Let us never forget this fundamental truth: If the State wishes …

Let us never forget this fundamental truth: If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay – that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.

No prize for guessing who said this – may she RIP.


Last week …

… the FTSE closed up 2.2% at 6384 with the FYSE 250 up3.2% and the Aim All Share at 729, a 2.5% improvement. The Feds $85bn, a month QE and now Japans monitory easing is dripping into UK equity.  In combination economic indicators are less obviously bullish with construction 7% lower year-on-year.  The Fed’s benevolence is perhaps set to continue as US forward indicators on Consumer confidence and manufacturing were weaker then hoped. The IMF’s forecast for US 2013 GDP growth has been reduced from 2% to 1.7%.

This week …

…  there are inflation numbers on Tuesday followed on Wednesday by BOE Interest Rate Minutes ,  and Unemployment. On Thursday Retail Sales will include some poor weather adjustments. It is going to be a close whether the First Qtr GDP will show a decline although more appropriate is judging the pace of the UK recovery from here.  In the US employment on Thursday is the week’s key indicator. After not seeing much cause for a recovery last week – a small decline could be this week’s trend.


Company Reports

Nationwide Accident Repair Services (NARS) – £30.4m – 70.5p

Slow-Mo High yield

Site closures reduced revenues in 2012 but this nationwide accident repair service provider increased profits in 2012. Revenues fell 9.8% to £156m, while underlying profit improved 1.8% to £5.5m. The insurance crash repairs market as a whole declined significantly last year and probably at a faster rate than the fall in Nationwide’s revenues. Growth was reported from glass replacement and mobile repairs while revenue from Fleet Management grew by 21% to £35m. Profit margins remain under pressure as despite closures there is overcapacity. Lower profits are being forecast for the December 2013 year-end at £5.2m for an EPS of 9.1p which gives a prospective P/E of 7.8x while yielding 8%.


The net cash was £5.1m at the end of 2012, and the net pension deficit of £17.5m is contained so the yield seems secure.


Surgical Innovations (SUN) – £21.4m at 5.23p


Cutting Niche

This designer and manufacturer of creative solutions for, Minimally Invasive Surgery (‘MIS’) reported a 30% fall in profits with revenues virtually flat at  £7.64m for the year end December 2012. There was, however a pleasing 13% growth in own-brand sales, which meant that gross margins improved by 7.3%. Underlying pre-tax profit fell from £1.71m to £1.53m, even if £294k of exceptional restructuring costs are excluded. Recent product launches and increased demand from the NHS could help profits recover in 2013. These are forecast at £1.9m for an EPS of 0.5p which gives an undemanding prospective P/E of 11x.


Net debt doubled to  £2.63m and the funds to finance the move to larger premises will largely be financed by a £5m grant.


NetPlay (NPT) – £49.0m – 17p

Good Bet

Interactive gaming operator of, supercasino.com and Jackpot247, Netplay reported a strong 2012 and the momentum seems set to continue. Customers can interact on a variety of platforms but 9% growth is recorded for mobile phone and tablet devices which accounted for 30% of total net revenue in the first quarter of 2013. During  2012, net revenues improved 27% £21.8m while PBT improved from £0.6m to £3.1m.This year will benefit from six nights a week of exposure on ITV as part of a three year agreement lasting until March 2016. Netplay is marketed on  the ITV.com website. There are plans to grow outside of the UK with Italy a possibility while the investment in marketing and new products will continue.  Profits are forecast, for the December 2013 Year-end at £4.4m for an ESP of 1.5p and a prospective P/E of 11x with a yield of 2.6%.


There is no debt while net cash was better than expected at £12.3m and there is a progressive dividend policy. It should be noted that a Director recently sold 2m shares at 16.9p


Clear Leisure (CLP) – £6.73m at 3.38p

Fun to Start

lear Leisure, formerly Brainspark, has become a leisure investor in primarily Italian Hotels, restaurants and theme parks. On Monday the 15th it was  announced that a 69% real estate subsidiary, Mediapolis , had cautiously reduced its asset valuation by 25% due to the uncertainty of the Italian real estate market. A trading statement on April 8th highlighted, that due to the range of changes comparisons with previous years have little meaning. It reported an unaudited 78% leap in NAV and a £0.5m profit. What does seem clear is that market price is an ‘indecent’ discount to its estimated NAV of over 10p a share.  Clear Leisure’s management has spent the past couple of years trying to clean-up its former technology and finance portfolio and focus on these leisure operations. The main businesses are hotel chain ORH, Italy’s largest waterpark Ondaland and So Sushi. Luke Johnson became Non-Executive chairman having invested £1m at 4p a share.


The balance sheet has been improved by share placings and a Euro 6Mconvertible loan note issue.

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