From AIM pin-up to 'rubbish AIM company,' to quote one IT analyst today, Blur Group (BLUR:AIM) has scored another spectacular own goal with this latest revenue warning. On closer inspection another audit review effectively means revenue from many projects signed in 2013 and 2014 not being recognised as previously hoped. Crash go the shares, down more than 30% to 55.5p.

House broker N+1 Singer had been looking for $12.3 million of income for 2014 but you can scratch that now. The broker has pulled its forecasts completely, it's frankly anyone's guess what the figure will be, or when we'll find out since, 'even more embarrassingly,' its auditors are in the process of dealing with enquiries from the Financial Reporting Council‎ which is likely to spark a delay to the results announcement.

For background, last year Blur announced full year results on 23 May.

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Having restated its 2014 revenue hopes in January one might have expected that to be that, which makes today's news all the more surprising. It's arguable that these revenue recognition issues are rear-view mirror stuff, that a line can be finally drawn under them now as older projects become a smaller part of the mix. We'll see.

N+1 Singer remains unsurprisingly forward-looking, flagging Blur's ongoing commitment to long-term growth and 'profitability in Q1’16.' This will apparently be driven by the company's much greater focus on enterprise customers 'which provide a more attractive and reliable revenue stream,' plus adding to its as bank of blue chip service providers.

But big issues still remain. As (again) pointed out by Anthony Miller, the respected analyst at TechMarketViews, 'there is nothing inherently wrong about running a services online marketplace,' but Blur's problems are its lack of control. 'Blur recognises revenues against agreed project milestones yet has no real control over the quality and timing of service delivery,' Miller says.


What we do know is that Blur burned through $7 million of cash in the second half of the year taking net cash down to $17.4 million. While Blur says net cash 'remains in line with expectations' it remains a business with just $3 million of gross profit and nearly $13 million of operating costs, assuming half year figures are annualised. Profit hopes 'look like a pipe dream unless it starts cutting costs fast,' says Ian Spence of IT consultancy Megabuyte today.

Issue Date: 10 Apr 2015