IT services group Ergo expecting revenues to more than double

Irish firm sees turnover rise 42% to €34.8m and forecasts revenues of €70m for next year

Ergo chief executive John Purdy: “We’ve got a pretty strong pipeline going into next year and see significant growth in both revenue and headcount.”

Ergo chief executive John Purdy: “We’ve got a pretty strong pipeline going into next year and see significant growth in both revenue and headcount.”

 

IT services provider Ergo, which has been on the acquisition trail in recent years, forecasts that revenues will hit €60 million this year with earnings before interest, taxes, depreciation and amortisation of €2.5 million expected.

The Dublin company offers IT solutions ranging from cloud and managed services to software and infrastructure. It was established in 1993 by Tim Sheehy and former EY Industry Entrepreneur of the Year award winner John Purdy.

Mr Purdy, Ergo’s chief executive, told The Irish Times that the firm was six weeks out from the end of its latest financial year and was on target to hit the €60 million mark, with turnover expected to rise again next year to €70 million.

“We’ve got a pretty strong pipeline going into next year and see significant growth in both revenue and headcount,” he said. “Like-for-like business, which is what we had before the recent acquisitions, is up 30 per cent year on year. In addition, acquisition growth is giving us a big uplift in revenue.”

Accounts recently lodged for Ergoservices Limited show turnover rose by 42 per cent in the year to the end of March 2016, climbing from €24.07 million to €34.8 million as pretax profits jumped to €4.78 million from €507,670 in the previous year.

During the financial year under review, Ergo sold its shareholding in Fenergo to US private equity firm Insight Partners for $75 million. (It acquired a 20 per cent stake in Dublin-based Fenergo for $4 million in 2013.) The deal resulted in a restructuring of the group where the previous holding company, Fineside Limited, was replaced by a new one known as Burlawn Limited.

More acquisitions

Ergo also acquired iSite, a customer relationship management specialist, in a deal expected to add €7 million in additional revenues. It also bought Cork-based software licensing specialist Micromail, which is forecast to add €18 million to turnover.

As a result of these acquisitions, Ergo said it recorded more than €600,000 in depreciation, amortisation and interest. This lead to an operating loss of €449,744, versus a €501,603 in profit a year earlier.

Ergo said it made a €5.3 million gain on disposal of assets during the 12 months under review.

Headcount at the company rose from 159 to 220 last year, with related staff costs climbing to €12.4 million from €9.17 million. Directors’ remuneration totalled €567,600, as against €458,292 to March 2016.

Mr Purdy said the number of employees had risen further since the end of the reporting period to about 250 full-time position, with a further 150 contractors.