LAST WEEK/ THIS WEEK
The FTSE improved 0.5% over the week while the Aim All Share rose 1.5% to 764.3. At the mid week point it felt like a bull market as the Dow Jones hit a year high helped by far better than expected earnings from giant US companies Intel, Goldman and JP Morgan. By Friday, however the Bank Of America disappointed and served as a reminder that the recovery is yet to come. No-one sees the rise stopping while Quantitative Easing continues. This week’s main event, is UK GDP figures which will be reported on Friday and should show a 0.2% increase confirming that technically the recession is over, but it case any one feels too good GDP is still likely to be 4.6% lower than last year and may improve slowly.

COMPANY REPORTS
Leisure & Gaming (LNG)£9.68m@10.25p – European Betting & Gaming Group
These 3rd Qtr results cover the quieter summer period but managed to show an improvement in key targets. An EBITDA profit of Euro100,000 against break-even while there was a 13% increase in the number of Italian distributors to 589 and new territories, of Cyprus and Greece showed traction on the business role out. Turnover from the new poker tournament game have continued improvement and also reduces the group’s reliance of sports betting.

Profits are forecast for the December Y/E 09 at £2.1.m giving an EPS of 2p so a prospective P/E of 5x. There have been a history of volatile earnings and the company was formed as a result of the US closing of online gaming where there are residual discussions casting a shadow of litigation. Leisure and Gaming are in a good position to trade towards better times even through the pathway of strategic development is unclear.

Financials
There are no long term debts and there is cash of around £2m which is more than sufficient to fund organic expansion.

Sceptre Leisure (SCEL) – £42.4m@76.5p – Gaming machines supplier
Although reported profits look flat the underlying performance is better. They rose from £1.05m to £1.82m in the year to April 2009. Revenues grew 83% to £39.2m. That is after a loss from the Gamingking business which was part of the shell that Sceptre reversed into. Gamingking provided seven months of revenues.
Pubs are closing at an increasing rate. The remaining pubs are looking for ways of generating more revenues and Sceptre’s gaming machines are also replacing cigarette machines. Weekly revenue per machine has risen from £31.62 to £38.92. Sceptre runs its assets efficiently with 95% of its machines on hire at any one time. The number of machines increased from 15,183 to 20,921. Market share is still below 15%.

Finance
Sceptre regularly collects the cash from its machines in most cases so it does not have significant exposure to bad debts.
Net debt was £19.3m at the end of April 2009. In July, Sceptre raised £5.5m at 33.1p a share. Negotiations continue with Sceptre’s bank about new facilities.

Ceramic Fuel Cells (CFU)£159m@14.5p – Fuel cells
An Australian utility is installing Ceramic Fuel Cells’ BlueGen gas-to-electricity generator in a showcase sustainability home. This will help to show off the technology and boost commercial sales when they start in 2010.
Like its micro-CHP peers CFC was frustrated by the slow progress made by its boiler manufacturing and utility partners. BlueGen, which is the size of a dishwasher, can work with an existing or new boiler and can produce up to 17,000 kilowatt hours of power a year. That is enough electricity to power a home and the surplus can be sold to the grid. CFC is still working with boiler manufacturers who will incorporate the fuel cell technology in their boilers but this will take longer to generate revenues.

Finance
CFC raised A$32.2m (£16.1m) from a placing and rights issue at 2.2p a share. The share price is now more than 600% higher. There was A$25.5m (£12.8m) cash in the bank at the end of June 2009. CFC has sold all its financial investments since the end of June 2009. They were in the books for A$4.3m (£2.3m) and CFC received A$6.6m (£3.5m) for them.
There will continue to be a cash outflow from operations even if revenues do grow significantly. Even so, CFC has plenty of cash for its immediate needs.

Animalcare (ANCR)£20.5m@105p – Vet medicines, livestock identification
The share price is exactly double the level at which the veterinary medicines and livestock products joined Aim in January 2008.
The eponymous Animalcare business was acquired when the group joined Aim so this year’s figures are not strictly comparable with last year’s numbers. Revenues grew from £11.8m to £17.6m in the year to June 2009. Underlying profits rose from £1.21m to £2.01m.
On a pro-forma basis the revenues of the core veterinary medicines division grew by two-fifths. This business generated the main growth in profits.
Adverse foreign exchange movements hit the profits of the animal identification chip business. The introduction of electronic tagging of sheep should help sales to grow.
The loss of a low margin helped to improve the gross margins of the animal welfare division. This is a commodity business so growth is likely to be more modest than in the other businesses. Exchange rates will have a negative effect this year.
Animalcare is on course to make profits of at least £2.5m in 2009-10. That would put the shares on 13 times prospective earnings for the year to June 2010. That rating reflects the strong growth prospects for earnings.

Finance
Net debt was £3.92m at the end of June 2009 and the cash generative nature of the business means that borrowings will continue to reduce. Net debt should fall below £3m by June 2010. There are no worries about the banking covenants. The majority of the debt lasts until December 2012, with the rest in the form of 12 year mortgage of £1m.

Walker Greenbank (WGB)£13.3m@22.5p – Wallcoverings and furnishing fabrics
Interior furnishings supplier Walker Greenbank is seeing some signs of improvement in its markets after a tough first half.
Revenues fell 12% to £29.1m in the six months to July 2009. The interim profits slumped from £1.72m to £568,000.
The Zoffany brand was hardest hit in the first half. This is because it is the most upmarket. The Sanderson brand held up well. The brands still made an operating profit of £2.3m, down from £3.09m. The manufacturing operations swung from an interim operating profit of £672,000 to an operating loss of £84,000. The second quarter was better and redundancies should help the second half performance.
Sales in September were higher than one year before and revenues are set to be higher in the second half than they were in the first half. Hedging the dollar meant that Walker Greenbank has not benefited from that currency’s recent weakness. This year’s rate is $1.88/£ and next year it is set to be $1.50/£.

Finance
Despite the fall in profits net debt was much lower than 12 months before. Interest charges were seven times covered. The net debt was £6.73m at the end of July 2009 and it is on course to be £4.5m at the end of January 2010. The main bank facilities last until July 2010 with a £4m property loan lasting until July 2019.

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