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Andor Technology steadies

RESULTS: Conditions are tough in developed markets, but shareholders in Belfast-based scientific camera specialist, Andor Technology, are rewarded for their patience as the board announces a maiden dividend.
December 10, 2012

Belfast-based scientific camera specialist Andor Technology (AND) found trading particularly difficult in 2012, as sales in major US and European markets came under pressure and the shortfall was only partly offset by strong growth in emerging markets. A profit warning in June wiped 40 per cent off the company's market value. However, with cash on the balance sheet, and a maiden dividend declared, it's worth holding on for an improvement in its key markets.

IC TIP: Buy at 391p

The problem for Andor is that many of its sales originate, either directly or indirectly, from publicly-funded research institutions with most of the spending related to capital investment budgets. Chief executive Conor Walsh said the end of stimulus spending in the US was behind an 11 per cent fall in revenues in the region to £20.3m. "It is pretty much the same in Europe. With stimulus coming to an end, we are seeing lengthening sales cycles," Mr Walsh added. European sales were consequently down 3 per cent to £21.8m due to lower demand for microscopy instruments. Taken together, this had an adverse effect on the order book, which fell by £2.5m to £11.3m, although this has apparently improved since the year-end. One source of optimism is that revenues from the Asia Pacific bucked the trend and soared a third to £16.1m, buoyed by a large one-off equipment order to China.

Broker Investec forecasts pre-tax profits of £10.9m and EPS of 26.2p (from £10m and 26.8p in 2012).

ANDOR TECHNOLOGY (AND)

ORD PRICE:391pMARKET VALUE:£140m
TOUCH:382-400p12-MONTH HIGH:605pLOW: 304p
DIVIDEND YIELD:0.5%PE RATIO:16
NET ASSET VALUE:126p*NET CASH:£17.1m

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200824.71.514.2nil
200933.14.6114.4nil
201042.75.8115.7nil
201157.38.7421.6nil
201258.38.9324.52.0
% change+2+2+13-

Ex-div: 30 Jan

Payment: 28 Feb

*Includes intangible assets of £15.7m, or 44p a share