Pause for thought: A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Winston Churchill

Last week

Markets fell back, with the FTSE 100 at 5828.7 down -2.7% and the FTSE 250 had the same % fall, while the AIM All Share at 893.0 dropped 4.8%. Investors worried about the worsening Libyan civil war, an unstable Middle East as well as Eurozone debts and UK economic belt tightening prospects. This catalogue of concerns did not leave much room to discount the impact of Japan’s 9 reciter scale earthquake, tsunami and nuclear catastrophe.

This week
It will take time to calculate the effect of the Japanese disaster on the world economy and clearly there could be further aftershocks. Japan’s central bank is meeting on Monday and Tuesday. US Base Interest rates are set to remain unchanged on Tuesday despite US inflation challenges. US consumer prices will be reported on Thursday as will unemployment. In the UK unemployment will be reported on Wednesday. After a knee-jerk fall this week markets seem to set to slide further.

Company Reports

Advanced Medical Solutions (AMS)£123.7m at 80p
Woundcare products provider AMS has managed to continue to grow its revenues and profit while it has been completing its move to new premises in Winsford. Revenues grew 32% to £31.9m with both the woundcare and wound sealants divisions contributing to the growth. However, most of the growth in profit came from the sealants division which benefited from the US launch and better than expected sales of the LiquiBand product. Pre-exceptional profit improved from £4.07m to £5.29m with the tax charge remaining modest because of past tax losses. The polyurethane foam business has been fully integrated. This is the fastest growing segment of the woundcare market and AMS is keen to expand its product offering. There will be new launches this year.

The current year has started strongly and profits of £6.32m are forecast for the December 2011 yearend which gives a prospective P/E of 18.7x. Product development perhaps by acquisition is the focus of the growth strategy.

Finance
There was net cash of £3.9m at the end of 2010 and the major capital investment for the new factory is at an end so that cash pile should increase more rapidly from now on. A maiden final dividend of 0.38p a share has been proposed.

Access Intelligence (ACC)£11.58 at 4.5p
Software-as-a-Service provider Access Intelligence increased revenues by 28% in the year to November 2010 but recent acquisition Cobent disappointed. Compliance software supplier Cobent was included for nine months of the year and contributed £183,000 to operating profit on revenues of £950,000 but the lower than expected contribution meant that £2.6m has been written off the goodwill paid for the business. Access Intelligence intends to boost the sales and marketing of Cobent and will appoint a new chief executive of the business.

Group revenues grew from £5.77m to £7.98m and even the like-for-like growth was 21%. Excluding the goodwill impairment and other exceptionals, the pre-tax profit rose from £584,000 to £1.2m. The company capitalised £415,000 of software development costs. This represents an upturn in spending on developing own-company products. The split between public and private customers is roughly even. The plan is to increase private sector exposure. New media relations management software Vuelio was launched too late in the year to make a significant contribution in 2009-10. Trading is going to be tough this year with customers taking longer to make the decision to sign up for software. Recurring revenues are 65% of sales and renewal rates for public sector licences are described as promising. House broker Northland forecasts a 2010-11 profit of £1.3m, a reduction of £500,000 on its previous figure. So the shares are trading on 16xprospective earnings.

Finance
Access Intelligence plans to pay a dividend in 2012. It will ask shareholders to agree to a capital reorganisation at its forthcoming AGM. There is cash in the bank of £2.21m and the business is cash generative. There are £1.61m of convertible loans on the balance sheet but these are no longer redeemable and they have to be converted at 4p a share by June 2014. The focus is likely to be on organic growth.

Interquest (ITQ)£21m at 67.5p
IT staff recruiter InterQuest Group says there is much more visibility to business than there was in the middle of 2011. Financial services customers are spending more money on IT and that is boosting demand for InterQuest’s staff, especially in areas where there is a shortage of skills. This improvement has come at just the right time because public sector demand has fallen. Revenues rose 15% to £112.2m, while gross profit was 18% ahead at £14.7m. Pre-tax profit was one-quarter higher at £2.2m, or £3.2m excluding amortisation. The recruitment process outsourcing business has won two large contracts and this should become increasingly important to the group. Smaller businesses are now also looking to outsource their staffing needs to specialists so the market is increasing. The IQ Equity operations lost money in 2010 but they should move into profit in 2011. House broker FinnCap is maintaining its 2011 profit forecast at £4.3m on a modest rise in revenues. The shares are trading on just over 7x prospective 2011 earnings. InterQuest is looking to make acquisitions now that the staffing market is turning up. It is also considering opening an office in Asia.

Finance
Net debt was £2.7m at the end of 2010. The total dividend was one-quarter higher at 2.5p a share.

STM Group (STM)£11.6m at 27p
The 2010 figures from this Corporate and trustee services suggest that STM has turned the corner and the 2011 figures should be even better. Pre-tax profit more than doubled to £1.5m on revenue that improved from £8.5m to £10.5m. There was a maiden contribution from Zenith, the Jersey business bought last year, but there was also organic growth. The new business in Malta has started off well – STM made sure it could cover its costs with existing business before moving into the new market. Additional pensions and insurance management business should be generated from this jurisdiction. Organic growth is likely to be the main focus this year, although STM would consider appropriate acquisition opportunities. Joint broker Evolution forecasts a 2011 profit of £1.8m, while fellow joint broker FinnCap forecasts £2m. The shares are trading on less than 8x prospective 2011 earnings.

Finance
There was £3.7m in the bank at the end of 2010. The total dividend for 2010 was 0.6p a share.

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