Monday, 12 October 2009

Intec foresees happy outcome for FY09

(By Philip Carnelley, 12 Oct 09, 10.15) In a year-end trading update, Intec Telecom says that sales will be in line with expectations while profits should be ahead. Consensus expectations are for revenue up 22%, to £166m, and adjusted PBT up 85% to £24m. So a good performance in challenging times, particularly on profits. As we have noted before, Intec’s operating margins (9% last year) have been historically quite low for a software company.

Speaking to FD Robin Taylor earlier this morning, he attributed the improved performance to two things. First, growth has been balanced across all regions, with good recovery in Asia following management changes. At the half year (see Intec sees best ever first half), almost all growth was in the US with Asia falling 1% in constant currency. Second, the company has been focused on only spending money where it could see a return – mainly, sales and marketing – keeping costs down as revenues grew. He admitted that overall, constant currency growth would be far lower than the 22% headline growth – we believe around 6–7% – but he pointed out that this still meant cash in the bank – cash generation has been ‘exceptionally strong’ with net cash up to £70m.

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