The prospects for the global economy are slowly improving as

… World GDP is set to rise by 3.5% this year and by 4.1% in 2013.                  

IMF Forecast


Last week …

… the FTSE 100 improved to 5760 an increase of 2.1%. The FTSE 250 was 1.2% better while the Aim All Share at 781 was virtually unchanged.  Markets on balanced were helped by the general economic news. UK Inflation in March at 3.5% was higher than the 3.4% reported in February, while unemployment fell to 8.3% which was better than our expectations. US Retail Sales were reported to have improved by 0.8% giving an acceptable annual run rate of 6.5%. While despite EU debt concerns the German’s economic Sentiment Index surprisingly jumped to 23.4 when the conscious estimate was for 20.3.

This week …

… UK GDP is skating on thin ice. Wednesday’s GDP figures for the First Quarter of 2012 may show marginal growth of 0.1% a recovery from the -0.3% decline in the last Quarter of 2011.  Technically a Double Dip of three consecutive quarters of sinking growth will be avoided but it is hardly plain sailing.  US Consumer Confidence and Jobless statistics will be reported and should continue to prove to be resilient. Markets may make further  gains.


Company Reports

I-Design (IDG) – £5.8m at 42p

EPS Growth Next Year

i-design is a  provider of software and marketing services for banks and ATM network owners allowing clients to run both internal marketing campaigns and third party advertising. The  recent trading statement reported that first half revenues should show growth in software sales and that a small profit can be expected. Prospects were helped by the multi-year licence signed last November with a large bank in Canada which was secured by IBM,  i-design’s channel partner. Media sales growth is sluggish and expected to make a similar contribution as last year. Profits forecast for September 2012 are of £100k which is around the same as last year with EPS of 0.9p giving a prospective P/E of 46x. i-design has established a global niche which has the potential to produce significant growth from both licensees fees and eventually increasing media sales. During 2013 the operational leverage effect could see EPS growth leap to 2.2p,  giving a Sept 2013 prospective P/E of 13x.


There is net cash of around £1m shown in September 2011’s balance sheet.


Bond International (BDI) – £21.8m at 57.5p

Asian expansion

Following the finals reported at the beginning of April, Bond the rRecruitment software and outsourced services provider won an  AU$ 1.25m contract  with one of the largest Australian recruitment providers. Bond’s software will be installed throughout their network of offices within Australia, Canada, South Africa, Hong Kong, Philippines and the UK, this year. Asian expansion is a strong target of the geographic expansion strategy. The finals showed a higher profit in 2011 from a combination of organic growth and a full year’s contribution from US acquisition VCG. VCG was included for 1.5 months in the 2010 figures. Revenues grew 30% – 12% organic – to £36.8m in 2011, while bond moved from loss to profit. The underlying profit was £2.4m, against a £200,000 loss in 2010. Recurring revenues are 28% higher at £22.4m and they cover 83% of fixed overheads. Most of the growth in revenues and profit came from the recruitment software business although the outsourcing operations also grew. The UK market is tough but there are growth prospects in Japan, China and America. House broker Cenkos forecasts a profit of £2.9m in 2012. The move to a tax charge, rather than a tax credit relating to R&D investment, means that earnings per share will be flat at 4.5p giving a prospective P/E of 12.8x.


Net debt was £987,000 at the end of 2011. The dividend has been increased by 50% to 1.2p a share for a 3.3% yield.


Walker Greenbank (WGB) – £41m at 70p

Quality Exports

Finals from Walker Greenbank, the  luxury interior furnishings group were  ahead of forecast with a profit of £5.72m, a 14% increase despite challenging consumer markets. The demand for high-quality interior furnishing products proved resilient and key products are a range of branded woven and printed fabrics and wallcoverings. The share price has risen by over 60% since the interims perhaps as a result of investors recognizing the management’s continuing strategy of investment in innovative and quality products.  The main feature of trading was the growth in exports/overseas sales resulting from the decision to invest over the last few years in building export sales.  Licence income also improved, while growth in the UK was modest. Profits for January 2013 are forecast at £5.9m giving an EPS of 7.5p and a prospective P/E of 9.3x while yielding 1.9%


The Balance Sheet is strong with a NAV of 39p a share and net borrowings sharply lower at £0.7m from £1.8m giving gearing of less than 3%.


Chaple Down Group (CDGP) – £6.2m at 13.75p

Fine wine maturing

The finals for the December 2011 year-end reported record trading from the Tenterden vineyard tourist attraction and distributor of premium English wines, in Kent. Profits improved 158% to  £218,079 on turnover up 41% at £3.78m.  Chapel Down wines are positioned as a highly desirable premium brand and is supported by some of England’s great chefs, including Gordon Ramsay, Gary Rhodes and Jamie Oliver as well as retailers such as Majestic, Morrison’s, Marks and Spencer, Waitrose and Selfridges. Restaurants such as Pearl Restaurant, RAC Club and Gordon Ramsay Holdings and Jamie Olivers new concept Union Jack Restaurants all stock the wines. The wines continue to win awards with a Gold Medal from the International Wine Challenge for Chaple Down Rose. Progress has been made in building the business and improving the product through better vineyard management, new grape suppliers and investment in the winery. Discussions continue with existing and new growers to increase their acreage of vines to help future sales growth of high quality and margin wines.  Curious Brew is a new Beer venture in which Chaple Down hold a 70% stake is increasingly available. The historic P/E is 38x and strong growth is anticipated.


The Net Asset value is around £5.2m with long term debts of £3.3m


NetDimensions  (NETD) – £9.47m at 38p

Talent to Spend

Training and talent management software group, NetDimensions had a strong 2011. Some of the revenues growth was from acquisitions and the fourth quarter was particularly strong and accounted for 46% of the year’s revenues. New client wins helped with software licences contributing around two-fifths of revenues, while software customisation and implementation showed the fastest growth. Revenues increased from $8.26m to $12.3m in 2011, while reported profit jumped from $116,000 to $635,000. Excluding non-cash items, profit nearly trebled to $1m. The historic P/E is 24.5x while yielding 2.3%.

NetDimensions has nearly $4.5m of deferred revenue in the balance sheet that should be recognised this year. Recurring revenues are running at $7m a year. New staff are being  recruited and an office opened in Shanghai. The strategy is to be seen as a talent management software business rather than a learning software business, which is a much narrower market segment of talent management worth around one-third revenue growth will be much slower in 2012. The software should fully cover talent management by the end of 2012 and NetDimensions expects to reap the benefits in 2013.


Net cash was $6.86m at the end of 2011 – equal to 17.8p a share. NetDimensions is paying a maiden dividend of 3.1 cents (2p) a share, although 0.8 cents of this is the underlying dividend and the rest is a special dividend designed to return some of the surplus cash to shareholders. The shares do not go ex-dividend until June.


NetDimensions is looking to acquire more of its own resellers as well as expanding its geographic coverage.

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