The FTSE closed up 3% on the week at 5,296.38 the highest level for 14 months helped by the view that interest rates are likely to be low for longer and that the earnings are recovering. The AIM All-Share showed little trickle-down effect last week and fell to 661.3,


The main economic news will US Retail Sales on Monday –helped by cash for clunkers should be up 0.4% and Wednesday the US Consumer Price Index up 0.2%. A picture of UK Real Estate is likely during the week with British Land and Land Securities reporting.

COMPANY REPORTS

Printing.com (PDC) – £15.5m@34.5p – Printing
The printer has been hit by increased competition in a shrinking market. It has needed to enhance its promotional offers but this has meant that it has gained market share. Management remains cautious about short-term trading.


Total retail sales from the Printing.com network were flat at £13.2m in the six months to September 2009. Printing.com’s revenues fell from £7.18m to £7.13m. Franchise income was flat and there was a small decline in printing services revenues. Pre-tax profit fell from £1.02m to £870,000 – partly due to a decline in interest received.


Hardman Research forecasts a fall in profits from £2.1m to £1.84m in the year to March 2010, recovering to £2.09m the following year.


The shares are trading on 13 times prospective 2009-10 earnings. The shares yield 8.6% and Printing.com has strong enough cash flow to maintain this dividend.


Finance
Net cash is £576,000 even though £1.82m was paid in dividends during the first six month so the year. The interim dividend is unchanged at 1.05p a share.


Serabi (SRB) – £5.9m@2p – AIM in 2005 the focus is on gold-copper in the Tapajos area of Brazil.
Serabi has licenses over 158,000 hectares but will focus efforts in the near term on evaluating 18 of geophysical anomalies located within 10 kilometres of Palito, which it considers have strong potential to host similar ore-bodies to that at Palito (where gold has been found). Discovery of additional ore-bodies would allow Serabi to increase the reserve and resource base of the Palito project and through the development of a series of satellite deposits create a mining opportunity with a significantly increased production base. Over $33m has been spent to date on building the resources


Around £2.3m was recently raised to invest in developing the new strategy at the Palito project. The funding was £2.3m in new shares including £300k as an open offer to existing shareholders. There was £300k as a convertible are at 1.5p at any time before 2018.


Serabi will use the proceeds of the Placing and the Convertible to commence the first stage of exploration and further evaluation of the 18 prioritised anomalies identified within the surveyed area together with further oxide resource definition


(expected to amount in aggregate to approximately US$1.7 million in the first year) as well as to fund the general working capital requirements of the Group including new project development. Ground work needs to be covered before drilling commences


Financials
The funding is sufficient for Serabi to look to add- value to a project in a gold producing area.


Highams Systems – £1.64m@2.4p – Recruitment Consultancy
The focus is on contract and permanent placements in business, technology and professional services to the insurance and financial services sectors. The interim results showed a 33% fall in turnover to £3.8m and although the gross profits fell 10% to 15.2% due to increased efficiency an operating profit of £40k, was reported against a loss of £266k last time.


As anticipated, by Ken Ford the chairman at the finals Highams have recorded a profit despite the difficult trading conditions. Administration cost was reduced to £527k from £1.2m. Also the early signs of increased demand and visable and Highams believe that they are well placed to deliver quality candidates into clients at the right time and at the right price . Perhaps slightly more than a shell Highams should be keen to acquire.


Financials
It will take some years of organic trading to rebuild the balance sheet with has £2.5m of retained losses


Egdon Resources (EDR) – £10m@13.25p – Onshore oil and gas
EnCore is talking to Egdon about the sale of its onshore assets in France and the UK plus a stake in the Ceres gas field which commenced production this month. EnCore would receive Egdon shares in return for the assets but it would not take a stake that exceeded 29.9% of Egdon. This deal should happen by early next year.


Finance
Egdon believes that it has enough cash for its immediate needs. The EnCore deal will bring cash flow from the Ceres gas field which should help finance investment in exploration.

Obtala Resources (OBT) – £37.6m@19.5p – Mining
Obtala is an Africa-focused explorer. It has its own interests as well as taking stakes in other companies. Obtala’s interests are in Tanzania and cover gold, nickel, uranium and copper. If any of these become significant operations in their own right then they are likely to be spun off.


Obtala has a 60% stake in an unquoted agricultural business called Montarra Continental. It has also bought stakes in Kopane Diamonds, Gemstones of Africa and Central China Goldfields. It is sitting on a large gain on its investment in Kopane.


Baqus (BQS) – £4.25m@3.75p – Surveying services
Quantity surveyor Baqus reported lower full year profits as margins started to come under pressure.


Revenues increased from a pro forma figure of £7.7m in 2007-08 to £7.85m in the year to June 2009. Profits declined from £1.06m to £739,000. There was an even split between the first and second half profits but second half revenues were slightly lower.


Some of the company’s fees are based on a percentage of construction costs, which have fallen over the past year. Management expects this year to continue to be challenging.


Management has done well to maintain its underlying overheads at a similar level to the previous year. There was a fall in the first half as the three businesses that came together to form Baqus in 2007 started to benefit from integration but the summer 2008 acquisition Sworn King has been included for a full six months in the second half.


The public sector is an important source of work and some projects are being delayed. It is uncertain what will happen after the next General Election.


Finance
Nigel Rose Group was acquired at the end of the period and this added around £500,000 to working capital. That held back cash generation. Net cash was £86,000 at the end of June 2009.


A final dividend of 0.06468p a share has been declared to go with the interim of 0.05p a share. This is lower than the 0.11p a share final dividend paid last year but Baqus has a policy of paying out 25% of earnings per share as a dividend.


M&A
Chief executive Clive Sayer believes that this is a good time to be looking for acquisitions. In the busy times firms are busy working on projects and don’t have much time to consider their long-term future. They are also enjoying high profits. Now, though, trading is tougher and profits are declining. This means that bids are more likely to be considered seriously and there will also be more realistic price expectations. Sayer says that Nigel Rose Group fits this description.

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