Checkit losses widen after disposal of Bulgin

Checkit reported revenue from continuing operations of £9.8m in its preliminary results on Tuesday, rising from £1.0m year-on-year.

The AIM-traded firm said Checkit UK, which was acquired in May 2019, contributed £8.5m in the year ended 31 January - up 7% on an annualised basis - while Checkit Europe contributed £1.3m of revenue, up 30%.

Recurring business, including software-as-a-service, via Connected Workflow Management (CWM) and Connected Automated Monitoring (CAM) was currently providing “significantly more attractive” margins than Connected Building Management (CBM), the board claimed.

Trading results before non-recurring or special items for the year were said to be “as expected”.

Checkit said reported results were impacted by non-recurring or special items, resulting from the corporate restructuring during the year totalling £0.7m, and the amortisation of acquired intangibles and impairments of intangible assets totalling £10.6m, as a result of the Covid-19 crisis.

Its operating loss for continuing operations, after non-recurring or special items of £11.3m, was £16.5m, widening from £4.5m, with the board noting that of the £11.3m, £10.6m was related to the impairment of intangible assets.

The company reported an operating loss before the non-recurring or special items of £5.2m, widening from £4.5m.

Its loss before interest and non-recurring and special items, tax, depreciation and amortisation came in at £3.6m, compared to £2.8m a year earlier.

A gain of £85.3m was generated from the sale of Bulgin, which contributed to its £89.4m profit from discontinued operations.

Checkit said its cost base had grown in line with expectations during the year, as a result of its investment in technical and marketing spend, as well as an expanded leadership team and the absorption of plc costs, which were previously shared with the now-disposed Bulgin business.

Elektron Eye Technology was treated as a discontinued activity, and its assets impaired.

Cash as at 31 January totalled £14.3m, up from £10.1m year-on-year, which the board said left Checkit “well-funded” to enable it to survive the current economic uncertainty created by Covid-19, while continuing to pursue its new product development programme.

Cash as at 31 May was £13.1m, the directors added.

“In the financial year to 31 January, the group experienced by far its most successful year and underwent a significant change since admission to the London Stock Exchange in 1948, over 70 years ago,” said executive chair Keith Daley.

“The sale of Bulgin, the original bedrock of the group, allows Checkit to concentrate on the business of digital transformation through a connected suite of cloud-based products.

“We are excited by the opportunities that we have identified and begun to capitalise upon.”

At 1511 BST, shares in Checkit were up 3.33% at 31p.