On the basis that gold is an inflation hedge some think that its value is $800

“On the basis that gold is an inflation hedge  some think that its value is $800 an oz so that $1,200 may not be the bottom”



Last week …

… markets recovered after weeks of losses. The FTSE 100 improved 1.6% to 6215, with the FTSE 250 increasing by 1.9%, while the Aim ALL Share at 691 was 0.86% lower. Collectively the UK economic news was positive with Retail Sales increasing 2.1% last month, Consumer Price Inflation edged higher at 2.7% and revised GDP figures showing that a double dip recession was avoided by a cigarette paper thin £28m.  The international themes continue with a growing chance of China’s growth dipping below last year’s 7.5% while in the US a Fed statement reduced the immediacy of a cut in QE.


This week …

… the first BOE Interest Rate Meeting with the new Governor, Mark Carney is on Thursday. The most market sensitive news is likely to be the US Unemployment figures on Thursday and Friday where ‘too much’ growth is likely to reignite QE worries. The most sensitive Eurozone statistics is on Wednesday when a survey on German growth is reported. Our guess is a flat week.


Company Reports

Allocate Software (ALL) – £47m at 73.5p


There was a relatively positive trading update ahead of finals to be reported in the week of 22nd July. The key performance indicators are likely to be inline but due to the new business model based on reoccurring income, cash flow is far stronger.  Allocate is an acquisitive provider of workforce and compliance solutions with a focus on healthcare  supplying markets in the UK, Australia and Scandinavia.  There is a 100% renewal rate on HeathcareRoster while Allocate Cloud is exceeding expectations. After the already reported slow first half profits are forecast for the year to June 2013 at £5m, compared to £6.2m to give an EPS of 5.7p so a prospective P/E of  14x while yielding 1.6%.The quality and increasing predictability could makes them more attractive.


There is net cash of around £4m and perhaps further acquisitions will be considered.


Accumuli (ACM) – £22.1m at 14.88p

Criminal Growth

Accumuli provids IT security services and Cyber crime costs are around £27bn a year and growing market.  For the year to March 2013, revenues improved 17.5% to £14.8m, excluding sales from the disposal of Webscreen IP  as Accumuli have signed up 28 new customers.  EBITD improved to £2.5m from £2.1m but PBT slipped from £385k to £298k as amortisation was £241k higher.  The Financial Services sector is particularly showing growth and  Accumuli have around 250 customers. Last month Signify Solutions which provides managed service called Two-Factor Authentication (2FA) was acquired for £2.5m. It product allows secure remote access to networks. Profit forecast for the March 2014 year end are for £2.6m on turnover of £18m this gives EPS of 1.3p and a prospective P/E of 11x with a 3.4% yield. Further organic and acquisitive growth seems likely.


Net cash is around £3.5m.


Pentagon Protection (PPR) – £2m at 18.25p

Contract Wins

Interim turnover to March from this security contractor jumped 189% to £1.75m. This was because significant protective film and anchoring contracts had been won.  A profit after tax of £3k was made compared to a loss of £0.33m. There are two divisions; Protective Film and Security and both are likely to perform better in the second half. The Security Business won a £1.9m order in April and its year’s turnover is already higher than last year.   There are several large projects being pursued in UK, Africa, Middle East and the US. A large security window film project is being installed in Nigeria and there are several security equipment orders from Nigeria and Jordan, where the company is working with local partners and expect the deal flow to increase.  The shares are up from 3.5p over 12 months and a profit of £0.4m for the full year, with no tax would give a P/E of 5x.


There is no long term debt but the lumpy orders make working capital very tight with a liquidity ratio of 0.75x where above 1 would still be low.

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