The FTSE 100 improved 1.6% to 5142.45 last week, while, the AIM ALL Share closed at 661.3 a 0.6% gain. A robust performance given the poor January Sales figures, which weather effected but there is some distance and a currency between the UK and troubles in Portugal, Italy, Ireland , Greece and Spain.

Next week: inflation figures are on Tuesday and contain the raise in Vat and fuel so the pace of the underlying trend may be disguised but GDP is too weak for worries about increasing interest rates. Thursday will see the US jobless which should be reducing. Friday the actual UK Retail Sales figures are reported as is US inflation.

Perhaps worth noting:
After bumping along the bottom a gradual recovery in output may now be in prospect for the UK economy
Mervyn King
 
Amino Technologies (AMO) – £18.8m@32.5p – IPTV and internet TV software
Even though IPTV technology developer Amino Technologies slumped into loss last year it is in a strong position to do much better this year.
 
A contract for so-called ‘Over-The-Top’ video technology – effectively the likes of YouTube and BBC iPlayer through a set top box – with a major Western European customer for its broadband TV service provides a strong start to this financial year.
 
Amino says that it won the contract because its technology was specifically designed for this use whereas rivals adapted their existing products.
 
Amino swung from a profit of £2.16m to a loss of £8.73m in the year to November 2009. That included £2.86m of impairment and restructuring costs, against £140,000 the previous year. Revenues slumped from £31.9m to £25.3m as contracts were delayed. Component shortages also hampered progress. Cost cutting helped to reduce the effect of lower revenues and the full benefits of the annualised cost reduction from a peak of £19m to £11m will show through this year.
 
FinnCap forecasts that Amino should be able to get back to breakeven on revenues of £35.6m in 2009-10. A profit of £1.4m is forecast for 2010-11.
 
Amino should not have anything to worry about from the news that Motorola is putting together its mobile phone and set top box operations.


Finance
The balance sheet remains strong with net cash of £9m at the end of November 2009. That figure is expected by FinnCap to fall to £5.7m by November 2010.


M&A
There could be consolidation opportunities in the IPTV sector.

GB Group (GBG) – £18.7m@21.75pIdentity verification services
The loss of a large customer and another customer limiting the number of identity checks it carries out have hit third quarter revenues for data authentication. They fell 16% and are expected to decline by 22% in the fourth quarter. New customers are being added but it will take time to replace the lost revenue. The more mature data solutions business continues to grow. GB made operating profits of £550,000 for the nine month period and is expected to make £830,000 for the year to March 2010 for a P/E of 26x. Operating profits are expected to double next year.

Finance
There is net cash of £4.4m so GB can continue to pay an unchanged and uncovered dividend of 1.2p a share.

Intandem Films (IFM) – £2.81m@3.80Films
A final piece of Intandem’s structured recovery has fallen (at last) into place. Although a solution to the $9.6 million of debt had started to be anticipated after the 28th January AGM statement there was still considerable uncertainty, which today’s announcement clears. Intandem have sold the ownership rights of 5 films for $9.6 million which settles the outstanding debt. The book value was $3.1million so this creates a non-cash profit of $6.5 million and so strengthens the balance sheet.

As a bonus the management of the five films has been retained taking the number of films under management to 30. Intandem earn commissions on all sales generated which are usually between 10%-20%. Also announced is the appointment as co-producer and worldwide sales on a new film entitled “Ghost of Slaughterford”, a British thriller which is expected to commence production by June 2010. The executive producer is Neil Marshall who directed “The Descent” which grossed over $57 million at the box office. As co-producer they earn a 1%-3% fee on the films budget that is made regardless of sales. that it is now working on a large number of new titles and this is a company where operational gearing is high.

Maxima (MXM) – £22.9m@89pIT services
IT services Maxima Holdings reported lower interim revenues and profits because of the loss of the QAD business but the new management team says that it is making progress with its planned strategy. Maxima has reduced its cost base to reflect the loss of the QAD enterprise software distribution contract but the benefits are only starting to show through.

Maxima’s revenues fell from £28.3m to £26.2m in the six months to November 2009. Recurring revenues account for three-fifths of the total. Pre-exceptional profit declined from £3.7m to £2.6m. Restructuring costs of £1.3m are not included in the figure. There should be no more exceptionals in the second half. Profits pre-exceptionals to May 2010 are forecast at around £5.5m for an EPS of 16.9p and so a prospective P/E of 5.3x.

Maxima either owns its intellectual property or supplies major software such as Microsoft Dynamics AX. Many clients are migrating older software to up to date software. Management is increasing its revenues from existing customers and becoming an increasingly important partner for the likes of Microsoft and IBM. Two customers have signed managed services contracts worth £6.5m in total. These are all indications that the management’s strategy is bearing fruit.

Finance
Cash flow is strong and net debt has declined by around £4m over the past 12 months and was £13.5m at the end of November 2009. The dividend has been halved from 2p a share to 1p a share. A total of 3p a share is expected for 2009-10.

NWF (NWF) – £40.6m@86pFeeds and fuel distributor, warehousing
The benefits of reduced debt can be seen in the lower interest charge at the interim stage – although £600,000 of the £1m decrease related to a one-off interest swap loss. That helped NWF improve interim profits from £1.8m to £2m. Food distribution made a record operating profit but animal feed and fuels could not repeat their strong performance last time.


All three of NWF’s divisions have the ability to grow. Food distribution is running at near to capacity but it is well placed to take advantage of changes in the sector and would like to open a warehouse further south. There are bolt-on acquisition opportunities in fuel distribution and NWF plans to invest £500,000 in a new branch in Sheffield. The animal feed market is switching from compound to blended feed, where NWF is strong. Highly borrowed rivals could provide consolidation opportunities.

The second half of the year is always strongest. Daniel Stewart forecasts a fall in profits from £7.4m to £6.2m in the year to May 2010 which gives a prospective P/E of 9.2x. To put this in perspective, animal feed and fuel operations made bumper profits on the back of price movements in the previous year. NWF reported a profit of £4.2m in the previous year.

Finance
The disposal of the garden centres division last year helped to cut borrowings and gives NWF scope to grow. Net debt is down to £17.5m at the end of November 2009, while NWF has total facilities of £47.8m. There is no intention of reducing the facility when it comes up for renewal in May 2011.

Real Estate Investors (RLE) – £21.72m@6.38pCommercial property investor
Chief executive Paul Bassi will use his expertise and contacts in the Midlands to expand the property portfolio and increase its value. REI joined Aim in June 2004 but Bassi did not join the board until 2006 and he became chief executive at the beginning of 2007. His colleague Marcus Daly became finance director at the same time. Contracted annual rental income is £3.5m. The portfolio does include properties outside of the Midlands – there is an unlet property in Gillingham High Street for example. The main properties are in the Midlands and acquisitions will be in that region. The investment portfolio was valued at £49m at the end of June 2009, while net asset value was £25.2m. Management believes that the underlying NAV is nearer 10p a share. REI will release its 2009 figures at the end of February.

Finance
Real Estate Investors has raised £10.1m to take advantage of the availability of potential property deals in the Midlands. The cash will make it easier to buy properties, which can be geared up after they join the portfolio. Loan to value will not exceed 65%. Bassi even intends to start paying a dividend next year – based on the performance in the current year.

M&A
There are already a number of prospective deals. These include distressed sales and properties where rental income can be increased. Banks also have portfolios of client properties that they want to sell.

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