Blur warning sparks sell-off

Former technology high-flier blur Group (BLUR) has plunged to a record low after warning that revenue in 2014 will miss forecasts by miles. Its auditors and the Financial Reporting Council are also currently trying to sort out recognition of problematic historical contracts, which could delay publication of full-year results.

"The board, following discussions with KPMG, has determined that a number of older projects started between late 2013 and early 2014, which have experienced delays, have shown a lower likelihood of completion," said the company. "As a result the recognised revenue for the full year will be substantially lower than previously expected."

Still run by founder Philip Letts, blur operates an online exchange for businesses to commission services and experts to pitch for the work. Argos, Regus, Amazon and Danon have already used the platform to buy and sell services.

It had appeared that the company, which last year issued a series of warnings, had turned a corner in 2015. New business has been coming in and the share price broke above 100p for the first time since last June.

In January, blur said project bookings had more than doubled in 2014 to $49.1 million and it had attracted a greater number of larger customers - at least $500 million per annum turnover - too.

However, it's the top and bottom line that continue to worry investors. Yes, blur is growing, but revenue in 2013 was just $4.8 million and the company made a pre-tax loss of $6.5 million. In the first half of 2014, it generated revenue of $5.7 million and lost $4.8 million.

Letts maintains that last year was one of "transition" for blur amid a time of heavy investment to speed up sales growth. He's also adamant that blur will become profitable in early 2016.

Shareholders will hope that blur's new revenue recognition policy, employed from mid-2014, will provide clarity. "This process will draw a line under certain older projects and completes blur's transition which started with the updated revenue recognition approach announced in Q2 2014," says David Sherriff, who became deputy chairman in February.

"With the increasing mix of enterprise customers over recent quarters the business is benefiting from better project completion, higher repeat business and tighter invoicing to cash."

This latest warning comes just two months after technology industry veteran Sherriff got his new role. He bought 28,500 shares at 87p shortly after, and non-exec Richard Bourne-Arton picked up 32,051 at 78p.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.