Cerillion lifts orders on GBP £42.5 million Omantel deal

Cerillion said first-half trading was driven by a major new contract with Omantel, worth about GBP £42.5 million over its term.

The agreement, signed in January, is the software group's largest contract to date. Implementation is on track, and the contract is expected to make a significant contribution in the second half of the financial year.

First-half revenue is expected to be about GBP £18.0 million, down from GBP £20.9 million a year earlier. EBITDA is expected to be about GBP £6.2 million, compared with GBP £9.9 million in the same period last year.

The weaker first-half result reflected contract timing and limited recognition of high-margin software licence revenue. Cerillion expects a stronger second half, supported by the unwinding of a strong back-order book.

Orders rose sharply. New orders had doubled to GBP £39.6 million by 30 March from GBP £19.6 million a year earlier, driven mainly by the Omantel contract and demand from existing customers.

Its cash position also improved, with net cash at the half-year end of about GBP £32.5 million, up from GBP £31.2 million a year earlier.

Second-half weighting

The update points to a familiar pattern for the AIM-listed company, with results weighted towards the latter part of the financial year. That reflects how software and implementation contracts are booked, as well as the timing of licence revenue, which can have a marked effect on margins.

While first-half sales and earnings were lower year on year, order intake points to stronger activity ahead. The Omantel contract is central to that shift, both because of its size and because it adds a large telecommunications operator to the customer base.

Cerillion sells billing, charging and customer relationship management software, mainly to the telecommunications sector. It has around 70 customer installations across about 45 countries, with operations in London, India and Bulgaria and sales coverage in Continental Europe, the US, Singapore and Australia.

Growth backing

The board said the business remained on track to meet market expectations for the full year, citing first-half progress, the expected second-half income mix and anticipated new orders from existing customers.

It added that the pipeline of new business opportunities remained strong and that investment in the business was continuing to support growth.

The update underlines the importance of large contract wins to Cerillion's financial profile. A single agreement can materially affect order intake, visibility and the timing of revenue recognition, especially when higher-margin licence revenue falls into a later reporting period.

That dynamic was evident in the first half, when lower recognised revenue did not prevent a higher cash balance and a substantial increase in new orders. For investors, the key question is whether the expected second-half conversion of the order book will align with management's assumptions.

Chief Executive Officer Louis Hall has led the business since a management buyout from Logica in 1999. Cerillion joined AIM in 2016.

Implementation of the Omantel contract remains on track, and new orders from existing customers are also expected to support the full-year outcome.