The Investment Column: Bowthorpe

First-half results from Bowthorpe may obscure brighter prospects from next year. During what is a transition year, Bowthorpe's interim pre-tax profit narrowed 5 per cent to pounds 43.9m, while sales grew a healthy 10 per cent to pounds 317m.

The pounds 292m acquisition of Netcom Systems, as well as smaller buyouts of firms specialising in wireless and satellite system testing services, is set to deliver mid-teen percentage earnings growth from 2000 onwards. The agreed sale of the thermal products business, which has seen heavy pricing pressure in the past year, is expected to be completed within two months.

This overhaul of the business portfolio is set to boost top line growth well into the next decade. Indeed, from next year telecoms test provision equipment and the North American market should account for 60 per cent of total earnings. On a prospective 2000 p/e of 17, investors should buy ahead of the re-rating.