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Eckoh expands US reach

The secure payments company grew its US business, while restructuring the UK division and preparing a strong business pipeline
November 22, 2017

Eckoh (ECK) revealed six months of encouraging progress, swinging to a pre-tax profit from a loss a year earlier and erasing its net debt position. The secure payments specialist has enhanced its US presence, with bosses expecting this ultimately to surpass the UK. Indeed, the US payments business won seven contracts valued at $5.1m (£3.8m) in total – a significant improvement on the three contracts worth $2.7m achieved in last year’s first half.

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In the UK, revenue dipped by 1 per cent while gross profit was up slightly. Eckoh has 87 clients here generating more than £25,000 in revenue each, up from 74 clients in the same period last year. Tenpin was the largest contract to be renewed, while Eckoh also capitalised on its partnership with BT to sign a three-year secure payments contract with a high-street retailer. Management has restructured the UK sales team with a view to focusing on larger deals.

The US now comprises 37 per cent of group revenue. Alone, it achieved whopping turnover growth of 28 per cent. Most contracts are run on a software-as-a-service model, giving Eckoh greater visibility over future earnings as well as improved recurring revenue. In further good news, the US Patent and Trademark Office recently granted two new patents for Eckoh’s CallGuard product – protecting all US payments revenue.

Analysts at Berenberg forecast adjusted pre-tax profit of £5m for the year to March 2018, up from £4.2m in FY2017. They expect EPS to stay flat at 1.6p.

ECKOH (ECK)   
ORD PRICE:52pMARKET VALUE:£132m
TOUCH:51.5-53p12-MONTH HIGH:55pLOW: 37p
DIVIDEND YIELD:0.9%PE RATIO:41
NET ASSET VALUE:8.3p*NET CASH:£1.7m
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201613.5-0.2-0.11nil
201714.81.50.55nil
% change+10--nil
Ex-div:na   
Payment:na   
*Includes intangible assets of £8.8m, or 3.5p a share

£1 = $1.33