20 April 2011 – trading update

The software and IT services group has issued a positive trading statement for the six months to 31 March with profits set to be ahead of the comparable period last year.  The sale of more proprietary software and services has resulted in higher gross margins and this has more than compensated for a slight fall in turnover.  Recurring revenues have also continued to grow.  A surge in orders in March at the group’s manufacturing business resulted in an increase in the order book to £3.25m at the end of March (2010: £2.6m) with most of this expected to be delivered in the second half.  Strong cash generation has allowed net debt to fall rapidly to £7.5m and this is now 40% less than the peak three years ago – net debt is expected to fall further going forward.  Although the group’s markets in the UK remain challenging, the introduction of new products and strong order book give us confidence that prospects overall are good.  We retain our recommendation of  BUY.