 million and a 49.8% increase in cash at hand to €0.74 million. On the liabilities side, the Group’s borrowings grew by 26.1% to €2.1 million while trade payables were reduced by 6.3% to €2.59 million. Total shareholders’ funds increased by 13.7% to €5.6 million, in the main reflecting the amount of profits generated during the period. This translates in a net asset value per share of €0.184 (March 2014: €0.165).
Segment Reporting
In the interim report, the Directors give an overview of the performance of the Maltese, Dutch and British units during the period under review.
Crimsonwing UK’s revenues increased by 15.6% to €5.5 million, as Dynamics was the best performing unit for the entity and during the period under review managed to secure new international projects. In the meantime, the UK entity also launched three new eCommerce sites with Mothercare, and made good progress on the omnichannel solution. However, EBITDA of the UK business unit dropped by more than half to €0.12 million largely due to the substantial increase in administrative expenses (+21.7% to €0.77 million).
Crimsonwing Malta’s revenues edged 11.6% higher to €4.6 million as the Malta office continued to support the UK and Dutch operations. Additionally, further product development and research was undertaken during the period under review which builds both on the Dynamics for Membership solution and the mobile-enabling solution, both of which are earmarked for launch in early 2015 and which are anticipated to improve the Group’s margins, allow repeatable deployments and capture annuity support revenues.
Meanwhile, Crimsonwing Netherlands faced a challenging first half of 2014, as most of its efforts were directed towards providing additional client support to those customers who were migrating to the new Dynamics and eCommerce platform. New opportunities and the new licences sold with respect to the Dynamics for Membership solution are expected to bring back sales growth in the Dutch entity over the coming periods.
Dividend
Similar to previous years, no interim dividend was declared.
Outlook
The Directors stated that they are pleased with the progress achieved so far in the current financial year, with the units delivering an overall performance in line with budgeted plans. Furthermore, the Directors expect the new contracts engaged during the first half to underpin and drive the Group’s performance during the second half of its financial year which is now expected to be stronger than the first half.