Auditors raise fears for Pigsback

THE future of Empathy Marketing, the company behind the pigsback loyalty brand, has been questioned by its auditors in its latest accounts.

The company’s accounts show a loss of €5,077,433 for the year ending in December 2008, with net liabilities of €1.6m, compared with a profit of €352,000 the previous year.

Auditors Deloitte said such losses “cast significant doubt about the company’s ability to continue as a going concern”.

While Empathy attributes its losses to the fall in marketing and online advertising spend, its level of debt is sinking any potential for profitability.

Turnover of €3.1m generated a gross profit of €2.6m, an inter company loan provision of €4.8m and administrative expenses of €2.7m combined to create an operating loss of €4.8m before tax.

The firm received a €4m injection from private investor Hotbed in 2005.

The company also launched its British operation in 2005, and has since attracted clients such as CDWow, Oasis and Tesco to its customer incentive programmes and its online “permission marketing” services. It had hoped its British operations would break even this year. The firm also has Bank of Ireland, eBay and Aer Lingus as clients.

The directors’ report cites remuneration as being critical for the company’s sustainability, in order to retain key staff. It also says it has cut its operating costs significantly in order to regain a positive cash flow.

The company is run by founder Michael Dwyer, who has 1.3 million shares in the firm.