A crackdown by HM Revenues on SMEs …

… resulted in a total of £434m being raised in tax and fines in the 2011 tax year.  Since 1998 Starbucks has paid £8.6m in UK tax while in 2010 EBay paid £1.2m.


Last week …

… the FTSE 100 improved by 1.8% to 5896 but was outperformed by the 2% rise in the FTSE 250. The Aim All Share continued its steady run with a 1.4% increase to 712. Inflation, measured by  RPI was flat month-on-month but fell to an annual rate of 2.2%. Unemployment fell a further 0.2% to 7.9% and House Prices rose at an annual rate of 1.5%. Elsewhere, German Economic Sentiment improved, Portugal passed it austerity budget and Spain’s bonds are not junk. US production improved by 0.4% and China’s annualise GDP at 7.4% is down from 7.6%.

This week …

… the relative economic improvements over the last weeks could be highlighted when Third Quarter GDP is reported on Thursday. It is forecast that after two quarters of falls that growth will be between 0.4-0.8%, helped by the once in a lifetime events of Jubilee and Olympics.  The economy may continue to bump along the bottom but it is now on the positive side and GDP for 2013 is forecast to grow 1.2%. Further gains seem likely


Company Reports

Software Radio Technology (SRT) – £29.7m at 25.62p

Starting to Move

Already EBITDA profitable this marine identification systems developer Trading Update reported a strong start to the financial year and is ahead of budget. SRT’s technology dominates the vessel tracking technology market and it will be a major beneficiary as countries around the world make the technology mandatory. Revenues were £3.5m in the six months to September 2012, while the order book for the second half is £3.2m so are already ahead of last year’s £6.2m. Russian orders are coming through following the adaptation of the company’s products so that they can use the Russian alternative to GPS. SRT has shipped $250,000 of a $1.2m order and a further $350,000 order has been received. The technology is mandated in certain regions for specific sizes of ships and boats and, although non-mandated sales are growing, new mandates are where the growth will come from. The US mandate for some commercial vessels will not happen until after the Presidential election. EU Inland Waterway demand is likely to be delayed until the deadline at the end of the year, while a further phase for fishing vessels has a deadline of the end of May.  New products, such as the search and rescue transponder and aids to navigation will be launched at the beginning of 2013. Turnover for the March 2013 year end are forecast at £10m with profits at £1.9m for an EPS of 1.3p with a jump to £17m turnover and PBT of £5.2m for 2014. Interim figures will be published on 20 November.


After a £2.56m placing at 27p a share right at the beginning of this financial year there is net cash while much of the Capex on new products has already been incurred.


StratPro (SOG) – £65m at 105p

Cash Machine

The recent trading update, reminded followers of this provider of ‘mission critical’ software to the Global Investment Industry, that the group is in a strong position to grow its highly scalable cloud based solutions.  Given a 94% customer retention rate it is highly leveraged news that the number of customers of its traditional product Revolution has risen by 19 in three months since June to 130. This includes 12 fund administrators which are effectively resellers of the product and a distribution deal with a third-party software company, Linedata, a French company with 700 customers globally.   The new customers and distribution channels is ahead of the launch of Revolution Plus, next year which is a Software-as- a-Service (SaaS) model which should lead to a strong improvement in margins. Current forecast for December 2012 and 2013 are for £4.5m and £4.9m for EPS of 5.25p 5.7p giving a prospective P/E of 20x reducing to 18x while yielding 2.5% and 2.6%.


The development stage seems complete and net debt at the interims fell from £5.15m to £3.92m as cash-flow from operating activities improved to £4.72m.


Brainspark (BSP) – £9m at 5p


Since the interims and the relisting a  £2.8m placing at 4p, the appointed of an FD and a new non- executive  chairman have been  announced.  Luke Johnson’s appointment to board could become significant as he previously grew PizzaExpress from 12 owned restaurants to over 250 and from around 40p a share to over 900p before selling the business in 2006 and his holding will be 13.8%. The interims showed that the NAV had increased to £21.2m while the loss before tax was reduced to £304k. Operationally the company is being developed and there is a list of events that are starting to add-up to an emerging  business  with  a portfolio of  Italian companies primarily in the leisure, entertainment and real estate sectors.  The pro- forma net asset value is estimated at £24m or around 13p a share.


The interims to June are superseded by recent events but showed a slight net cash position. 

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