Nine family businesses have been trading for over 200 years.
…the FTSE 100 closed 0.4% higher at 5488.63 while the FTSE250 fell -0.7% with the Aim All Share at 708 was 0.1% lower. Inflation jerking to 5.2% and September Retail Sales at a paltry 0.6% were secondary considerations to the BOE minutes. These suggested that a significant minority of BOE members consider the £75 billion QE2 was insufficient, as 2011 4th QTR GDP forecast were cut to zero as UK recovery goes, “off track”.
…there is only a little UK economic news to report this week. Balance of Payment on Tuesday and Consumer Confidence on Friday. Thus Greek debt and its default management at the Brussels meeting with its Wednesday dead-line will be the focus of market responsiveness. The argument over how the Greeks bill is covered without setting future precedents is likely to continue. US Jobless Claims are reported on Thursday where employment is proving robust. Market could fall back this week
Next Fifteen Communications (NFC) – £44.3m at 79.5p
Technology and consumer PR firm Next Fifteen continues to perform strongly helped by the geographical spread of activities. Europe has been weak and it made a lower profit contribution last year but this was more than offset by improvements in the UK and North America. Revenues grew from £72.3m to £86m in the year to July 2011, while underlying profit moved ahead from £6.6m to £8.4m. The technology PR reported a slightly lower profit contribution because it was hit by the loss of a significant customer. Digital business is growing fast but it is still a relatively small percentage of revenues. Edison expects earnings growth of 10% a year for the next two years with 2012 giving an EPS of 9.37p for a p/E of8.5x.
Net debt was £1.6m at the end of July 2011. This is after financing further acquisitions in the period. The dividend continues to rise. It moved from 2.05p a share to 2.25p a share this year. That is much slower growth than earnings but Next Fifteen tends to steadily increase the dividend whatever the growth rate of earnings or even if earnings decline.
Seeing Machines (SEE) – £11.2m at 2.75p
Vision-based technology Seeing Machines reported higher revenues in the year to June 2011 but the loss also increased. Seeing Machines designs integrated software and digital camera technology that tracks facial movement and reactions. Delays in roll-outs hit the figures. Revenues improved from A$4.25m to A$7.02m and the majority of those revenues come from the DSS driver safety systems. R&D spending increased from A$1.57m to A$2.63m and that is one of the main reasons behind the increase in loss from A$1.77m to A$2.17m.
This year there should be some bigger contracts for the DSS driver safety system from mining companies. There will also be higher sales from head and face tracking technology faceAPI with the company’s 3D technology being used in Toshiba laptops. This will provide a stream of royalties. However, faceLAB, which accounted for one-third of revenues last year, is likely to make a smaller contribution this year while the new version is developed.
The appointment of Ken Kroeger as chief executive should mark the shift from a development-focused company to a commercial-focused firm. Breakeven could be just around the June 2012corner.
There is A$1.65m in the bank after a cash outflow from operations of nearly A$2m in the year to June 2011.
Sarantel (SLG) – £6.02m at 0.72p
Antenna developer Sarantel says that its revenues picked up in the second half of its financial year to September 2011. This follows a first half that was hit by lower than expected demand from an important customer. Revenues are still expected to decline from £2.9m to £2.2 m and losses may be similar to the previous year at £2.9m. A restructuring has saved £500,000 a year in costs. The military market is a significant revenue contributor. Positive field trials with a Japanese camera manufacturer show that the Sarantel technology is smaller and better performing than its rivals. Sarantel’s antenna is still dearer than the current technology but management believes that the cost can be brought down to below the competition while continuing to offer a better performance. If gross margins could improve slightly to 40% then break even annual revenues would be £8.25m. If gross margins reached 50% then the breakeven level would be £6.6m. That is still more than3x the current turnover level.
Sarantel should have ended the last financial year with net cash of nearly £1m, having raised £3.25m from share issues during the period.
Silvermere Energy (SLME) – £3.72m at 21.38p
Oil and gas company Silvermere Energy has raised £150,000 from a placing and the exercise of warrants. The placing with two existing shareholders raised £75,000 at 16p a share and was undertaken because the sellers of Silvermere’s Mustang oil and gas asset did not exercise their warrants even though they had irrevocably agreed to. The other warrant were exercised at 30p each. The previous share placing at the time of the reversal of the US exploration assets raised £1.5m at 25p a share. Chief executive Andy Morrison has reinvested £9,600 of his salary into the company’s shares by exercising 32,000 warrants at 30p a share. That takes his stake to 0.88%. RPS Energy values the proven and probable reserves that US-focused Silvermere owns an interest in at £18.4m – 100.2p a share but even on the basis of flat oilprices the NPV is £14.7m. The I-1 well should be drilled and in production before the end of 2011 and Silvermere is in discussions with the operator of the licences about a three well programme next year. Final decisions will be made after the results of the I-1 well are known.