The public-sector net borrowing requirement was £8.6bn for October, …

 … taking the stock of net debt to £1,068bn or 67.9% of gross domestic product.      


Last week …

… saw five straight days of gains with the FTSE up 3.8% to 5819, the FTSE 250 improved 2.7 and the AIM All Shares at 693 gained 1.9%.  All seems well; with the US Budget Niagara Fall under control and China’s  growth stabilized.  Euro Zone economics, however did not improve with France credit rating downgraded to Aa1, Greek Budget negotiations extended and a reduction in Spanish growth prospects.


This week …

… we are heading into the critical shopping season. US Consumer Confidence figures are reported on Tuesday with the UK and Germany reporting theirs on Friday. On Thursday, US and Euro Unemployment will be reported as well as various PMIs (Purchasing Managers Index) which are forward indicators of business trends.  The Euro Budget stalemate, rather like the US one will continue  to haunt investor sentiment, so market’s may drift.



Company Reports


Eckoh (ECK) – £31m at 15.25p


Sounding Positive


Eckoh was an early provider of hosted speech recognition platforms for the customer contact centre market with associated payment solutions.  Interims to September showed a modest 1.8% improvement in revenue to £5.1m but leading to an 8% increase in PBT to £0.4m. Eckoh’s direct sales force and the growing number of indirect sales channels are delivering new contracts, helped by strong demand for the secure payment services offered by EckohPAY and EckohPROTECT.  Five contracts were won in the period and will start to generate recurring revenue during the second half. The number of active contracted clients has grown from 38 to 47 for example Eckoh has signed a three-year contract with a global financial services insurance company  to provide three services; EckohPAY, EckohPROTECT and contact centre services. Payment solution services are typically faster to deploy than the complex speech services so it reduces the average sales cycle. Profits for the March 2012 year-end are forecast at £1.65m on revenue of £11.5m for an EPS of 0.77p giving a prospective P/E of 19x dropping to 15x a further year-out while yielding  1.8%.




There is net cash of £6.7m which is increasing as Eckoh are cash generative.




Accumuli (ACM) – £15.9m at 10.75p


Increasing scale


In the six months to September 2012, revenues increased by 10% to £6.7m with EBITDA up 20% to £1.2m. IT security services provider Accumuli plans to expand both organically and by acquisitions to  offer an overall service as many of its rivals only offer part of the IT security services required and not the enterprise end of the market. Consequently there is less competition in the higher enterprise segment of the market which gives Accumuli a high margin growth opportunity.  The strategy is to increase branding and marketing to focus on the higher margin products and services. The recent interims include three months from recent acquisition,  EdgeSeven which cost an initial £800k with a further £3m performance  related to be paid one-third in cash and two-thirds in shares. Accumuli has provided £2.6m for the deferred payment.   Further acquisitions are targeted but need to be high margin businesses providing additional technology and skills. Profit is forecast to improve from £2m to £2.4m in the year to March 2013 which gives an EPS of 1.2p and prospective P/E is 9x.




Accumuli has £1.5m in the bank and a maximum of £1m in cash could be payable for EdgeSeven at the end of 2013.




Brady (BRY) – £81m at 101p


Niche acquisition


Brady provides risk management software for the commodity sector, has diversified with the acquisition of US-based Systems Alternative International (SAI) whose PBT is $2m and moves the company into the attractive metals recycling sector. Brady will pay up to $9.95m (£6.22m) for SAI with an initial $6.25m (£3.91m) payable in cash and the rest depending on whether financial targets are met over the next three years and the deal is earnings enhancing. SAI supplies software which manages the scrap metal process from receiving the material to be recycled through to its transformation into a saleable metal. Nearly all of the sales are in North America but there are some revenues from Australia. Brady intends to sell the software through its own UK and international distribution channels. Profits for December 2012 are forecast at £5.3m on revenue of £30m which would give EPS of 6p and a prospective P/E of 16.8x dropping to 15x while yielding 1.6%.




There should still be £7.2m in the bank at the end of 2012, following the payment of the initial SAI consideration.


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