Sagentia has had an unexpectedly good first half and is on track to exceed expectations this year after a rocky 2012 (see Sagentia moves forward after major contract suspension). The AIM-listed, Cambridge-headquartered R&D outsourcing firm chaired by Martyn Ratcliffe, saw 36% organic revenue growth in H1 to £14.5m and a 49% improvement in PBT to £2.7m. That’s materially ahead of the Board’s plan year-to-date thanks to a number of large projects.
Looking more closely at the numbers, consulting fees from core operations increased by 43% to £12.3m and other core revenues (mainly recharged project material revenues) saw a corresponding increase to £1.1m (H1 12: £0.7m). The Group’s core revenue is now split 50/50 between the Medical Sector and the Commercial Sector. North America remains the largest market contributing 69% of core revenue (H1 12: 63%).
For the next phase of its development, Sagentia is looking to extend the sectors it covers, primarily within oil and gas. The acquisition earlier this month of OTM Consulting, an international technology management consultancy specialising in the oil, gas and alternative energy sectors, should kick-start its ambitions in this area. It also plans to grow its sales organisation and extend its customer base geographically.
It’s great to see Sagentia bouncing back after a disappointing first half last year. Of course, as a project-based consultancy, Sagentia is at the mercy of market conditions and some of the projects that boosted the first half of 2013 have now come to completion. Indeed, the fact that its top five clients account for almost half its revenue and its top ten clients for 71% (H1 12: 65%) is a risk for the business. So, the Board remains rightly cautious in its outlook but it’s highly likely that the full year performance will be ahead of previous expectations after such a strong start.