Big Technologies reports weaker first half after loss of Colombia contract

25th Sep 2024 11:10

(Sharecast News) - Big Technologies reported a small decline in first-half revenue on Wednesday, with total income reaching £26.5m, down 3% from £27.3m in the same period last year, as it warned that full-year results would likely be at the lower end of market expectations.

The AIM-traded firm said the reduction was primarily due to the loss of a criminal justice contract in Colombia, which had been subject to short-term renewals.

Adjusted operating profit for the period stood at £11.5m, compared to £13.9m in the first six months of 2023, while statutory operating profit fell to £2.4m from £8.2m.

Despite that, the company maintained a robust adjusted EBITDA margin of 54%, and generated £11.2m in cash from operating activities.

The group's gross margin decreased to 70%, down from 73.3% in a year earlier, reflecting increased depreciation linked to the rollout of new 4G technology and higher operational costs.

Nevertheless, Big Technologies ended the period with a net cash position of £92.9m.

Operationally, the company said it had seen early successes in expanding its business development efforts in the US, and launched the Buddi AlcoTag, a new body-worn alcohol detection device combining Smart Tag technology with transdermal alcohol sensing.

The company said it was also making good progress in upgrading its installed base of electronic monitoring equipment to the latest 4G technology.

Looking ahead, the group said it was confident in its strategic direction and financial flexibility.

The board anticipated full-year revenue of around £50m, with results likely to be at the lower end of current market expectations due to foreign currency fluctuations.

However, the electronic monitoring market was supported by favourable conditions, and the company said it expected to return to growth in 2025 and beyond.

"We have continued to deliver high levels of profitability and strong cash generation despite the ending of a contract with one of our larger customers based in Colombia, which had been subject to short-term renewals for a number of years," said chief executive officer Sara Murray.

"Our expanded business development efforts in the US are starting to gain traction and will help replace the revenue from Colombia over time.

"We have been encouraged with the news that one of our largest US customers has entered into a new contract through until November 2030."

Murray said the company had also seen the return of a former customer in Latin America.

"We remain well-positioned, with the financial flexibility to invest in target markets where we are currently under-represented and continue to pursue value-enhancing acquisitions and partnerships.

"The demand for our products remains strong and we see a pipeline of attractive organic opportunities across the world which we are working hard towards securing."

At 1222 BST, shares in Big Technologies were down 2.69% at 108.5p.

Reporting by Josh White for Sharecast.com.