Engin performing better

Stuart Corner
Wednesday, 26 August 2009 07:38

IT Industry - Strategy

Struggling VoIP service provider Engin (ASX: ENG) is showing signs of improvement. It has significantly reduced full year EBITDA and after tax net losses for the year and achieved  small positive EBITDA and cash flow in the second half.

For the full year Engin reported a loss after tax of $6.8m compared to $12.2m in the previous year EBITDA was negative $1.5m compared to negative $8.4m last year. In the second half of 2009. EBITDA was positive $0.1m and the cash reserves at 30 June $4.3m, the same as at 31 December 2008 but $2.3m down on 30 June 2008. Revenue for the full year was $20.1m, fractionally up on $19.8m for FY08. Services in operation were up 6.3 percent to 67,000.

The result means that the company has delivered on the promise made to shareholders at its 2008 AGM when chairman Ian Smith said the company expected to achieve cashflow and EBITDA breakeven on a monthly basis in the current financial year.

In that address, he also talked up the company's marketing initiatives, saying "we have entered a new phase of marketing and promotion which includes substantial upgrades to our website, a greater focus on targeted online promotion and the refinement of our product and service offerings." In its half year report the company described marketing activities as being "much reduced."

Its full year results show that Engiy spent just $970,00 on marketing for FY09, compared to $3.6m the previous year. It also slashed employee costs from $12.3m to $7.8m and operating expenses from percent5.8m to $4.0m.

Commenting on the company's full year results, Smith said that the positive EBITDA and cashflow had "exceeded expectations."

Engin's performance pales against that of MyNetFone (ASX: MNF). MyNetFone has yet to release its full year results but told the ASX last month that it had made cash receipts from customers of $10.96m for the year to 30 June 2009, a 46 percent increase over the previous year.

It ended the year with cash reserves of $1.21m, a 41.5 percent increase over the previous year, and at 30 June had 74,000 customers in Australia, New Zealand and Asia, up from 60,000 a year earlier. The company said e it expected to post a full year net profit in the range of $100K to $150K.