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Buy Charteris at 19p The Investment Case: We tipped this stock at 16.75p two weeks ago. Already we are up but the shares are still a buy. More than half-way through a new strategic plan to lift the company into the next echelon of IT consultancy service providers, Charteris has made firm progress along these lines, visible in its results and the benefits of the new direction are yet to really kick in. The company has seized upon the growth in online shopping and developed its relationship with Microsoft. Strong demand from government intelligence services have handed the company key involvements in several large national programmes that should spur growth. Company Description: Charteris is a business and IT management consultancy business based in London. It provides advice on improving the performance of its clients businesses by a more efficient use of information systems. The company positions itself to build an effective bridge between business and information system strategies. Charteris’ services are concentrated in three main specialised service offerings – Customer Centricity, Integrated Enterprise, and Infrastructure Optimisation. Customer Centricity is concerned with enabling organisations to deliver a seamless service across multiple sales and communication channels through activities that seek to assist clients in becoming more customer-focused, while boosting revenue from existing customers and maximising net customer additions. Integrated Enterprise focuses on transforming business performance through the integration of core processors and systems and providing timely access to complete business information to enable well-informed decision making. The purpose of Infrastructure Optimisation is to organise IT infrastructure assets to deliver operational improvements and cost reduction by the use of advanced processes and automated management. Charteris targets its services at a number of key sectors, including retail, manufacturing and services, public, legal, financial services and media. The company’s three Southern Practices address the different market sectors, while the Northern Practice addresses all of these market sectors from a base in Edinburgh. Financials: For the year to 31st July 2007, Charteris notched up revenue of £19.3 million, marginally down on the £20.1 million achieved in 2006. Pre-tax profit showed a bigger slump, down at £0.11 million from the restated figure of £0.31 million in the previous year. Underlying pre-tax profit was down 31% to £0.46 million, giving diluted earnings per share (pre goodwill and share based payments) of 0.77p, compared to 1.11p a year before. The dividend per share was maintained at 0.5p per share. Further to this, the company has released a trading update, announcing that first half trading has built on the progress recorded in the second half of the previous year, with particularly good growth in the retail sector.
*Pre-good will and share based payments Management: Cliff Paddy – Non-executive chairman: Experienced director and IT professional, who has developed and managed substantial businesses which supply major systems and services to large corporations and government de25partments. David Mann – Non-executive deputy chairman: Extensive board-level experience of managing a range of IT-related businesses and ventures, from small start-ups to substantial operations, across many industry sectors in numerous countries. Paul Biddle – Non-executive director: Qualified Chartered Accountant with Deloitte, ex-finance director of Nat West UK and latterly Chief Financial Officer of the Retail & Commercial Businesses. David Pickering – Chief executive: Experienced director with a track record in leading service-based businesses to achieve major growth and direct experience of the finance, manufacturing and distribution sectors. Chris Rees – Executive director: Highly experienced practitioner in systems for financial institutions and has also led strategic assignments for clients in other fields such as Centrica, Meyer International and UNESCO, and acts as an expert witness in IT disputes. Alan Woodward – Executive director: Many years experience of technical and business management in the IT industry having successfully established and run IT businesses as well as being responsible for some of the most advanced solutions in the industry. He has experience of rapidly growing businesses through organic development and mergers and acquisitions, and managed large and complex IT projects. Patrick Carter – Finance director and company secretary: Qualified Chartered Accountant and barrister. He has eight years’ experience with Deloitte, within the audit, corporate finance and corporate recovery functions. Bull Points:
- Rapid growth in online shopping should continue to result in increased sales of Customer Centric offering. - Strong demand from secure government boosting public sector operations. - Provision of new legal services. - Recently strengthened management and sales team with wealth of experience in leadership and IT. - Net cash of £1 million and property assets worth £3.5 million Bear Points: - Difficulties within the financial services and media sectors. - There is some evidence of a slowdown in businesses' IT spending.
Key Data EPIC: CAE
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