Sharp recent declines in the share price of Inspace reflected a warning of temporary delays to tenders (prompting downgrades) as well as lack of understanding of the strategic benefits of the recent £57.8m acquisition of Widacre.

However, management is now banging the drum to regain investor confidence and first half figures to June weren’t a disaster in any way, shape or form. Though turnover was lower at £62.6m (£70.8m), improved operating margins of 5.7% (5%) meant operating profit was held at £3.6m despite the faltering top line, and with Inspace free of bank borrowings and enjoying interest on deposit, pre-tax profits put on a decent 6.8% at £3.7m, though diluted earnings were lower at 3.74p (3.94p), reflecting shares issued at float.

Management also insists the acquisition of Widacre in August, a large business taking Inspace into social housing 'new build' contracting and affordable housing development, is apparently a win-win situation. The deal, which has almost doubled the size of the group and trebled its workload visibility, has positioned the firm as one of the biggest service providers in the social housing market, brings strong ties with the UK’s highest spending ‘Registered Social Landlords’, and more than £900m worth of social housing orders and frameworks.

This year, analysts are gunning for adjusted pre-tax profits of £10.3m and 9.8p of earnings, placing the shares on a forward multilpe of only 10.7, despite forecast earnings growth of 16%.

For December 2007, expect profits of £13.8m and 11.7p of earnings, placing the shares on a forward p/e of 8.9. Investors that have suffered a bloody nose would be foolish to sell now, even after recent mishaps. Hold for long-term growth.