Robotic Technology Systems
SPECULATIVE BUYRobotic Technology Systems, known to City followers as RTS, has three strings to its bow. Nuclear Solutions provides decommissioning services, Flexible Systems specialises in robotic solutions for the food industry, and Life Science supplies automated storage testing facilities to the pharmaceutical industry.
Interims to June were transformational, boosted by earlier US disposals and changes to the management structure. Turnover was lifted over 22% higher to £22.5m and continuing pre-tax profits rose from £1.2m to £2.4m.
Chairman Chris Brown flagged up strong growth in the nuclear arm, where RTS is a lead company in the ‘Deltec Alliance’ of contractors. He insists RTS is seeing rising levels of work at Sellafield, despite uncertainty caused by creation of the Nuclear Decommissioning Authority.
Brown also announced burgeoning business levels at flexible systems, where there was another doubling of sales stirred by the food industry ‘moving to cleverer ways of doing their packaging and handling’. And there was a move into the black for life sciences after a tough second half of 2004, spoiled by the run off of low margin legacy contracts. Life sciences is now benefiting from ‘new contracts with more profitability in them’, says Brown, and margins should continue to improve.
Proceeds from US property sales mean investors are being treated to a special dividend of 6p, although Shore Capital’s Robin Speakman says investors shouldn’t expect a final one for the full year. He has upgraded profit forecasts to £3.3m, off of £48m sales, giving earnings of 3.89p and a forward p/e of 15.2, below the sector average.
Having disappointed in the past, RTS looks back on track with decent growth prospects in its core markets. We are speculative buyers.
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Market cap: £33.2m
PE Forecast: 15.2
Share price: 59p
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