“the best way to grow the economy out of difficulty and increase tax revenues was …

than cut funding to, the public sector.”                                      

Ed Balls


Last week …

… 5.5% fall in the FTSE100 to 5267.2  was the worse weekly performance this year.  The true fear of Euro debt contagion hitinvestors. Greece’s next Election is June 17th and exiting Euro is apossibility as is struggling  Spanish Banksfalling into in full scale banking collapse. The FTSE 250 was down 5.3% while the Aim All Share at 693 fell6.7%.  Robust economic data was lost tothe euro maelstrom; with better than expected UK Employment and German GDP at0.5% helping Euro countries to avoid recession (so far).


This week …

… the cause and effect of  Euro politics and  will take-over from economics as the risk driving  market direction. So for academic interestthere are results from the BOE Interest Rate Minutes on Wednesday which followsthe Consumer Price Index on Tuesday. Having been so wrong last week while stillhoping that enlightened self-interest will keep the Euro together, thus week wewill  be following Euro politics.



Company Reports

Sanderson Group (Snd) – £17m at 39p

Tempting Target?

These interims to March 2012included the sale of the high street retail software business to Torex for£11.75m in cash. Sanderson is a software and IT services business specialising in the manufacturing and multi-channel retail markets. The sale of its POS Equipment business generated net cash of £10.86m allowing £7.4m of bank borrowings to be repaid and transform a net debt position of £6.7m at the previous year-end into a net-cash £3.6m. Operating profits of the continuing business improved to £0.8m, up from £0.75m despite revenue falling12.8% to £6.1m. The fall reflects reduced operating expenses and a continuing transition to a focus on higher margin, ‘proprietary owned’ software and services, gross margins improved 3% to84% .  Customer solutions primarily comprise of Sanderson developed software, integrated with other market-leading products and importantly, delivered, supported and serviced by Sanderson staff.  This model has enabled the Group to deliver a reliable and consistent quality service and has ensured the development of long-term relationships with customers. A 0.5p dividend will be paid and a further 0.7p was indicated for the full year increasing it to 1.2p from 0.75p. New products and services are being developed such as for factory and warehouse automation and growth opportunities such as developing online and mobile-commerce applications. A 17% increase in order book to nearly £2m was reported so far to the year-end September2012. A PBT of £1.8m is forecast which gives a prospective P/E of 10x with a 3% yield and the following year the P/E could drop to 9x with a yield of 3.4%.


The transformed balance sheet with net-cash of £3.56m opens the organic ad acquisition growth opportunities. Directors have brought 45,000 share at over 40p a share.


DDD Group (DDD) – £31.5m at 23.5p

The DDD Inside?

A 1million milestone has been reached as DDD announced that TriDef 3D shipments have crossed the 1m mark for both PCs and mobile handsets, underlining the broadening adoption of DDD’s technology beyond the TV market.  DDD Group develops and licenses IP and technologies in the TV, PC and mobile markets for converting 2D content to 3Dand supplies originally made 3D content. Leading OEM brands including Intel, Samsung, LG Electronics and Sony license these solutions. Its unique high-performance Power 3D render mode increases the frames per second, making games run smoother and faster while using less power. Due to seasonality, Q1 shipment volumes are likely to be somewhat lower than the 600,000 units shipped in Q411, but the overall trend does look encouraging. Given the higher royalty rate generated by PCs, this is a key variable in defining the full year sales and earnings figures. For the Year end December 2011 a loss of $96k was made on continuing operations while a profit of £1.2m is forecast on sales of £8m, which gives 0.5p EPS and Tech-boom prospective P/E of73x.


The Group achieved positive cash flow from operations for the year and moved into profitability in the second half. Net cash is $3.2m at the year end Dec 2011 with anet-cash inflow of $1.2m.


 Noble Investments (NBL) – £30.5m at 197p

Coining it

Coins dealer Noble Investments reported a record interim profit boosted by the ancient Greek Prospero collection auction in New York in January.  Revenues rose 7% to £7m in the six months to February 2012.The increase in revenues was relatively modest due to the change in mix from retail to auction. The $25m of sales from the Prospero auction are not included in the revenue total just the auction revenues relating to the sale. Higher margin auction revenues nearly quadrupled and retail revenues fell. Pre-tax profit jumped 59% to £2.42m and the interim dividend is 29% higher at 2.25p a share.  There have been two Islamic coin auctions in April but the second half will not be as strong as the first half. House broker forecasts a rise in full year profit from £3.1m to£3.8m. This gives EPS of 19.7p and a prospective P/E of  10x while yielding 2.5%


The change in mix from retail to auction is positive for cash flow with the rise in creditors much greater than the increase in debtors. Part of this positive working capital effect was offset by two significant purchases which increased the value of inventory. Net cash was £3.33m at the end of February 2012.


Vane Minerals (VML) – £4.03m at 0.91p

Cash + JV Potential

An operations update reported that Vane is using cash generated from gold and silver production in Mexico to finance exploration of porphyry copper targets in Arizona and New Mexico. The region accounts for 60% of US copper production. Vane has been able to use the Freeport-McMoRan database and the giant mining company has an option to acquire up to 25% of any project. This deal renews every two years with the next renewal in June 2013. Vane also has Uranium exploration assets in the US. The Breccia pipes in Arizona have high grade uranium with low cash costs for mining. Atypical pipe requires $25m of capex but cash cost would be $33 per pound of uranium. Vane is closing the diablito mine in Mexico but adjacent La Coloradavein system is in production. Recovery rates of gold and silver are strong.  First quarter revenues were$2.6m. The JV’s with the RuIz Brothers will initially focus is the four concessions, of which La Colorada is currently in production. Exploration and mine planning of the additional concessions continues and news is likely to flow as decisions are taken.


Vane is breaking even on a cash basis. This includes exploration and overhead costs. The majority of exploration spending will be on copper. Vane raised £1.16m last October at 1pand there was £2.3m in the bank at the end of 2011.

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