Recurring revenue up at EDP in half year

Sales apps specialist EDP sees more profit from hosted services, announces acquisition plan

Sheffield cloud apps provider Electronic Data Processing (EDP) has reported a seven per cent rise in operating profits to £431,000 in the first half of 2013, including a greater proportion of revenue from recurring contracts based on hosted apps.

EDP specialises in providing sales intelligence applications, including to wholesalers across the UK. Revenue from hosted apps is now 44 per cent of the debt-free firm's £2.93m turnover in the first half – up from 41 per cent in the same period a year ago, when it recorded a total revenue of £2.89m.

Contracted recurring revenue accounted for £2.2m or 76 per cent of turnover – the same proportion as the first half of 2012, the company said.

Its operating margin is also up, to 14.7 per cent from 14 per cent in the year-ago period.

Sir Michael Heller, chairman of EDP, said the result was down partly to careful management.

"We have a robust business model, with strong recurring revenue and a carefully managed cost base. While the economy remains uncertain our customers will remain cautious. However, with our product and financial strength we are well placed for the future," Heller said in its interim results announcement.

He also said the company could soon be on the acquisition trail. "At 31 March 2013, group cash balances were £5.9m, vs 2012's £5.2m. Our policy is to use these cash balances for acquisitions should suitable opportunities arise."

EDP also made £440,000 in cash from selling off freehold property in Bellshill, Scotland, which it said will save it £35,000 a year.

"We have continued to sign new users for our main products, Quantum VS and Vecta. The economic backdrop has created a very mixed picture for businesses in the sectors we address, with some experiencing growth, while others continue to face difficulties," Heller noted.

However, EDP customers "continue to recognise" the benefits from cloud. "Our strategy over recent years has been to increase the proportion of our business delivered through our hosting centre in Milton Keynes and this now represents 44 per cent of turnover," Heller confirmed.

EDP's last results announcement was for the full year ending 30 September 2012,where it reported turnover up 3.6 per cent to £5.8m for the year.