“ Saving is a fine thing- especially when your parents have done it for you”.
Last week …
… the Chancellor stated the UK was growing faster than any other major advanced economy. This was supported by increases PMI Surveys in Manufacturing, Services and Construction. The FTSE 100 declined by 1.5% to 6551, the FTSE 250 was 1% lower while the AIM All Share at 822 reduced by 0.6%. The BOE decided to leave interest rates unchanged at 0.5% and QE at £375bn this no change policy allows increased room for the Chancellor to control the economy through fiscal rather than monetary policy.
This week …
… could decide if the theory of ‘Obverse Causality’ (news+good=bad4markets) is too simplistic, as there are plenty of economics being reported. On Tuesday the UK reports its actual Manufacturing and Industrial Production as well as Balance of Trade. In the US there is a Budget Statement on Tuesday (rem: Fiscal cliff?) followed by the number of Jobless on Thursday. In the Eurozone and Germany, there are production, manufacturing and inflation reports. Over this seasonal period to the New Year if the news is good and markets still go up ‘Obverse Causality’ is invalid. We wish you get what you wish for, but be careful of cause and effect!
OMG (OMG) – £28m at 27.35p
Prosperous New Year
Finals to September from this diverse technology group showed three of the four key divisions were profitable. OMG are providers of image understanding products for the entertainment, defence, life science, engineering and consumer markets. The Group’s technology is used to capture the movements of actors (for the movie industry it services were used in the film Gravity, sportsmen (for video games or improving team performance), and children with cerebral palsy, rehab patients and animals (for medical, life science and research industries). Revenues were unchanged at £29.5m and the while it is not transparent adjusted operating profits improved to £3.6m from £3m. The reported profits on continuing business fell to £0.4m from £1.2m although the dividend was increased 14% to give a 1.3% yield. Despite the decline in key performance the directors are confident that the strategy is beginning to deliver. The House of Moves division had a poor year causing the single biggest impact on results by reporting a loss of £0.7m from a £0.9m profit, action has been taken to stem these losses. The £5.3m acquisition of Mayrise was completed in July and will broaden the the professional services business that provides surveying services and software. The acquisition was stated to be immediately earnings enhancing. Profits for the year to September 2014 could rebound to £3.8m to give EPS of 2.6p and a prospective P/E of just over 10x, while yielding 1.3%.
Net cash is around £7.8m after an open offer at 29p a share raised around £9m and the £5.3m acquisition of Mayrise.
Sweett (CSG) – £40m at 58.5p
Couldn’t be sweeter
A good six months was reported by international construction and property consultancy Sweett Group. The Interims to September reported an 89% increase in EPS and the dividend was increased by 67%. PBT improved by 75% to £2.8m, while revenue was up from £37.m to £44.4m and all its businesses were reported to be making a positive contribution. Sweett seem to have successfully diversified into new sectors as well as geographic markets. There were notable contract wins from energy and infrastructure projects in the UK and Hong Kong, and strong international relationships are helping the cross selling of services. The order book is worth £101m and 60% of this is work outside of Europe. Profits for the full year to March 2014 are forecast at £5.0m for an EPS of 5.7p which gives a prospective P/E of just over 10x while yielding 2%.
Helped by the disposal of a PPI contract net cash from operations increased to £3.8m from a negative £1.35m and net debt was reduced by 23% to £7.1m.
Accumuli (ACM) – £32.6m at 21p
IT security products supplier Accumuli reported solid interims to September as predicted in October’s Trading update. Accumuli supplies software that is used to rapidly process large amounts of data and 63% of gross profits is reoccurring. Revenues improved 23% to £7.7m and pre-tax profit improved from £900k to £1m. November’s complementary £1.9m acquisition of Eqalis, is expected to add £2m to revenues and £400k to EBITDA in a full year. Eqalis provides Data Analytics which helps organisations monitor, manage and gain end to end visibility of their security and operational risks and brings 135 new clients to the enlarged group. The traditionally stronger second half will be accelerated by the recent acquisition and profits to March 2014 are forecast at £2.6m which gives a prospective P/E of 16x while yielding 3%. Organic growth will continue to be supplemented with acquisitions with a focus on managed services.
Net cash from operating activities improved to £976k from £261k and net cash was £3.6m.