Bristol-based marketing software specialist Alterian has slumped to a £18.6m half-year pre-tax loss. That compares with a profit of £600,000 last time for the company which delayed its interim results announcement by a fortnight because of ongoing talks with SDL.
Maidenhead-based SDL has made an improved indicative takeover offer of £68.4m, the equivalent to 110p per share.
Alterian posted a £4.26m pre-tax loss in April and subsequently replaced both its chairman and chief executive, telling the London Stock Exchange at the end of September that, having successfully implemented a range of cost saving initiatives earlier in the year, it was undertaking a major review to examine its positioning in its target markets – and to ensure it has the appropriate level of resources required both to achieve a leadership position and to create shareholder value.
Chief executive Heath Davies said: “As our 100-day transformation programme nears completion, we are now in good shape to focus on generating cash and growing profits and providing the platform for future organic growth. We are clearly focused on providing must-have software solutions to a range of international marketing partners and customers in specific vertical markets, including retail, financial, leisure and travel and TMT.
“We are now gaining real momentum. With some £23.3m of forward visibility, 800 active customers, a global footprint and market leading IP, the board is increasingly confident about the group's prospects.”
Chairman Phil Cartmell added: “The hard work by the new management team over the last few months has stabilised and revitalised the business. Although we are now in an offer period which may or may not result in a firm offer for the group, we have now established an excellent platform from which Alterian can build and prosper.”
Despite this the group admitted that there are a number of potential risks and uncertainties which could have a material impact on Alterian’s long-term performance. It has closed five satellite offices to focus on six main sales and marketing centres globally. In all, it has made £10.6m of annualised cost savings at a cost of £3.5m.
Future revenue streams depend on close, long term relationships with its end customers. It says: “Damage to, or loss of, these substantial relationships could cause a detrimental effect on long-term revenue prospects. To manage this risk, working reviews take place with key customers and partners to ensure their needs are met. Economic and market uncertainty adds a further element of risk to the long-term viability of some customer and partner relationships. A continuous review of these relationships is maintained to mitigate this risk.”
The company continues: “The current restructuring risks could cause disruption to the business resulting in the loss of customers and staff. It adds that group does not have infinite cash resources and is exposed to the risk of running out of cash should its new business revenues prove insufficient to cover its cost base.”
Referring to the all cash offer of 110p per Alterian share from SDL, it says discussions are continuing but emphasises that “there can be no certainty that an offer for Alterian will be forthcoming”.
In the meantime the group had cash balances of £1.9m on September 30 down from £8.1m a year earlier – and down from £7m at March 31. It says this cash outflow is largely due to costs being in excess of cash-generating revenues for the period.
However, the board expects the business to be cash generative in 2012 and to have sufficient resources to meet its liabilities as they fall due on a continuing basis. It adds that the group will consider all financing options to support its growth and currently has a £2m overdraft facility with HSBC.
The shares closed 1.5p lower on Wednesday at 101.5p, a fall of 1.46%.
