Energetix (EGX, 51.5p, £28.40m) Trading update has highlighted it has achieved the necessary certifications for 2 of its key developments, Pnu Power and VPhase. It has warned that the time taken for Genlec to achieve its certification, now expected in Q2 1010, will inevitably delay sales. Tight cost controls have ensured the loss before tax has reduced by £0.25m and the group will have net cash resources of £5.5m at the December year end. VPhase is in trials with potential customers including Scottish & Southern, has seen its first commercial installation with British Gas and has received a letter of intent from a Northwest based housing trust that intends to start trials. Pnu Power has gained its certification and has secured the first trial, from a Spanish based international infrastructure provider. Despite the delay Genlec believes it is on target still for equipped boiler tests in homes this winter and expects to be on commercial sale in the second half of 2010. While there is clearly a building momentum we maintain our HOLD recommendation, though news flow is clearly improving.
VPhase (VPHA, 4.375p, £30.65m) A trading update has highlighted cost controls will lead to a loss some £0.3m less than previously expected and the company will end the year with cash reserves in excess of £1.7m. The trials with Scottish and Southern are progressing with 30 units installed in consumer’s homes with another 20 to be installed as part of the UK Government’s Carbon Emissions Reduction Target trial. A letter of intent has been received from a Northwest based housing trust that intends to start trials next year; it provides over 15,000 homes across 30 council areas. We repeat our SPECULATIVE BUY, last iterated at 5.75p on 15/09/09.
Craneware (CRW, 332.5p, £84.1m), has signed a 5 year contract with Intermountain Healthcare, a non-profit, integrated healthcare delivery system based in Salt Lake City consisting of 23 hospitals, physicians, clinics & services, and health insurance plans from SelectHealth. The value of the contract has not been disclosed. Sales momentum remains strong for H1 2010. The stock is highly rated, trading on a 2010 PER of 29.9x falling to 21.8x in 2011, but the prospect of further contract wins combined with a potential strong trading update in January 2010, encourages us to retain our HOLD recommendation.
Atlantic Global (ATL, 15.5p, £3.5m), the provider of integrated business and resources management software applications, reports trading for the year ending 31 December 2009 is below market expectations of PBT of £0.3m and EPS of 0.8p. Trading in H2 has been stronger than H1. A fall in turnover from 2008’s £2.2m coupled with the maintenance on research and development cost, will led to pre-tax losses of £0.15m. The year end cash balance is expected to be slightly below FY08’s £2.2m. Atlantic continues to win new business. The order book for 2010 remains strong, with c.60% of its budgeted support revenue for 2010. However, the fall in profits to this year, encourages us to retain our HOLD recommendation.
NetPlay (NPT, 23.75p, £46.37m) has announced the completion of the Abstract Games acquisition (originally announced in February 2007) and Info-Download (announced on 2 January 2009). The group has paid the vendors of Abstract games an agreed final deferred payment of £1.1m to finalise the acquisition – and then sold it back to the vendors for £1 as previously announced in its group restructuring. The Info-Download games acquisition is completed with the payment of a deferred consideration of £0.25m with the issue of 961,538 new shares.
Intandem Films (IFM, 0.5p, £0.42m) Final results to June 2009 saw revenues £0.21m (£0.58m) with a loss before tax of £1.91m (loss £1.38m). At the period end the group’s net debt had increased to £6.0m (£4.3m). However since the year end the group has paid down the overdraft and is now in talks to remove the £7.5m loan via a “non-cash settlement”. The group has progressed well with its appointment to represent 13 films and has slashed at its cost base with staff costs down 50% and Director’s remuneration down 25%. During the year the group sold its stake in Radical Publishing for £0.45m - representing a net profit of £0.3m. Until the details of the “non-cash settlement” is known we maintain our SELL recommendation, last iterated on 28/07/09 at 0.875p.
Hot Tuna (HTT, 0.335p, £2.19m) Final results to June 2009 saw revenues of £1.14m (£1.13m) with an underlying loss before tax reduced to £1.36m (loss £3.18m). The results represent slightly lower revenues in the second half, but losses contained to broadly the same rate as the first half. Importantly the group returned to making a gross profit of £0.25m V.S. a loss last year of £0.03m. EBITDA profit (£0.The group has seen strong growth in the Children’s range in Australia which will now be introduced to the UK and Europe in 2010. The strong interest in its ranges is leading to discussions with further distributors. With a strong take-up of the 2010 ranges with the added driver of the children’s clothing in Europe and the UK we rate the shares a HOLD.
Software Radio Technology (SRT, 9.5p, £9.29m) has signed 2 deals for its AIS (Automatic Identification Systems) in an Asian country. The deal will see payments covering certain customisation related payments received in the next 9 months but then sales to meet a mandate requiring AIS on 60,000 locally registered vessels and 5,000 buoys and shore stations – starting in 2010. Still a HOLD.
Mavinwood (MVW, 0.4p, £1.9m) states its major shareholder, Geraldton, will provide £4m of working capital facilities, which complies with year-end covenants with its banking facilities with Lloyds TSB. Furthermore, the group’s Restore and Wansdyle divisions are trading in line with management’s expectations, but the Document Control Services continues to be operating in a challenging market. Peter Cox will report an operating loss for the full year and the cost of the closure of Ansa Building Services will be taken into 2009. We believe the current 2009 forecasts of EPS of 0.175p, may not be achieved. If the forecasts are achieved, the group trades on a 2009 PER of 2.3x falling to 1.1x in 2010. On this basis, we believe the stock is cheap and upgrade our Hold recommendation to a SPECULATIVE BUY.
Freshwater UK (FWUK, 19p, £2.9m), the PR and marketing services group, reports trading for Q1 2010 are significantly below expectations. Delays in projects have led to sales to decline by c.14% below management’s expectations. Management expect trading to improve for the remainder of FY2010 from anticipated income from the delayed projects and annualised costs savings of £1.4m, which will start to see a positive impact in Q210 benefits. However, as we expected, the group will not achieve 2010 PBT of £1.1m and EPS of 4.78p. The business continues to lack critical mass. Management will now undertake a strategic review. The stock trades on a historic 2009 PER of 12.4x. The share price has fallen 39% since our Sell recommendation on 16/11/09 (share price 31p). We look forward to the strategic updates in the New Year. Given the fall in the share price combined with the strategic review, we upgrade our Sell recommendation to a HOLD.
Scotty Group (SCO, 33.5p, £6.8m), has received further purchase orders for video conferencing equipment, valued at c.€0.55m, for the German and other Armed Forces. The share price has fallen 31% since our Sell recommendation on 26/10/09. The stock now trades on a 9.1x in 2009 falling 6.5x in 2010. The stock is fully valued – we upgrade our Sell recommendation to a HOLD.
Works Media (WKS, 0.42p, £0.63m), nominated advisor, Dowgate Capital Advisers, has de-registered. The recent resignation of the non-executive director and the NOMAD, combined the lack of news on the fundraising, encourages us to reduce our Hold recommendation to a SELL.
Cinpart (CINP, 14.25p, £11.20m) The group is progressing the Voltmaster product well, announcing today that it is in early talks with a UK blue-chip energy supplier regarding a partnership to develop new markets for the product. The company has raised £1m by a placing of 8.4m shares at 12.5p (a 13% discount) with the Chairman, Christopher Foster, subscribing for 2m of them – all very encouraging.
Earthport (EPO, 24.75p, £21.91m) has confirmed that the payment of £3.25m, a non-returnable fee, for the first year’s franchise by Zink Financial is expected to be received very soon, it had been expected by the end of December. Still a HOLD.