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EU Supply revenues rise as e-procurement rules loom
Electronic procurement software provider EU Supply reported a 28% improvement in unaudited revenues for the first four months of its year on Wednesday, as investors gathered for the company's annual general meeting, in line with the board's own expectations.
The AIM-traded firm had said its focus for 2018 was to continue to grow revenue and to secure increasing European market share with a profitable future.
"As of 31 December 2017, 66% of revenues were of a recurring or repeated nature which, together with the group's promising pipeline of opportunities, gives the board confidence that strong revenue growth will continue for the rest of this year," said chairman David Cutler.
"Group costs continue to be tightly controlled and, with the growing revenue stream and conversion of its pipeline, the group continues to make careful investment in key staff to support the continued growth of the group."
Cutler said the continued strong growth into 2018, size of the group's order book and the encouraging pipeline of opportunities reassured the board of the group's prospects for 2018, including from Denmark and Norway, which had contributed more than 100 new end-customers in the year-to-date.
"This high growth into 2018 is being fuelled by the mandatory provisions in the 2014 EU Directives, which require all public sector bodies and authorities to make available all tender documents and notices online and to manage essential phases of all higher value tenders electronically, which is fully effective in November 2018.
"The directors believe that this continued strong growth demonstrates that EU Supply is well positioned to take advantage of this still expanding market.
"We are also pleased to see some initial orders from the group's refocused approach in the German market."
For the intermediate period 2019-2020, Cutler said the group saw further upselling opportunities of integration work and other services, and licences of additional already available modules in addition to those minimum services required for compliance with the EU directives.
"Such demand, and the functional breadth, depth and flexibility of the company's CTM platform, reinforces the board's view that the underlying market is also continuing to expand well beyond November 2018 and that EU Supply continues to secure a share of that growth.
"The board also intends to build a platform for a renewed acceleration and longer term sustained high revenue growth in 2020-2021 and beyond on the back of this strong foundation by developing and marketing new micro procurement services for the human resource element of major public and private sector bodies, starting with the group's large existing customer base."
The resource for that project would be provided for by the net proceeds of a successful placing and subscription of new shares of, in aggregate, £0.6m at 15p per share, which was announced on 25 May, Cutler explained.
"The board looks forward to the rapid development of the required features for this new service with a roll-out during 2019 and an expansion of the opportunities for the group in 2019 and beyond."