The FTSE closed up 4.6% last week at 5599.76, an 18 month high helped by the weak pound, as around 70% – 80% of the FTSE constitute earnings come from outside the UK. The AIM All ShareIndex at 687.5 improved 2.9%, not being helped by the UK economy but hopefully by foreign takeover activity eg as an old favourite Gladstone.

This week:
Concerns are growing that our Chancellor Darling’s Budget will not be tough enough on debt repayment. A benevolence that is likely to increase the prospects of a small majority Government after the election. There are various EU economic numbers (Employment, Industrial Production) and UK Balance of Trade on Tuesday – all of which likely to reduce the pounds scope for recovery.

Pause for Thought:
History repeats itself, first as tragedy, second as farce.
Karl Marx
Metrodome (MRM) – £4.2m@2.25p
Film and DVD distributor Metrodome grew its revenues from £6.59m to £9.09m in 2009, while a loss of £543,000 was turned into a profit of £199,000. The year started off badly with the collapse of Woolworth and Zavvi at the end of 2008, which hit retail DVD operations but in December 2009 a distribution deal has been signed with ITunes . Retail DVD accounts for the vast majority of revenues but the other areas are growing faster such as DVD rental, where revenues grew 310% partly as a result of taking the operations in-house Also TV and video on demand sales nearly doubled. Metrodome released 63 Titles during the year but the cost base at over £2m seems relatively high.

The new chairman Mark Webster continues to seek acquisitions and spent £45k in legal fees but failed to do a deal last year. After raising £0.96m the balance sheet is strong with £1.58m in cash at the end of 2009 and there is a £1m line of credit is in place.

Access Intelligence (ACC) – £9m@5.75p
Software-as-a-Service supplier Access Intelligence reported a return to profit in the year to November 2009. Revenues from continuing activities increased 52% to £6.01m, while a loss of £4.6m has been turned into a profit of £566,000. Access is building up its recurring revenues.

Access is raising £3m at 5p a share to help finance the £5.2m purchase of compliance software provider Cobent. The rest of the purchase price is being paid in shares at an issue price of 6p a share, except for up to £200,000 of deferred consideration. Cobent generated revenues of £1.5m in 2009.

Cobent specialises in the pharmaceuticals, financial services and retail sectors. Management believes that Cobent fits well with the existing operations.

There was cash of £1.71m at the end of November 2009 but net cash was £59,000.
Access is looking for more software businesses with strong recurring revenues in the compliance and public sectors.

Goals Soccer Centres (GOAL) – £70.5m@146p
Five-a-side football centres operator Goals Soccer Centres has shown that its model can hold up well during a recession. The only real weak part of the business is corporate events and management is hopeful that the World Cup will give a boost to this part of the business.

Football revenues account for three-quarters of revenues and they edged up 1% during the year. This has proved management correct in its assertion that people would still play even during a recession. Corporate events revenues fell 17% but they are only 4% of total revenues. Revenues from birthday parties also fell but bar income held up well. Total revenues rose from £24m to £26.2m in 2009. Pre-tax profit improved from £8.23m to £8.76m.

The opening of the Liverpool centre was delayed until January and Goals is on course to open six more this year. A standard 10 court facility costs £2.3m. The company’s 60%-owned Los Angeles joint venture will also open its first centre during the summer.

Even more impressive was the cash generation. Goals generated £11.4m from operations which covered the majority of the £15.6m spent on adding centres. That figure may be slightly lower this year but debt is expected to rise slightly in 2010. Net debt was £37.7m at the end of 2009. A £10.6m placing at 165p a share has helped Goals to set a target of opening six new centres each year. There is still £9m of headroom on the borrowing facility which lasts until February 2013.

Interquest (ITQ) – £15.1m@49.5p
IT recruiter InterQuest reported lower revenues and profits in 2009 but cash generation remains strong. Revenues fell 8% to £97.4m, while underlying profits declined from £4.8m to £2.9m. This is not surprising for such a cyclical business. There was a particularly sharp fall in permanent recruitment revenues, although there were signs of improvement later in the year.

Net debt fell from £5.5m to £3m in 2009 and it is expected to fall further to £1.3m by the end of 2010.
The recent focus has been on starting up new businesses via IQ Equity. The five businesses made initial losses of around £400,000 in 2009. InterQuest says that it will concentrate on building up these businesses. InterQuest is also in a good position to acquire existing businesses that will broaden its activities.

Just Car Clinics (JCR) – £7.09m@48.5pCar crash repairer
Reduced road usage and higher insurance excess payments held back demand. Revenues edged up from £42.6m to £42.9m as Just started to offer cosmetic repairs and servicing as a way of offsetting lower demand. There was a small fall in like-for-like repair volumes. Pre-tax profit fell from £1.31m to £1.15m with a £69,000 loss made by the Stourbridge and Redditch sites acquired from the administrator.

Just believes that its link-up with other regional independents will help it compete for additional business. The National Accident Repair Group was launched at the end of last year. This is a network of 10 regional groups. Capita had come up with the original strategy the network is based on but did not go ahead with the plan. The companies involved felt it was a good idea and agreed among themselves.

Just has 25 sites in the North and Midlands and is the second largest independent crash repairs group but it is much smaller than Nationwide Accident Repair Services. In order to keep costs down, insurers are working with fewer repair businesses. National Accident Repair Group can offer national coverage from more than 70 sites.

House broker Brewin Dolphin forecasts profits of £1.3m in 2010.

Cash generation was strong in 2009 and net debt fell from £1.82m to £1.28m. This debt could be nearly wiped out by the end of 2011 – assuming no significant acquisitions.

Just is paying a total dividend of 1.63p a share for 2009. This is a 2% increase on the previous year and the company can afford to continue to increase its dividend.

Cinpart (CINP) – £12.6m@14.5pVoltage optimisation equipment
Cinpart’s Active Energy voltage optimisation equipment subsidiary is starting to win contracts. The latest is from the Ministry of Justice. A deal with Southern Electric Contracting means that Active has the ability to install its product in a large number of buildings.

There are plans to establish a subsidiary in Spain to sell to the hotel sector. Australia is another potential market. The equipment is currently manufactured in Scotland but overseas markets will be supplied from the company’s Thai factory, which currently makes gas ignition components.

Cinpart raised £1.05m at 12.5p a share just before Christmas.

Zamano (ZMNO) – £13.8m@14.5pMobile phone content and services
Mobile services and content provider Zamano reported a sharp drop in revenues in 2009 but profits have held up well.

Revenues slumped from €41.4m to €25.1m. Stripping out impairment charges and amortisation, underlying profits declined from €4m to €3.5m.

Zamano’s strategy is to focus on a limited number of niche mobile applications. There are plans to launch apps this year, including Somebody To Love, which is based on a proposed TV programme.

Revenues should start to recover this year although the UK may continue to decline in the short-term. House broker Cenkos forecasts a strong recovery in reported profit because of a much lower amortisation charge. However, underlying profits are expected to decline to €3.2m. That still puts the shares on around six times prospective earnings for 2010.

Net debt has been cut by two-thirds to €2.25m at the end of 2009. Last year’s €2.5m share placing helped. Zamano should be cash positive during 2011.

Strontium (STTM) – £1.54m@11.5p
Professional services provider Strontium Group has refocused its business activities and the latest figures show that it is reaping the benefits. Revenues grew by 23% to £1.23m in the six months to December 2009 and pre-tax profit nearly doubled from £74,000 to £145,000.

Strontium sold its Executive Development Consultants business last year and it is focusing on its training activities. The NHS is a major customer. A new Australian operation is near to breaking even.

Strontium has switched its nominated adviser and broker from Astaire to Cairn, whose employees used to work for Dowgate before it was acquired by Astaire.

Strontium has paid £25,000 of deferred consideration in shares for Miad. These shares were issued at 16p each.

There is £359,000 of cash in the bank at the end of 2009.
Management is still looking for suitable professional services businesses to add to the group. The cash in the bank will help to finance acquisitions. The low rating of the shares makes it difficult to finance an earnings enhancing acquisition with shares.

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