Optare (OPE.L, 7.125p, £16.6m) has signed an agreement for the exclusive rights to Hardstaff’s dual-fuel conversion system, for the use in both new and existing passenger service vehicles. The Dual- Fuel system enables engines to run on a mixture of diesel and bio-methane gas with benefits in terms of reduced fuel cost and considerably lower emission and noise levels. Furthermore, the group has won its first contract, to utilise the Dual-Fuel System, for the conversion of 11 of Lincolnshire County Council’s existing bus fleet. The value of the contract is small and therefore has not been disclosed. We retain our HOLD recommendation.
Infoserve (INFS, 9p, £1.7m), will receive additional funding from David Hood, the group’s largest shareholder and non-executive, totalling £0.8m, at an interest rate of 10%. The funding will comprise of a £0.55m loan and a further facility of £0.25m, should the group’s overdraft facility be withdrawn. The monies will be used for working capital. As part of the proposal, Infoserve is proposing to issue 40m new shares at an issue price of 5p in satisfaction of loans to the value of £2m, currently owing by the Company to David Hood. Following the latter, Hood will own 82.84% of the company, up from 46.86%. Furthermore, the group reported it will cease to be an Authorised Google AdWords Reseller, as of 7 January 2010. This is extremely disappointing news and we believe it will have a negative impact on sales going forward. The lack of free float combined with the cessation of contract encourages us to retain our SELL recommendation.
FUSION IP (FIP, 34p, £14.3m) The university commercialisation company announced it has recently completed a licensing deal with a leading global orthopaedic company for orthopaedic planning software. The software was originated by the Medical Physics team at the University of Sheffield. The deal, which was worth just over £0.8m in total resulted in a one-off licence fee income for Fusion of just over £0.4m. This is the first major licence fee licensing generated since the expanded agreement with University of Sheffield IP which gives Fusion the right to license out any University originated IP for half of net income . Fusion is targeting breakeven in 2011/12 and is well underpinned by cash. As a one-off deaf this is relatively small and there will be no recurring income which would be the ideal. Yet monetisation at this stage which aids overhead recovery is to be welcomed and vindication of its IP inventory also bodes well.
Staffline (STAF, 51p, £10.83m) Reports that trading in the second half since June has been strong due to a number of new business wins and that cost cutting will help the group achieve a full year outcome that is now expected to be ahead of expectations. Existing forecasts are for £3.1m - so we would expect these to rise to £3.4m or so with 11p EPS and at least a 2.9p DPS for the year, putting the group on a 4.6x prospective PER with a 5.7% yield. We repeat our BUY recommendation, last iterated on 21/05/09 at 47p, with a price target raised from 60p to 71p.
Novera (NVE, 65.5p, £94.86m) Has announced the expected process of seeking stakes in existing generating wind farm assets to fund further expansion is underway and the group has received a good level of interest. The group has received an unwanted bid approach from Infinis. We maintain a HOLD recommendation during the bid period.
Matchtec (MTEC, 220p, £51.22m) AGM statement highlights stability in the permanent placing activity while contractors are 6% higher than the previous year. Q1 trading so far confirms the board’s expectations for the year to July 2010. We maintain our recommendation of BUY, iterated at 191.5p on 08/10/09, with a 242p price target.