Coupling inflation and the rate of unemployment has a disastrous history

“Coupling inflation and the rate of unemployment has a disastrous history.”

Prof Mike Wickens, who is on the Shadow Monetary Policy Committee (MPC).

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Last month …

… despite the mostly improving economic narrative the FTSE 100 fell 3.1% during August to 6412 the FTSE250 is 0.5% lower while the Aim All Share  rose  3.1% last month.  Last week, the BOE Governor’s growth friendly speech was supported by the prospects of further QE, but this news  was over-shadowed by the possible ricochet of missiles in Syria and the subsequent increasing oil prices fueling inflation.

This week …

… the BOE’s Interest Rate Meeting on Thursday becomes irrelevant as interest rates policy seems set to Unemployment dropping to 7%. There are PMIs (Purchasing Managers Index) to be reported in Manufacturing and Construction so indicating likely growth rates. Similarly there are US and Europe confidence indices most days but perhaps the more sensitive report will be US Unemployment Claims on Thursday and Job Creation on Friday. Markers seem set for a lower week.

 

Company Reports

Pilat Media (PGB) – £38m at 61p

Bigger Picture

Interims to 30th June from this cash rich global supplier of software for the media industry showed an 18% increase in revenue to £12.4m.  Encouragingly Second Quarter growth was 21.4% higher. Profits increased to £179k from £44k and net cash was £12.2m. Five new contracts have been signed so far this year, worth approximately £11m in license and initial implementation fees over the next 18 months. Pilat’s solutions are sold worldwide and cover growing areas such as content and rights management, linear and on demand programming, media preparation and transmission scheduling across all channels and Video on Demand (“VOD”) services. The new contracts and increased demand from existing clients needs increased delivery capacity and so consequentially operational costs will continue to increase. R&D on an OTT product under the OTTilus brand is costing around £40k a month but sales are expected by the end of this year. For the year to December 2013 profits are forecast at £2.2m for EPS of 2.6p and a prospective P/E of 23.4x.

Financials

Cash generation remains strong with cash up to £16.6m from £14.9m  but due to foreign currency loan balance  net cash has increased to £12.2m from £10.7m.

 

Seeing Machines (SEE) – £19.2m at 4p

Red Bull Growth

Finals to July 2013 recorded a 66% jump in turnover to A$11.7m and a return to profitability with A$0.6m (£344k). There was strong demand for the Driver State System (DSS) fatigue- and distraction monitoring from mining haul truck operators and this division’s revenue improved 84% to A$9.2m. The DSS outlook is robust and supported by a pipeline worth more than A$20m with forward orders at around 270 units. A global alliance with Caterpillar, the blue-chip manufacturer of construction and mining equipment was announced in May which is set to transform the group’s approach in tackling the global mining haul truck market. There are also longer-term opportunities in the road transport and consumer electronics sectors. Profits are currently forecast to improve to £1.15m (£0.55m) which would give EPS of 0.23p and a prospective of 17x but there is potential for large orders.

Financials

After a fund raising  £1.3m(A$2.26m) in October at 2p net cash stood at  a disappointing A$0.8m which is lower than last year and  mainly reflects an sharp increase in debtors although there is  no debt.

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