IT solutions business Chelford has cheered investors, reporting a 41% hike in revenues to £9.17m, with 14% organic growth and £231,000 of pre-tax profit for the six months to June.

Admittedly this is down on the previous year’s figure of £702,000, due to an ‘cost over-run on a fixed price contract’ in the SAP division, a practice that Chelford has now ceased. The profit warning that preceded the results warned some investors away, sending the shares down from around 240p to the current 181p each. Chief executive Trevor Lewis assures that this ‘blip’ is now behind the company and should not affect it going forward.

Chelford’s products have historically been based on SAP technology, but the group now boasts a Microsoft-based solution, increasing the complexity of its offering with a range of software and services.

The group remains debt free and cash generative, with Lewis saying that he has every intention of maintaining this situation. Broker Charles Stanley forecasts that the group is in line to meet expectations for the full year, highlighting a divisional reorganisation as a positive move.

Analysts predict revenues of £19m for the full year and £20.6m in 2007. Profits before tax of £1.8m are expected this year, and £2.4m next. With forecast earnings of 17.4p and 23.7p respectively, the company trades on a forward multiple of 10.5 now and 7.7 for 2007. The shares are still good value and should recover. Hold.