US Investors poured more funds into equity markets than at any time since the financial crisis in 2008 with $23.12bn of net income in the 3 months to July.
Last week …
… the FTSE 100 improved by 1.6% to 6,631, the FTSE 250 increased 0.8%, while the Aim All Share at 718 was virtually flat at 0.4% higher. UK economic news steadily improved with a slight fall in Unemployment, Inflation (CPI) increased from 2.7% to 2.9% which is at a slightly lower rate than expected. The Ernest & Young Item Club, revised UK GDP up to 1.1% from 0.6% for this year. Elsewhere, there was good news from China as its GDP eased to 7.5% rather than falling to 7%. US Consumer Spending increased at a more moderate 0.4%. Euro-gloom as German Economic Confidence Index fell to 36.3 when 39.6 was expected.
This week …
… the UK preliminary GDP figures for the second Qtr is announced on Thursday. A growth rate of faster than 0.6% will be encouraging. The CBI Trends Surveys on Wednesday are always worth a glance. Thereis ‘lack’ of Confidence Figures from Eurozone on Tuesday, but increasing US Confidence is likely to be reported on Thursday, alongside Initial Jobless figures. The flat trend may be interrupted with a small rise this week.
Ideagen (IDEA) – £email@example.com
Compliance-based information management software provider Ideagen is set for further acquisitive growth. For the year to April 2013, revenues improved 63% to £6.51m through a combination of organic and acquisitive growth. Underlying pre-tax profit jumped from £1.08m to £1.87m. This is despite the loss of a US VA Contract were there is a £2.1m impairment of acquisition goodwill of Proquis, which had the VA laboratories software contract. Healthcare is the largest generator of revenues followed by aerospace and defence. Ideagen supply Compliance based Information Management (‘CIM’) solutions. CIM is focused on the capture, storage, retrieval and distribution of ‘unstructured’ and ‘semi-structured’ information such as documents, electronic forms and content, email, video and scanned images. Its effective management is a corporate necessity in highly regulated sectors that have a high consequence of failure. Last year’s £2.5m acquisition of healthcare software provider Plumtree brought in additional in management and a client base. Recurring revenues are running at £3.4m (53%) a year. A deal with medical devices company Abbott Laboratories will provide additional recurring revenues from software for pathology results. Assuming no further acquisitions profits to April 2014 are forecast at £2.6m for an EPS of 1.6p and a prospective P/E of 13x .
In December 2012 £6m was raised at 19p, which after part funding the Plumtree acquisition leaves net cash of around £6.2m to fund further acquisitions.
Amino Technologies (AMO) – £49m@89p
Profits Fast Forward
Interim revenues were flat but profits leaped. In the six months to May 2013, revenues were unchanged at £20.1m, while underlying profit improved 735% from £206k to £1.69m as there was a 10.8% increase in gross margins to 46.2%. That excludes a duties rebate of £1.65m and restructuring costs of £709k. AMO provide digital entertainment solutions for IPTV and set-top boxes. Supply chains have been shortened and the comparative margins were low because of a low margin contract which was completed in that period. Amino has boosted marketing to win contracts in North America and the lower specification product is winning business in emerging markets. A significant European contract has been delayed. Amino continues to develop new products and the latest focus is on an Intel-based media gateway Full year profit is forecast to improve from £2.9m to £3.3m for an EPS of 6.3p which gives a prospective P/E of 14x, while yielding 3.8% .
Cashflow from operations improved by £1.8m to £3.9m and there is net cash of £18.2m which is nearly 40% of the market cap.
Access Intelligence (ACC) – £6.76m@ 2.9p
Interims to end of May seem to under-state the progress made by this supplier of Software-as-a-Service (SaaS) solutions for management of governance, risk and compliance. Revenue increased 6% to £4.2m of which 72% is reoccurring. Losses after £0.7m development cost fell from £216k to £30k but contracted revenue is reported to be up 25% to £5.5m which means at the 4.9% net margin Access are operating profitably for the first time since 2009. The investment made in product innovation, sales and marketing and the Development Centre in York is producing results and expected to lead to increased revenue. There is an undercurrent of growing demand for its solutions as a result of the heightened pressure, from the public, government and media, to ensure responsible corporate governance and compliance with industry regulations. The solution is aimed at risk mitigation, cost reduction cost and improved productivity. The November 2013 year-end should be profitable, a point past which software companies add accelerated value.
Cash flow improved to £278k from last year’s outflow and net cash is £0.5m after deducting debt from cash balances of £2.2m.