Companies: MAO   

Business software supplier Macro 4 is likely to end the year with profits of around £1 million and revenues of £39 million – a creditable performance considering the state of US and European markets. Leslie Copeland reports.

In an upbeat message this morning, finance director John Foster said that, after a disappointing first half (in which the company clocked-up losses of £3.5 million), Macro enjoyed strong second-half trading, signing contracts with the likes of Littlewoods and BSkyB for its 'Business Information Logistics' packages.

Pre-tax profits in this period hit £2.5 million, although the group will probably end the 12 months to June in a breakeven position, once goodwill amortisation and exceptional items are included.

This performance is significantly down on last year (pre-tax profits of £5 million on £47 million sales), and market expectations of £3 million profits. However, Foster says Macro's cash-generation, cash-management and cost-savings were broadly encouraging.

During the year, the group effectively repaid an outstanding loan note of £11.6 million, which means the only significant debt on its books is a bank term loan of £7.5 million. When its cash-pile of £5 million is added back into the equation, net debt stands at just £3 million.

Although Foster admits that forecasting sales is unusually difficult in the current climate, he remains confident that both the top-line and bottom-line figures will bounce back over time.

In a surprising reaction to what was in essence a profits warning, the market marked the shares up 7p in early trading to 53p, valuing Macro at £11.5 million. Considering that the group is back in the black and throwing off cash, this seems a rather conservative estimation of its worth, market conditions notwithstanding.