While most of the focus of today’s FY results from Corero Network Security was (not unexpectedly) on the eponymous Network Security division (CNS), the plaudits really belong to the orphaned education software Business Systems division (CBS – see here for the backstory).
Indeed, revenues at CBS soared 45% to £4.4 (all organic). EBITDA margins expanded to 36.2% (2010: 33.8%), generating a £1.4m pre-tax profit. But this wasn’t enough to counteract the £1.6m in pre-tax losses from the CNS division, which was heavily weighed down by the acquisition of loss-making Top Layer Networks (see Corero finds a new Top Layer). Net net, at group level, Corero made pre-tax losses of £1.2m on £11.3m of revenues.
So the race is well and truly on to reach profitability (at least at the operating cash flow level) before the dosh runs out – Corero burned almost £1m last year. But there seems to be plenty of room to manoeuvre for now. Corero raised £4.6m gross in last month’s placing (see Corero placed to grow) which adds to the £4.3m year-end cash balance, itself boosted by a £2.3m fund raising.
Network security is not a bad area to place your bets – as many other players are doing. The story on sales at the CNS division looks promising but somewhere along the line they do rather need to make some money. Meanwhile, the CBS division just shines on. Given that this is the only bit that is generating cash, I would imagine CEO (and Datatec founder) Jens Montanana will not be keen to jettison it quite yet. But I would presume that there would be no shortage of buyers when the time eventually comes.