“We have a Tax rate that has become more and more pro …

… the rich as the 400 richest US earners paid less than a 15% tax rate”.

Warren Buffett


Last week …

… a fall of 2.1% was recorded with the FTSE 100 at 5655, while the FTSE 250 fell 2.8%  and the Aim All Share 1.9% lower at 762.  Mining stocks were hit and there was clearly little investor support; perhaps influenced by the fact that Germany Manufacturers reported the first drop since 2011 which was followed by slower US employment growth on Friday.

This week …

… the BOE Interest Rate Decision  maybe for no change on Wednesday but might become  significant if it is decided to  expand QE.  This reflects the pressure of a Double Dip Recession replacing the Bank’s inflation concerns to become its prime performance indicator. If so portfolios may seek to reduce risk if not longer term growth in GDP is revised down. Holland, French and Greek elections are democratically challenging political committed to the already agreed austere debt repayment policies.       Markets are likely to fall back again this week.


Company Reports

StatPro (SOG) – £57m at 93p

Tangible Clouds

The AGM, reported that trading, so far for this Financial year to December 2012 is in-line with expectations. StatPro provides asset management software and asset pricing to the global investment industry and now has 80 clients taking Revolution – the new cloud service which should lead to improving margins. The first modules of this new product – Revolution Plus – are expected to be launched in 2013 and the group is transforming to a pure cloud delivery model.  Cloud delivery has significant advantages such as scalability, swift deployment, simple upgrade cycle and lower entry price. Profits are forecast for 2012 at £4.6m with £5.2m for 2013 so the shares are trading on a prospective P/E of 17x falling to 15x in FY13. These numbers are likely to be cautious about the take-up of the cloud based services. The yield is around 3%.


There are longer term borrowings of £10m while the company is cash flow positive. The NAV is largely intangibles.


GVC Holdings (GVC) – £51m at 162p

House Winning Again

GVC continues to grow its B2C gaming business, particularly in Latin America . The figures include the discontinued activities of Betaland, where revenues decreased by 16%. Revenues increased 17% to €64.3m but increased investment in marketing led to a fall in profit from €4.1m to €100,000. However, cash flow from operating operations was €6.6m. The disposal of the Betaland business means that GVC will avoid closure costs and debtor write-offs. Poker revenues declined but the German revenues held up because of the marketing spend. The uncertainty concerning German online gaming legislation continues. The B2B business is providing back office support to the buyer of Sportingbet’s Turkish operations. The plan is to add further contracts. The Betboo operations in Brazil are growing and it is probably number two in the market.

The current years has started well and profits could recovery strongly if they matched 2010 the prospective P/E would be 5x.The yield is a tempting  8% .


The final dividend was higher than expectations at 11 cents, taking the total to 21 cents. The strategy is to pay at least 75% of cash flow as dividends. Quarterly dividend payments will commence in 2013.


Pennant International (PEN) – £7.1m at 26.75p

Offensive Growth

Defence training systems, software provider Pennant International is prospering despite the pressure on UK defence budgets. The recent purchase of shares for treasury at 27.65p highlighted Aprils finals which showed that demand for its training systems remains strong, particularly in overseas territories where defence budgets are growing, such as Asia and Middle East. Pennant’s contract with helicopter maker AgustaWestland has been increased in value to £12m. This should come through to revenues in 2012 and 2013, which underpins expectations of revenues of £12.8m in 2012 and £13m in 2013.

Pennant is also involved in the aerospace and rail. There is a solid order book and a number of potential new contracts. MoD contracts are being retendered later this year. Longer-term growth will come from broadening the product range to include 3D and other technology, expanding the non-defence operations and new products.

House broker WH Ireland forecasts a jump in profit from £700,000 to £1.04m in 2012 for EPS of 3p. That puts the shares on 8.9x December 2012 prospective earnings and the yield should be 5.6%.



Net cash was £2.33m at the end of 2011 but this was boosted by advanced payments. The cash figure is likely to be lower at the end of 2012. The total dividends were increased from 1.25p a share to 1.5p a share.


Kingswalk Investments  (KWI) – £1.44m at 0.78p

One Small Step

Kingswalk Investments Ltd is becoming a financial services business following the purchase of 33.3% of wealth manager European Wealth Management Group. Kingswalk was previously known as Equity Pre-IPO Investments Ltd. It has other investments but  from now on the focus of the company will be the financial services sector through European Wealth.  Kingswalk is issuing 92m shares for the 33.3% stake in European Wealth. The founders of European Wealth include former Aberdeen Asset Management chairman George Robb and Rod Gentry who used to run wealth manager Ashcourt Holdings. Kishore Gopaul of Courvoisier and Rod Gentry are joining the Kingswalk board. Another founder is former Syndicate Asset Management boss John Morton.

European Wealth has already made acquisitions in Maidstone and Cheltenham and it plans further purchases in order to grow the business. It also has offices in London and Brighton and management wants to have further regional offices in the UK and mainland Europe. The target is to have £1bn under management in three years and £3bn in five years. European Wealth is 15 months old and it has £155m under management.  European Wealth made a start-up loss of £1m in 2011. There are significant fixed costs in the business, particularly due to the costs of regulation, and once revenues get past £2m the business should move into profit and this profit will rise sharply as additional revenues are added. European Wealth is already widening its operations through a fixed investment service offered by investment operation European Investment. Nigel Marsh, formerly of Epic Asset Management and New Star, will establish the new operation.

A subscription is raising £700,000 at 0.75p a share, although it is dependent on shareholder approval oat the GM on the 14th on May. Courvoisier and Rod Gentry are two of the subscribers. Courvoisier will own 21.5% of Kingswalk, Rod Gentry 10.4% and John Morton 5.9%. Non-executive director Tim Revill is subscribing for shares through Hearth Investments and his stake will be 10.6%.

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