Travel firm targets profit in 2017 after posting loss

Serko chairman Simon Botherway. Photo / Chris Gorman

Serko, the online travel booking business, reported a wider annual loss in line with its prospectus forecast, while delivering slower growth in sales than anticipated, and is targeting profitability in the first half of 2017.

The Auckland-based company posted a net loss of $6.43 million in the 12 months to March 31, more than the $6.33 million forecast in offer documents when the company was floated last year.

Sales rose 55 per cent to $10.4 million, about 5.8 per cent below the prospectus forecast and in line with Serko's warning in March that it would miss that target.

Serko has previously said some billable services would not be recognised until the 2016 financial year, while delays to its mobile app would weigh on revenue.

The company cut its revenue forecast for the first half of 2016 to $7.5 million to $8 million, down from the $8.3 million target in the offer document, expecting annual revenue of $16 million to $18 million.

"Revenue in the second half is expected to accelerate as these new and refreshed products gain traction," Serko said. "The company anticipates moving into profitability in the first half of FY17 within existing cash resources."

When Serko listed in May last year, chairman Simon Botherway said the company forecast losses over an 18-month horizon, and expected a positive cash flow by the end of 2016.

Last year Serko raised $17 million in new capital selling 15.5 million new shares at $1.10 each, via an IPO to fund growth and repay debt. Founders Darrin Grafton and Bob Shaw sold a further $5 million of shares into the offer, retaining about a 20 per cent stake, and agreed not to sell any more shares until two days after Serko announces its 2016 annual result.

Shares closed up 4c yesterday at 91c.

The company's cash balance was lower than the offer document forecast by $400,000 at $4.5 million.

Serko

Year ended March 31
$6.43 million net loss.
$10.4 million in sales.
$4.5 million cash balance.