Europe has 7% of the world’s population but 50% of its social spending

Title quote from Angela Merkel


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Last week …

… the FTSE100 improved 2.1% to 6284, the FTSE250 rose 1.5% and the Aim All Share at 740 increased 0.5%. The pain of  a larger drop in GDP than expected to -0.3% was anesthetised by Unemployment falling 0.1% to 7.7%, no sign of the BOE committee reducing QE and growing pressure on Osborne to consider growth policies. The nascent equity optimism was helped by the US lifting the debt limit and so putting a temporary bridge over the fiscal cliff.

This week …

… data on the state of Euroland’s economic health will be reported. On Wednesday there is GDP followed on Friday by Unemployment and hopefully the prognosis will only be of gentle decline. The US also reports GDP on Wednesday and Unemployment on Friday. The FTSE’s   6.1%   improvement so far in 2013 demonstrates that the investment switch from bonds into equities may be a new trend which is not likely to change this week, so further gains are likely.


Company Reports

KB3 Business Technology Group (KBT) – £30m at 106.5p

A falling Knife?

Weak retail trading caused KBT, the enterprise software supplier to the retail supply chain, to reduce full year profit expectations. Trading is tough, with customers continuing to defer spending decisions although there are a number of key deals still in progress that could improve prospects. The Trading Statement cautioned on deferral of deals as well as cost increased due to investment in product development. The interims to be reported in mid-March will contain a further update. So far the manufacturing and Managed Services clients are relatively unaffected.  The June 2012 profits were £10m on £68m of revenue while on slightly higher revenue on a PBT of £7.1m is being pencilled in for the June 2013 year end giving an EPS of 19.2p for a prospective P/E of 6x with a nominal yield of 1%. The shares have fallen from over 200p and the interims are likely to be weak.


Net debt is around £15m of which the majority is due for repayment by December 2013 and should be refinanced before then.


Ideagen (IDEA) – £27.6m at 22.75p

Acquisition Hungry 

Ideagen reported interims in line with last month’s trading statement and profit is expected to continue to grow strongly.   Profits from this supplier of Compliance based Information Management solutions, were 51% higher at £2.6m. Recurring revenues cover 90% of the fixed cost base. Underlying profit was 69% ahead at £690,000. The latest figures include a full six months from Proquis, which was acquired at the end of 2011, but no contribution from recent acquisition Plumtree. Proquis continues to pick up additional work from the US Department of Veteran Affairs hospitals. There are 155 hospitals and they are rolling out the company’s software. Plumtree has 125 NHS customers and there are cross-selling opportunities. The acquisition of Plumtree makes the healthcare sector the biggest generator of revenues but Ideagen is keen to expand in other highly regulated industries, such as utilities and complex manufacturing.

Profits are forecast for the April 2013 year end at £1.8m for an EPS of 1.5p giving a prospective P/E of 15.2x although EPS growth likely to be held back news shares and higher tax charges unless further profitable  acquisitions are made .


Net cash was £1.2m at the end of October 2012. Following the Plumtree acquisition and £6m placing at 20p the net cash figure has risen to £5.3m. Further acquisitions of profitable businesses with IP supplying management information systems to highly regulated sectors are being sought.


Casdon (CDY) – £3.2m at 58.5p

Cheap as chips with on-line Sizzle

The long established traditional toy business run by the Cassidy family reported an 118% jump in interims profits to £693k from £318k, with a 33% increase in revenue to £4.5m. The shares have moved up from around 42p since January. The raise of exports to around 25%  of turnover  is  a pertinent growth factor  which is supported  by online efforts as the products can be selected directly from CDY own image server, and down loaded to  clients own systems. The company continues to invest heavily in new product development and in addition to new product for the UK market it is working with a small number of key overseas customers on exclusive custom designs. The tooling cost that can run into several £100ks can be financed in-house. The second half can be expected to be quieter but still likely to be profitable even so the interims EPS of 9.75p  puts the shares on a prospective P/E of 6x while assuming the same dividend as last year the yield is 2.5%.


The net assets are £3.8m and there is cash of £0.8m.


LPA GROUP (LPA)  – £8.2m at 70p


Finals to September 2012 were reported by this LED lighting and electro-mechanical engineering group. It showed profits had doubled to £0.8m on turnover of £18.35m. This gives EPS of 6.17p so an historic P/E of 11.4x, while yielding 1.2%. The strong start to the current year was disrupted some as regular business has been delayed by the Rail re-franchising process.  Although being compensated for other contracts  wins such as an £0.8m London Underground related contract. The factory for LED lighting In Normanton is being extended while   the refurbishment of the recently acquired Shire Hill factory in Saffron Walden for £1.3m, will allow for the disposal of the Tudor Works facility in Saffron Walden. This should be sold this year with planning permission for 22 houses and likely to show a profit as well as reduce gearing. The Group, in particular its LED based lighting business, has many exciting prospects with a number of infrastructure projects being bid for and the order book is over £10m. Profits of £0.88m for the current year would give an EPS of 7p and a prospective P/E 10x.


Debt is £2.4m with a net asset value of £5.6m, gearing will be reduced with the sale of the Tudor works.

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