Horizon’s growth slows in 2007


13 Mar 2008

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Horizon Technology Group has reported lower than anticipated growth rates during 2007 due to a number of cancelled and deferred orders from the financial services and government sectors.

The company also invested heavily in its EMC, IBM and Oracle business units in the UK to support revenue growth in the year ahead.

Profit after tax was up 6pc for 2007 to €5.8m, with EBIDTA up 6pc to €10.6m and revenue up 12pc to €288m. Diluted, adjusted earning per share were up 3pc to 9.39c.

Horizon Technology Group’s Irish revenue declined by 11.6pc on 2006 figures to €53m in 2007, reflecting a change in mix towards higher-margin services businesses. EBITDA increased by 7.9pc to €6.8m.

Horizon’s Irish enterprise applications and services operation delivered good growth in earnings in 2007. Its consulting business continued to deliver growth in business intelligence, application development, enterprise resource planning, business service management, corporate governance and learning management solutions.

Some 82pc of Horizon’s revenue comes from the UK. 2007 represented the sixth consecutive year of earnings growth, albeit it at a slower pace than in recent years.

Horizon said investment in building a services capability and infrastructure to support revenue growth in 2008 and beyond, particularly in its EMC, IBM and Oracle business units, combined with the cancellation or deferral of a few key orders from the financial services and government sectors in December, resulted in a lower growth rate in profitability during 2007. Nevertheless, EBITDA grew 6pc and diluted, adjusted EPS increased by 3pc.

Although some of the deferred orders have since been received and others are still expected early in 2008, the impact on the 2007 outcome was exacerbated because the group’s revenue has become increasingly weighted towards the end of each quarter, the company stated. It said it remains committed to focusing on higher-margin, service-rich enterprise solutions businesses.

“Horizon continues to develop as a valued and capable outsourcing partner for major global IT vendors,” said Gary Coburn, CEO, Horizon. “During 2007, we strengthened our position with existing partners and made significant progress with new partners such as Oracle, EMC and IBM.

“In addition, we continued to deliver both acquisition and organic growth during 2007 – both of which remain a focus for growth into 2008. Despite a challenging second half in 2007, Horizon has very strong businesses with key market positions, providing significant benefits to customers while ensuring resilient profitability, strong cash flow and superior returns to shareholders.”

“Strong financial focus on working capital management and cash flow has driven a significant improvement in the group’s balance sheet,” said Cathal O’Caoimh, chief financial officer, Horizon. “Cash flow from operations was €12.6m, 118pc of EBITDA and return on invested capital increased 610 basis points to 28.5pc. Horizon ended 2007 with net cash of €4m, against net debt of €7m at the end of 2006. Horizon is well positioned to deliver earnings growth and shareholder value in 2008 and beyond.”

By Niall Byrne