BuildOnline UK revises past performance

New figures available from the UK regulator, Companies House, show that BuildOnline UK, the UK-based construction collaboration vendor that is now part of CTSpace, waived a substantial debt prior to its 2006 merger with Citadon. It appears BuildOnline also substantially overstated its revenues for four years. However, the business was still operating at a loss at the end of March 2007.

While updating a presentation I use for various university lectures, I did another Companies House search on BuildOnline (UK) Ltd and discovered that last month it finally lodged a financial statement for the year ending 31 March 2007. As long-time readers of this blog may recall, this covers the period (December 2006) during which the company merged with Citadon (see post) to become CTSpace. A year later (December 2007), the combined group was acquired by the Sword Group.

In a series of posts in March (listed below), I related the various corporate changes that preceded the Sword group acquisition, and the latest financial report confirms much of what I wrote. The directors report says that on 12 May 2006, following the liquidation of parent undertaking BuildOnline (Holdings) Ltd, BuildOnline (UK) Ltd became a subsidiary of BuildOnline Global Ltd. On 15 December 2006, this company (whose return for the year ending 31 March 2006 is still marked as ‘overdue’) was acquired by US-registered company Collaboration Technology Inc, to become CTSpace.

The report outlines the financial performance of the group, describing a £16.7m profit (up from a restated 2006 loss of £1.4m) – an apparently phenomenal turnaround that is actually largely due to an “exceptional gain of £17,147,741 in relation to the waiver of intercompany loans due to the previous parent undertaking, BuildOnline (Holdings) Limited.” In other words, a substantial portion of the £17.4 debt owed to the company’s shareholders at the start of the financial year was written off by the end of it.

However, previous years’ revenues dating back to 2002 have also all been restated to reflect changes in BuildOnline UK’s revenue recognition policies. As a result, 2002’s turnover was up a little but the turnovers from 2003 onwards are all much lower than previously stated – 2005 is reduced by £681k (ie: its revenues were overstated by a whopping 38%) – with the total adjustment amounting to a downwards revision of £1,724,895 (or 21% over the five years). Add these to changes relating to royalty accounts with other group companies totalling nearly £268k, and the shareholders are left with an additional £2.07m deficit, making the March 2007 closing shareholders deficit £2.75m.

Aside from these transactions, BuildOnline (UK)’s turnover in the year to March 2007 was £2.39m (up just 3% from a restated £2.31m in 2006). Operating losses were down to £0.64m from £1.47m the previous year. UK staff numbers declined from 37 to 26, helping cut the staff costs from £2.4m to £1.6m – accounting for most of the savings by the look of things.

The turnover growth figure is certainly on the low side, given that rival UK collaboration vendors were recording double-digit growth rates over the same period – eg: Business Collaborator achieved 22% growth in 2006 and 20% in 2007, 4Projects achieved 40% in the year to March 2007, BIW Technologies [my employer] achieved 24% growth up to September 2007 and Asite achieved 26% up to December 2007.

Related posts:

Update (25 November 2008): I have just been forwarded a copy of the latest CTSpace newsletter which makes repeated reference to “Sword CTSpace” – presumably the preferred branding for the business. It also says it has “Over 140,000 users across 12,000 projects and 26 countries.”

Update 2 (28 November 2008): I see that one-time BuildOnline managing director Mark Oliver, after a spell as business development director at Laing O’Rourke, is now managing director of H+H Celcon.

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