Investment: Guardian gains from corporate IT disasters
Tuesday 23 February 1999
However, companies are increasingly preparing for the worst. Disaster recovery groups such as Guardian IT, which yesterday reported a 30 per cent rise in operating profits to pounds 7.3m for last year, are being called in to back up vital computer information and, in some cases, provide office space that will allow staff to carry on working.
And the market is booming. According to Peter MacLean, the chief executive, pressure from regulators such as the Bank of England and the Financial Services Authority is forcing financial institutions to provide proper backup. "In some areas disaster recovery is no longer optional. It's a mandatory requirement," he says.
Guardian's customer base is largely based in the City. One of the company's sites just north of the Square Mile is now full, and it is spending pounds 7m this year on a new 100,000 sq ft centre in London's Docklands, which could offer work space and dealing desks to 1,600 City workers.
Meanwhile, Guardian is hoping that pressure from regulators will make disaster recovery mandatory in other industries such as telecommunications, the utilities sector, and the health service. Analysts think the market for recovery services will grow by up to 19 per cent a year.
Guardian is one of the largest players in the market with a share of about 14 per cent. And the income stream is extremely predictable. Guardian yesterday pointed out that it has an order book worth pounds 67m, of which 45 per cent will be booked this year. This means that although there are still 10 months of the year to go Guardian is already guaranteed to match last year's turnover of pounds 30m in 1999.
However, there are several worries. The first is Guardian's operating margins, which reached 24 per cent last year. They will be squeezed this year due to the new investments. Analysts suggest that, as the market matures and contracts are renewed, Guardian may find its margins are unsustainable.
This is worrying given Guardian's high rating. Since its flotation last year shares in the company have more than doubled in value, closing at 572.5p, down 2.5p yesterday. On 1999 profit forecasts of about pounds 8.6m, the shares now trade on a multiple of 54 times earnings.
"If you want to be on a forward PE ratio of more than 50 you have got to be growing your bottom line at a terrific rate," said one analyst. "I just can't see Guardian keeping it up."
Yesterday directors and senior management announced that they planned to cash in shares in Guardian worth more than pounds 12m, while the group's venture capital backers are raising around pounds 30m by selling down their stakes. It all points to a problem that dogs British IT investors - for most of the good companies, the growth potential is already reflected in the share price.
- 1 Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 Israel's propaganda machine is finally starting to misfire
- 4 Zayn Malik on Israel-Gaza: One Direction singer bombarded with Twitter death threats after posting #FreePalestine
- 5 'Hello mum, this is going to be hard for you to read ...'
Sally Farmiloe dead: Howards' Way actress, and former mistress of Jeffrey Archer, dies aged 60
Women in Turkey have a laugh in public at the deputy Prime Minister's expense
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
Australian model Robyn Lawley stages naked protest against huge coal mine seven times the size of Sydney Harbour
The secret report that helps Israel hide facts
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
- < Previous
- Next >
iJobs Money & Business
£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...
£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...
Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...