Intelek

Intelek, guided by chief executive Ian Brodie, has transmitted a strong profits increase for the six months to September. The designer of electronic systems for satellite and microwave communications and manufacturer of composite materials for the aerospace sector reported a drop in turnover to £17.3m (£18.4m), due to the translation effects of the battered US dollar and a change in the business mix at its Labtech division.

However, buoyed by margin and efficiency gains, pre-tax profits increased 45% to £1.48m and earnings rose 44% to 1.15p, allowing for a 15% dividend increase to 0.15p.

Performance was driven by ‘noticeable’ operating profit improvements across the group. Satellite communications equipment arm Paradise Datacom shrugged off dollar weakness to record operating profits of £1.45m (£1.34m) on lower sales of £7.8m (£8.5m), which was impressive given last year’s revenues were fattened by the company’s biggest modem order from China.

Basking in the buoyant aerospace market in which composite structures and assemblies are all the rage, CML raised sales and profits once again and Labtech, which designs and makes specialist microwave package products for the security and defence markets, moved into profit during the half despite a reduction at the sales line.

For the year to March, upgraded numbers from Brewin Dolphin suggest a rise in profits to £3m (£2.3m) from £36.7m sales, ahead of £3.3m from sales approaching £40m the following year. Forecast earnings of 2.3p this year and 2.6p next year place the shares on budget forward multiples of 8.6 and 7.6 with a decent yield. An undemanding enterprise-value-to-sales ratio of 0.6 and a significantly reduced pension deficit underscore the investment case. We remain buyers.

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