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Eckoh sees significant increase in deferred revenue

Accountancy rules changes have made it harder to gauge the underlying picture but Eckoh highlighted a "significant increase" in deferred revenue to £12.7mln from £8.6mln in the first half of the previous fiscal year

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The US Secure Payments order book grew 78% to US$21.7mlm from US$12.2mln

Eckoh PLC (LON:ECK), the provider of secure payment products and customer contact solutions, has seen a return to sales growth in the UK.

The company released a set of results for the six months to the end of September that were in line with management’s expectations.

READ Eckoh sees strong progress in news orders for the US and the UK

Revenue dipped 2%, or 1.4% on a constant currency basis, to £13.1mln from £13.4mln the year before, although recurring revenue as a percentage of total revenue rose to 87% from 86%.

UK revenues were up 5% year-on-year, which the company said reflected the restructuring of the UK sales team.

Sales in the US were down 14%, with growth in secure payments revenue offset by a short-term decline in revenue from support services and sales of the company’s Coral product, which is a browser-based desktop that brings all the contact centre agent's communication tools into a single screen. Coral had no new licence orders in the first half of the current financial year but the group is expecting some orders in the second half.

The company said that owing to accountancy rules changes, a proportion of secure payment revenues from the US that were expected to be recognised in this year have instead been contracted as arguably better-quality earnings, which will now be recognised over future periods. This is reflected in the increase and size of the Secure Payments order book, which has grown by 78% to US$21.7mln from US$12.2mln a year ago.

Adjusted underlying earnings (EBITDA) declined 15% to £1.6mln from £1.9mln the year before while the company posted a loss before tax of £197,000, versus a restated profit the year before of £822,000.

The company ended the period with net cash of £3.4mln, up from £1.7mln a year earlier.

Turning to current trading, the company said that (fiscal) year-to-date contracted business now exceeds the £15.3mln of contracted business for the whole of the previous fiscal year.

"Eckoh has had an extremely strong first half with significant increases in new business contracted in both the UK and US. Following the steps taken last year it is pleasing to see the UK return to growth in such a convincing manner and the US Secure Payments business performed particularly strongly with record levels of new business contracted and a total order book that now well exceeds US$20mln,” said Nik Philpot, the chief executive officer of Eckoh.

“Whilst the IFRS 15 accounting rule changes have reduced reported revenue and profit, we have excellent revenue visibility from the increasing levels of deferred revenue and a fast-growing order book, which provides a solid platform for predictable significant growth and further confidence in the outlook for future periods,” he added.

Shares in Eckoh were up 1.3% at 37.75p in early deals.

Quick facts: Eckoh PLC

Price: 46.25 GBX

Market: AIM
Market Cap: £117.48 m

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