“ I am deeply sorry to have left this $2,3bn …

… mess  and to have put UBS at risk”

K. Adonboli’, Former UBS Trader


Last week…

…  markets jumped. There was a 2.1% rise in the FTSE100 to 5915, the FTSE 250 improved by 2.6% and the AIM All Share at 711 increased 2.0%. UK economic news was a familiar spluttering along the recovery road. A sharp reduction in the Trade Deficit from £4.5bn to £1.5bn and a 15,000 fall in Unemployment were reported.  Construction, which is around 7% of the economy, fell 10% year-on-year although month-on-month it’s beginning to recover. The springboard for the market jump is a belief that the Feds $40bn a month of US QE3 will drive growth while the ECB’s ‘what-ever it takes’, stability  strategy  is gaining credibility.


This week …

…  the RPI (Inflation) is on Tuesday and Retail Sales Figures on Thursday.  Both are likely to be pointing in the wrong opposite directions (up and down). The BOE Minutes to be reported on Wednesday are unlikely to stimulate hopes of UK QE3.  In the US there are Balance of Trade figures to be reported on Tuesday and Consumer Confidence on Friday and may be both pointing–up. Markets seem likely to marginally improve.


Company Reports

Avesco (AVS) – £30m at 158p (Mkt Cap/ Price)

Olympic Gold

Avesco provider of broadcast and audio-visual equipment and services reported 3Q results with revenue up 8% to £38.8m. Last year heavy investment was made in new equipment adding further services and rental equipment such as lighting. Third quarter trading profits were £2.1m compared with £2.9m but 2011 included a £1.2m profit on asset sales. The remaining Olympics & Paralympic contributions will come in Q4 when more profit can be recognised. Avesco provided services at the opening and closing ceremonies, to Panasonic,  at the torch relay for Samsung and to many of the corporate pavilions and hospitality events including the Hyde Park BT London Live events. Having won the Disney/Celador litigation Disney appealed and the oral hearing is on 10 October, with a decision likely within 12 months. Avesco’s share of the damages would be US$60m or about 140p per share. Profits for the year end September are forecast at £5m which gives of EPS of 15p so a prospective P/E of 10.5x with a 2.6% yield. Richard Murray, the founder recently purchased a further 20k of shares at up to 155p a share and holds around 20%.


The net debt is £27m making gearing 70% but cash flow from the rental business is strong allowing debts to be paid down. The NAV is £38.6m or 152p a share.


Advanced Medical Solutions (AMS) – £164m at 80p (Mkt Cap/ Price)

Branding Ahead

Although woundcare products supplier AMS warned in June that revenues could be disappointing the recent interim figures showed underlying profit growth and the share price recovered.  Revenues improved 52% at £24.8m although all that growth came from Resorba which was acquired last year and pre-tax profit doubled to £5.4m. The integration of Resorba is on track and there were £610,000 of costs in the first half currency movements were unfavourable. There was like for like growth in the revenues of the wound closure and sealants division and profit more than trebled. Woundcare revenues may improve in the second half due to  stronger  of silver alginate sales and there is a growing pipeline if new products. AMS is a leader in the development and manufacture of innovative and technologically advanced products for the US$15 billion global wound care market and own branded products account for 50% of sales which is up from 25%. Currency movements will hold back revenues but full year profit is expected to grow from £4.5m to £12.0m but a moderate EPS increase from 4.26p to  5.1p which gives a prospective P/E of 15.8x. The interim dividend was increased 17.6% to 0.17p giving a yield of 0.7%.


Net debt was £10.6m at the end of June. The loan taken on to acquire Resorba is being paid back ahead of schedule.


Belgravium Technologies (BVM) – £6m at 6p (Mkt Cap/ Price)


Interims at mobile data capture systems supplier Belgravium Technologies, was hit by customers’ delaying orders and profit halved in the first half. In the six months to June 2012, revenues fell 9% to £4.32m, while the pre-tax profit fell from £321,000 to £151,000. Belgravium’s growth strategy is to supplement investment  in new products  with Third-Party distribution agreements.  It has signed-up partners with add-on equipment. The latest is vehicle telematics equipment supplier Isotrak. An illustrative example of what this could contribute to Belgravium is a client with 120 vehicles could invest £300,000 in hardware and pay £72,000 a year in recurring revenues. This income would be split between the Isotrak technology, where Belgravium has not had to invest in development.  The second half is always much stronger than the first half and some delayed orders have already come through. December  2012 profit forecast have been downgraded  to £500,000 which  gives an EPS of 0.42p and so a prospective P/E of 14.3x. Belgravium ‘s progressive dividend policy is expected to double its dividend to 0.2p a share giving a prospective yield of 3.4%.


Despite increased stock levels cash flow fron operations was £693k and there was net cash of £1.6m at the end of June.

Please leave a comment - we all like them