Last week
The FTSE 250 closed up 1.5% at 10601.5 seemingly ignoring the worse employment figures for 16 years, inflation at 3.4% almost double the BOE target rate and 0.2% GDP growth which is at the bottom of the range. The FTSE 100 at 5723.6 was 0.4% lower but surge 1% on Friday as banks raillied ahead of a busy week for reporting. The Aim All Share at 732.5 improved 0.86%.

This week
UK economic news is thin this week with Consumer Confidence of Friday allowing attention to focus on the last full week of general election. House Prices in the US are reported on Tuesday followed by GDP on Friday which along with the Greek IMF drama are the main international economic events.

Pause for Thought Sell in May?
October to late May is on average is the best part of the year for shares.
Investment Research of Cambridge


Company reports:
NetDimensions (NETD) – £5.01m@20pa
Online trainer NetDimensions (Holdings) Ltd has moved into profit and increased its cash pile in 2009. Revenues moved ahead from $6.35m to $6.84m, while a loss of $589,000 was turned into a profit of $701,000. A $892,000 swing in foreign exchange movements accounted for more than two-thirds of the positive swing into profit. The UK, Benelux and South Africa were strong markets but the Middle East was weaker. New clients accounted for 23% of 2009 revenues. Support and SaaS revenues were 55% of the total. Trading in the first quarter is in line with expectations.
 
Finance
NetDimensions has net cash of $7.44m, which is equivalent to £4.86m.
M&A
NetDimensions is actively seeking acquisitions that will add to its distribution capability around the world.
 
Concurrent Technologies (CNC) – £27.9m@39.5p
A £279,000 bad debt stopped, ruggedised computer equipment Concurrent producing a fifth year of growth in profits. The bad debt relates to a telecoms customer. Pre-tax profit slipped from £2.95m to £2.8m after the bad debt charge. Investment in product development rose 60% to £3.25m with the Indian operation becoming increasingly important. The majority of this was capitalised but the expensed development spending did increase. The tax charge was reduced by R&D tax credits.
 
Exports account for 87% of revenues. The defence market remains the most important one for Concurrent but the telecoms and industrial markets are showing signs of recovery. Profits for the December 2010 year end are forecast at £3m giving and EPS of 3.8p so a prospective P/E of 10x while yielding 3.8%. Directors have been buying shares.
 
Finance
Cash of £4.91m was barely changed from one year before.
 
Nationwide Accident Repair Services (NARS) – £38.2m@89.5p
This car crash repairs mobile division generated £700,000 of revenues in 2009. These operations offer off-site cosmetic, glass, electronics and air-conditioning repairs. A director has been assigned the job of growing this business, which trades under the mobile restore and motorglass brands.
 
The vans can be used to carry out repairs at the home of a car owner or by the side of the road if there is enough room. If the van can’t carry out the repair then the customer can be referred to the body shop. The prospective P/E is 10x if the £5.28m forecast is reached, yielding 5.6%.
 
The mobile restore vans predominantly carry out paint jobs on cars where there is minor cosmetic damage. The motorglass vans offer a similar automotive replacement glass service to Autoglass. This is a fragmented market and Nationwide could significantly increase its revenues from this source.
 
The number of vehicles is expected to grow from around 30 to more than 200 over the next three years.
 
ClearStream Technologies (CTN) – £12.4m@27p
Medical devices company. ClearStream had expected a €400,000 payment in the six months to January 2010 but this will be recognised in the second half. Without that contribution, revenues dipped from €6.03m to €5.85m in the first half. Sales to other manufacturers nearly halved but co-labelling sales rose by more than one-third. The co-labelling contract with Cordis has been extended.
 
There was a swing from a profit of €107,000 to a loss of €701,000. That was mainly due to a reduction in margins from 35% to 24% due to a period of reorganisation in the manufacturing facility. These margins have already recovered to nearer to former levels. There was a €2.5m order book at the end of January 2010. Revenues tend to be second half weighted any way. ClearStream is focusing on fast-growing countries such as Brazil, India and China. Profits or the July Year-end o £0.4m would give a prospective P/E of 30x.
 
ClearStream can produce €25m worth of products from the equivalent of seven production lines based on two shifts. Production bottle necks have been removed. A third shift could be added to increase production further but the current capacity would satisfy.
 
Finance
There was net debt of €306,000 at the end of January 2010.
 
Michelmersh Brick (MBH) – £22.6m@39.5p
Sales of bricks slumped at Michelmersh Brick manufacturer in 2009 but it still managed to generate a higher gross profit. Lower gas costs helped but it was a change in mix of sales that really boosted gross margins. Higher margin products are the focus. Brick sales fell from 79m in 2008 to 50m in 2009. Average selling prices increased from £305 per thousand bricks to £350 per thousand. Production at Telford is still being rationalised and focused on specialised wire cut and clay paviour production. While revenues fell from £24.2m to £17.9m, gross profits rose from £3.92m to £4.62m. Higher gross profits, the lack of a large bad debt and other lower admin and interest costs meant that the overall loss was reduced from £2.87m to £996,000. Delays in refurbishing the Savoy Hotel have been good news for Michelmersh. It set up Hathern Terracotta last year and recently won a contract for the Savoy.
 
M&A
Michelmersh also intends to develop its landfill assets. Michelmersh recently completed the acquisition of fellow bricks manufacturer Freshfield Lane Brickworks for £10m in cash and shares. Selling agricultural land and houses bought with Freshfield and the receipt of payment for 16 acres of land in Telford where Persimmon has permission to build 170 homes will help to cut debt. There is another 69 acres on this site. Pro forma net assets are £35.9m.
Finance
Net debt was £18.1m at the end of 2009 and it will have risen by around £4m as a result of the Freshfield acquisition.
M&A
Michelmersh has its eye on other acquisitions. The Hanson brick operations are likely to be sold by HeidelbergCement. This business has around 30% of the bricks market and will be difficult to sell in one piece. Michelmersh would be interested in the more specialist parts of the business.
 
Mission Marketing (TMMG) – £5.34m@13.5p
Mission Marketing Group says that it will concentrate on organic growth from now on. The advertising and marketing services provider was built up via acquisition. Chief executive Iain Ferguson and finance director Tim Alderson are leaving. The bosses of the main subsidiaries will all be on the board and David Morgan, the boss of Mission Marketing’s largest firm Bray Leino, becomes executive chairman. There was a decline in operating income last year but it appears to be bottoming out. Operating income fell 15% to £36.1m and underlying pre-tax profit fell from £7.4m to £4.2m. Cost savings helped profit but could not offset all the decline in income. The profit figure excludes a goodwill write-off of £4m and the £705,000 cost of the debt restructure.
 
Finance
The vendors of the main acquisitions have agreed to accept deferred consideration and consideration for loan notes in Mission Marketing shares. This will remove a potential cash flow problem. The shares will be issued at 13p each to the loan note holders. Those holders still taking cash will be financed by a further placing at 13p a share. Mission Marketing has restructured its lending facility, which will be split into a £17.3m term loan and £3m of mezzanine debt. There is no capital repayment on the loan until June 2011. The mezzanine debt will have no capital or interest margin until the end of 2013.

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