The response by the markets to ACT Group Plc’s full year results and a statement concerning the current year, was swift – ACT’s share price tumbled 15% or 26 pence to 143 pence shortly after the announcement. The offending passage in the statement of chairman, Roger Foster, posited that ACT’s current year of trading would […]
The response by the markets to ACT Group Plc’s full year results and a statement concerning the current year, was swift – ACT’s share price tumbled 15% or 26 pence to 143 pence shortly after the announcement. The offending passage in the statement of chairman, Roger Foster, posited that ACT’s current year of trading would be adversely affected by the restructuring of its financial products division that merged ACT Kindle, ACT Financial Systems and BIS Banking Systems, and that ACT would increase spending on new product development by #3m to #22m this year. Not that the figures it reported were bad – in the 12 months to March 31 pre-tax profits rose a healthy 39.0% to #28.5m, while sales grew 63.9% at #250.6m. The year also saw significant changes for the group: the acquisition of the BIS Group for #93.5m and the disposal of non-core activities yielding #28m, marked the completion of the group’s transition to a financial software and services company and the end of its hardware presence. Responding to the City’s disfavour, Foster defended the decision to merge and thereby consolidate worldwide sale operations, saying that in the long term, it does make us a world-class company. However he conceded that the restructuring will involve some pain and will have an effect on short term profitability, and that while he expects a year of growth on sales he sees profitability as flattish. Though no redundancies are envisaged, ACT’s sales strength will be compromised as staff are retrained to sell all ACT products and personnel are relocated. Foster was buoyant about the future, boasting that while ACT already trades with 35 of the top 50 banks worldwide, he believes the financial software market to be one of the fastest growing areas of the computer industry, as banks increasingly outsource for products and the emerging economies of Russia and China look for a banking infrastructure to support a market economy. ACT is very much focussed on organic growth, but is cash-rich from the recent disposals and is looking to buy in products for specialised areas, not presently covered by ACT. The company will pay a dividend of 5.25 pence, up 5% on the previous year.