There are three interlinked euro crisis; sovereign debt, banking and balance of payments

“There are three interlinked euro crisis; sovereign debt, banking and balance of payments” .

European Economic Advisory Group


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Last week …

enthusiasm could be attributed to the US. The FTSE 100 improved 1.6% to 6484 with the FTSE 250 up 2% and the AIM All Share at 748 increased 1.2%.The Dow Jones  reached a succession of records highs helped by an impressive 0.2% fall in Unemployment to 7.7%,  also optimism that the economy can grow out of its fiscal cliff and the seeming continuance of QE.  Life in the UK and Eurozone is less rosy, although both interest rates remained unchanged.  UK construction output was reported to have toppled by 7.9% year-on-year, although the Service Sector’s PMI at 51.8 was the right side of a triple dip recession.

This week …

a batch of Euroland Economic data will be reported with Industrial Production on Wednesday preceded by Inflation and Balance of Trade. On Friday the US report Industrial Production with Inflation on Thursday were we hope one is making enough lids to put a cap on the other.  Markets seem set to stand still.



Company Reports

Belgravium Tech (BVM) – £3.28m at 3.35p

Acquisition – Target

Finals to December 2012 reported a 22.3% fall in revenues to £8.7m with a 61% decline in profits to £336k as the large contracts of 2011 were not repeated. Belgarvium’ gross margins are 55% as they have developed from a provider of hardware to a systems supplier of solutions and services for mobile data capture applications to a wide variety of industrial sectors giving operationally leveraged to revenue growth. Expansion from the core area is illustrated by the recent contract with a major fuel retailer for vehicle tracking and driver behaviour monitoring systems. Geographic expansion continues with the fitting of an aircraft refuelling system in South Africa and JV has been agreed with a local partner to develop the Japanese market. Further product development is underway to both improve utility and reduce production cost of existing systems. Profits for the December 2013 year end are forecast at £0.6m on revenue of £9.5m for an EPS of 0.51p which gives a prospective P/E of 6.5x, while yielding 2.2%.


There is net cash of £1.3m which is around 1.28p per share. Organic growth is the main strategic objective but selective acquisitions are being considered. The largest shareholder is the chairman with 9%.


Wildhorse Energy (WHE) – £18.6m at 6.62p


An operational update from this ASX and Aim duel listed underground coal gasification company reported that the (UCG) project in Hungary has multiple coal deposits so it should have a long potential life. The strategic objective is to become a leading supplier of gas feedstock to power stations in Central and Eastern Europe.  The UCG process has not been used in Europe and involves directional drilling and the production of syngas that be used to generate electricity. The first project will be to develop a 50MW power plant with a partner costing €90m. This should show the commercial viability of the project and future projects could be larger scale and there should be much more interest from other central European countries with appropriate coal assets.

Wildhorse has been applying for coal resources in Poland and the Czech Republic in order to build up a portfolio of assets that will increase in value when the potential is recognised. There is also a 77m LBS uranium interest in Hungary and a joint venture is being sought with the government to find a strategic development partner.


At the end of January there was $6m which the estimated working capital for 12 months.


Access Intelligence (ACC) – £8.14m at 3.5p

Near the Hockey Stick?

The year to November 2012 was always going to be a transformational one for Access Intelligence as it rebranded its products and invested in a new development centre. Revenues grew 11% to £8.05m  with two-thirds re-occurring due to the company’s SaaS (Software as a Service) model.  As contracts tend to be for three years it means that Access has significant contracted revenues that have not been invoiced. This figure doubled to £5.5m by the end of the financial year and this will become revenues over the next two years. The reported loss increased from £279,000 to £497,000, although the previous year included a £299,000 impairment charge. The latest figures include the additional costs of the development centre in York. The incident management software provider AIControlPoint is the fastest growing part of the group but it remains the smallest with revenues of around £500,000. As well as oil and gas, additional sectors, such as leisure, are starting to use the software.  AICloud, which is moving from a hardware-based business to a hosted cloud services provider, is also a significant revenue generator but there is scope for margins to continue to improve. Additional marketing investment has helped AITalent to generate more business and lead times are shortening.  There should be increasing cross-selling benefits showing through in the coming years. Profits of £0.5m are tentatively forecast for a prospective P/E of 23x and a new broker as recently been appointed. A reduced dividend is being paid to illustrate confidence.


Net cash is £2.8m but it is likely to be an outflow in the next two years as Access continues to invest in software development.

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