NetDimensions, the AIM-listed, but increasingly international in focus, training systems supplier, delivered a strong performance in FY11. Revenue for the twelve months ended 31 December grew 48% to $12.3m, and operating profits were up 360% to $576k.
This is a swift turnaround from the loss-making first half (see NetDimensions delivers the expected H1 loss) and shows NetDimensions has now got to grips with the increased costs from its two acquisitions made in 2010 - US-based training software company Business Performance Technology (FY09 revenue $1.2m), and EKP, the distribution rights business of its UK partner, Intellego Group. 2011 revenue has clearly been boosted by these two acquisitions, but even so, we suspect organic growth was in double digits. Investors were pleased, driving up NetDimension's shares c7%.
The North American and EMEA regions were particularly helped by the M&A. NA (Canada, USA and the Caribbean) is now the largest division group-wide, representing 47% of total sales or $5.8m vs. $2.5m in FY10. Meanwhile, the EMEA region saw revenue grow 15.2% to $4.99m. An increase in higher margin customisation and implementation work – which more than doubled to $1.9m thanks to the acquisitions - should also help on the margin front.
But it is in the fast growing emerging markets in China and Asia Pacific where we expect most of NetDimensions’ future organic growth to come from. Even though this is a small percentage of the total - rest of world division is just 12% of the group - growth here was up 21%, and we suspect largely organic. To expand further into the China region NetDimensions opened an office in Shanghai in 2011. It is no coincidence that the company’s headquarters are also in Hong Kong.
