In its financial results for the year ended December 31 2006, the group reported a 35% increase in turnover to 29.2m, up from 21.5m in 2005.
Although turnover was healthy, Network Data has admitted it has taken a risk with its Hipstar subsidiary after its 2006 results revealed a decline in pre-tax earnings of 47.3%.
Last week, Mortgage Strategy reported Network Data’s prediction that Hipstar would control 10% of the Home Improvement Pack market. Richard Griffiths, chief executive of Network Data Holdings, stands by this prediction.
He says: “We are not worried about the figures. We went into this venture with our eyes open and turnover was better than expected.”
The 2006 report predicts Network Data’s revenue will soar in the next two years as HIPs are introduced, with revenues of 55.4m in 2007 and 87.6m in 2008.
Griffiths adds: “We have a list of 25 HIP competitors – incidentally, the same number of competitors as we have in the mortgage network market – and we will face the same skewed competition as we do there, with five big players competing against us.
“The small guys simply won’t survive in the HIP industry. By the end of 2007 it will be down to 12 players and in 2008 there will be fewer than 10.”
Network Data’s results were published by Edison Investment Research, which used the group’s HIP prediction as a reason to raise its share price prediction for 2007.
The report states: “Given that there is increased certainty about the likely main players in the HIP market, this leads to a revision of our valuation for the company to 99p a share from 78p a share previously.”