Parseq, the AIM-listed software and BPO provider for the financial services sector, seems to be all at sea with its forecasts for FY11.
Parseq's CEO Rami Cassis, who is expecting double-digit organic revenue growth in FY11 (see here) said, "Trading subsequent to the year-end is progressing broadly in line with expectations and we remain confident of fulfilling our growth aspirations." However chairman, Richard Last said that although the target is "supported by the current level of prospects", this would require “a step change in the level of new sales”. Parseq issued a FY11 profits warning in January. We also see it has had to cut costs out of the Avance business, including the closure of two sites and 15% of its headcount. Investors weren’t too impressed, and Parseq’s shares fell 8%.
Parseq's revenue for the year to 31 December was £16.5m, up from £10.2m in 2009, and pre-tax profits were £718k vs. £1.8m (margin of 4.3% vs. 17.6%). Excluding the impact of the Avance acquisition and Intelligent Environments, which contributed £6.5m since the end of August 2010, organic revenue growth was flat. Excluding all exceptional items, finance costs and amortization, Parseq’s margin was over its targeted 20% (see Parseq emerges with Lloyds/HBOS deal).
Parseq is now managed as two business units, Services and Software, which are headed up by MDs, Rod Edwards and Phill Blundell. The Services unit is made up of the Documentric (BPO) and Avance (receivables outsourcing and loan processing) acquisitions, and Software is the former Intelligent Environments business. Services makes up 75% of the combined revenue, with software the remaining 15%.
It is still early days in the development of Parseq as it builds and buys a software and BPO capability to serve the financial services sector. Clearly however there is a lot of work still to be done, particularly if it is to achieve the desired organic revenue growth.