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Epic & Msn data

Epic	UKX
Time:	15:46:41
Mid Price:	5120.38
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Fifty Two Week High:
Fifty Two Week Low:
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Period & price data

Period	Price
Now:	5120.38
3 Months ago:
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Additional information

Additional	Information
Market:	LSE
Sector:	General Financial
Epic:	UKX
News:	Latest news
Web Site:	Hoodless Brennan
Other Articles:	05-02-201004-02-201003-02-2010

These are flash views from Hoodless Brennan PLC and are not investment advice. Please ensure that you have read and understood the risk warnings below or by clicking here.

Hoodless Brennan Daily Cmall Caps News Flash including Accsys Tech, Savile Group, Intelek, AdEPT Telecom, NEOVIA, Rubicon Software and others

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Savile Group (SAVG, 69p, £11.0m) has acquired the right to take a controlling interest in Ashbourne Assessment Systems Limited, the provider of assessment, selection and training services to the public sector. Savile has agreed to provide a loan facility of up to £0.3m, with the right to acquire more than 50 % of Ashbourne on or after 1 July, 2010. The option to acquire a majority stake is at a valuation of £1m adjusted by actual performance of 2009 and 2010. The stock trades on an average PER of 7.9x with a compelling yield of 3.6%. We retain our BUY recommendation.

 

Intelek (ITK, 15.5p, £13.5m) Interims to 30 September reports sales down 10% to £16.9m (H109: £18.8m), adjusted pre-tax profits and EPS down 35% to £1.3m (H109: £2.0m) and 1.07p (H109: 1.64p) respectively. The interim DPS remained flat at 0.165p. Trading in Q1 was slow followed by a much stronger performance in Q2 across all three divisions. The order book stands at £12.5m. The satellite communications equipment division (Paradise Datacom) performed in line with the previous year, reporting a 2% increase in sales and maintaining margins. The microwave components and manufacturing services (Labtech) performed broadly in line with the previous year, reporting an increase in sales in specialist defence and communication companies, whilst leaving behind the commodity telecoms sector. As expected, Aerostructures (CML) reported a dire H1 due to the reduction in the corporate jet market, which appears to be levelling off, but the recovery is expected to be slow. Net debt rose to £5.1m at the end of September due to the pension transfer programme, restructuring actions and an increase in working capital, following an enhancement in terms for some customers and suppliers. Management expect to reduce net debt by the end of the year. The strong order book provides is with some confidence for the future. The market forecasts 2010 pre-tax profit of £3.3m and EPS of 2.8p, which puts the stock on 5.5x. Assuming DPS is maintained at 0.41p, the group offers a yield of 2.6x. We retain our BUY recommendation and increase our target price to 20p.

 

Allocate Software (ALL, 56.5p, £25.27m) NHS Professionals, the largest provider of flexible staff managed services to the NHS, has chosen Allocate Software’s e-rostering system, with first implementation in early 2010. We remain fans and repeat our BUY recommendation, last iterated on 09/09/09 at 55.5p, with a 68p price target.

 

Oxford Instruments (OXIG, 221.25p, £109.32m) Interim results to September 2009 highlighted flat revenues of £92.8m (aided by £12.3m of currency movement) but adjusted pre-tax profits of £2.8m (£2m), an order book of £133.9m (£97.5m), EPS of 4.1p (3.4p) and a maintained interim dividend of 2.4p.  Forecasts to March 2010 of £10.7m PBT with 14.2p EPS and 8.4p DPS put the group on 15x prospective PER with a 3.8% yield. Despite a healthy rating and the group reaching our BUY price target of 220p (last iterated 02/10/09 at 192.5p), we see upside towards 18x PER – or a yield of 3.2% - a raised target price of 256p.

 

AdEPT Telecom (ADT, 23.5p, £4.95m) Interims to September 2009 saw revenues fall to £13.01m (£14.76m) with underlying pre-tax profits of £1.83m (£1.75m) and EPS 4.9p (5.4p). Results suggest forecasts will have to rise from the existing £0.55m PBT with 6.5p EPS for the year to March 2010 towards the 8p EPS. Despite net debt of £10.23m we see continued upside towards 32p. We repeat our BUY recommendation, last iterated on 24/09/09 at 24p.

 

Accsys Technologies (AXS, 0.5525p, £86.39m) Interims to September 2009 saw revenues fall to €9.3m (€17.9m) with a pre-tax loss of €8.0m (profit €0.2m). The group ended the period with net cash of €9.5m (€17.5m at March). The group reduced headcount from 126 to 102 while still adding an additional distributor – taking the total to 12 distributors Sales of Accoya wood were up 51% but the second quarter was hit by a planned shut-down to add improvements, 335 additional capacity, and an automated wood handling system with the plant re-opening in September, resulting in first half sales up 17% on the same period last year. Sales are up significantly in H2 with October setting a new sales record.  

 

NEOVIA (NEO, 52.25p, £62.7m) NEOVIA Financial announced 5 more contract wins for its payment suite with trade associations and professional bodies. The contracts are with; the Association of MBAs with over 9,000 MBA students and graduates; BCS the Chartered Institute for IT, with over 70,000 members; The Chartered Institute of Taxation; The Institute of Acoustics with 3,000 members and The Royal College of Psychiatrists. No guidance is given as to potential turnover contribution and it seems likely that these will add relatively modest amounts to the top line, but in terms of achieving increased leverage this seems reasonable indication of steady progress. SPECULATIVE BUY.

 

Uniq (UNIQ, 38p, £43.9m) is in the process of disposing the Group’s Netherland Business Units to Benelux investment group, for €20.0m (£18.0m), payable on completion. The net cash proceeds (after costs of approximately £2m and settlement of £0.9m of outstanding provisions) will be used to eliminate Group net debt of £2.5m with the balance being applied to shaping the long term future of Uniq whilst having regard to the significant UK pension deficit. We retain our SPECULATIVE BUY recommendation.

 

Rubicon Software (RUBI, 1.75p, £0.7m). Rubicon Software Group, a provider of CRM solutions announced results for the year ended 30 June 2009. This was a difficult period for the company following the loss of 3 significant clients in the financial services sector at the end of 2008. As a result sales of £874,000 were down 29% on the previous year's £1,231,000. However, the group has broadened its markets, won business in new sectors, and reaffirmed its relationship with key client First Response Finance Limited (FRF) worth £1m over 5 years (with £300,000 paid up front). The company also received an investment from new clients and strategic partner ISA with £50,000 received on 22 April 2009. EBITDA loss reduced to £2,000 (2008: EBITDA loss £123,000). Pre-tax loss for the year was down to £194,000 (2008: £262,000). Operating costs in the year, excluding depreciation and amortisation, reduced by £478,000 (35%) to £876,000 largely as a result of reduced headcount and renegotiation of rent. Bad debts of £17,000 compared to £65,000 last year. The Group loss in 2009 was £194,000 (2008: £137,000) the difference relating to prior year tax credits that were not repeated in the current year. We were positive on this stock following the deal with Information Systems Associates (ISA) the US based IT asset inventory and audit services company announced earlier this year. The deal included a strategic investment by the latter which has become a major shareholder and it will also be granted up to 5m warrants at 5p per share, subject to the delivery of £5 million of revenue to Rubicon from ISA over the next three years. With the difficulties of the last year behind them the group looks to have a reasonable platform from which to accelerate growth and with underlying losses reduced the cash flow position was further shored up after period end by the £300k received from FRF we maintain our positive stance.

 

Cropper (James) (CRPR,  151.5p, £12.8m) Revenue of £35.89m compared to £37.68m. EBITDA £3.7m versus £1.7 million. EPS 14.1p (H1 2008: of 2.9p). The dividend was raised to 2.2p from a comparative of 1.1p. Net debt is well in hand at just over £1m representing gearing of only 6%. It is anticipated that Speciality Papers second half turnover and volume will be down marginally down on the first 6 months and the rising cost of pulp will also dampen profitability. Mitigation is found in energy costs which are expected to be significantly lower. It is also expected that the Paper Mill Shop will incur a loss for the full year similar to that of last year (£388,000), which partially explains the subdued earnings outlook for the full year when compared to the first half performance. While the group is still experiencing challenging times, the uplift in dividend bodes well for confidence in the outlook and the full year outlook does not look too demanding. Since we last wrote the forecasts have moved from 12.7p of earnings to 16.3p. However the share price has also performed strongly in that time and the company looks reasonably fully valued at around 9.5x present estimates with a prospective yield of around 3.5%. There could be some profit taking following a good recent run. We maintain our HOLD for now.

 

Imaginatik (IMTK, 8.25p, £13.14m), the provider of enterprise collaboration software and services for innovation reports interims to 30 September 2009. Sales were up 26% to £2.3m (H109: £1.8m), driven by new customer acquisition and increasing average contract value. However an increase in spend on marketing and sales led the group to deliver an increase in pre-tax losses of £0.57m (H109: £0.22m). Trading in H1 2010 started off slower, but towards the group began to gain momentum and has signed multi-year services and software contract with leading organisations. Annual recurring revenue was up 8% to £3.2m, providing the group with greater revenue visibility. In August 2009, the group raised £1.58m (gross) through a placing at 6p, for working capital and investment in sales and marketing. Imaginatik ended September with net cash of £1.33m. Debtor and creditor days remain high. Despite the business performing traditionally better in H2, we are cautious about the current 2010 pre-tax losses of £0.03m and EPS of -0.02p. In order to achieve current market estimates, the group will need to report pre-tax profits of £0.54m in H2, a 2.6x increase on H209 (H209: £0.15m) We believe there is scope for downgrades.  We believe potential contract wins will help sustain the share price. We retain our HOLD recommendation.

 

Byotrol (BYOT, 33.5p, £28.04m) Interim results to September reflected the successful trials of anti-microbial technologies at the Manchester Royal Infirmary with sales up to £2.00m (£0.39m) with a reduce loss before tax of £0.59m (loss £1.46m). Our recommendation, Speculative Buy on 06/10/09 at 33.5p, is reducing to a Hold due the note of caution regarding visibility in Q4. The group used some £1.19m cash in the first half, though that reflects reduced margins due to problems sourcing suitable bottles, and with £1.68m net cash at the interims there is a possibility the group may need additional financing to avoid a qualified report and accounts – so HOLD.

 

Redhall Group (RHL, 141p, £41.7m) has secured new contracts with Sellafield and the Atomic Weapons Establishment, for a total value of £10m. The group will manufacture specialist nuclear storage containers for the Sellafield Fuel Handling Plant and infrastructure equipment for two new build projects, principally Evaporator D for Costain, for £3.3m. The £6.7m contract with Atomic contract includes £4.7m of turnkey design, build and upgrade of control and electrical systems in the radiological areas and a £2m three year cross-site infrastructure framework agreement. The contract wins increase the size of the order providing greater revenue visibility. The stock trades on a 2010 PER of 8.3x supported by a yield of 3.1% in 2009. We retain our HOLD recommendation. 

 

Arena Leisure (ARE, 26.75p, £97.42m) Statement for 4.5 months (July to mid November) of the second half confirms trading has been in line with expectations. With attendances proving resilient (567,000 V.S. 564,000 to end of October) the company has benefitted from additional fixtures in this period against the same period last year (106 V.S.95). Hospitality has seen a decline to 34,000 (48,000) to October end with some of the impact offset by reduced operating costs and by using in-house catering. Income from media rights is ahead due to the additional features and a 4% contracted price increase. The new contract with SIS that replaces the existing one in 2012 will result in an additional £10m of profitability. The Lingfield Park Marriott Hotel and Country club is progressing well and is on track to open in May 2010. The group is trading well within its facilities, having used £42.6m of £59m available. Forecasts around 1p and 1.1p for 2010 put the group on a significant premium to the sector – hence our continued HOLD.  

 

Ffastfill (FFA, 7.625p, £30.25m) Ignis Asset Management has chosen Ffastfill’s Eclipse for Listed and OTC derivatives processing. Forecasts to March 2010 are for £1.5m PBT with 0.4p EPS - putting the group on a 19x prospective PER. Too high – we move from a Hold to a SELL with a 6p price target.

 

Havelock Europa (HVE, 35.5p, £13.68m) Trading statement that encompasses the first 10 months to October highlights orders were down 31% to £81m (£117m). Retail interiors have continued to decline at the same pace as seen in the first half, the rate of decline in point of sale has moderated in the second half and the education has shown considerable growth, up 35%, thanks to the Building Schools for the Future programme. Revenues for the first 10 months are down 24% at £82.2m (£108.6m). The outlook for the year appears to be fairly mutes, thus the group now expects results to be below market expectations - that had stood around a PBT of £2.4m with 4.7p EPS. Our previous recommendation, Sell at 44p on 28/05/09, had put a 34.5p price target, which we now drop to 30p based on some 3p EPS. The group does expect a better year next year – thanks primarily due to cost savings. SELL to 30p.

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