4Projects has a flat year

In “tough” trading conditions, 4Projects’ revenues slipped slightly in the year to 31 March 2011, while profits – though positive – fell 35% as the company looked to invest for future growth.

The latest financial statements from Sunderland, UK-based construction collaboration technology vendor 4Projects will be submitted to Companies House shortly. However, I got an advance preview and a chance to talk about the numbers with 4Projects’ CFO Chris Baty and sales director Steve Spark in London yesterday.

The figures for the year to 31 March 2011 show a second successive year of falling revenues, with turnover down 1.5%, at £5,007,253 (compared to £5,083,492 in 2010 – post), though the rate of decline has slowed. Steve was keen to compare 4Projects’ performance with that of BIW – which I reported last week – pointing out that, pro rata, its 12-month turnover had also dropped, to around £5.27m (2009: £5.93m); on this basis, the gap between the two Software-as-a-Service rivals is narrowing.

4Projects’ profits were down 34.7% to £1,358,508 (2010: £2,079,569). The report shows £195,337 in exceptional items (mainly old debt write-offs), but the sharp drop in profit is the first in 4Projects’ history (it has been consistently profitable since the early 2000s). The company paid a dividend of £1.165m to its parent company during the year.

Chris said the figures showed it was “tough out there”, but he felt the figures were “pretty solid”. He explained the business was seeing an underlying decline in non-recurring revenues, as 4Projects sought to convert volatile project-based income into more predictable long-term enterprise deals. 4Projects’ customer base is still dominated by construction contractors (“55 of the top 100 contractors use 4Projects”), but the company was also securing industry clients, particularly in utilities, energy and retail, Steve added  (UK chains Wilkinson and The White Company were mentioned)

Profit margins were also squeezed due to 4Projects’ investment in its software development, in marketing, and in growing its overseas presence – particularly, but not only, in the USA (the report highlights advance payments made to its retail-focused sister company 4Retail Ltd* and to US-based 4Projects Inc); the Middle East also now features on 4Projects’ radar (it had previously refrained from following others into Dubai). Average staff numbers increased from 53 to 57 during the financial year; in terms of personnel, 4Projects is now bigger than BIW (though the latter is now sharing some resources with German sister company conject – the total group employs 155 people).

For 4Projects, Chris said the prospects for the current financial year were already brighter, but said the big payback would come in future years as the long-term benefits of the Software-as-a-Service model kicked in. We talked a lot about building information modelling, and it was clear that 4Projects – like other vendors in this space – is investing to keep itself at the forefront of SaaS collaboration as BIM-related functionality becomes increasingly important both in the UK and in other markets.

* Update (3 January 2012) – 4Projects’ retail-focused subsidiary, 4Retail Ltd, reported a loss of £371k on a turnover of £30k in the year to 31 March 2010. The company owes £500k to other group undertakings.

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