The Investment Column: CMG needs fresh direction
Thursday 02 September 1999
CMG, the Anglo-Dutch IT company, shed little light other than noting that the millennium bug will have a negative effect, while maintaining that the company would continue to surpass the industry's 15 per cent plus annual growth rates.
Rated at 49 times expected full-year profits of pounds 79m, CMG has to perform better than the industry average. It did just that yesterday, posting better-than-expected interim results showing a 51 per cent rise in pre- tax profits to pounds 36.8m.
Sales soared 50 per cent to pounds 290.5m. What's particularly impressive is that organic growth accounted for over 80 per cent of the sales gain; acquisitions added a relatively small amount. Given CMG's single-digit market share in most countries outside the Netherlands - there it commands 12 per cent - there's little reason why organic growth can't continue.
Of CMG's four revenue streams, systems development, including installation and integration, accounts for around 60 per cent of total sales. However, the reliance on financial services clients - in particular investment bank ABN Amro, which accounts for some 5 per cent of total sales, is a potential source of weakness given evidence of IT budget pruning among banks.
Other sectors, including telecoms and trade and industry, delivered respective 95 per cent and 65 per cent revenue growth in the half. Indeed, CMG's mobile message product has around 50 per cent market share in Europe.
The 4.5 per cent gain to 1,940p in CMG's shares yesterday was the market's gut reaction to thestrong results. Though the group has ample capacity to grow further across Europe, four-fifths of earnings still come from the Benelux region. In that respect, CMG is an old story that needs to write new chapters in other markets such as the UK, France and Germany. Pending further evidence of earnings diversification and clarification of the impact of Y2K, the shares are fully priced.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Rotten egg smell could help battle heart disease and Alzheimer's
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...