Last week
The FTSE 250 was -0.4% lower while the FTSE 100 fell -1.4% dragged down by the additional weight of BP’s sticky problems. Friday’s US job creation figures were 20% lower than expected leaving the US unemployment rate at 9.5%. The Dow fell -3.4% on the growing realization that the US recovery will be a long-hard slog. The AIM All Share was 689.3 against 674.3 last time.

This week
There is little economic news this week. Ahead of the ‘tough-love’ Budget this month consumer confidence is likely to fall. While the PIIG list of Euro-Zone sovereign debt potential defaulters now includes Hungary.

Pause for thought
America’s highest earning CEO is Lawrence Ellison of Oracle who was paid $56.8 million in 2009.


IS Pharma (ISPH) – £22.3m@72.5p
This Drugs marketer revenues grew 17% to £14.2m in the year to March 2010, although that includes £700,000 of the £1.4m receivable for the sale of plasma expanders Volplex and Isoplex. Underlying revenues grew 19% to £13.4m. Variquel (Haemopressin), a treatment for uncontrolled bleeding from oesophageal varices, grew sales by 80% and Aloxi, the acute nausea and vomiting caused by cancer treatment, increased revenues by 84%.
 
Pre-tax profits rose from £2m to £2.59m. IS Pharma reported reduced profits in the first half so there was a sharply improved performance in the second half.
 
Episil, an oral spray used to treat oral mucositis, and Aquoral, an oral spray used to lubricate the mouths of cancer patients suffering from dry mouth, were acquired near the end of the financial year. The products have not been launched yet but they should make a revenue contribution in the second half.
 
FinnCap forecasts profits of £2.7m on revenues of £14.7m in 2010-11. The loss of revenues from Volplex and Isoplex will mask the underlying growth of the continuing activities. The shares are trading on 10 times prospective earnings for 2010-11.
 
Finance
IS Pharma had net debt of £213,000 at the end of March 2010. There is also £9.58m of contingent consideration. There is £2.78m payable within one year and the rest is payable over a number of years depending on milestones and sales.
 
Printing.com (PDC) – £15.3m@34.5p
Printing.com has performed in line with its recent trading statement and it hopes that future revenues will be boosted by its new software. The new software, which uses templates to make it easier for businesses to order stationery and other printed products, will be launched near the end of the first half of the year to March 2011. That means that there will be no benefits until the second half. Revenues were flat at £14.5m in the year to March 2010. Pre-tax profit declined from £2.06m to £1.7m due to higher materials costs and lower interest receivable. The Irish business performed poorly.
 
Printing.com is making steady progress with its overseas operations. The New Zealand franchise has proved a success and the first company owned store has been opened in France.
 
The US franchisee has built up the presence of the brand in Florida and the surrounding area but Printing.com may have to find other regional players to help it penetrate the market in other regions of the US.
 
Printing.com is on course to edge up profit to £1.8m on slightly lower revenues for the year to March 2011. If the new software proves successful then Printing.com could do even better. The market is still difficult to predict with strong weeks followed by poor weeks. Following a recent trade show there are a number of potential new franchisees.
 
Finance
Net cash is £1.29m, even after paying out a special dividend of £887,000 during the year. The normal dividend is maintained at 3.15p a share, including a final dividend of 2.1p a share. Cash generation is strong enough for the company to afford this dividend even though it is not covered by earnings per share. There is little need for significant capital expenditure because the Manchester printing operations still have spare capacity.
 
Real Good Food Company (RGD) – £17.5m@26.5p
Real Good Food is on course for a much better year in 2010. EBITDA is ahead of budget for the first four months of 2010. In 2009, Real Good Food reported an increase in pre-exceptional profit from £887,000 to £2.15m. Revenues fell slightly from £218.7m to £215.6m.
 
Ingredients supplier Renshaw and sugar supplier Napier Brown were at one point last year merged into one business but that move has been reversed and they are run separately.
 
Renshaw has been the star of the business in recent times and this has not changed. Operating profit rose from £1.82m to £2.49m in 2009 and Renshaw remains busy even though this is normally a relatively quiet part of the year. Export sales are growing.
 
The Napier Brown sugar business has been hit by the fall in the price of sugar due to changes in the EU sugar regime. Profits have been declining. The sugar price should be near to its low and the next sugar contract is in October 2010. The sugar price is expected to rise by 10% over the next two years.
 
Napier Brown is developing its Whitworth’s brand by adding specialist sugar products. Retail sales are growing with William Morrison a significant customer.
 
Evan bakery products maker Hayden’s, which has been the main problem in the group, appears to be on its way to returning to profit. Demand is strong from Waitrose and Marks and Spencer and it has added a 30,000 square feet facility across the road from the existing one in Devizes.
 
Winning business has not been a problem for Hayden’s but making sure that it is profitable has been. An IT system is being installed and additional manufacturing plant is being acquired.
 
The share price has risen by 500% over the past year. The share price rise reflects the recovery in profits and reduction in debt.


Finance
Net debt fell from £27.9m to £20.9m during 2009. Management believes that it can implement its three year growth strategy within its existing facilities and is not keen to issue shares at the current share price.

Media Corporation (MDC) – £8.71m@3.1p
Online advertising and internet portals operator Media Corporation has moved back into profit in the six months to March 2010 and it should have an even stronger second half. A near-six month contribution from Malta-based online gambling business Purple Lounge and the lifting of a Google penalty on the Gambling.com portal helped to boost the revenues. Purple Lounge was strong in Scandinavia before it was acquired last October and Media Corp helped it grow in the UK. The whole internet publishing division still made a small loss in the period.

The internet advertising division is also growing strongly. Revenues grew from £1.42m to £1.92m and it made an operating profit of £203,000 after losing money last year. The growth in advertising has come from a number of sectors and there are around 150 different campaigns each month.

Group revenues jumped from £2m to £10.3m in the six months to March 2010. Keeping admin expenses flat helped Media Corp to swing from a loss of £898,000 to a profit of £157,000.

Astaire forecasts full year profits of £1.2m. The shares are trading on eight times prospective 2009-10 earnings.

Finance
The cash balance is moving upwards as well, helped by an increase in creditors. Net cash has increased from £1.7m to £2.3m in the six months to March 2010. Media Corp raised £420,000 from selling shares it held in treasury, which was similar to the cost of the Purple Lounge acquisition. A further £453,000 has been raised from treasury share sales and this cash should be received in June.


M&A
This cash can be used to make add-on acquisitions for Purple Lounge. These could be affiliate sites or other gaming brands. Chief executive Justin Drummond is hopeful that the US market will open up to online gaming. The Gambling.com business used to generate significant revenues from the US before the clampdown on online gaming.

Stratex International (STI ) – £10.5m@3.45p
Stratex International expects the feasibility study for Turkish gold prospect Inlice to be completed in six months.

Inlice is part of 45%-owned NS Madencilik, a joint venture with Turkish civil engineer NTF which is earning 55% of Inlice by paying up to $2m for the feasibility study. It could take $8m-$10m to get the mine up and running and it will have a two-to-three year mine life based on the present resource of 70,000 ounces of gold.

Altintepe is also part of the NTF joint venture and this could be an even bigger resource than Altintepe.

There should be news of drilling at Hasancelebi, which is being developed with Teck, in the second half of the year. A separate joint venture with Centerra is planning to start drilling at Oksut in the third quarter of 2010.

All those prospects are in Turkey but Stratex also has interests in Ethiopia. It is earning -in to an initial 60% of the Shehagne gold project in northern Ethiopia. An anomaly has been identified. There could be drilling later this year.

Extensive hot spring mineralisation in the Afar Rift Valley could mean there is a significant gold discovery in the region. There are already sings on the surface at Megenta of a bulk-tonnage deposit albeit at low grades. Further exploration results are expected in the near future and there could be some drilling to firm up the potential. Stratex has 2,245 square kilometres of exploration land in the region.

Finance
Stratex’s partners will be spending the money on most of its Turkish projects so Stratex can use cash to develop the Ethiopian prospects.
There was £2.5m in cash in the balance sheet at the end of May.

Advanced Power Components (APC) – £4.77m@19.5p
Electronic components distributor Interest is beginning to build up in APC’s iMop product which enables motors to run more efficiently by increasing the power factor. This saves money on electricity and also means that machines should not need as much maintenance. (www.imop.com). One UK water company is already interested in using the iMop at their pumping stations. If it bought iMops to cover all of its requirements then that could be £20m worth of orders and the payback should be less than two years even allowing for lower maintenance costs.

APC has the rights to the technology outside of America. The Middle East is an area where it is likely to prove popular and there are already business leads in Dubai and Kuwait.

APC assembles the iMop, which is an improved version of a US product, and makes around £100 gross profit on each one sold. APC also has a stake in the company marketing the product.

If the iMop takes off it could be a large proportion of APC’s business.

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