Fitbug expected to reduce loss as it continues turnaround

19th Jan 2017 16:20

(ShareCast News) - Corporate digital wellness technology provider Fitbug Holdings issued a trading update for the year to 31 December on Thursday, saying revenue for the year is expected to be slightly behind that for the corresponding period last year.The AIM-traded company said the mix of revenue is expected to have changed, however, to over 90% of 2016 revenue from corporate customers.Losses before tax for the full year are expected to be in line with the board's expectations.The firm's board said overall, its turnaround strategy is expected to have reduced losses for the full year by almost 50% in comparison with 2015's audited loss before taxation of £6.53m, with substantial cost savings made in the second half which will continue to benefit Fitbug through 2017 and beyond. Its balance sheet is also expected to show an improvement over the FY15 balance sheet as a result of its £2.61m fundraise and the conversion of £8.4m of the group's core debt into equity, which was completed in July.The board said it expects to announce its final audited results for FY16 in April."The board remains mindful of the funding needs of the business moving forwards, particularly with the company's corporate wellness growth strategy, and will continue to keep this position under review," it said in a statement."The company has continued to make good progress with the development and sales of its digital wellness programmes in pursuit of its new service based strategy which was first announced in December 2015 to focus on corporate wellness."As it announced on 18 January, Fitbug has secured an order for 14,000 Orb devices which it shipped to an overseas client in late December."The client, a global financial services group, is embarking upon one of Fitbug's corporate challenges during the early months of 2017 as part of a one year programme and will pay ongoing service revenue for this programme."Fitbug's corporate wellness strategy is designed to shift the focus of the business away from the sale of Orbs to the generation of ongoing service revenues from the use of its digital wellness technology."The board said Orbs are supplied to corporate customers at low margins to allow employees to access and participate in the group's digital wellness programmes.However, the development of ongoing service revenues is expected to provide more significant margins over the longer term."The board expects this contract to provide in the region of £60,000 in ongoing service revenue in 2017."Fitbug said it believes that the group's prospects for 2017 are positive with a growing pipeline of corporate opportunities particularly in the UK and Europe, with further opportunities being explored in the Far East and the US."The directors believe that current progress and sales opportunities confirm that the company has embarked on the right strategy to move away from retail to focus on the B2B corporate wellness sector as previously outlined."Fitbug's shares were suspended from trading at 1520 GMT on 18 January pending the release of its trading update, but the shares were restored to trading on AIM from 1330 GMT on Thursday.