… looking towards India and Africa for growth.
According to figures from Western Union Business Solutions
…three working days the FTSE 100 improved by 3.3% to 5435. The FTSE 250 increased 3.4% with the Aim All Share at 690 recording a 0.6% raise. UK interest rates and QE remained unchanged despite a 2.5% reduction in manufacturing costs, which is a key inflation indicator. Global investors seemed encouraged by reduced interest rates in China as well as Australia and a better US Index on Non-Manufacturing up 53.7% from 53.5% when at best no change was anticipated.
…Spain takes centre stage with a Euro 100 billion loan to stabilize its economy. This reduces the value of a fine-tuned analysis of the nuances of the developing narrative of growth v recession and austerity v stimulation. Perhaps of most importance of this week’s Economic performance indicators will be UK Industrial Production on Tuesday and Balance of Trade on Friday. In the US Jobless Claims will be reported on Thursday with Retail Sales and Producer Prices on Wednesday. The Greek election looms next Sunday so the relief rally may not last long. Market could end the week flat.
Pilat Media Global (PGB) – £17.6m at 28.5p
Critical Next Episode
Pilat Global Media , the media business management software provider reported a first quarter profit in 2012 and demand is growing from existing clients. The first quarter is normally weak for the broadcast management software provider so any profit in the period is positive. There was no contribution from Fox following the settlement of the dispute at the end of 2011 and no repeat of a £454,000. Oracle software sale in the first quarter of 2011 so this makes the performance even more impressive. That was why revenues were flat at £5.05m. Oracle revenues were low margin so a loss of £190,000 was turned into a profit of £11,000. Operating costs were lower. Two significant contracts are due to be signed in the near future. Initial work has commenced. Pilat is upgrading existing clients to new technology platforms. Research and development spending increased 7% to £822,000. Eurocom Investments increased its stake in Pilat to just short of 24% after it acquired 1.3m shares at 26p each. Most of the shares were sold by directors after they had taken up options. Pilat non-executive Alex Rabinovitch owns 49.9% of Eurocom, and another non-exec, Or Elovitch, is a director of Eurocom Group. The historic P/E for the year to December 2011 is 7. 4x calculated on an operating profit (net of impairment) of £2.4m which is around 10% of sales and lower than last year’s 14% profit margin. The track record is varied and so a high beta is appropriate.
Net cash was £7.1m at the end of March 2012 and Pilat has been the subject of a bid in the past. They may seek acquisitions to broaden the geographic and product range, as well as adding new customers.
Datong (DTE) – £3.94m at 28.5p
Expect a stronger Second Half
At the interims to March 2012 surveillance equipment supplier Datong are confident of a stronger second half. DATONG provides advanced covert tracking and location based solutions to military, security and law enforcement agencies for the gathering of intelligence to help combat terrorism and organised crime. Revenues declined from £6.33m to £3.84m.Budget delays in the US and the deferral of a £900,000 UK orders led to the skewing of revenues to later in the financial year.
The order book was worth £2.4m at the end of March 2012 and in April and May the additional order intake was £3.1m. The cost base has been reduced by £500,000 a year but not all of that has shown through yet. Datong reported a £142,000 pre-tax loss but that was after a £300,000 non-cash write-back relating to a successful defence against patent litigation. Mark Cook took on the role of chief executive earlier this year. He intends to improve production efficiencies and move into additional markets. He is also looking into providing services which could generate steadier revenues. House broker Canaccord Genuity forecasts full year revenues of £12.8m, up from £11.7m last year. IF so this would give a PBT of £0.5m and a prospective P/E of 5.6x.
Net cash increased from £1.3m to £2.1m over the interim period. Datong continues to invest in product development.
Printing.com (PDC) – £13.9m at 29p
Online Model working
All of the growth in to the March 2012 year-end came from online services. It included a full 12 month contribution from the Netherlands business acquired late in 2010 but also strong organic growth and initial revenues from new on-line services. The TemplateCloud.com site is going to be the engine of online growth. It enables designers to make their own designs into templates that can be edited by clients. The company plans to launch the service in the US later in the year. BrandDemand, the service aimed at larger businesses, is building up its revenues. Group revenues rose from £17m to £21.8m in the year to March 2012, with online revenues growing from £2.64m to £7.4m. Pre-tax profit edged lower from £1.31m to £1.26m for an historic P/E of 12x while yielding 8.8% despite the dividend being cut from 3.15p a share to 2.55p. There is slight caution for 2013 as £1.8m is forecast giving an EPS of 3p and a prospective P/E of 9.7x yielding 8%.
The business was strongly cash generative last year. Net cash was £1.9m at the end of March 2012. Further acquisitions were not hinted at by the outgoing Chairman.