eg’s recent interim results were in line with the August 2015 trading statement. With underlying performance ahead of our expectations, continuing improvement in the order book (up 19%), and upbeat commentary from management, we are increasing forecasts. We now expect PBT breakeven in FY16. Alongside the results, eg also announced new mobile and forecasting modules for the eg intelligence suite, giving further confidence in the growth outlook.
In line interim results, reflecting ongoing investment: eg reported interim results in line with the August 2015 trading statement. At £3.6m, underlying revenue was up 16% over H1 2015. A number of new contracts for the eg operational intelligence suite were signed in H1 with new and existing customers and across a range of verticals and geographies. EBITDA fell to £0.1m, reflecting ongoing operational investment, which was the key driver of a H1 £1.2m net cash outflow.
Further improvement in visibility in H1: eg confirmed the order book now stands at £15.5m, to be recognised over the next 3-4 years. This represents a £2.5m improvement on H1 FY15 and we note the current level equates to 174% of FY16E revenues, or 107% of FY18E.
Forecasts increased: Following the interim results, we make upward revisions to forecasts. Notably, we now expect eg to reach PBT breakeven in FY16E (vs a forecast £258k loss previously).
Breaking out of the back office: eg also announced the release of eg mobile and eg forecasting, extensions to the core back-office workforce optimisation platform. With mobile working increasingly prevalent, the broadened product suite should provide eg with additional competitive advantage. We attended the product launch event, and include additional detail in this note.
As longer term followers of the eg story will be fully aware, eg’s financial performance over recent years has been impacted by investment in the platform and new products. Whilst this remains the case, the impressive top line growth being delivered provides evidence that the benefits are beginning to come through. With the product suite enhanced, and a solid cash position, eg seems well set to deliver on its future growth targets.