It has been a painful few months for tech start-up, Blur (BLUR). Specifically, the group's auditors demanded that management should adopt a more conservative approach to the way that revenue is recognised. Accordingly, these full-year results were delayed and revenue was reported at roughly half the level expected by analysts.
"Revenue recognition has not matched cash flows," points out analyst Robin Speakman of broker Shore Capital. "While flagship projects make for great headlines, a business has to have the model and infrastructure resource to service these efficiently." In fact Mr Speakman isn't confident that blur is "yet mature enough" to handle such projects efficiently.
The group operates an online exchange that allows businesses to commission services and - regardless of revenue recognition worries - growth is impressive. The average brief value, for example, jumped nearly 200 per cent and the number of briefs soared 169 per cent. Moreover, business is streaming in from large blue-chip companies.
But earnings were hit by significantly higher administrative costs and management now hopes to raise £11.9m (before expenses) through a placing and open offer. The proceeds will be used to strengthen the balance sheet and invest in areas such as technology, marketing and customer service.
Broker N+1 Singer expects a pre-tax loss of $7.8m (£4.6m) for 2014, with profitability not anticipated until 2016.
| BLUR GROUP (BLUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 83.5p | MARKET VALUE: | £24.7m | |
| TOUCH: | 82-85p | 12-MONTH HIGH: | 806p | LOW: 81p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 37¢ | NET CASH: | $9.5m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 0.89 | -0.68 | -39 | nil |
| 2012 | 2.81 | -1.87 | -9 | nil |
| 2013 | 4.78 | -6.53 | -23 | nil |
| % change | +70 | - | - | - |
£1=$1.68 | ||||
