The FTSE rallied on Friday and closed virtually unchanged on the week at 5354.5 perhaps helped by an upwards revision in UK GDP figures, while the AIM All Share at 667.6 was-0.9%on the week. During February the FTSE 100 improved 3.2% while the AIM ALL Share is around -1.3% lower.
This week: Economic figures generally will have a weather factor and in the UK an election interpretation political factor. This Thursday the BOE interest rate meeting is expected to leave the rates unchanged but for how much longer? On Friday the US will have unemployment data which could show a disappointing perhaps weather related deterioration.
Pause for thought:
A government that robs Peter to pay Paul can always depend on the support of Paul.
George Bernard Shaw
Monitise (MONI) – £firstname.lastname@example.org – Mobile banking technology services
Deals with the likes of Visa and Carphone Warehouse have yet to bear fruit but they should start to contribute in the next financial year. Revenues grew from £1.1m to £1.73m in the six months to December 2009 but Monitise is growing so fast that annualised revenues are running at £5m. The reported loss rose from £6.39m to £6.67m but that includes a notional gain of £956,000 on the acquisition of the other 50% of Monilink.
Monilink has annualised fixed costs of around £4.5m and Monitise Chief Executive Alastair Lukies says that Monilink should breakeven later this year.
Monitise has started to generate revenues from Visa but the service is not up and running yet and significant additional transactional revenues won’t come through until next year. A deal with Carphone Warehouse to launch the ‘Mobile Money Network’ will help to expand the range of services on offer. There will be a range of financial services and discounts on offer.
Monitise has raised cash at a premium to its market price three times in a row. The most recent placing raised up to £15.8m, although some of that is conditional on deals being signed. Monitise has received £7.4m at 13p a share. Another £2.8m (at 13p a share) is dependent on a deal being signed with Hong Kong investment firm First Eastern for the Asia Pacific market. First Eastern will subscribe for these shares and will also have a warrant to subscribe for a further £2.8m worth of shares at 15p a share. First eastern already owns just over 8% of Monitise. The completion of a joint venture with Carphone Warehouse will spark a subscription of £2.8m at 15p a share by the telecoms retailer.
There was net cash of £9.5m at the end of 2009 with an operating cash outflow in the first half. There should be £13.6m in the bank at the end of June 2010 but much of that will be used up in 2010-11.
Energetix (EGX) – £email@example.com – Cleantech technology developer
Energetix thinks that the new feed in tariffs are good to have but they should not be the basis for a business. The company’s domestic combined heat and power boiler technology developer Genlec will potentially benefit from the FIT but it is not fundamental to the business.
Pnu Power has won a contract with National Grid US to test its compressed-air backup power system for utility switching applications. National Grid has already started testing the system in the UK and it is seen as a market leader.
Recent results from voltage control products supplier VPhase have been better than expected with much larger electricity savings than envisaged.
The 2009 figures will be published on 23 March.
Lo-Q (LOQ) – £firstname.lastname@example.org – Queuing technology
Virtual queuing technology developer Lo-Q reported growth in profits even though trading was dampened by wet weather. The latest figures are for 10 months to October 2009 which flatters the comparisons. Revenues increased from £13.5m in the previous 12 month period to £17.3m. Revenues could have been £3m or more higher with better weather. The pre-tax profit improved from £1.85m to £2.39m. Probably around 50% of that improvement is due to the fact that two unprofitable months were not included in the figures.
Theme park operator Six Flags, which is Lo-Q’s main customer, remains in Chapter 11 bankruptcy protection in the US. Six Flags hopes to publish plans to leave Chapter 11 in March ahead of the main theme park season.
Lo-Q continues to invest in new technology and products. The latest version of its Q-bot technology is for water parks but the improvement could be used elsewhere. Development spending will increase from around £400,000 to £1m. Last year £309,000 of the spending was capitalised.
The greater development spending will hold back profits this year, although it depends how much is capitalised. House broker Arbuthnot forecasts flat profits of £2.4m for 2009-10 but this represents an underlying improvement of more than 10% – due to the loss of around £250,000 in the two extra months.
Net cash increased from £2.56m to £4.44m in the 10 months to October 2009. Lo-Q could still generate cash this year even after its higher development spending.
Minoan (MIN) – £11.7m@16p
Finals from this Greek leisure, tourism and now renewable energy group showed a large reduction in operating expense from £2.6m to £0.9m and again no revenue being generated. There is new management and over £1m has been raised since the September year–end to invest in renewable energy. There is logic for a Greek land owning Leisure Company with stalled planning permission on the massive Cavo Sidero site due to environmental impact concerns, moving into solar power. So in making the best of the situation Minoan have acquired two solar energy licences as they intend to develop income from renewable energy. The book value of the Cavo Sidero Project was £33.8m and it’s development is a long running saga and proposals for its development including joint ventures are active. Whatever happens to the Greek Government and the financial challenges, Greece will need to encourage foreign investment, so the prospects for this project remain.
Goldplat (GDP) – £email@example.com – Gold recovery and mine developer
Exchange rate movements held back the profits of Goldplat. Gold recovery was lower in the six months to December 2009 than the same period in the previous year, although it was higher than the second half of last year. Higher gold prices meant that revenues increased from £5.22m to £5.44m in the six month period. Profits dipped from £1.2m to £1.15m.
The Kilimapesa gold mining project in Kenya is applying for a mining licence and the first gold sales should be later this year. Goldplat hopes to build up production to 10,000 ounces of gold a year.
Goldplat has agreed to spend $500,000 on the development of the Nyieme gold project in Burkina Faso in order to gain ownership of the licence. The current owner would receive a small royalty on production. A drilling programme is planned for this year.
There is £1.05m of cash in the bank. Goldplat still owes £942,000 for the purchase of Kilimapesa. The gold recovery operations are cash generative and once the Kenyan gold mine is up and running it will generate enough cash to finance further exploration in the area. More cash may be needed for Burkina Faso or any additional mine project acquired by the company.
Boomerang Plus (BOOM) – £8.11m@91p – TV programme producer
TV programmes producer Boomerang Plus reported lower interim revenues but expects the second half to be much stronger. A £50m plus order book covering around four years gives good visibility, particularly for the second half. Revenues fell from £11.8m to £8.87m in the six months to November 2009. Although gross margins improved gross profits were lower and admin expenses were higher. Pre-tax profit declined from £1.08m to £470,000.
Lower working capital requirements meant that the company generatee enough cash to finance its acquisitions in the first half. The main purchase was factual programmes maker Indus Films.
Net cash was £2.48m at the end of November 2009. There is also £1.48m of potential deferred consideration.
Boomerang is spending £1.4m on post-production facilities for its £12m children’s programming contract for S4C. Most of that will be in the second half.
Boomerang is still on the look out for acquisitions. It wants to build up its intellectual property portfolio of programming and exploit it internationally. Digital is another area where Boomerang wants to expand.
Beowulf Mining (BEM) – £firstname.lastname@example.org
Scandinavian mining A study by Raw Materials Group shows that the Ruoutevare iron ore project in Sweden has a resource that easily be extracted through open pit mining. There could be more than $3bn in cash generated over a 15 year period. Gross revenues would be $6.85m. There is another iron prospect nearby called Kallak and RMG is due to deliver a study on this project. Beowulf will need to find a partner to help finance the $800m cost of setting up the mine.