News blog
Focus Solutions
- BY: Andrew Hore |
- POSTED: 13/06/2010 |
Financial services software supplier Focus Solutions reported much better profits for the year to March 2010.
Stripping out reorganisation and onerous contract costs, Focus improved its profit from £1.88m to £2.38m. The majority of revenues are now from licence and support revenues rather than professional services and this is helping to improve margins. They should rise further over the coming years as the mix continues to change.
Revenues were relatively flat at £9.85m in the year to March 2010. The good news is that HSBC will be much less prominent this year with the bank likely to be responsible for around 15% of revenues in 2010-11. This is because new contracts were won late in the last financial year from the likes of Mastek, Tenet and AWD Chase de Vere. All of these contracts will make a further contribution this year.
The Mastek deal involves reselling Focus software outside of the UK. Focus has received a US patent for its software and there is also scope to generate more revenues from IFA AWD Chase de Vere outside of the UK. The Retail Distribution Review for IFAs will bring new opportunities until it comes into force at the end of 2012.
There are four or five deals in the pipeline that would cover most of the additional work needed to achieve forecast revenues in 2010-11.
Cash flow has always been erratic at Focus. Some years there are advance payments for work while other years these unwind. The cash flow last year was poor with hardly any cash generated from operations, compared with a figure more than twice operating profit the year before.
The balance sheet reveals the reason behind this poor cash generation. Trade and other receivables for more than one year jumped from £345,000 to £2.55m. This is mainly down to the Mastek deal where 80% of the £2.75m was recognised as revenue but it is being paid in instalments over a number of years.
There was also an increase in capitalised development costs from £1.19m to £1.73m. Net cash fell from £4m to £2.4m in the year to March 2010.
At 42.5p a share, Focus is valued at £12.6m.
© 2024 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Browse by issue
- All issues
- Popular tags
- All tags
- AIM Micro feeds
Keep up to date with articles published at AIMMicro.com. Subscribe to AIM Micro RSS Feeds
|