Over the last three months the Aim All Share increased 13.7%, the FTSE 250 rose by 10.73% and the FTSE 100 increased by 8%.
Aim seems to be benefiting from an improving Economy and perhaps the new pool of ISA investors.
Last week …
… CPI Inflation eased to 2.7%, August’s Retail Sales were unexpectedly 0.9% lower instead of a small rise. Forecasters at UBS Bank increased their 2013 UK GDP growth expectations from 1.1% to 1.5%. The Fed’s decision, not to taper the $85bn a month QE, is a mixed signal of good and bad news. The FTSE 100 was flat at 6596, the FTSE 250 declined 1.2% while FTSE the AIM All Share at 794 rose a further 1.8%.
This week …
… the UK will report GDP on Thursday followed by Consumer Confidence on Friday. European news will include a German Election result, Manufacturing PMI on Tuesday and an Economic Sentiment Survey on Friday. The US report GDP, Consumer Confidence and Jobless figures all on Thursday. The flat trend seems likely to continue.
Stadium (SDM) – £17.5m at 59p
Spark in the Dark
The shares have recovered since reporting mildly disappointing interims as there is belief in a swift recovery by this electronic technologies group. This belief is helped by Director’s purchasing shares, the new chief executive’s ‘new broom’ and the growing order book. Profits fell from £0.74m to £0.37m, as overall sales were flat at £21.4m but the like for like sales showed an 8.1% decline. The electronic manufacturing operations reported a slight fall in sales due to pricing pressure, while a delay in a major order hit the first half performance of the power products operations. The displays business, acquired last year had a successful first half. The Rugby factory has been closed and all of the UK manufacturing operations transferred to the larger Hartlepool. The Chinese operation is now supplying the Asian domestic market. A stronger second half and margin improvement are being forecast so that profits to December 2013 are expected to improve from £1.4m to £1.8m. This gives a prospective P/E of 13.8x, which would drop to 8.2x if a profit of £3m is achieved 2014. The yield is 2.3%.
Net cash is £0.3m with operating cash flow of £0.35m. The cash conversion to operating profit ratio improvement to 124% from 66% is mostly due to debtor and creditor management.
NetDimensions (NETD) – £23.1m at 61p
Interims from this provider of talent and learning management systems to global enterprises showed an 11% increase in revenues $6.5m. Due to planned expansion losses increased in line with expectations to $2.9m while net cash was $10.2m with little debt. This should be sufficient cash for two years and perhaps nearly to profitability. In May NetDimensions announced a new three-year business plan, supported by a $6.1m fund-raising at 38p. The objective is to reach $50m revenues along with growing, sustainable profits in five years. The global Talent Management Software sector grew at an annualised 17% between 2009 and 2012 and according to specialist research firm Bersin by Deloitte, the market will grow by 21% in 2013 to $4.8bn. The group has hired five senior executives, including four new roles along with an expanded sales force, which should impact from Q4. Losses of $6m are forecast for December 2013 with turnover of $16m
Operating cash outflow was $1.5m, of which $1.1m related to the new business plan. The acquisition of eHeathcareIT cost an initial $1.25m in cash while the share placement at 38p brought in $6.2m of cash.
Deltex Medical (DEMG) – £29.0m at 17.6p
The interim loss increased from £1.27m to £1.44m as revenues fell from £3.21m to £2.92m but higher margin probe revenues were higher. Sales of probes for the cardiac monitoring devices are growing in the UK, US and France and there is a significant opportunity for growth in the US where £293k was invested so the loss would have been lower without the investment. Deltex is collaborating with US hospital operator Premier Inc, which could create in-time a significant market opportunity for the company’s products. There are around 1,000 monitors installed in the UK which is generating good cashflow and there are monitors in 30 countries. Profit margin on each is increasing as the manufacturing cost is reduced. Deltex is moving towards joint ventures in markets which are more developed and has a launched new products. Inventories increased in the first half but this should unwind as turnover for the December 2013 year-end could still be higher at £7.85m compared to £6.78m while losses of £2m are expected.
Cash used in operations increased to £1.3m but second half cashflow demands are lower. There was £0.46k in cash with long term borrowings are £1m. Its last funding was for £60k at 16.88p to repay a debt.