Vebnet benefits as new deals ease pain of £100,000 loss

Published on Thursday 22 March 2007 12:04

VEBNET, which provides technology for flexible employee benefit schemes, has reported a first-half loss of £100,000, compared with a profit of £68,000 over the same period the year before.

But the Edinburgh-based group - which was founded by former Royal Bank of Scotland worker Gerry O'Neill and fund manager Sandy Nairn - said that business so far over the second half of the year had been encouraging, with new deals signed with Bupa and Centrica.

And the company said that it was confident of meeting the City's full-year profit expectations of around 260,000.

Revenues increased slightly to 2.1 million, from 2.08m. Turnover from the group's core Fix&Flex technology rose 42 per cent to 1.7m, while the actual number of workers using it rose by a quarter to 216,336 and the number of customers using it jumped to 105, from 86.

The group also said that it was currently targeting 14 new deals in the second half, which could add another 26,000 employee enrolments, after adding clients such as ICI and Royal London over the course of its latest trading year.

Vebnet said that earnings had been impacted because of a decision by insurance giant Prudential, following a strategic review, to focus on its core business and therefore not to invest further in a worksite marketing solution.

This meant that revenues from Prudential reduced significantly from 878,000 to 118,000 over the reporting period - a drop of 760,000. But chairman Derek Scott said: "The financial impact of the Prudential's decision, to exit the worksite marketing business in the UK, will be restricted to the current financial year."

Overall costs rose to 2.14m, from 1.91m, including 170,000 spent on extra technology staff to service the Pru's business.

However, Mr Scott remained upbeat and said: "Vebnet continues to build up its core business. All measures of progress exhibit solid growth characteristics."

He noted that business in the first ten weeks of the new calendar year has been "encouraging".

"Already we have gained new and relatively large customers for Fix&Flex and remain very confident about the company's ability to sustain this growth in the UK in future years."

Last October, Vebnet, bought English-based rival 4th Contact for 661,000, a move which chief executive Mr O'Neill said marked a "significant development" for the city centre-based group as it brought clients such as Walt Disney, Daimler Chrysler, Warner Brothers, Volkswagen and The London Stock Exchange into its reach.

Mr O'Neill said that the firm was continuing to look at other opportunities, including possible acquisitions, to drive sales in both the UK and overseas markets.

"We're making a lot of headway in terms of the 4th Contact integration but we're continuing to look at opportunities. At any given time there's always one or two we'll be looking at. Whether they surface as transactions remains to be seen."