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EU Supply slides on mixed picture as profits expected to beat forecasts but revenues seen below estimates

The e-procurement software firm said it expected to report a maiden pre-tax profit of £400,000 for the year, “materially above” expectations, compared to a £200,000 loss the year before
Good and bad sign
Revenues, however, were predicted to be £5.1mln and “slightly below market expectations”

EU Supply PLC (LON:EUSP) shares slid mid-morning as it gave investors a mixed picture in a trading update, saying that profits would be ahead of expectations while revenues would come in below forecasts.

In an update for the year ended 31 December, the e-procurement software firm said it expected to report a maiden pre-tax profit of £400,000 for the year, “materially above” expectations, compared to a £200,000 loss the year before. However, revenues were predicted to be £5.1mln, 10% higher than 2017 but “slightly below market expectations”, with recurring earnings amounting for 70% of the total compared to 66% the year before.

The company’s cash balance at the end of the year was £830,000, up from £650,000 last year, although this did not include £130,000 that was in transit or due at the end of 2018, which was received in early January.

Looking ahead, EUSP said it had allocated “significant development resources” in the second half of the year to build new services for buyers and suppliers that would underpin its recurring revenue growth in the medium-term.

The firm added that the development of its micro procurement solution was “proceeding to plan” and was expected to further increase recurring revenue growth.

Thomas Beergrehn, chief executive of EU Supply, said the profitability was achieved in the year by “increased development activity during which revenue, all of which was organic, continued to grow, and for the first time exceeded £5 million”.

“We now have a profitable base and solution platform that will enable us to deliver our growth plan."

EU Supply is scheduled to release its full-year results in April.

Shares were down 2.3% at 10.5p.

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