LONDON (Alliance News) - Escher Group Holdings PLC Monday expressed confidence for 2014 and beyond, as it saw pretax profit decline in 2013 due to higher expenses, despite rising revenue.
Escher primarily provides software for the postal industry. Its retail division provides point of sale software.
The company posted a pretax profit of USD1.5 million for 2013, down from USD4.4 million in 2012, despite revenue rising to USD24.7 million from USD23.0 million in the previous year, hit by higher sales costs and operating expenses.
The company said that all customers with contracts expiring during 2013 renewed their contracts, including some who had expanded their contracts. Revenue from software development and consulting services rose to USD11.7 million from USD8.7 million in the previous year, as it won contracts with Pos Malaysia and the United States Postal Service.
However, license revenue declined to USD5.1 million from USD6.3 million, as in the previous year it had received license revenue from Pos Malaysia. Escher said that USD6 million of licence revenue had been delayed from 2013 to 2014.
Escher's gross profit margin declined to 61% from 66% in 2012 due to its revenue mix, as licence revenues declined and lower-margin software development services revenues increased.
Escher said that its development into new product areas had been reinforced by new patents in the US and Singapore covering its RiposteTrEx digital message and mailbox services platform.
"The business is doing really quite well, investment in new technology and business development seems to be paying off," Chief Executive Officer Liam Church told Alliance News. "Our contract win in South Africa gives us a reference, both for the region and globally, this is an emerging business area."
Escher Group did not propose paying a dividend for the year.
Last Friday Escher won a contract with food retail chain Just Falafel to provide a loyalty, coupon and pre-payment service for its retail outlets in the UK. Although presently this only represents a relatively small part of its business, Escher is looking to expand further in this area.
"We're been operating a service like this in Ireland for a few years, this is our first foray in the UK," Church said. "We would be hopeful of signing more in the UK this year."
Church said that Escher's ambitions for this service reach further than just the loyalty and couponing services.
"We would like to get an increasing share of this market as it develops and grows, at the same time the facilities that are being use in this space are also applicable for where our current business sits, our core business sits. We've noticed in a number of countries where the government is paying, for example, welfare or pension payments through paper systems, through physical outlets, they'd like to move towards mobile infrastructure," Church said.
"We expect some tenders to come out around this space, particularly in South Africa," Church said.
Shares in Escher were trading up 2.7% at 380.00 pence Monday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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