Norkom shares rise 7pc as pre-tax earnings hit €1.6m
Published 10/11/2010 | 05:00
FINANCIAL software company Norkom said yesterday that it was trading "marginally ahead" of previous guidance after a half-year of "strong" growth.
For the six months to the end of September 30, the company recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of €1.6m on the back of revenue of €22.6m. That translated to adjusted diluted earnings per share of 1.6c. Net cash was €37.3m, down from €41.6m at the end of March. Those figures were well down on last year but had been flagged by the company in a September profit warning. Last year the company recorded EBITDA of €4.5m and posted earnings per share of 4.5c.
Norkom's chief executive Paul Kerley said Norkom's markets had "changed" but added the company's order book remained strong.
"Customers now prefer an incremental approach to procurement and are engaging in longer sales cycles," he said. "Whilst this impacted our view of what is achievable in terms of operating performance for the full year, the pipeline for new business remains strong and the fundamental market drivers are still present. We therefore believe the correct strategy is to continue to invest in the business, reflecting our confidence in the future growth of Norkom," he added.
The results were broadly welcomed by the market, with the company share price up more than 7pc in late afternoon trading. Davy stockbrokers' Simon McGrotty said the results were as expected but warned future company targets may be difficult to attain.
"Given the pre-release of numbers, we are less concerned about the beat in both revenues and EBITDA but more encouraged by the progress in closing new client contracts, which should help the stock price going forward.
"The group is targeting 20 new contracts in the full year -- a mix of new and existing clients -- but we would note with caution that this target could be ambitious despite recent trends."
Shares in the company fell 24pc overnight in mid-September after the company said it would miss revenue targets due to increased trading cycles.
The stock is yet to recover that loss.