Norkom revenues hit €48m

SHARES IN Dublin-based software company Norkom rose sharply yesterday after it reported a 17 per cent increase in revenues to €48 million for the year ended March 31st.

At 4.30pm shares in the company, which develops software for the financial sector to guard against fraud, were up 20 per cent at €1.06, its highest level since November last year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 14 per cent to €8.2 million while pretax profits were up marginally at €4.90 million, from €4.87 million the previous year.

On a constant currency basis revenues were up 22 per cent and EBITDA 38 per cent.

Chief executive Paul Kerley said existing clients had contributed more than 80 per cent of revenues and this was a strength of the company’s business model. He said regulation of the financial sector was likely to increase due to the banking crisis and a combination of “more banks, more crime and more regulation” meant demand for the company’s anti-fraud and compliance products looked positive.

Adjusted diluted earnings per share rose 1 per cent to 7.74 cent. The company employs 340 worldwide, including 170 in Dublin where its RD is based.

Norkom said it secured 16 new clients last year and signed its first Middle East deal, with Dubai Islamic Bank.

This partly offset the loss of its contract with US lender Washington Mutual, which was cancelled last autumn after it was bought by JP Morgan Chase.

On a sectoral basis revenues from the Asia Pacific region rose by 76 per cent to €7.9 million and by 12 per cent in North America to €19.4 million.

However, Ireland, the UK and rest of the world, recorded a 10 per cent drop in revenues to €8.1 million, due to the decline in sterling.

Digital Harbour, which was purchased in 2007, secured a contract to provide software solutions for medicare fraud last year and Mr Kerley said this was the beginning of an expansion into different sectors.

Mr Kerley issued conservative guidance for the current year, forecasting “low single digit growth”. He said the company had signed one new Middle East customer this year and was in the process of signing a contract with a second.

Margin pressure was unlikely to get any tighter than last year and the company had cash reserves of €27.4 million coupled with a credit line of €10 million with Ulster Bank to use for acquisitions, he said.

Summary

Revenues€48m (+17%)

EBITDA€8.2m (+14%)

Pretaxprofit€4.9m (flat)

Adjustedeps7.74 (+1%)