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Dec 16 2011

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BIW still hampered by tough market conditions

In its final year as an independent business, Woking, UK-based construction collaboration technology provider BIW Technologies continued to be affected by the effects of the global financial crisis on the wider construction industry. Its latest annual report and accounts, for the 15 months to 31 December 2010, show a turnover of £6.59m (up from £5.934m in the year to 30 September 2009 – post) and a pre-tax loss of £140k (an improvement on the £0.73m losss last time). BIW was acquired by German vendor conject almost exactly a year ago.

[Update (13 January 2012) – I have updated the graphs below to take account of the change of year end; the amended turnover figure pro-rata is c £5.27m while the loss would be £112k.]

In its report, BIW underlines the tough trading climate:

The continuing global economic malaise severely impacted funding for private sector funding and the withdrawal of funding for public works projects (as part of the UK government’s debt-reduction measures) resulted in challenging trading conditions. Despite this, the company’s revenues amounted to £6.59m for the period, clearly demonstrating the strength of the SaaS business model.

The change of financial year-end brings BIW into line with its new German parent, but the preceding 15 months was clearly a difficult time, with turnover dropping pro rata over the five quarters. The tough market conditions since 2008 have affected all services businesses supporting construction projects, and some – but not all – of the SaaS collaboration vendors I monitor (eg: 4Projects, Aconex UK, Asite, Unit4) have struggled to maintain revenue levels in their core markets.

The impact of the downturn on company profits was particularly marked for BIW (especially as others maintained or even increased profitability), so the 2010 performance looks encouraging, edging the business back towards break-even after 2009’s big reverse – which was inflated by one-off expenses totalling £618k associated with its September 2009 financial restructuring. If the exception costs were subtracted from the previous year’s results, BIW lost £112k, so 2010 actually saw losses increase slightly.

Fifteen months earlier, BIW saw its order book drop by about a quarter. The continued impact of project deferrals and cancellations is apparent from the figure given for future revenues yet to be invoiced: down from £9.4m to £8.3m.

However, after a year working with conject, BIW directors clearly believe they have the critical mass they need to benefit if and when the construction sector recovers:

The directors believe that, as a member of the Conject Group, with offices in nine countries, combined revenues of around €17million, 150 employees and approximately 170,000 active users, BIW is best placed to benefit from any upturn in the economy, well ahead of its competitors.

BIW’s own headcount dropped from 56 employees to 51, partly due to a decision to close its development and support operations in India and bring them back onshore to Nottingham in the UK (p.11 of the annual report still refers to its off-shore operation in Vadodara, but I was told the withdrawal from India took place in phases spanning either side of the report’s year-end, hence the slight ambiguity).

Permanent link to this article: http://extranetevolution.com/2011/12/biw-still-hampered-by-tough-market-conditions/

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  1. Steve Nelson

    Hi Paul
    Happy New Year.
    Do your useful Collaboration Vendor graphs still make sense (particularly the turnover chart)?
    Surely you have to scale down the latest BIW numbers by 12/15th’s, otherwise you are over-stating both their annual turnover and annual loss?

    Kind regards
    Steve

    1. Paul Wilkinson

      Thanks, Steve. Not being an accountant, I wasn’t sure how one allowed for a change of year end – beyond changing the year-end date. I have amended the graphs now (the difference is negligible on the loss, but it clearly reflects in the turnover chart).

  2. Steve Nelson

    Paul
    For a non-accountant you’ve got a good grasp of the Aconex accounting shenanigans!
    Ever thought of a change in career? 🙂

    Regards
    Steve

    1. Paul Wilkinson

      I’ve been learning as I go along, just trying to apply some kind of consistent approach (which isn’t easy when year-ends, revenue and equity recognition policies, etc keep changing). I don’t think I’m cut out to be an accountant, though – keep falling asleep if I try to read even simple explanations of book-keeping.

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  2. Aconex revenues flat and losses deepen | Extranet Evolution

    […] is similar to that of other SaaS vendors in this sector (eg: 4Projects – post; BIW – post; Unit4Collaboration – post), who in recent years have struggled to maintain previous turnover […]

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