With our ageing populations and overhang of debt, there’s little prospect of …

… developed societies keeping up with the rapid expansion that is going on in emerging countries. Wouldn’t we be better off thinking about how we can enjoy a good life in conditions of low growth?

Philosopher, John Gray


Last week …

… the FTSE 100 closed at 5651 which was 0.3% lower. The FTSE 250 improved by 1.3% and the AIM All Share at 685 decreased by 1.2%. Corporate earnings are generally OK, but the direction of the UK economy remains ‘robustly’ on the slow-track. Inflation measured by CPI was down to 2.4%, Unemployment rose marginally as did Retail Sales by 0.1%. The policy solutions in play will take time.  The relative slowdown in China, the 34,000 increase in US Unemployment and Spain likely to need a bail-out all detracts from positive market sentiment.

This week …

… hopefully a quiet week on the Euro disintegration front. EU Consumer Confidence will be reported today, Monday and is likely to show a widening crack.  There are US Consumer Confidence figures and more US Jobless Figures on Thursday.  On Wednesday, Preliminary UK Second Qtr GDP will be announced, which could show a 0.2% fall an improving trend   following  falls off 0.4% and 0.3%. Summer drifting seems set to continue.


Company Reports

Empresaria  (EMR) – £12.7m at 28.5p

Should work better

Empresaria, the staffing specialist, announced the acquisition of the remaining 5.7% of FastTrack Management Service for up to £282k, implying a value of £5m. In the year to 31 December 2011, FastTrack generated revenue of £43.3m and profit before tax of £0.6m. It specialises in the placement of permanent and contract personnel into the Construction, Building Services, Engineering, Automotive, Aviation, Rail and Systems industries. Empresaria operates on a largely devolved basis, with 20 brands operating across seven main sectors in 19 countries and has been built through acquisition and organic growth. This strategy is underpinned by the philosophy of operational management owing equity. Further such infill deals seem likely and while prices may be sensible Empresaria’s low valuation is a hindrance.   Interims are to be announced on September 6th and should show traction is being made for the December year–end PBT of £5.7m which gives and EPS of 5.5p so a prospective P/E of 5.2x while yielding 1.2%


Gearing is around 20% and Banking facilities were renewed for five years last March.


Amino Tech (AMO) – £29.8m at 51.50p

Dual Core Investment

Interim results from IPTV and in-home multimedia distribution technology developer Amino showed a 19% increase in gross margins to 35.4%, while headline revenue was down to £20.1m. This due to a combination of supply chain efficiencies but also reflects an order last year from Telecom Italia at very low margins. Amino moved from a loss of £416,000 to a profit of £206,000. Russia remain structurally difficult and  revenue growth came in the Netherlands . The first contract has been won in eastern Europe and was for a lower specification set-top box which was more price competitive.  So far over 3m devices have been sold to 850 customers in 85 countries. In January the company launched the world’s first hybrid/OTT media gateway powered by Intel’s next generation system on chip (SoC).  This new product combines dual core processing power with a range of new enhanced trans-coding and encoding capabilities and with multi-screen distribution to deliver content seamlessly to TVs, smartphones and tablets around the home. Profits for the full year to 30 November 2012 are forecast at £2.76m for an EPS of 4,85p  giving a prospective P/E of 10.6x while yielding 4.9%.


There was £13.9m in cash in the balance sheet at the end of May 2012. Management is confident that it can grow without significant increases in working capital.


SolGold (SOLG) – £11.7m at 3.38p

Drilling down-under

The recent fund raising of A$2m at 4p  supported by Directors who hold 17.6%   for SolGold, should last until there are further positive results from the Rannes  asset. The focus is on gold exploration in Queensland, Australia and the opportunity of earning an 85% stake in the Cascabel gold, copper, silver project in Ecuador.   The main asset in Australia is Rannes, where the overall target is 2m ounces of gold equivalent. The current resource estimate is 550,000 ounces of gold equivalent. More recent drilling has produced positive results and the resource is expected to increase once the current drilling programme is completed.  A delay on finding a JV partner contributed to Solgold’s share price falling from 22.38p over the last year. TSX-V quoted Cornerstone currently owns 100% of Cascabel and SolGold can earn up to 85%. The initial 65% of Cascabel can be earned through the investment of C$850,000 in Cornerstone shares and $7.8m on exploration over a five year period. The other 20% can be earned through further work towards a bankable feasibility study. There should be more news on the Rannes exploration in the next few weeks.


The focus of the spending is the Rannes project and the Cascabel project in Ecuador. This cash should last until there are further positive results from Rannes.

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