Last Week There was a 0.5% increase in the FTSE 100 to 5625.65 reflecting corporate actively more than global fundamentals. The FTSE could be treading-water ahead of the electioneering budget on Wednesday March 24th at 12.30. There is a developing dilemma; as perhaps the better the budget is the harder it will be to have a majority Government and the worse the budget is the harder it will be for the recovery. The AIM All Share Index at 690.3 improved 0.4%.

This week
There maybe two conflicting economic tunes playing this week; as Inflation (Retail Price Index) will be reported on Tuesday and the Unemployment Rate on Wednesday.

Pause for Thought:
The GDP of the of 40 most indebted countries with a combined 606m people is less than the wealth of the worlds 13 richest people combined.
Forbes Lists

Company Reports
International Media Distribution (IMD) – £17.6m@51.5p
Digital distributer of adverts IMD lost a reselling client early in 2009. The loss of the reseller could have cost the online distributor of advertising to TV and radio stations more than £1m in revenues. However, most of the customers have been signed up directly and although not all of the revenues were retained the ones that were are at better margins.

Overall revenues grew 9% to £8.08m, while underlying profits improved 50% from £1.1m to £1.7m. Even though advertising spending may have fallen there were still a large number of different adverts being transmitted. IMD have developed bespoke technology in media distribution and Data Administration means that it is working with all of the UK’s top creative and media advertising agencies, post production houses, TV and radio broadcasters and a growing number of digital media companies.The German operations are profitable but it may take another year or so for France to move into profit. Adding new products and services has also helped IMD to grow and two Irish Companies were recently acquirted. Management believes that it may be able to spot other businesses that it can acquire that will add further services to its product range. Trading has been strong in the first couple of months of 2010. All of the core operations are growing revenues. House broker Charles Stanley has raised its 2010 profit forecast by 22% to £2.2m. The shares are trading on 12 x prospective 2010 earnings.

The total dividend has been raised from 1.05p a share to 1.2p a share. Strong cash flow has helped IMD to move to a net cash position of £893,000.

Brainjuicer (BJU) – £18.8m@145p
Online market research agency BrainJuicer Group reported slightly better than expected revenues and profits for 2009 thanks to a strong second half. BrainJuicer had already flagged up the figures. Revenues were 27% higher at £11.8m and profits were 21% higher at £1.66m, giving a P/E of around 16.3x.

BrainJuicer has grown at a time when the overall market research market is declining. This has been achieved by growing revenues from the company’s own-developed market research products. Switzerland and Germany moved into profit in their first full year and the US and the Netherlands both grew revenues and profits. In contrast, the UK was slightly down. The Canadian licence partner has been acquired. New operations are planned in Brazil and China. Currently a moderate profit improvement is forecast PBT £1.85p for EPS of 10.15p for a prospective P/E of 14.7x.

Even after paying a special dividend of 1.7p a share, BrainJuicer ended the year with an increased cash pile of £2.34m. The total underlying dividend is increasing from 1.5p a share to 1.9p a share. An interim dividend of 0.6p a share for this year will be paid in the current tax year but the 1.3p a share final dividend for 2009 will be paid after April.

Cheerful Scout(CLS) – £0.62m@7.25p
There is more to be cheerful about than the share price would suggest. The interims showed a narrow fall into a loss before tax of £21,789 (2009: profit before tax £18,109) on lower turnover at £736,664 from £894,889. There has been a number of operational developments were reported, most significantly the broadened its media services through the creation of a new corporate events division and a strengthened its team . The DVD business has completed several Blu-ray projects and, although overall revenue has decreased. The new events division, complements and broadens the services and allows cross selling opportunities. Twentyfirst Century Communications Limited (‘Twentyfirst’)was acquired , from its administrator for a nominal amount, including software, hardware, domain names and the registered trademark of ‘Brand Theatre’. Along with recruiting five key members of staff. The team has already attracted new business.

The Group’s cash balance continues to be healthy at £901,587 against £943,624 last year. Further bolt on acquisitions seem likely.

Brady (BRY) – £18m@63.5p
Risk management software provider Brady has grown organically and through the purchase of fellow software business Comsoft. The core markets for the group’s software are the metals and commodities sectors. Roughly one-half of the revenues are in Europe with the rest split between the Americas and Asia. The latter should prove to be a source of growth over the next few years. There was little in the way of revenues from Asia three years ago.

In 2009, revenues rose by one-third to £8.19m and underlying profits improved from £1.04m to £1.18m. Organic growth in revenues was 17%. Recurring revenues account for more than one-third of the group revenues. The £1.5m Comsoft purchase is doing better than expected and has won new business from Xstrata. Comsoft is still being integrated into Brady.

Brady intends to add further software modules to help it to grow. The company is also improving its marketing. Edison forecasts a 2010 profit of £1.6m. The shares are trading on just over a P/E of 16. Founder Robert Brady still owns one-third of the company but he has stepped down as chief technology officer and is now a non-executive director.

Net cash was £5.87m at the end of 2009, rising to £6.1m at the end of February 2010 – equivalent to 22p a share. The dividend has increased from 1.2p to 1.3p a share.

Brady intends to look for more acquisitions and expects to do one deal a year. These might expand the business geographically or add software.

Fiberweb (FWEB) – £63.4m@51.75p
Nonwoven products supplier Fiberweb produced slightly better than expected results for 2009 and it has declared the completion of its turnaround phase.

Revenues fell from £512.8m to £454.2m but operating margins improved from 3.7% to 5.1%. There is scope for further improvement in margins. Underlying profits rose from £9m to £11.1m. Restructuring charges and write-downs were still significant at £17.2m but that was one-half the previous year. The final dividend is unchanged at 2.5p a share. Fiberweb appears likely to maintain its total dividend at 4.2p a share for the foreseeable future. The hygiene sector remains strong with Fiberweb running at capacity but there has yet to be a recovery in the construction market, which accounts for two-fifths of the industrial division’s revenues. Panmure Gordon forecasts earnings of 5.6p a share for 2010 for a prospective P/E of 9x.

Net debt fell from £149.9m to £136.6m by the end of 2009. Higher interest charges relating to the refinancing of group debt will hold back future profits, though. Fiberweb negotiated a new £210m loan facility in February. The facility lasts until July 2013 but interest rate margins are much higher than the previous facility. This means that there will be an additional £3m of interest payments in 2010. There will also be a £3m non-cash amortisation charge, relating to interest rate swaps, in each of 2010 and 2011.

Fiberweb had hoped to announce an acquisition with the figures and that is why they were delayed by one day but failed to secure this acquisition at an appropriate price. Value enhancing acquisitions are still being sought.

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