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EG Solutions expects full year loss

20 February 2014  |  512 views  |  0 Source: eg solutions

eg solutions plc ("eg" or "the Company"; LSE-AIM: EGS), the back office optimisation software company, today provides an update on trading for the financial year ended 31 January 2014. Final results for the year will be announced on 19 March 2014.

The Company expects to report revenue of approximately £4.5 million and a loss before tax of no more than £1.5 million for the financial year, in line with market expectations.
Recurring revenue has continued to grow, increasing by 36 per cent on the prior year and
resulting in a contracted order book of approximately £6 million to be recognised over the coming two financial years. Approximately 60 per cent of revenues anticipated for the year ended 31 January 2015 are under contract.

During the year a number of notable new contracts were secured. These wins reflect growing customer demand for hosted solutions and a significant increase in recurring revenues. They include:
 in December 2013, a further managed cloud services contract worth £750,000 over three years from an existing major third party outsourcing client;
 in November 2013, an initial contract through Aspect Software Inc, ("Aspect") from a leading global financial institution covering 750 users in Asia Pacific with potential to
roll-out across the global back office functions thereafter. This was the first contract won through Aspect;
 in July 2013, the first major contract outside the financial services industry, worth £1.2 million over 3 years, from a leading UK utility;
 in May 2013, following a competitive process, an initial project from a UK friendly society.

As the Company reported at its interim results, the year has centred upon investment in the Strategic Distribution Partnership with Aspect, as well as in its own direct sales channel in EMEA and expanding its client implementation team to support future growth.

The level of investment during the first half continued into the second and will total approximately £1 million for the year. The Company has continued to invest in software product development and is delighted to announce that the latest version of the eg operational intelligence® software suite will be launched in March 2014. This new version includes significant platform and functionality enhancements and will provide substantial benefits for existing and potential global customers.

At 31 January 2014, the Company's net overdraft was £312,000 (2013: £301,000). The Company is pleased to announce that, following the year end, it has entered into convertible loan facility arrangements with new and existing investors under which the Company may draw down up to £0.55 million (the "Loan Facility"). The Loan Facility will be deployed for general working capital purposes. As at the date of this announcement the Company has no other forms of debt. The terms of the Loan Facility are set out below.

Work is underway to strengthen the Board, through the appointment of executive and non-executive directors. Further updates will be provided in due course. 

Elizabeth Gooch, Acting Chief Executive of the Company, commented: "Despite the challenges and changes during this year, solid foundations have been laid through the investments made over the past two years. With good visibility over future revenues, a strong pipeline of potential client opportunities and the resources to capitalise on these, we have started the new financial year with confidence."

 

Terms of the Loan Facility

The Loan Facility, with principal value of £0.55 million in total, is repayable by the Company, together with accrued interest at an annual rate of 10 per cent, no later than the first anniversary of issue.

The providers of the Loan Facility may at their discretion convert their loans , together with accrued interest, into new shares of the Company at any time up to and including the earlier of the first anniversary of issue and any Material Placing (i.e. a placing which raises, net of all costs, £2 million or more for the Company). The conversion price is the lower of 50 pence per share and, where conversion takes place on a Material Placing, the price per share of the Material Placing. One investor participating in the Loan Facility has agreed with the Company that the amount repayable, including accrued interest, shall automatically convert upon maturity or, if earlier, a Material Placing.

The Company has undertaken to use reasonable endeavours to arrange that the Loan Facility becomes secured by way of subordinated fixed and floating charges over the assets of the Company. 

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