Eckoh PLC (LON:ECK) shares rose on Wednesday as the secure payment products and customer contact solutions reported a 7% increase in annual profit after record levels of new business and contract renewals lifted revenue.
Pre-tax profit rose to £1.2mln in the year to the end of March from £1.1mln last year with revenue up 5% to £28.7mln. Total business sales jumped 62% to £32.7mln with new business up 47% to £22.6mln.
The company achieved a return to revenue growth in the UK, up 5.2% to £19.4mln, as new business and contract renewals surged 69% to £10.1mln.
US revenue rose by 4.6% to US$12.2mln on the back of a 33% increase in total new business to US$16.3mln, led by a strong performance in the secure payments arm.
Among the business secured during the period was Eckoh’s biggest ever secure payments contract worth US$7.4mln. The agreement, announced in October, was with an unnamed client described as one of the largest corporations in the US.
Eckoh ended the year with a net cash position of £8.3mln, up from £4.7mln last year.
The group proposed a full-year dividend of 0.61p per share, compared to the prior year’s 0.55p payout.
"Eckoh performed extremely well in the 2019 financial year, and in line with market expectations,” said chief executive Nik Philpot.
“We grew both the UK and US divisions, achieved record levels of new business sales that will convert into future revenue growth, and had another strong cash performance.”
Order book supports greater revenue visibility
He added: “Looking ahead, our fast-growing order book is supporting greater revenue visibility. This, combined with our investment in our business and people, and our patented IP, provides an excellent platform for future growth and reinforces our confidence in the positive outlook for the group."
Since the end of the financial year, the company has won a number of contracts including a three-year deal for a contact centre digital transformation project, a five-year secure payments cloud agreement covering the US, the UK and Europe.
It has also secured its largest contract renewal for fiscal year 2020 with hotel chain Premier Inn, who has been a customer since 2010.
In a note to clients, analysts at Canaccord Genuity raised their target price for Eckoh to 52p from 50p and repeated a ‘buy’ rating on the stock.
They said: “Should management achieve its long-term goal of growing US revenues to the same level as its UK business by FY22, we see scope for EPS upgrades and long-term upside potential for the shares to 80p.”
In afternoon trading, shares in Eckoh were 1.7% higher at 44.75p.
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