Cerillion shares rise after software upgrade, profit forecast

Shares in Cerillion soared after the group told investors that annual profit would significantly beat previous expectations amid sustained strong trading.

The software provider now believes its adjusted pre-tax profit for the 2022 financial year will be “significantly ahead” of market forecasts of £10.1m, while revenues will be “marginally ahead” of expectations.

After reporting record interim results earlier this year, the London-based business noted that demand has remained very strong since early April, partly due to a robust backlog.

In the fourth quarter, Cerillion secured its largest-ever contract with an unnamed telecoms customer, worth around £15m and spanning ten years.

It said its performance benefited from a more favorable foreign exchange rate, lower net finance costs and lower depreciation and amortization than previously expected.

Cerillion shares jumped 7.7 per cent to £11.20 by late Monday morning, making them one of the most popular on the junior AIM market.

They are up 40 per cent in the past 12 months, but have soared more than fifteen-fold since listing on the London Stock Exchange six years ago at a modest 76p offering price.

“The pipeline of new business opportunities, both from existing and potential new clients, remains buoyant and the company is in a good position as it enters the new financial year,” the London-based firm said.

Brokerages Liberum and Singer Capital Markets raised their price targets and maintained their Buy recommendations on Cerillion.

Cerillion, founded in 1999 as a spin-off from the defunct IT consultancy Logica, provides software for invoicing, billing and customer management systems to companies in a variety of sectors and in dozens of countries.

Prominent clients have ranged from private security giant G4S, mobile service provider Three and New Delhi-based Bharti Airtel, the world’s second-largest mobile operator.

In the six months to March 31, group revenue rose 26 per cent year-on-year to £16.1m, while its statutory pre-tax profit rose 72 per cent to £5.7m.

Although the value of new large orders fell significantly, sales from new customers rose by almost a third to £172m.

Gross profit was also kept strong by Cerillion’s decision to open a new office in Sofia, Bulgaria, and to expand operations in India, two countries with lower average personnel costs.

When the results were released, Louis Hall, the firm’s founder and chief executive, said: “We see excellent opportunities for further growth and new client sales have grown significantly.

“Given the company’s progress and its strong financial and operating position, we continue to view the outlook very positively.”