2 June 2011 – trading update

The group has confirmed in a trading statement that its results for the year to 31 March are going to be lower than originally expected due to a combination of lower spending by customersand some operational failures which were the responsibility of management.  The management concerned have since been dismissed for negligible cost.  Trading in the first quarter of the current financial year has also begun slowly, although visibility and activity levels for the second quarter appear to be improving.  The group has also announced that it has agreed a substantial contract extension with an existing customer which should generate recurring revenues of £700,000 per annum for the next three years.  Regular readers will know that this is one of our favourite stocks which so far has been a very poor performer.  Although potential investors may prefer to wait until the 2011 results are announced early in July, we continue to have faith in the management team and rate the shares as a BUY.