Crimson Tide's profit falls after costs rise on new hires

Crimson Tide on Friday reported a drop in annual profits despite a slight increase in revenues, as its cost of sales and operating expenses increased.

The mobile business app developer's profit before tax dropped to £0.1m in 2018, falling by 67% compared to the year before, as cost of sales increased by 40% to £0.3m and operating expenses climbed by 20% to £2.0m as the AIM traded company said it added "some very senior sales people".

The new sales team consists of director level appointments in partner sales, enterprise sales and solution sales, and has already increased the AIM traded company's pipeline.

Meanwhile, revenue increased by 5% to £2.4m as UK turnover increased by 8% to £2.0m and Irish turnover climbed by 24% to £0.4m amidst a higher proportion of SaaS revenues, though the company received no revenues from Switzerland or the US, unlike the year before.

Cash and cash equivalents stood at £0.6m at the end of the year, down from £0.8m at the same point 12 months earlier.

Crimson Tide said its internet of things and time & attendance mpro5 modules are seeing their first rollouts, now including features such as fingerprint and facial recognition.

Barrie Whipp, executive chairman of Crimson Tide, said: "A year of significant investment in new sales & marketing resource, whilst still producing profitability and net cash, sees Crimson Tide well set for growth. mpro5 has evolved into a gold standard mobility system used in over 260,000 sites and is poised for even wider opportunities."

The board expects that additional functionality and international expansion will accelerate long term contracted revenue growth in the near future, with this to have a positive impact on profits as margins stand close to 90%.

Crimson Tide's shares were down 5.66% at 2.50p at 1249 BST.