The US recovery has proceeded at a relatively slow pace…

Last week …

the FTSE 100 jumped 5.1% to 5989.76 with the FTSE 250 up 4.4% while the Aim All Share at 864.2  improved 3.1%. This is the market’s best weekly improvement for a year and resulted from Greek debt default seemingly being contained by austerity measures and better tax collection. The market’s strong performance was also helped by the unexpected 3.6% improvement in the US ISM Factory Index which points to an improving 3rd QTR GDP.


This week…

… in the UK economic news on inflation and production is likely to make the BOE decide to leave Interest Rates unchanged at Thursday’s meeting. There are Inflationary Shop Prices to be reported on Wednesday and Producer Prices on Friday with production measurements on Construction reported on Monday, Services production reported on Tuesday while on Thursday Industrial and Manufacturing stats will be announced. The market could give up some of last week’s gains.

Pause for Thought

The US recovery has proceeded at a relatively slow pace… and has recently weakened, state the IMF. It forecast economic growth of 2.5% this year and 2.7% in 2012, which is below the Federal Reserve’s own estimate of 3.3% next year.



Company reports

Active Energy (AEG) – £4.9m at 2.5p

The results to December 2010 are largely irrelevant as since the year-end the company has been restructured and is developing into an end-to-end environmental services group through the purchase of Red Line Engineering. For the record 2010 revenues increased to £3m with a loss of £1.9m of which £1.2 was due to discontinued activities. The Red Line acquisition included a new experienced operational management team. The deal was funded with a £1.8m placing at 2.75p to help implement the new strategy. The new Chairman is Gavin Little, formerly a senior executive at BAT, and the strategic objective is to provide advice and implementation of environmental solutions to corporates. The initial focus will be on the transport sector, where management has significant experience and contacts, but the company is likely to broaden progressively both its market exposure and product/service offering  being developed organically and with  acquisitions.Financials

Year-end cash was £0,7m and further funding for the new strategy seems likely. The interims to June which will be announced in September should put further flesh on these strategic bones.



Sutton Harbour (SUH)£26.8m at 42.5p

Sutton Harbour has sold its airline operator Airline Southwest, which made a total loss of £8.41m in the year to March 2011, and the closure of Plymouth airport is progressing. This, and other non-core disposals, will enable the company to improve its balance sheet and concentrate on its property and marine activities. Revenues fell from £17.7m to £12.3m and pre-tax profit dipped from £6.01m to £1.71m in the year to March 2011. Part of the reason for the profit decline was the fact that one tranche of spare land was sold at the airport site, compared with two the previous year. The marine activities made a slightly smaller operating profit while the loss on the airport was much higher. There was a small contribution from valuation uplift of the company’s properties. The development of the new site for the local BBC at the harbour appears to have been sorted out thanks to an agreement with Sir Robert McAlpine, which will develop flats above the BBC offices.  Aim-quoted activist investment company Crystal Amber owns 13.5% of Sutton Harbour and it appears to want the company to make faster progress in its recovery. Plymouth City Council has to produce a viability report before the closure of the airport can happen. The shares are trading at a discount to net assets of more than 25% and on a prospective P/E of 22x for the March 2012 year end.


Net debt has risen from £14.5m to £21m and the dividend has been passed in order to reduce borrowings. Disposals will help to reduce the net debt figure. New three-year bank facilities have been agreed.



ReThink  Group (RTG)£10.2m at 10p

Acquisitive growth continues at ReThink , an IT recruitment and consulting business with specialist practices in the commercial and public sectors. The business has grown organically and with acquisitions to currently 135 staff based in seven offices across the UK and Ireland, and two overseas offices in Dubai and Singapore, providing a range of recruitment, technology and managed services to a diverse client base.  Reasonable growth was reported in April finals showing a 13% increase in revenues to £56.4m with a 17% increase in gross profits to £12.8m helped by a 46% increase in permanent recruitment fees.  Berkley Recruitment Group was acquired in June for an initial consideration is €2.65m (£2.34m) with additional deferred consideration of up to €4.125m dependent on the aggregate EBITDA achieved. Berkley was founded in 1995 and employs 30 people in Dublin, Cork and Singapore. Berkley provides resourcing and outsourcing services, specialising in the Pharmaceutical and Life Sciences, Technology and Commercial recruitment sectors and consultancy services in the Engineering sectors.  Its recruitment services range from the supply of Contract and Permanent staff, Interim and Executive Search, as well as the provision of Recruitment Processing Outsourcing/Managed Service solutions. The audited accounts for the year ended 31 December 2010 show EBITDA of €479,000 and a profit before tax of €410,000 on turnover of €5.6 million on a base case after tax exit P/E 8x. Pre- the acquisition Rethink was on a prospective P/E of 9x for  the December 2011 year-end


Contracted staff are a cash negative which is funded by factoring and short term debt  and the £10.75m invoice discounting line was renewed in  March.

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