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Strategic Thought

  • BY: Andrew Hore |
  • POSTED: 03/06/2011 |

Risk management software provider Strategic Thought has raised £1.45m at 50p a share in order to strengthen its balance sheet.

Customers are reassured by a strong balance sheet and the new cash means that this will not be a problem for Strategic Thought when it is trying to win new business.

Last May, Strategic Thought raised £842,000 at 32p a share. The company had net cash £2.2m at the end of March 2011. No dividend is being paid and Strategic Thought wants to make higher profits before it starts to make a distribution to shareholders.

An indication of the importance of the balance sheet is the growth in revenues in the year to March 2011. Costs were cut in the period but more investment was put into sales. This helped to push revenues up from £8.24m to £8.87m with 20 new customers won in the period. US sales fell and all the growth came from the rest of the world. Licence sales increased 23% to £4.7m, while support revenues were 16% ahead at £3.33m. Services revenues declined but they generate little in the way of profit.

A loss of £272,000 was turned into an underlying profit of £605,000.

Risk management is becoming increasingly important in the Middle East and Saudi Aramco, which is the world’s largest oil corporation, is a new customer.

A partnership with Nasdaq-listed Deltek should help to boost sales to the US government contracting sector. Deltek has a much bigger sales force than Strategic Thought could afford. Strategic Thought will continue to deal with existing customers and sell into other sectors in the US.

At 52.5p a share, Strategic Thought is valued at £16m. House broker FinnCap forecasts a profit of £800,000 for 2011-12.

The company is changing its name to Active Risk Group.

Download the May 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFMay2011_20.pdf

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