… , it is to the Eurozone where German and France surveys are weak and Spanish unemployment is 27.2% although the IMF view the zones fiscal policy as broadly appropriate. Sunday Times
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Last week …
… share indices moved ahead. The FTSE 100 improved 2.2% to 6426 with the FTSE 250 up 2.6% while the Aim All Share at 706 was barely changed. UK GDP Growth of 0.3% was higher than expected and showed that the recession is at least statistically over. Disappointingly the moderate austerity measures taken in the US seems to have reduced annualised GDP growth to 2.5% from the expected 3%.
This week …
… in the UK there are some forward looking reports. On Tuesday Consumer Confidence is reported followed by PMI (Purchasing Managers Index) on Retail, Manufacturing and Construction combining to offer an penetrating insight into the pace and sustainability of UK growth. The US Unemployed will have to wait until Friday to see if there will be more than 7.6% of them. On Thursday the ECB (European Central Bank) could vote for a 0.25% reduction in Interest Rates from 0.75% reflecting the weaker economic figures and ‘perhaps’ politically inspired austerity alleviation. Markets seem most likely to stand still.
Dillistone Group (DSG) – £14.6m at 80.5p
The finals to December from this supplier of recruitment software showed a 29% increase in revenues to £7.1m with record reoccurring revenues at 63%. PBT after executional administration items improved 21% to £1.2m with EPS up 15% to 7.2p and the 2x covered dividend was increased 5.7% to 3.7p. Both of it’s trading business performed well; Dillistone Systems (cir.£4.6m) targets executive search and has just reported the Ist Qtr of 2013 was its best for years. Voyage Software (£2.4m) targets other recruitment markets and recently launched a next generation of its best selling product Voyage Professional. The growth strategy is organic and acquisition focused on developing products and markets. Profits for December 2014 are forecast at £1.7m for an EPS of 7.5p and a P/E of 10.7x while the affordable progressive dividend policy gives a yield of 5%.
After capital expenditure of £0.9m there was net cash of £1.6m and the company remains debt free.
IS Solutions (ISL) – £10.6m at 40.5p
Finals to December 2012, reported last month were moderate but prospects seem to have strengthened for 2013 with a 22% growth in EPS being forecast. Last year revenues improved 2% to £9.2m with 51% reoccurring and for 2013 are forecast to increase 6.5% to £9.8m. Profits as result of good operational leverage could increase 20% to £1m. IS are focused on three web-related areas: portals, content/document management and “big data” analytics. Clients includes Toshiba and SAS Institute (its two largest) as well as BT, GSK, HMRC, M&S and RBS. Software sales continued to decline relating to shrinking public sector budgets. Web Analytics continues to grow – this is using the internet data for optimising e-commerce performance including consumer experience analytics. Demand is growing from B2C companies seeking to improve their webb revenue conversion and reduce costs. According to ISL, a typical online business is now spending a third of its marketing budget on analytics, up from less than 10% in 2009. The forecast profits of £1m would give an EPS of 3.5p and a prospective P/E of 11.5x, while yielding 3.8%.
Net debt of £1m is overstated due to investment that could convert into cash and at this stage in its growth cycle cash starts to flow strongly.
LiDCO (LID) – £21.8m at 11.25p
Sales to grow
Changes in US distribution arrangements and a lack of licence income held back 2012 revenue growth at patient monitoring devices developer LiDCO Group. Revenues edged up from £7.12m to £7.21m but disposables revenues were 15% higher at £5.6m and the loss increased from £45k to £259k. There was no contribution from licence fees, which were £540,000 the previous year. The UK was a particularly strong market, while the US revenues fell by more than one-quarter as LiDCO took back the distribution rights for the region. Another US distributor could be appointed but LiDCO is currently distributing directly. Europe was a tough market. In contrast, sales in Japan are starting to build. Significant sales growth is expected by the management this year generated from new products and patients continuing to develop the global footprint with expansion into Japan and US.. A small profit for the current year is likely on £8.5m turnover and rising to £1.1m for the January 2015 year-end which would put the shares on prospective P/E of 13x.
There was £2.1m cash following the £2.21m placing in November 2012 at 13.5p.
Longships (long) – £1.8m at 2.63p
Finals to December 2012 reported net cash of £1.3m after raising £0.9m at 2p towards the end financial year. The Market Cap equates to a 38% premium to cash value and the search remains on for an RTO (Reverse Take-over) candidate that will enhance shareholder value. Malcolm Burne who has considerable knowledge of resources has a wide ranging brief on identifying a suitable opportunity.