11th Dec 2019 09:20
(Alliance News) - Rosslyn Data Technologies PLC on Wednesday said it expects annual results to be in line with forecasts despite a slow start to the year.
The stock was trading 14% lower on Wednesday in London at 5.10 pence a share.
The data technology company said it had a slower than hoped start to sales in the first few months of its current financial year, which started in May, with professional service revenue hurt by some clients deferring contracted projects.
In addition, Rosslyn said it has decided not to renew client contracts with a high element of resale revenue, as these were unsustainable due to low levels of gross margin.
More positively, the company said it signed a new analytics client in the transport sector. The contract is worth GBP410,000 over a three-year term with the first revenue expected to be recognised in the second half of Rosslyn's current financial year.
The company also said that the Langdon business - which was acquired in late September - is proceeding "satisfactorily", with the majority of clients having been retained.
Rosslyn said it expects that Langdon's retained annual recurring revenue to be in excess of GBP400,000 and said this has potential to increase as clients are renewed, new clients are won, and product prices are revised upwards.
"We continue to focus our attention on building out our client base with sustainable annual recurring revenue, ensuring that gross margins are in line with our expectations," said Chief Executive Roger Bullen.
"We expect the annual recurring revenue achieved from Langdon to increase in the next half year as we face Brexit and the new customs declaration system upgrade."
By Evelina Grecenko; [email protected]
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