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Eckoh – “comfortably in line with market expectations”... but what about September’s profit warning?

By Steve Moore | Monday 8 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

“Eckoh plc (ECK), the global provider of secure payment products and customer contact solutions, today issues a trading update for the year ended 31 March 2017. The board of the company confirms that trading for the year ended 31 March 2017 was comfortably in line with market expectations”. Hmmm, what about the September announcement that “it is expected that the company's pre-tax profits for the year to 31 March 2017 will be below market expectations and is expected to be in line with the performance last year” though?

Post today’s update Nomad and broker to the company, N+1 Singer, has forecasts for earnings per share of 1.3p, rising to 1.6p in the now current year. These though compare with 1.7p, rising to 2p, a year ago when the company updated on the prior year end. I think it means ‘comfortably in line with market expectations as reduced by September’s profit warning’ then!

This is also the case in terms of cash – with the announcement stating “net cash ahead of market expectations”. A year ago Singer was expecting £6.2 million. There has since been a £2 million acquisition and the forecast was for there now to be a small net debt position!

The theme continues – with “over 20%” growth and an increasing proportion of US-derived revenues noted. Er, yep – how much the result of acquisitions though? For example, the half-year results announcement having included on US revenue of £4 million, “£0.5m of revenue has come from Secure Payment revenues with the remainder coming from PSS”. The latter a November 2015 acquisition!

It is also added that “the company continues to make good progress in the UK” and that it “has a strong pipeline and is responding to an increasing number of tenders”, but the above – ahead of 12th June scheduled results, which I’ll review with interest – sees me presently here retain prior caution.

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