“ we need what I call a proper investment policy”

quote from Vince Cable, Business Secretary


Last week …

… the FTSE closed at 5794 which was a 1.5% increase,  the FTSE 250 improved 3.5% while the Aim All-Share ended at 697, a 2.8% hike. The prime reason for the optimism was the reiteration by Mario, the ECB President, of  full support for Euro-members seeking loans with a bottom-less pit of funds. In the US weaker than expected Unemployment at 8.1% could suggest QE3 at this politically sensitive political time. UK Manufacturing grew by a satisfactory 0.2% for the 3 months to August with a 2.9% jump in July.

This week …

… a relatively quiet week for UK economy watchers with Balance of Trade on Tuesday and Employment on Wednesday both could be robust. There will be political news with Vince Cable’s statement on Government Investment Policy and the TUC Conference in Brighton.  EU worries could centre on  Spain’s but with Spanish  bond rates at 6% the potential need to apply for help from the  ECB bottom-less rescue  fund, is reduced. Markets seem set to drift-up.


Company Reports

Empresaria (EMR) – £11m at 25p

Operating uncertainty slowly lifting

Interim figures from Empresaria showed improvement as specific difficulties are being resolved  but in a background of deteriorating markets particularly in financial services. Empresaria is a multi-branded specialist staffing group diversified by sector and geography, concentrating on emerging markets. Although revenue decreased by 4% to £97.8moperating profits increased £1.8m from loss of £1.4m. The largest market remains continental Europe ( Cir. 44%) and restructuring of Germany  is a priority where the management team is re-aligning the branch network. The UK business is stable enough but strong progress is continuing in Asia.  The business in Singapore which opened last year was as expected loss making in the first half. A new branch in China, again opened last year was been merged into existing business and should make an accelerated contribution. Profits for the December 2012 year-end are forecast at £4.6m giving an EPS of 4.9p for a prospective P/E of 5.2x while yielding 1.4.


Net debt at £8.5m was higher than expected due to an increase in debtor’s days and the exiting of a low margin contract in Chile but  debt should decrease by the year –end.




NetDimensions (NetD) – £8m at 31p

Growth to jump next year

Interims to June recently reported some eye-catching numbers; 75% decrease in operating losses and a 32% increase in net cash to $7.8m (£4.7m). The group provides learning management software that helps customers to deliver corporate training to foster collaboration and develops talent so enhancing performance and compliance for employees. It is expanding into emerging markets, increasing the emphasis on direct selling and broadening its product range to enable cross-selling of new modules to its global customer base.  It’s focus is on Asia which is supported by more than 120 employees based at offices in Hong Kong (head office), the US, UK, China, the Philippines and a new office has been opened in Germany. Customers typically operate in highly regulated industries and the group has blue-chip clients, including the BBC, Cathay Pacific, ING and Progress Software, which provide strong references.  The group is increasing investment in sales and marketing so increasing margin by reducing its dependence on resellers. Profits for the Full Year to December 2012 are forecast at $1m which translates into a prospective P/E of 17.2x while yielding 1.8%. There could be strong growth in 2013 and clearly no further cash in required.


The group is cash generative and its net cash pile rose by $0.9m to $7.8m (£4.7m). Given increased investment and the payment of a dividend the cash pile could marginally reduce. The company hopes to attract American investors via its quotation on the OTCQX market in the US.


ServicePower Technologies (SVR) – £12.0m at 6.4p

Significant opportunities

This scheduling software provider’s disappointing interims, reported at the end of August were signalled back in March when it was reported that the short-term visibility of revenues was poor.  Revenues slid by £0.9m from £6.5m to £5.6m and there was a plunge from a profit of £919k to a loss of £567k. SVR can provide a complete global field management platform that controls all elements of the service lifecycle from offering an appointment, assigning resource and dispatching work through to tracking resources, processing claims and providing business intelligence and analytical reports. Last year, the first half was stronger than the second half but this year it is expected to be the reverse as new business has been won since June. Four contracts have been gained from suppliers of electronics and appliances in the US and UK since June and the group have been investing in its sales force in North America. ServicePower has also agreed a two year contract extension with E.ON in the UK worth £1.2m. There are more potential contracts that could be signed before the end of the year and current customers include Assurant Solutions, Mitsubishi, Farmers Insurance and Pitney Bowes. ServicePower is widening its portfolio of software and the new ServiceMarket product enables it to bid for service jobs. Profits to December 2012 are forecast at £1.2m for an EPS of 0.6p which gives a prospective P/E of 10.6x


There was a cash outflow in the first half but this should be reversed in the second half and net cash was £4.13m although there is a £1.9m convertible loan note. Acquisitive growth remains part of the development strategy.


Global Market Group (GMC) – £82.1m at 84p

Trust being established

Chinese focused B2B e-commerce services group helps bring together quality Chinese manufacturers with international companies seeking a manufacturer for their products through its website,  www.globalmarket.com.   Interims to June reported a revenue improvement of 27.9% to $20.34m with net income at $5.36m up from $4.12m, as the number of customers increased to 4,456 from 3,712. Chinese manufacturers joining the site have to show that they satisfy a number of criteria including being established at their own premises, quality control, export experience, R&D capability and manufacturing capacity that meets minimum required levels. All this is audited by inspection services provider TUV Rheinland. The company feel  that since 2002 they have  become an efficient and trusted platform used by accredited Chinese manufacturers and international buyers to interact and conduct business   The shares have fallen sharply from the June 2012  IPO price of 130p when $9.6m was raised, as it seems that pre-IPO investors were inadequately locked -n. Profits are forecast  for  £9m for December 2012 growing to £14m in 2013 which would produce EPS of 8.96p and 14p to give prospective P/Es of 9.4x falling to 7x in 2013.


Net cash set to end this year at more than $28m and that is expected to increase by a further $10m next year. After paying for continuing product development it leaves plenty of cash to  develop the site in other Asian markets.

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