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Elecosoft cautiously optimistic

The construction software group cited slowing momentum in some of its markets
September 25, 2019

For the half year to June 2019, Elecosoft’s (ELCO) revenues grew by a fifth to £12.7m – or by 22 per cent at constant currencies. Recurring revenues constituted 56 per cent of the top line – up slightly from 55 per cent. The construction software group’s pre-tax profits climbed by 34 per cent to £1.6m. Meanwhile, net debt sat at £200,000 – down from £1.8m. Management noted that Elecosoft had achieved this performance “despite having to operate in markets that have been less buoyant than they have been for some time”.

IC TIP: Buy at 74p

The group referenced Brexit as a disruptive force, and pointed to a slowing of momentum in some of its markets – but said that it is seeing increasing take-up of its software outside of the EU and the UK. It adds that much of its software is designed to help customers lower costs amidst difficult conditions.

The shares were marked down following the release of these numbers. House broker FinnCap has lowered its 2019 revenue estimate by 4 per cent to £26.6m, and its adjusted EPS estimate by 9 per cent to 4.1p. But it has maintained its EPS forecast for 2020, and its target price of 93p.