“Something went very wrong with the Banking Industry …

… and we need to put it right”.

Sir Mervyn King

 

Last week …

… Euro summit optimism about a central bailout fund stimulated a strong rally in Spanish and Italian stocks helping the FTSE 100 improve 1% to 5571. The FTSE 250 also increased 1% while the AIM All Share at 675 was virtually unchanged.  The First Quarter UK GDP quantified the double dip recession and recorded a 0.3% fall, although inflationary pressure was further lifted as the planned tax increase on petrol was cancelled.

This week …

… the BOE Interest  Rate Decision is on Wednesday and is likely to include a £50 billion QE stimulus. Euro recession concerns could prod the ECB into reducing interest rates by 0.25% to 0.75%. Despite the volatility markets seem to be going nowhere slowly.

 

Company Reports

I-Design (IDG) – £6.6m at 47p

Concept proven – where next?

Interims from i-design reported a 13% increase in to £1.6m and a first-ever  interim PBT with £45k compared to years of losses. i-design provide propriety software (joono) and marketing services for banks and ATM network owners worldwide to run both internal marketing campaigns and third party advertising. The break through follows the addition of a large Canadian bank last November the total ATM and self-service estate has increased to 28,000, up 30% on nine months ago and there have been more wins in June. In the UK, the company has five banking network customer licensees: Nationwide, Tesco Bank,  Alliance & Leicester (part of the Santander Group), Barclays and The Royal Bank of Scotland. Third-party Media advertising sales have been slower to build-up but would increase gross profits significantly although gross profits are up 39% to 41% s. Profits for the year-end September are forecast at £200k for an EPS of 1.2p and a prospective P/E of 57x.

Financials

There is no bank debt with net cash of £0.81m and cash flow should start to increase.The future for a hydride technology and media company may not (longer-term) be as an independent.

 

Centaur Media (CAU) – £51m at 36p

Deserve a premium

Centaur provides high value business information across three platforms: digital, print and events. It has market-leading positions in law, marketing, engineering and financial services. The business has recently been expanded with the acquisition of digital marketing group Econsultancy. This is a well-established, UK-based supplier of information, events and training to the fast-growing digital marketing industry. It is growing strongly in the UK and has expanded into the US which is expected to break into profits. Centaur will pay £12m in cash plus a large differed payment of up to £50m clearly depending on profits. Strategically this takes the group further into higher-growth, higher-margin digital markets and the acquisition is EPSs enhancing. Profits for the Year end June are £8.2m and forecast to leap to £11.6m in 2013 this gives a prospective P/E of 8.5x falling to 5.8x. The yield is expected to be 6.2% increasing to 6.8%

Financials

The acquisition increases debt to £8.9m which is easily manageable with the growing cash inflow from operations but makes further acquisitions less likely.

 

Premier Gold Resources (PGR) – £2.25m at 0.33p

Passing Milestone

Premier Gold Resources is starting the next stages of developing a gold prospect which is expected to provide a maiden geological resource by 2013. PGR was formed after being developed as a shell when the Cholokkaindy gold project in Kyrgyzstan was reversed into former sports agency owner Premier Management.  Premier owns 80% of Cholokkaindy and there are large producing gold mines in Kyrgyzstan. The latest phase of exploration has started and drill targets are being refined and the preliminary drilling results should be published in the fourth quarter. A scoping study should be started next year and an inferred resource could then be published. Production could commence in 2016.

Finance

The results of the current exploration programme should be known before further cash is required.

M&A

Premier acquired a lithium project at the same time as the gold project and this will be separated out and could be sold.

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