Intelek produced another year of strong profit growth in the 12 months to March 2009.
Profits increased from £3.31m to £3.66m – after £417,000 of restructuring costs – in the year to March 2009, while revenues improved from £36m to £39.3m. The total dividend was increased from 0.45p to 0.465p a share.
Modems and amplifiers supplier Paradise Datacom has increased its profits for the past five years. Last year they improved from £3.2m to £3.6m. The commercial market was weak but this was offset by higher government spending. A new product, launched in partnership with ViaSat, that helps to reduce the usage of satellite capacity will be launched later this year. Investment in HDTV and other newer technologies will help this business continue to grow.
CML, the aerostructures business, improved its sales and margins. Profits rose from £1.8m to £2m. A new, grant funded composites facility will open later this year.
The microwave components business was the weak part of the business last year. It broke even on revenues of £7.3m. Telecoms business fell off but new work was won from air traffic control and defence sectors. Cost reductions and modes overall revenues growth should help the business make a better contribution this year.
This year could be tougher for Intelek. The aerospace market has turned down and production of corporate jets has slumped. Some military work is coming through but that will not be enough to totally offset the commercial sector downturn.
Profits are likely to fall this year with the weak aerospace market and the poor commercial demand for Paradise Datacom. Profits could end up at around £3.5m in the year to March 2010.
Shares in Intelek fell 1.25p to 15.5p each, which values the company at £13.5m. The shares are trading on around six times prospective 2009-10 earnings and yield 3%.
Paradise Datacom is an attractive business and it has attracted attention from companies so it helps to underpin the valuation.
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