Horizon Technology's shares more than doubled as it revealed a potential bid, alongside a mixed set of results. The Ireland-based IT infrastructure reseller and integrator says the possible offer was priced at €1.18 (90p) a share. Horizon stresses there is no guarantee of an offer, but Panmure Gordon analyst George O'Connor says that the inclusion of a price "suggests that talks have been ongoing" and that a bid is "likely to proceed".
The bid barely comes after that government and financial services customers had delayed or cancelled orders in December. While Horizon says that some of those have since been received, the company's sales are "increasingly weighted towards the end of each quarter", implying tougher bargaining from customers. Pre-tax profits missed Panmure Gordon's already lowered forecasts, although revenue was ahead, again suggesting discounting to secure deals. Earnings met expectations, but only thanks to a lower tax charge.
Alongside and , Mr O'Connor says Horizon's potential takeover confirms that the IT infrastructure market "appears to be better placed than investors or valuation ratings assume".
A bid at the suggested 90p a share values Horizon at 11 times Panmure's 2008 earnings forecasts of 10.7¢, below Computerland's takeout valuation of 13.2 times.
Horizon Technology Group (HOR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 71p | MARKET VALUE: | £58.4m | |
| TOUCH: | 70-72p | 12-MONTH HIGH: | 80p | LOW: 27p |
| DIVIDEND YIELD: | nil | PE RATIO: | 13 | |
| NET ASSET VALUE: | 50¢* | NET CASH: | €4.1m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2003 | 250 | 0.69 | 0.46 | nil |
| 2004 | 281 | 6.28 | 7.04 | nil |
| 2005 | 176 | 5.51 | 6.08 | nil |
| 2006 | 258 | 6.05 | 7.15 | nil |
| 2007 | 288 | 6.03 | 7.43 | nil |
| % change | +12 | - | +4 | - |
*Includes intangible assets of €24.2m, or 29¢ a share £1=€1.31 | ||||
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