Devaluation of the pound is the last shot in policy makers locker

“ Devaluation of the pound is the last shot in policy makers locker and either stimulates growth quickly or causes longer term problems with lower living standards”.

Sunday Times

Have you tried www.tradersown.co.uk, yet?

Shares can be bought and sold for as little £6 a trade. 

It is an informative share trading site with the occasional share TIP.

 Last week …

… the FTSE 100 improved 0.7% to 6378 with the FTSE 250 up 0.6%, while the AIM All Share at 739 was (1.5%) lower. The UK’s sharp fall in Manufacturing PPI from 51 to 47.9 sets a depressed tone for the UK economy while the US 4th Qtr GDP growth of 0.1% was better than expected. For sanity’s sake we will try to avoid Italian politics but its impact on the Eurozone is harder to ignore.

This week …

… on Tuesday the Support Services PMI will be reported and a fall could impact on the BOE’s Interest Rates policy. Although with the weak pound a reduction in rates is unlikely on Thursday’s decision meeting.  The ECB will also have an Interest Rate decision to make on Thursday and with rates at 0.75% signalling a reduction is a growing possibility.  The US Jobless Claims are reported on Friday and will not yet reflect the US cost saving needed to keep on the safe side of the ‘fiscal cliff’. Markets are likely to drift lower.

 

Company Reports

DotDigital – £44.4m at 16p

Strategic Reward

Interims to December 2012 reported at 24% increase in revenue to £6.8m with a 40% improvement in operating profits to £1.8m. DotDigital provide ‘clever’ Email Marketing – Software as a Service,  SaaS, to digital marketing professionals and this core business is preforming strongly. The reoccurring revenue represents 76.5% of total billing and is up from 73% while 66% of new  clients are  on contracts for over 12 months, new clients  include BBC Worldwide, e-Consultancy, Harveys, England Hockey Board, Investec, Osprey London, BP International, ITV, Odeon Cinemas, Ryman, Delice de France, Surrey County Council, City & Guilds, Cartridge World, Balfour Beatty and Help for Heroes. Revenues in the Services Division, web design and search, declined by 21% and profits fell from £0.18m to a loss of £0.14m.  The strategic options for this division are being reviewed and a number of indicative offers for acquiring this division in part or whole have been received but a goodwill impairment charge of £1.5m is likely. There are early stage initiatives to expand the core business worldwide although  the full year profits to June have different  scenarios assuming no disposals PBT of £3m give an EPS of 0.9p and so a prospective P/E of  18x.

Financials

There is net cash of around £4.6m and cashflow of £1.4m was generated from operating activities.

Fiberweb (FWEB) – £135m at  78p

Material cash

A strong improvement from this specialty industrial and construction materials businesses could have more than justified the 11% price rise since January. Revenue for the year to December 2012 improved 5.8% to £300m while operating profits increased 18% to £15m giving a PBT of £6.5m against a loss of £7.2m and an historic P/E ratio of 13x. The  performance is ‘hidden’ by the £25m sale of most of the hygiene  materials business but there is sufficient evidence  of the successful implementation of  initiatives taken to reduce cost  and to simplify the processes and product ranges especially for recession-hit European construction markets. The North American markets are recovering but are likely to be constrained by budgetary uncertainty. The company’s largest manufacturing site is at Old Hickory, Tennessee and had a record year, with growth in construction products, notably for housewrap and landscape applications, outstripping the strong recovery in US house building. Fiberweb focuses primarily on technical fabrics, which is a market of around US$28 billion per annum, with the major market segments being industrial, geosynthetics and hygiene. Profits are forecast for moderate EPS growth for December 2013 for a EPS of 6.1p (5.2p) and a prospective P/E of 11x while yielding 3.8%.

Finance

Net cash is £14.5 million after paying off £15.5m from the pension deficit leaving a more than manageable £11m. The board are considering returning £10m to shareholders which is 17p a share.

 

Pinnacle Technology (PINN) – £9.9m at 0.32p

Building Scale

Telecoms and IT managed services provider Pinnacle Technology has a strong base to grow in the current financial year. Pinnacle’s wide range of products and services allows increased cross-selling  of products and services to the core customer base of 3,000 small and medium sized companies. Pinnacle is divided into five complementary divisions; IT services, IT security, cloud-based services, telecoms services, which is predominantly the fixed line telecoms operations, and mobile phone services. The first three divisions are the growth areas for the group, while the other two have been hit by falling prices.  In the year to September 2012, overall revenues improved from £8.5m to £12.7m mainly from acquisitions but there was also an underlying improvement in the three main growth divisions. Recurring revenues are 90% of the total. Various write-offs, amortisation and gains on acquiring businesses below NAV make the profit figure confusing. On the face of it the reported loss increased from £117k to £1.12m. However, underlying EBITDA improved from £208k to £285k and if depreciation and interest charges are subtracted then Pinnacle made a small pre-tax profit. There was £564k of restructuring costs relating to the three most recent acquisitions, of which Online Computer Developments and RMS Managed IT Security were during the past financial year. A PBT is yet to be made and there is no forecast for 2012 but the critical for growth is the acquisitions strategy which has been relatively small but with the new funds in place a more substantial acquisition seems likely.

Finance

Net debt was £344k at the end of September 2012 and since then has raised £2.95m for further share issues at 0.3p ahead of the 100 for one share consolidation.

Share (SHRE) – £33m at 23p

Private client broking 

Rated for Growth

Share has refocused its business on private client stockbroking by selling its funds administration and Sharemark businesses. Share’s private client broker The Share Centre continues to increase its relative market share.  The disposals and costs of complying with new regulations led to a £562,000 charge. Stripping these out pre-tax profit for the year to End December 2012 still declined from £1.57m to £1.23m as revenues dipped from £14.3m to £13.9m, the historic EPS of 0.9p put it on a P/E of 26x. Fee income was flat, while interest income recovered. There was a decline in commissions because of lower activity levels.  Management says that there has been increased interest in the market this year following its strong performance in recent weeks. They also believe the Retail Distribution Review will provide opportunities for the company such as trading in Funds. Organic growth is the priority and early forecast for December 2013 in this highly volume related business are for £1.7m giving a prospective P/E of 23x yielding 2.3%. The dividend is twice covered by underlying earnings and has been increased by 20% a year for the past three years.

Finance

Cash in the bank improved from £11m to £12.2m.

Please leave a comment - we all like them