we may have reached the bottom of how low fixed rates deals can go

“A raise in lending cost seems likely and that we may have reached the bottom of how low fixed rates deals can go.”                                John Charcol, Mortgage Brokers Weekly          

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Last week …

monetary uncertainty spooked markets which took fright from a potential reduction in US QE and real Chinese monetary tightening. The FTSE 100 fell 3% to 6117, the FTSE 250 was off  2% while the AIM All Share at 697 fell 2.4%.  There was a higher than expected increase in UK, RPI Inflation to 2.7%,while Retail Sales increase by 1% to 2.1% which was much better than expected.

This week …

 on Thursday the final measure of  UK GDP for the First Quarter will be reported as well as the PMI for Retail, while a Consumer Confidence Survey is reported on Wednesday. There is a Eurozone two day Summit, this week where the tone maybe to turn down austerity. In the US following Consumer Confidence, on Tuesday and GDP on Wednesday will be Jobless figures on Thursday. We keep thinking markets are going to improve so eventually we could be right.

                                                                                                  

Company Reports

UBC Media (UBC) – £4.6m at 2.25p

Ready to Run

The finals to 31 March from this multi-media content and Services Company reported an 18% increase in turnover to £3.76m. If losses from discontinued activities are stripped out the EPS would be -0.46p. The headline reduction is £3.63m loss down to £1.1m and operating losses 7% lower at £0.55m. Following the new strategic direction revenues from Video Media and Content increased 5x which is 22% of turnover. An example of content revenue is the entertainment news service developed for radio stations being videoed and distribute to Yahoo on an advertising revenue sharing bases. Sky Arts television revenue more than tripled to over £600k, as UBC produced 15 hours of live music television from the Cambridge Folk Festival. The Interactive division’s revenues were flat, as UBC move towards large, strategically important international clients which should increase in revenues from mobile software and services, a potentially strong growth area. The expected growth in the Contend and Interactive revenues mix illustrate the new strategic direction and these revenue streams have no incremental cost attached. Break-even is insight for the current year to March 2014. This organic growth is supported by an ambition to use its cash pile to acquire a profitable new media business.

Financials

At 31 March 2013, the Group had no debt and cash in the bank of £2.57m down from £3.49m.

 

Redhall Group (RHL) – £14.6m at 49p

Dispute Dents Prospects

Engineering and nuclear products supplier Redhall Group interims reported  a reduction in both revenues and profit. The order book is, however at record levels of £152m up from £103m and with £40m for the current year.  In the six months to March 2013, revenues were 5% lower at £56.6m as an improvement in the engineering division was more than offset by lower revenues in nuclear and manufacturing. Underlying profit fell from £1.34m to £574k. The main profit decline was in manufacturing but there are £11m of orders in the oil and gas sector for blast decks and panels. Profits to September 2013 are forecast to increase 13% to £2.2m for an EPS of 6.4p and a prospective P/E of 7.2x.

Finance

Net debt was £18.6m at the end of March 2013. There is a dispute with a debtor over £9.8m which remains hopeful but timing may not be by the year-end. The bank facilities are for £22m loans with a £6m overdraft.

 

OneMediaIP (OMIP) – £6.24m at 9.75p

Right Movies

In the six months to April 2013, this audio and video rights acquirer increased revenues  by  32%  to £1.33m, while pre-tax profit excluding  to cost of moving to AIM  improved  28% to £263k. Audio still accounts for 95% of revenues but movies and video are increasingly important. The £1.92m cash pile and Aim listing should allow One Media IP to buy larger catalogues with significant revenues.  Recently video rights were acquired to the nineties version of The Adventures of Skippy which has 38 episodes and a feature length edition. Also acquired was Alien Autopsy content and more than 400 hours of music documentaries, including David Bowie, Mac Bolan and to be distributed via Youtube.  These rights cost an initial $100,000 plus ongoing royalties. Profits for the October 2013 year-end are forecast at £0.5m which would give a prospective P/E of 16x with a nominal yield of 0.6%

Finance

Net cash was £1.92m at the end of April 2013 and this will help it finance further rights acquisitions. One Media IP moved from ISDX to Aim in April and raised £750k at 8p a share.

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