“ It looks as if we are coming back in circles to places we had visited before”.
FT Euozone negotiators
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Last week …
… the FTSE 100 closed down 1.5% at 6392, with the FTSE 250, 1% lower while the AIM All Shares at 736 fell 1.5%. The UK Budget passed quietly, February UK (CPI) Inflation increased to 2.8% from 2.7% and Consumer Spending improved a warming 2.1%. Eurozone concerns continued with Cypriot default meltdown upsetting sentiment in other European struggling debtors.
This week …
… the economic news-flow will pause briefly over UK Balance of Payment and Consumer Confidence on Wednesday. Before flowing onto the US and the sentiment sensitive forward indicator PMI for manufacturing which is reported on Thursday. This follows US Consumer Confidence on Tuesday and Jobless figures on Wednesday. It is inconvincible that the Cypriot Parliament would be so dysfunctional as not to approve measures to obtain a 10 billion euro rescue funds. Markets could improve.
Empresaria (EMR): £14.9m at 33.5p
A mixed picture was shown in the finals to December, as revenue fell 7% to £194m but an 89% increase in PBT to £3.6m was reported. The decline in revenue was offset by tight cost control and growing contributions from minority interests. The widely diversified Net Fee Income (NFI) is split ; 36% UK, 36% continental Europe and 28% Rest of the World, currently this specialist staffing group is in 18 countries with 800 staff covering permanent and temporary recruitment, as well as other staffing services such as HR consultancy, training and recruitment process outsourcing. Empresaria’s fire-fighting phase is over and significant improvements have been made to the sustainability of the German operations post the restructuring, although the uncertainty remains over eurozone economies. Organic growth will developed with international expansion and the investments made in Singapore should contribute more positively. Although acquisition can be considered existing debt is a constraint. Profits for the year-end December 2013 are forecast at £5.5m which gives an EPS of 6p and a prospective P/E of 6x while we expect a maintained dividend giving a 1% yield.
Year-end gearing was 34% with net debt of £8.1m which remains comfortably within banking covenants and debt start to reduce.
SOPHEN (SPE): £8.5m at 5.83p
A highlight of the finals to December was the reported 49 new and extension license orders giving a £6.4m visibility on 2013 revenues. Sopheon provide software and services to help organizations generate more revenues and profits from new products. The leading product Accolade is a fully-integrated solution for the entire innovation management and new product development lifecycle. Revenue improved 23% to £12.7m while EBITDA increased 20% to £1.8m with PBT at £0.28m. While increasing sales to existing client remain a focus, around half of new business was won from new customers illustrating increased market interest and the successes of the reorganized marketing and sales teams. Gross Margins reduced to 71% from 73% as the proportion of higher cost services increased compared to license revenues. Three new products have been released including Accolade 8.3 and sales strategies includes working with third party software providers, broadening sales to existing customers and expanding the direct sales efforts. Profits for December 2013 are forecast at £0.7m on turnover of £13.5m giving an EPS of 0.4p for a prospective P/E of 15x.
The net debt is around £2m and an additional £1.1m of convertible debt finance. The company intend to reduce the accumulated deficit on the profit and loss account, and to consolidate shares.
ServicePower Technologies (SVR): £8m at 4p
Swiftly Moving On
Scheduling software provider ServicePower Technologies had another disappointing year in 2012 but management is confident that it will be profitable in 2013. In 2012, revenues fell from £13.3m to £11.1m, while a profit of £1.1m was turned into a loss of £1.8m. These figures were hit by delays in purchasing decisions by customers. Nearly 90% of revenues are recurring and additional SaaS contracts were won during 2012. The software schedules and routes allowing companies to locate their employed field resources in the right geography. Since the end of the year the Assurant contract has been extended and a contract won with a large but unnamed company worth up to £1.2m over three years. A small acquisition will provide additional elements to the company’s software. In June, ServicePower will launch ServiceRatings.com which will enable clients to market their service without hosting their own website. The directors report an extremely encouraging start to 2013
Net cash was £2.5m at the end of 2012.