The political stalemate caused red scorchmarks with the FTSE 250 falling -8.4% to 9491.8. The FTSE 100 fell -7.8% and the Aim All Shares at 684.5 was- 6.1% lower. The political uncertainty is a feature until a new Prime Minister is elected with a workable majority, meanwhile decisive action on the fiscal deficit etc may be postponed. The Euro hole is being filled with $700billion of available funding.
The postponed Monetary Policy Committee (MPC)’s interest rate at 0.5% and fiscal stimulus decision will be reported at 12am today. Interest rates and quantitative easing are likely to remain on hold. There could be a warning that an interest rate rise will be needed to store up sterling and counter inflationary pressure.
Pause for thought
David Cameron was deprived of a Commons Majority by failing to secure the votes of just 16,000 people.
Colin Rallings/ Sunday Times
Beacon Hill Resources (BHR)-£email@example.com
Beacon Hill Resources has moved into the coal mining sector through the purchase of the Mozambique-based Minas Moatize by a 49%-owned associate. Minas Moatize is costing $35m and BHR has an option to increase its stake in the holding company to 75%. This is the only operating coal mine in the Tete province of Mozambique – it is one of three sites in the area to have a mining licence. There is a mixture of coking and thermal coal at the mine. The estimated current resource is 33m tonnes of mineable coal with scope to increase this through a drilling programme that is just starting. BHR intends to expand current production to 5,000 tonnes of coal a month. BHR will invest $7m this year. Next year, BHR will invest $23m in starting open cast production and building a processing plant. The first export grade production should be at the beginning of 2012. The transport infrastructure is good with rail lines that can take the coal to ports. BHR plans to build up production to 2m tonnes a year in 2013. Revenues from the mine could amount to nearly $200m, even if coal prices are lower than they are now – at current prices the figure is nearer $250m. The profit after tax could be $66m. There have been complications in developing the company’s magnesite project in Tasmania but it should be in production in around 18 months.
BHR has cash of around £1m. BHR will need to invest in Minas Moatize but it hopes to do this at a project level.
There was a trading update ahead of finals for the year end December 2009 to be reported in May. Cinpart distribute voltage optimisation technology that can reduce the energy consumption and CO₂ emissions of commercial buildings by up to 20% The results are expected to be in line with forecasts of operating profits at the positive side of break-even. The growth potential for Active Energy’s product, VoltageMaster, is significant, with an estimated 400,000 large commercial buildings in the UK alone that could reduce their energy consumption via voltage optimisation. The installation programme following several major contract wins, secured over the past 12 months, has been helped by strategic relationship with Southern Electric Contracting SEC, one of the largest mechanical and electrical contractors in the UK. VoltageMaster units have been fitted into 52 Courts under the Ministry of Justice contract, which was announced in February 2010.The company was also been strengthened with two recent appointments.
In December £1m was raised at 12.5p
LiDCO Group (LID)-£38.27m@22p
Cardiac monitoring equipment producer LiDCO is set to move into profit this year. Revenues grew 18% to £5.37m in 2009-10 and this is before any significant benefit from last year’s distribution deal with Covidien. The installed monitor base has risen by 37% to 2,075. Higher margin sensor and smartcard sales almost doubled to £1.12m. The loss fell from £1.77m to £1.55m. Because of the way machines placed with customers were financed there was a cost of £688,000 in 2009-10 for past placements. This reduces to £480,000 in 2010-11 and £150,000 in 2011-12. Profits to 31 Jan 2011 are forecast at £0.38mfor a prospective P/E of 55.5x.
Net cash was £1.82m at the end of January 2010.
Next Fifteen (NFC)-£38.5m@70p
Pr Group Next Fifteen’s figures recovered in the latest six month period and management say that it is running at pre-recession levels. Revenues were 2% ahead at £34.2m when compared with the first half of last year but there was an even bigger improvement on the second half figure. Cost reductions helped profit improve 44% to £2.08m. The company is still investing in its digital communications operations but it has yet to see the benefits in its figures. Profits of £6.52m are forecast for he July 2010 year-end which gives an EPS of 7.66p and a prospective P/E of 9.1x.
The business is cash generative but payments for acquisitions meant there was net debt of £1.4m at the end of January 2010.
Waste oil recycling group Hydrodec has finalised a 50/50 joint venture deal with Kobelco Eco Solutions which will open up the Japanese market to the waste oil recycling company. The joint venture covers Japan plus South Korea, Taiwan, China, India and Vietnam.
Hydrodec has fully operational plants in Australia and the US and is focused on cleaning up waste transformer oil and reselling the recycled oil under the SUPERfine brand. The process can be used to clean up other oils but transformer oil is a significant niche market. The global consumption of transformer oil is estimated at around 5bn litres a year. Japanese recognises that it has a problem with PCB (poly-chlorinated biphenyls) contaminated oil and Hydrodec can deal with this problem. The Japanese electricity companies have significant amounts of PCB contaminated transformer oil that needs cleaning up. Two potential sites have already been identified in. It takes around one year to build a plant after planning permission is gained. It is realistic to believe that the first Japanese plant could be up and running by the first half of 2012. Theoretically, Hydrodec will have to pay 50% of the costs of constructing the plant. In reality, these plants should be able to obtain project finance so the capital invested by Hydrodec should be minimal. Hydrodec says that gross revenues of each Japanese plant should be at least $25m and there is potential for at least four sites in Japan.
Hydrodec is currently loss-making but raised around £6.5m last year. Iit has significant growth prospects and is looking for strategic investors to provide further capital to help it to take advantage of the opportunities available.