Shares digital

Shortly after publication of the very poor 2007 results Michael Love, executive chairman of IT specialist SciSys (SSY:AIM), bought 700,000 shares at 21.5p, his second purchase since he became executive chairman last November. Within 24 hours of that announcement he bought 1 million shares at 46.75p.

Last week it was announced, three days after Love had bought shares that the group had received ‘informal indications that a significant stake had been purchased by one of its trading partners’, now known as Microgen (MCGN), with 11.26 percent. Love’s investment preceded this deal.

Last year the group made three profit warnings, sacked CEO Mark Hampson, suffered from delays in obtaining two defence contracts and from difficulties with a number of contracts. Love clearly believes the worst is past. Certainly last year it gained new business from blue-chip clients such as National Archives, the navy and the planning inspectorate to add to its existing public sector base which includes the European Space Agency, TfL, MOD, the Environment Agency and the Met.

Last year the company acquired German group VCS ag, which should be earnings-enhancing and will offer cross-selling opportunities.

Love has indicated the company will this year ‘take the first steps to reclaim its reputation for delivering steady profitable growth’. However, the house broker Landsbanki is cautiously forecasting earnings of only 2p rising to 2.5p next year.

At 35p the shares are selling on a prospective PE of 17.5 falling to 14 next year. More importantly the £10 million market cap is much lower than the group’s £25 million turnover.

Shares says: Speculative interest could push the shares higher. Landsbanki has a 50p price target.