Norkom expects revenues to fall 10%

FINANCIAL SOFTWARE producer Norkom Group yesterday warned that it expected its revenues to fall by about 10 per cent in the first half of its trading year.

In an update to the Irish Stock Exchange, Norkom said it believed that, as a result of “elongated sales cycles, together with the delay in new regulatory guidelines passing into law in Asia”, revenues in the first half of its trading year would fall to €22.5 million – down from €24.6 million a year earlier.

Shares in Norkom fell as much as 32 per cent yesterday, to €0.85, following the announcement.

The group expects earnings before interest, tax, depreciation and amortisation to fall from €4.5 million to between €1.2 and 1.5 million because of reduced revenues and an increased investment in sales and product development.

Despite the warning, Norkom chief executive Paul Kerley said the company’s long-term prospects “remain positive”, and it would continue to invest in all areas of its business.

“The underlying growth in demand in the market is increasing, particularly for our packaged solutions. Buying trends have moved to purchasing packaged solutions that address specific areas of criminal activity while opening the way to put a full enterprise capability in place.”

Norkom said it expected a modest return to revenue growth in the second six months of 2011.

It was confident in the “underlying strength of the business and market opportunity” and US operations returning to growth.