“A familiar cry goes up – ‘yes we want more housing and infrastructure projects, but no to every development – and not in my backyard’.
David Cameron PM.
Last week …
… the FTSE 100 fell by 1.1% to 5711.The FTSE 250 declined -0.3% with the Aim All Share at 680.5 off a mere-0.2%. In summary; the UK economy remains flat but growth could be slipping further into the future, with a reduction in service sector confidence and house prices declining over the last three months by 0.5% . The Euro economy seems set to decline at a steeper rate given the Euro Economic Sentiment Indicator fell by 1.8% more than expected and the EU unemployment is at a record 11.3%. In the US, GDP at 1.7% is higher than expected, but Unemployment grew by 4,000 more to 374,000.
This week …
… the main focus could be on the Eurozone where there is a host of indicators. In Spain again, the funding plans remain unresolved for £12billion as they slide into a double dip recession so may need a bail–out. The BOE’s meeting on Thursday about Interest Rates and QE options is becoming less interesting as a new recovery initiative is required. There seems to be no reason for markets to improve.
Vislink (VLK) – £35.4m at 31p
Improving data constantly
Interims to 30th June reported an operating profit of £1.4m, which is a 5% margin on the £27.5m turnover and compares to a sequence of losses. The now established turnaround results from Novembers 2011’s strategic review. This result of which was to refocus products away from broadcast advertising revenues which have declining as GDP contracts as well as the shift from TV to online advertising. Vislink has become a global technology business specialising in solutions for the collection and delivery of high-quality video and data from the field to point of usage particularly advantageous for outside broadcast and surveillance markets. The redefined strategy continues to focus on the broadcast and surveillance markets, but aims to revitalise the product portfolio through internal development and acquisition to reflect changing market requirements and to introduce recurring revenue streams. The interims show this strategy has delivered revenue growth while cost-have been reduced. New products have been developed which could increase sales substantially in 2013 Profits for the full year to December 2012 are forecast at £2.7m for an EPS of 1.8p which gives a prospective P/E of 17.3x while yielding 3.7%
Vislink have a completely debt-free balance sheet with £8.4m cash.
Inspired Energy (INSE) – £15.2m at 3.75p
Inspired Energy procures energy for UK companies and recent interims show it is growing rapidly as companies increasingly control energy costs. Income is based on the usage of clients but Inspired is broadening its range of services. This includes bill verification where significant mistakes and overcharges can be made by suppliers. Inspired has been trading for 12 years and following its flotation it acquired Direct Energy Purchasing (DEP) in April, which has been successfully integrated and made a two month contribution to these results. The group manages more than 1,000 contracts for 600 customers. The customer retention rate is greater than 70%. The overall group order book was worth £7.9m at the end of June 2012.
In the six months to June 2012, revenues grew from £1.48m to £2.13m. PBT was held back to £541k compared to £898k due to commissions paid on new contracts which will begin to contribute later this year and due to a increased costs base to fund future organic growth. The December 2012mforecasts of £2.5m gives EPS of 0.43p and a prospective P/E of 8.7x.
The business is cash generative but in the latest period exceptional costs relating to the acquisition meant that there was a cash outflow from operations. Net debt was £2.17m at the end of June 2012.
Phytopharm (PYM) – £37m at 10.75p
An end in sight for tremor
An in-depth Interim management statement in August reported PYM are seeking to strengthen its partnering package for its Parkinson’s disease candidate Cogan. Currently it is being tested as a slightly less convenient liquid formulation, but more commercially viable and attractive to potential partners. The value is ultimately dependent results in February 2013 from the Confident-PD Phase II study, success in both trials and securing a partner would raise the valuations substantially. Phytopharm is a UK biotech company principally focused on the development of drugs for neurodegenerative disease. Lead candidate Cogane is undergoing a Phase II study in Parkinson’s disease, with results due in February 2013. The shares have improved from 6.2p since we reported their interims in June.
No debt and the net cash for the Year/End September 2012 is likely to be around £7m, so assuming less R&D cash would drop to around £1m by September 2013. A further funding before February seems likely.
Totally (TLY) – £1.3m at 1.35p
Having sold off the Jewish news Totally, the AIM quoted digital health and software development announced it had entered into a strategic partnership agreement with M&C Saatchi Mobile, to assist in the £1.6m national NHS Shared Decision Making contract that Totally secured in February 2012.M&C Saatchi Mobile is an award-winning international full-service mobile marketing agency which helps brands to engage with their customers using creative mobile solutions. Under the terms of the agreement M&C Saatchi Mobile will provide front end design and advice on mobile distribution. The design will link into the back end data storage ‘SANDY’ system, which Totaly has built for the NHS and which forms the basis of the National Shared Decision Making platform.This represents an important strategic partnership with a consumer facing mobile marketing agency. The Company fully expect that the partnership will strengthen future tender bids with the NHS, which include a mobile requirement. The is an attractive build once and sell often development strategy although presently there are no forecast for this new business and further funding may be required as new long term NHS contracts are won.
Debt to December 2011 was around £0.5m and since then the Jewish News was sold for £350k.