NetDimensions

Investment spend dragged software play NetDimensions into the red for the half to June, but the business looks well placed for growth on the back of burgeoning regulation and compliance requirements.

Guided by enthusiastic CEO Jay Shaw, NetDimensions provides software that helps companies and government agencies deliver, manage and report on certification, training and development programmes. Main product Enterprise Knowledge Platform (EKP), used by HSBC and Cathay Pacific among others, is gaining traction across regulated industries such as finance, government and aviation.

Though interim revenues rose 11% to $3.38m (£2.1m), investment to capture growth, with the headcount swelling from 56 to 73, combined with an unrealized exchange rate loss, meant $400,000 pre-tax profits made way for losses of $260,000, although debt-free NetDimensions closed the half with a reassuring $6.3m cash in the coffers.

This was a half of many operational highlights, including healthy growth in the Europe, Middle East & Africa (EMEA) region, the winning of a further 45 new clients and NetDimensions' first AIM acquisition, in the form of the EKP client business bought from Intellego for £276,000.

‘We are just beginning to use our cash’, explains Shaw, who says the group is now ‘looking for bolt-on acquisitions or to sign up really powerful joint venture or reseller partners', with the US, Canada, France, Germany, Japan and China earmarked as areas for development.

With the stronger second half to come, analysts expect full year profits of $400,000 and earnings of 1.5 cents (0.9p), placing NetDimensions on a punchy looking forward p/e of 29.

However, bear in mind cash alone equates to 16.7p per share, so the true p/e is much lower and so long as promised growth is delivered, the shares should have further to go.