Last week
After climbing higher than 6,000 earlier in the week the FTSE 100 fell-back to close up 1.4% at 5,984. The FTSE 250 improved 1% while the AIM All Share at 940 improved 0.76%. The increase in US Employment was a slightly disappointing 47,000 lower than expected. In the Euro Zone inflation is 0.2% higher than the Central Banks 2% target, while Portugal is struggling to raise sufficient funds even at an interest rate of 7.2% and may need a more fundamental debt restructuring.

Next week
The weaker pound and strong manufacturing should have helped the UK Balance of Payments which is reported on Wednesday. The BOE Interest Rate Decision is reported on Thursday and for 18 months or so, has remained unchanged the future maybe less certain as an interest rate rise manybe triggered by increasing inflation. The is a whole host of economic statistics from the US and Euro Zone on Retail and Balance of Trade etc.

Pause for thought
“When it comes to predicting investment markets, the over 50’s have proven that older is definitely wiser”.
Saga’s New Director General FT.

Company Reports

Interbulk (INB)£18.5m at 6.13p
Intermodal transport provider InterBulk Group is reducing its debt and there are signs that its markets are improving. Revenues rose from £232.5m to £273m in the year to September 2010. Both the liquid bulk (chemicals) and the dry bulk (food and minerals) divisions grew their revenues. The liquid bulk division also increased its profit contribution but the dry bulk side made less money last year. Both sides were hit by lower margins but the dry bulk business suffered the most due to the changing mix of business and currency losses.

The underlying profit fell from £3.34m to £1.78m because of an increased interest charge.

Interbulk should benefit from further recovery in the chemicals sector but margins remain under pressure. Profits are forecast £38m for the September 2011 which gives a prospective P/E of 7.0x

Finance
Cash was generated during the year helped by the fact that not all of the interest cost is paid out in cash immediately. Net debt fell from £118.1m to £109.3m in the year to September 2010 even though the tank fleet was increased. New interest rate swap agreements will reduce this year’s interest charge by around £1m.

InfraStrata (INFA)£27.5m at 27.5.p
Gas storage developer InfraStrata has signed up a joint venture partner for its Portland project and this will reduce the cash outflow from the business. The shares have doubles in the last month on the back of the deal with CORP Oil & Gas, which is acquiring 50% of the Portland project, means that the new partner will match the £22.9m already spent by infrastrata to acquire the stake. This should take the project up until the time when it is ready for the financial investment decision, which is expected in 2012. A new energy bill should be come into force in 2011 and that should ensure that gas prices will rise when there is more demand, thereby making the Portland project more attractive. The loss was £1.25m in the year to July 2010. Most of that relates to the Portland project. From now on there will be service revenues from the project to the holding company and no more costs. That will sharply reduce the loss over the next couple of years. InfraStrata is involved in another underground gas storage development at Islandmagee in Northern Ireland. A planning application was submitted in March and a decision is expected in the first half of 2011. InfraStrata is also looking to develop exploration activities in the same area as Islandmagee. These could eventually help to generate cash to help finance other projects.

Finance
There was £1.26m in the bank at the end of July 2010. The underlying corporate overheads are around £400,000 a year and service revenues from the Portland joint venture will help to offset the costs.

Begbies Traynor (BEG)£55.4m at 61.5p
Insolvency practitioner Begbies Traynor says that activity levels in its market continue to decline and getting paid is taking even longer. There are likely to be around 21,000 insolvencies in 2010 compared with 25,000 in 2009 but Begbies executive chairman Ric Traynor believes that this figure could rise by 10% in 2011. The HMRC’s time to pay initiative has probably reduced the number of insolvencies.. Begbie’s underlying profit fell from £4.3m to £3.6m. That reflects the £2.8m drop in insolvency income reducing profit offset by better performances from the tax and investigative services divisions. Begbies is reducing its costs so they are more in line with business levels but the main reductions will come from non-work generating back office personnel. The net asset value per share is 75p but that is mainly goodwill and intangible assets. The second half is normally stronger with January to Easter strong in the insolvency side and the tax division benefiting from the end of the tax year. Trading will continue to be tough but may start to show signs of improvement. Meanwhile, an unchanged dividend provides a 5.3% yield. On forecast profits of £9.3m would give a P/E of 89x for the April 2011 year end.

Finance
A £50.5m figure for trade receivables in the balance sheet compared with flat interim revenues of £34.4m in the six months to October 2010 tells its own story. The time taken to receive cash in the insolvency side is moving up towards nine months. The latest interim of 1.2p a share will not be paid until after the year end which means that only last year’s final will be included in this year’s cash flow. At the moment Begbies is comfortably inside its borrowing limit. It is using £23m of its £35m bank facility. If it takes even longer to get paid then borrowings will naturally rise and that headroom could disappear.

M&A
Begbies has made three small add-on acquisitions in recent months – the last two were after the interim period. Those acquisitions and deferred consideration will add £2.5m to debt.

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