Having drifted down over the last 18 months eg solutions (AIM: EGS) shares have enjoyed a 50 per cent rebound over the last couple of days on the back of contract wins and a positive trading update.
Strong second half momentum
The second six months of the year to January was strong with revenues more than double those of the first half. Likewise, ebitda in this latest period was over £2 million, compared with a loss of £0.9 million previously. The improved sales performance reflects a push into a wider range of customer sectors and the development of new distribution channels.
The company has just won a £0.7 million deal for its back-office workforce management software from the public sector. This is the first contract won through its partnership with GCI. GCI provides eg solution’s managed cloud service platform and is now marketing the company’s products to the public sector and its other clients. A similar marketing arrangement with a business process outsourcer is addressing the utilities sector and has already secured another £0.7 million deal from the UK’s largest energy supplier.
eg solutions has been something of a disappointment over the years, but if it can scale up its revenue base then it could have a bright future. The trading update spoke of ‘real momentum’ in the business and ‘excellent customer feedback’. The shares trade on a current year p/e of 24 times.