Despite DCS Group Plc turning in its strongest ever first half, chairman Robin Lodge isn’t a happy man. The UK software and services group has produced net profits for the six months to June 30 up a massive 69.0% to 1.3m pounds on revenue that rose 47.0% to 23.7m pounds and the forecast for the second half is exceptional. But the share price has failed to recover from the resignation of DCSs chief executive Bob Williams in June. The news drove the shares down 30 pence at the time, and the stock is still languishing at 266 pence, having failed to respond to the latest figures. I’m angry about the gross over reaction triggered by Bob’s departure, it was a total misreading by the market, said Lodge. Our price to earnings ratio is around 20 versus 40 (for our competitors), something is very, very wrong here. Mr Williams retired for health reasons, a fact not emphasised at the time of the release, and chief operating officer Robert Arrowsmith admitted to making a mess of the subsequent announcement. We stuffed it up, he said. Operations wise, Arrowsmith sees potential for further increases in margins with a medium term objective of 15% from software products which represent over half of group revenues. On the services side, he sees the drift towards sub-contracting slowing down as all the consultants who were inclined to leave the payroll should have jumped by now. Sales were also helped by recent troubles at automotive software rival Kalamazoo Computer Group Plc, which helped DCS make inroads into Ford Motor Co, a staunch Kalamazoo client. The interim dividend has been doubled to 1.0 pence per share.
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