eg solutions

In the midst of a pleasing turnaround, performance improvement technology group eg solutions has also completed a strategically astute-looking bolt-on acquisition.

Operations management software specialist eg has bought Bristol-based XTAQ, a developer and supplier of business performance measurement software, for up to £233,333 in cash, shares and loan notes. XTAQ, whose ‘Nuqleus’ software is used by the likes of Aegon, Barclaycard and GE Capital as well as the public sector, lost £150,000 on £550,000 sales in the year to March 2009. However, the deal boosts the eg client base from 25 to 40 in one fell swoop and offers up the potential for recurring revenue growth and opportunities for cross-selling.

CEO Elizabeth Gooch sees XTAQ as ‘an excellent’ acquisition which ‘strengthens our position in the back office optimisation market’ and believes sales prospects for Nuqleus will be significantly improved by XTAQ ‘being part of a larger and stronger business’.

Having disappointed in past periods, eg, whose software and services deliver a measurable return on investment and improves the customer experience for clients, has recently cheered with a raft of positive announcements. Contract highlights include new orders from two existing UK financial services clients – Nationwide and an unnamed ‘major UK life and pensions company’ – together worth £250,000, as well as a contract extension worth £565,000 over five years with a Nordic financial services giant.

Encouragingly, eg has already briefed the market about a turn-round from losses of £750,000 to ‘a small profit’ – analysts are forecasting circa £50,000 – in the year to January 2010, on improved annual revenues of £4m (2009: 3.7m), as a result of steadier trading and new wins. Confirmation will come later this month.

Given positive upswing in the group’s fortunes, eg shares are beginning to resemble a very decent recovery bet.