22nd Sep 2014 07:36
LONDON (Alliance News) - Shares in Publishing Technology PLC dropped 19% Monday morning after it warned that it expects its results for 2014 to be "significantly below market expectations," and to extend the loss reported in its first-half, as a result of one-off costs to realign the business.
The software and services company has undertaken a strategic review under its new Chief Executive Officer Michael Cairns, and as a result has implemented a new strategy targeting over GBP25 million in revenue, with a 20% profit before interest and tax in the next five years.
Publishing Technology expects to see profit reduce by around GBP1 million. It will also post one-off costs including restructuring of GBP300,000, investments of GBP300,000 to support its Chinese operations, GBP400,000 of development costs for its pub2web product and GBP300,000 in bad debts relating to a US client who is in default.
The company has agreed to increase its bank facilities to cover its expected funding requirement into 2015.
Although the company's outlook in the short term is bleak, it is optimistic that the new strategy will place to resume revenue and profit growth in 2015.
The review found a number of issues, Publishing Technology said, requiring the company to make "difficult decisions" to resolve them. Amongst the issues cited was agreeing to too many product enhancements for its 'advance' products, leading to resource issues and implementation delays, which has hit its revenue in 2014.
Going forward, Publishing Technology will work with partners to implement its 'advance' and pub2web products in an effort to reduce risk, boost sales and increase the scale of its business. It signed its first partnership with Cognizant Technology Solutions Corp, and expects to secure similar potential partners in the coming months.
Publishing Technology will continue to invest in research and development at levels at a similar to current rates into at least the second-half of 2015 in order to optimise its products, it said. The company will also increase its focus on its joint venture in China, making sure that its products are ready for a quick deployment in the Chinese market.
Additionally Publishing Technology said it is revamping its management structure; the company has already begun its search for a new chief technology officer and global projects director.
"We have taken some tough decisions in the last few weeks and months which I feel are necessary to address the short-term issues that were holding back the business and to invest in future growth," Cairns said in a statement. "However, I believe the new strategy will fundamentally strengthen the group's market position, improve our prospects for future growth, and in particular will allow us to move forward through 2015 cleansed of historic issues."
Shares in Publishing Technology were trading down 19% at 195.10 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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