LONDON (Alliance News) - Rightster Group PLC saw its shares dip Wednesday after it said it expects substantial revenue growth for 2015, but announced that it plans to close its technology centre in Bangalore, India, and consolidate its development activities in London.
The cloud-based global video distribution company said that following the integration of the two businesses is acquired last year - Base79 Ltd and Viral Management Ltd - it identified "material" cost synergies. The company said that following a strategic review of its global operations, it has decided to close its technology centre in Bangalore and consolidate its development activities in London to better align its technology organisation.
"A number of roles across Europe have also been identified as no longer required. Overall, the directors believe that these actions should result in annualised cost savings of approximately GBP3 million," the company said.
Rightster shares were trading 7.7% lower at 24.00 pence following the announcement Wednesday morning.
In a statement last month, Rightster said revenue grew more than expected in 2014, and it now expects net revenue for the full year to exceed GBP8.5 million. In 2013, the company reported net revenue of GBP6.2 million.
In Wednesday's statement, the company said it expects net revenue for 2015 to grow by between 80% to 100% from 2014.
"Whilst it is expected that the tiered pricing model powered by the new software platform will contribute to these revenue streams, management consider that these benefits will likely be realised towards the end of 2015 or early 2016," the company said.
Rightster said that following the acquisition of base79, which had a deferred consideration element of up to GBP25 million, subject to certain earn out conditions being met, it currently expects to pay out between GBP22 million and GBP24 million. It said the payment will be satisfied by a combination of new equity, unsecured loan notes or cash.
Rightster said its cash balance at the end of 2014 was GBP8.5 million, and it currently expects cash flow breakeven by early 2016.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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