Megabuyte - Technology sector intelligence

Arqiva’s latest accounts show a year of relatively stagnant revenues, at £823m, but improving EBITDA profitability. However, the accounts continue to be covered in red ink, with cash interest still outweighing operating cash flows, net debt nudging up £130m to £3.5bn, and non balance sheet interest rate swap liabilities increasing £261m to £754m. Bank debt of £2.87bn is 8.7x EBITDA. Pressure on public sector budgets and more mobile network sharing suggest FY10/11 won’t be much better. As we noted in our recent initiation analysis (Premium Plus readers see here), it is hard to find any equity value in Arqiva.

SRT bumper interims herald next stage in company evolution

Marine navigation specialist SRT has released interim results confirming the company’s strong progress (Premium Plus readers see here), with revenues almost doubling, margins improving, and operational leverage leading to a big jump in profitability. We spoke with CEO Simon Tucker, who remains as upbeat as ever about the significant worldwide opportunity for SRT, but also the challenges that go with managing growth, and he outlined some of the moves being taken by the company as it moves to the next level. Read our full review in Newswire Plus.

Solid trading, strong cash flow and management changes at Gresham Computing

In its Q3 IMS released this morning, Gresham has said that trading in the four months to October has been in line with expectations. Trading conditions have remained tough but the company is generating a solid level of professional services revenue from existing customers in both the Software and Real Time divisions. This morning’s announcement comes on the back of news last week that Gresham had renewed a significant contract within the Software division to the value of £1.3m, improved cash flow from which will significantly strengthen Gresham’s balance sheet. Alongside the IMS, Gresham has also announced the next logical move in the regeneration of the management team – read the full story in Newswire Plus.

Craneware gets fiscal 2011 off to a strong start

Supplier of revenue management software to the US Healthcare sector Craneware has issued a brief but positively worded AGM statement this morning noting that its current fiscal year ending June 2011 has got off to a strong start. Craneware shares have enjoyed the most remarkable run since the company was admitted to AIM having risen from the IPO price of 128p to nearly 600p today. As well as strong growth in earnings, the share price performance has been driven by a substantial re-rating such that the shares now trade on 36x current year earnings.

Fixed Line Peer Group Report - November 2010

October was marked for the Fixed Line sub-sector by strong results from Virgin and BSkyB, and ‘in-line’ results and updates from COLT, Adept, AltNet, Daisy and Telecom Plus. The resilient UK consumer is driving good telecoms and broadband growth for Sky, Virgin and Telecom Plus, whilst the business telcos continue to find organic growth elusive or hard won. Following the recent spate of private equity deals, it was the turn of strategic buyers in October, with AltNet buying data comms provider Scalable Communications, and Maintel buying two maintenance businesses from Redstone, both at an estimated 5-6x historic EBITDA, pre synergies. Good share price performances came from Adept (+15%), Pinnacle (+15%), Maintel (+11%) Virgin (+8%), and Altnet (+7%). BT also had a good month (+8%) on favourable news on pensions, rural broadband funding and public sector budgets, whilst CWW fell 9%, despite apparently also reaching agreement on public sector budgets. Premium subscribers ca download the full review here.

Cognizant continues to lead the Indian pack; expects growth to slow

US-listed IT consulting and outsourcing company Cognizant posted strong growth in its third quarter, beating market expectations. Revenue grew 43% Y-o-Y and 10% sequentially to $1.22bn, with strong growth witnessed in the key financial services, healthcare and retail verticals which0 contribute more than 85% to its total revenue. Both the application development and maintenance businesses, which contributed equally to the total revenue, posted strong growth of 14% and 6% sequentially and 59% and 29% Y-o-Y respectively. Net income jumped 49% Y-o-Y to $203.7m. Read our full coverage of Cognizant’s results in Newswire Plus and click here to read our round-up of results from the other Indian majors.