Conject UK resists competitive pressure to cut prices, and grows revenues 13% in 2014.
The Woking, Surrey-based SaaS construction collaboration vendor Conject UK, the British subsidiary of the Munich, Germany-based Conject Group, has reported turnover up 13% in the year to 31 December 2014 to £5.696m, compared to £5.028m the previous year, continuing its double-digit recovery since its post-recession 2012 low-point.
The UK business reported a modest operating £40k operating loss (2013: £177.6k), which, with a little accounting magic, allowed it to declare an after-tax profit of £72.9k (versus a £75.6k loss in 2013). The firm’s order book position improved, with “future recognisable revenues” up just over £1m – or 9% – from £11.69m to £12.74m at 31 December 2014.
The results might have been stronger but for some aggressive domestic competitor action; the directors report:
“In the second half of 2014, we experienced some serious price-cutting from a number of competitors. We chose not to compete at these levels. As a result, a number of new business opportunities were lost.”
Operations in Singapore continued to expand, while “the Middle East, was, and remains, very active,” though “some contracts took some considerable time to conclude, resulting in a number of delays to project commencement dates” (and presumably reducing revenues).
The Middle East remains a key market for several vendors with significant untapped potential: Asif Sharif, the company’s Dubai general manager, recently wrote in in the region’s Construction Business News that 70% of the region’s projects were still not supported by ‘fit for purpose’ project collaboration systems. UK MD Steve Cooper, right, told me that UK or US-led projects were more likely to deploy a platform, but locally-based clients delivering projects with less onerous approaches to contract compliance currently found little value in online collaboration (Conject has today announced that its core ConjectPC platform will be used on the US$1bn Reem Mall project in Abu Dhabi).
In terms of headcount (2014: 52), Conject UK comprised just under a third of the parent Conject group, which in the year to 31 December 2014 generated revenues of €21.5m (c £15.94m or US$24.25m) – up 7.5% from 2013 (post) – and was profitable. Even on a conservative projection covering just two years of anticipated revenues, Steve told me the group had an order-book worth some €34m (c. £25.21m or US$38.31m). In Europe, the UK and Germany remain the most established markets, but France had also seen strong revenue growth of 30% (albeit from a low starting point); revenues in the group’s Asia-Pacific arm – which includes the Middle East – were up 55%.
(The group’s revenue growth lags behind that of fellow Munich-based SaaS construction collaboration provider, think project!, which grew 13% in 2014, achieving revenues of €20m, closing the gap on its rival. I hope to learn about the 2014 performance of Conject’s closest UK competitor, 4Projects, soon.)
Alongside long-established Conject UK customers such as Gleeds, Mace and Lend Lease, the company secured new project and enterprise agreements with Ericsson (data centres projects, I believe), Cap Gemini and US contractor Paragon (adopting Conject’s defects reporting tool), and new programme appointments with Interserve, University of Manchester and Rise Management Consulting (an offshoot of Mace). The Conject platform continued to be deployed in the busy London market on both commercial and residential projects (Greenwich and Battersea schemes were mentioned), but traditional housebuilders are also adopting the system, Steve said, looking to roll-out projects more efficiently, automate reporting and save time on project reporting.