Information management software expert Infonic’s first-half results were received unsympathetically by the market, which has in recent weeks sold the shares down to their lowest ever level.

This was perhaps not entirely surprising given wider concerns as, even though the tone was buoyant and turnover was up 45% to £2.6m, margins had shrunk, admin costs had risen and losses were flat at £3.1m. However, the company is historically weighted to the second half due to the procurement cycle of its military customers.

Along with existing contracts that are due to complete in the current half, house broker FinnCap reveals that a $5.6m US military deal is close to completion and an upfront payment worth $3m (of which just over $1m has already been paid) from Reuters is due to arrive soon. Looking further forward, the group’s order book has swelled to record levels and the sales pipeline currently exceeds £25m, with the company stressing that, due to the ‘global nature’ of its customer base and market sector spread, they had ‘seen little slowdown in demand to date’.

Hence it has strengthened its sales team to process the increased demand it anticipates, driving up staff costs in the six months in question. New finance director Matthew Bagley, who can call on £700,000 of cash in the bank and two-thirds of a £10m debt facility, is also taking a hatchet to costs elsewhere in the business, with an expected reduction of £1m in the second half and £1.6m next year.

With more revenues and lower costs in the second half, FinnCap is predicting a profit for the full year, leading to 0.95p of earnings per share. Even if profits don’t arrive this year, the current price is extravagantly low and could repay a brave speculator.

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Infonic	AIM	£3.75m	1.38p	0.00p
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Infonic			03/10/2008
Infonic			07/08/2008