Greeks have expressed their will to remain …

… an integral part of the eurozone and honour the country’s commitments.                                                                                 

 Antonis Samaras.


Last week …

… the FTSE closed at 5478 which was an increase of 0.8%. The FTSE 250 improved 0.3% while the Aim All Share Index at 675 fell 1.4%. QE has two new stimulating siblings; £80 billion  is going into Funding for Lending to help SMEs  and upto  £5 billion a month of, Extended Collateral Term Repo Facility is available for short term emergency Bank borrowing. The economic news flow was disappointing with Balance of Trade widening by £1.4bn to £4.4bn and Manufacturing production falling 0.7% in April.

This week …

… is all about Greek remaining in the euro while showing both growth and austerity to help the coalition to compromise. This week BOE Minutes are reported on Wednesday when April’s Unemployment Rate will also be announced. This is followed on Thursday by Internet and Retails Sales.  In the US on Thursday Jobless Claims and Consumer Confidence will be reported.  As Eurozone turmoil is adverted, markets are likely to slightly up this week.


Company Reports

AVESCO (AVS) – £38mat 150p

Watch the cycle rise

Interim showed a 12% increase in revenues to £67.46m with a PBT of £1.4m compared to a loss of £0.3m. Avesco provide broadcast and audio-visual equipment and services to the corporate presentation, entertainment, and broadcast industries. Creative Technology performed strongly and Full Service benefited from the prior year restructuring. The CEO, Ian Martin is leaving after 10 years  during which time substantial investment has been made in equipment, people and international expansion. The new CEO is yet to be named, although Richard Murray the Chairman will take on a more executive role.  This however is a cyclical business and the second half should benefit  strongly from major events; such as the Diamond Jubilee , Euro 2012 and Olympics as Avesco provide the giant screens in Trafalgar Square and St James’s Park etc.  Profits are forecast at £4.8m for the year to September 2012 which give an EPS of 14.2p for a prospective P/E of 10.6x while yielding 2.9%.


Avesco increased net operating cash to £6m from £4.4m although increased net investment spending saw net debt rise to £24.3m the NAV is around 146p per share. A wind-fall from a court case may land in 2013.


ECKOH (ECK) – £21mat 10.75p

Talking profits up

Finals to March reported profits of £1.3m which is a 38% increase while revenue improved 15.4% to £10.4m.  This Illustrates operational leverage as new products are launched to the existing and growing customer base. Eckoh provide hosted speech recognition platforms for the customer contact centre market.   New payment solutions and products such as EckohPROTECT and EckohASSIST,   have helped win the first local authority contract. The interest in payment solutions is increasing with significant opportunities in the pipeline. Since March two major customers renewed  for another two years, highlighting Eckoh’s high customer retention levels with at least a third of its customer base have been customers for more than five years. Profits for March 2013 are forecast at £1.7m with turnover of £11.5m this would give a prospective P/E of 13x with EPS of 0.84p with a 2.4% yield.


At the March year -end Eckoh had a net cash position of £6.4m which should start increasing as much of the product development work has already been done.


Zattikka (ZATT) – £24.3mat 109 5.5p

Zatt Boom or Bash

Despite the “funny” name the shareholder list of newly floated Zattikka should be taken seriously. It consists of Legal & General, Cazenove , AXA  andSchroder. The company supplies interactive online games across a variety of platforms and it was co-founded by former Yahoo! Europe boss Mark Opzoomer, who is its chief executive.  Zattikka has already acquired four businesses with a deal recently completed . The focus is the download and streamed segment of the games market which is currently relatively small but will grow significantly over the coming years. Social media and mobile devices are changing the market. People are playing games more often but for shorter periods of time. Interestingly around half of US gamers are female.  At the moment, more than 50% of Zattikka’s revenues come from subscriptions to games. The second biggest chunk of revenue comes from work for hire from other games companies and there are also revenues from add-ons to games. Advertising is still a small slice of revenues. Longer-term, Zattikka believes the Asian market will be increasingly important. Former Virgin Interactive executive Tim Chaney is co-founder and president. Lionsgate Entertainment executive Howard Ludwig is chairman. The board has a lot of experience and it is really a size that assumes the business will be a lot bigger in a short time.


Zattikka raised £12.6m at 100p a share as part of its flotation on Aim in April. Most of that cash went on the main acquisitions.


Park Group (PKG) – £71.4mat 42.5p

Cashing in

Full year operating profits at Park Group, the provider of vouchers and pre-paid cards improved 23% to £8.6m although 2011 included a one-off VAT repayment and property disposal gain of £5.5m. Revenues were flat at £279m but margins improved to 2.4% from 2%. The majority of the profit growth came from the corporate business and its profit contribution is now larger than the consumer division, which includes the renowned  Christmas hamper business. The pre-paid card business continues to build up its customer base and 1.7m cards have been issued. The Corporate and consumer divisions generate further growth capitalising on internet technology and new product opportunities such with Love Films, Love to Shop etc. There are 38 retailers that accept the card and Marks & Spencer could be joining them for Christmas.   The forecast for March 2013 is for £9.5m on turnover of £325mgiving EPS of 4.13p and a prospective P/E of 10/3x while yielding 4.8%.


There is no bank debt with a strong cash position with £9.2m in the bank an improvement from £6.8m with £46.9m being held in trust for the saving scheme.


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