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Here we comment on announcements made during June from companies featured in Aimzine during the previous year. To see a list of the companies featured or view the original Aimzine article please visit our Archive facility.

June has been a busy month with several of these ‘featured’ companies reporting results. The star performer of the month was undoubtedly security specialist, Red24, whose shares almost doubled in three days following favourable final results. We featured Red24 in the May edition of Aimzine. Whilst Red24’s shares have subsequently fallen back on profit taking the shares are still up by approximately 50% on the month.

Red24

The Company reported a strong set of results for the year to 31 March 2009. These showed a pre-tax profit £536,000, earnings per share of 0.95 pence and an improved cash balance at £626,000. Chairman, Simon Richards commented:

'I am delighted to announce a strong set of results which has seen improvements in all of our key performance indicators. The Board has done an excellent job of stripping out unnecessary costs whilst maintaining outstanding levels of service, and has succeeded in broadening our customer base.’

'The Company is now a lean and profitable organisation where new customers can be added and supported at minimal additional cost. With new features to our products attracting a wider range of customers, the Board is confident of creating significant value for its shareholders.'

When we spoke to CEO, Maldwyn Worsley-Tonks, two months ago he indicated that the Company had been unhappy with the low share price. The outlook statement from the results clearly shows the Company is working on this issue:

‘The Board are most encouraged by the very solid progress the business has been making and would hope that, despite the negligible impact the progress has had on the share price, shareholders are similarly impressed. Since the business is now cash positive the Board has no current need to access the market for capital and potential investors will need to buy shares in the market if they wish to be part of the company. This should have a positive impact on the share price and, hopefully, should lead the market to value the business more highly. In the meantime, the Board is considering what practical steps can be taken to draw the attention of potential investors to the company. A first step has been to appoint Seymour Pierce as Nomad and Broker to the company, which took effect last month.’ 

Whilst these results have been slightly enhanced by currency movements, Red24 are certainly trading well with apparently good prospects. Even after the recent rise the shares still trade on a low single figure P/E.

ZOO Digital

Red 24 are certainly trading well with apparently good

prospects

Another company reporting favourable results was ZOO Digital. In their final results to 31 March 2009 ZOO reported that revenue had doubled to £6.6 million and that pre-tax profit had increased from a loss of £1.9 million in the previous year to a profit of £0.2 million. Cash at the year end was a healthy £1.0 million. In the year the Group made an exchange translation gain of £1.4 million which flattered the figures somewhat but this was nonetheless a strong performance.

 ZOO Digital’s results statement concluded by saying:‘Based on continued strong demand for ZOO's products and services, the Board remains very positive about the opportunities for the Group and believes that 2009 will be another year of growth for our core business. Revenues are now almost all denominated in US dollars and trading in the current year has started well, with turnover improved over the same period in the previous year and profits significantly higher when compared on a fixed currency basis. We look forward to a successful outcome for the year as a whole and providing a further update to the market at the time of our AGM on 16 September 2009.’ 

ZOO seem to be making good progress showing strong organic growth from their business with the Hollywood Studios. We asked Stuart Green, CEO of ZOO Digital, if he could explain further about the Group tools currently used by the Studios. Accordingly, Stuart has agreed to provide Aimzine with an article in the not too distant future – watch this web site!

Private & Commercial Finance Group (PCF)

     Zoo Digital CEO: Stuart Green

PCF described their results for the Year to 31 March 2009 as a ‘robust performance’. The results showed that profits had fallen from £963,000 last year to £263,000. Much of this fall was however due to a non-cash write down of the Group’s interest rate derivatives.  PCF’s share price has gained 20% since the results were released.

PCF provides finance for small business and consumers. The Group is being impacted by the economic conditions since they are being charged higher margins and fees by their funding banks. Furthermore the Group has seen an increase in arrears in both its Private and Commercial divisions.

Nonetheless, the Group does seem to be weathering the downturn well and it is benefitting from many of its competitors leaving the market. This has enabled PCF to improve the quality of the business they write. The outlook statement summarises the Group’s position well.

‘Although we are realists and expect the economic environment in the coming months to remain challenging, we believe that some areas of the economy are showing signs of improvement, albeit that funding shortages and increases in unemployment and business failures will persist for some time to come. We have products which are very much in demand, a robust portfolio, supportive banks, firm control of costs, a strong Board and a very capable and experienced team. The improved competitive environment, coupled with the more prudent lending terms now being offered by our remaining competitors is highly advantageous to us. The business we are currently writing is of exceptional quality which augurs well for the future. In short, we have all the resources and qualities needed to manage the business through the remainder of the recession and to prosper in the long-term.’

Certainly when we eventually see an economic recovery PCF will be extremely well placed. However, it may be quite a while, in our view, before the credit and second hand car markets improve.

Synchronica

when we eventually

see an economic

recovery PCF will be extremely well placed

Last month we featured mobile email specialist, Synchronica. On 12 June the Company announced a £4.7 million placing along with the signing of a collaboration agreement with third parties to design, build, market and sell low cost mobile devices ('LC Devices') to be bundled with the Company's Mobile Gateway product. Carsten Brinkschulte, Chief Executive Officer of the Company will participate in the Placing, subscribing for 2,000,000 new Ordinary Shares of 1p each at the Placing Price of 2.5 pence.

The company commented on the collaboration agreement: ‘Final discussions are taking place in respect of a definitive Collaboration Agreement. It is anticipated that the Collaboration Agreement will be finalised and signed before the General Meeting. The Collaboration is likely to be for an initial term of four years. ‘ 

‘The Company believes that the Collaboration represents an exceptional opportunity for the Company to benefit from substantial additional revenue streams it can receive as a result of the Royalties from the sale of the LC Devices. In addition, the Company believes that the sale of the LC Devices will trigger further revenues from related sales of Mobile Gateway licences, professional services, support and hosting services. The Company considers that the Collaboration will enable access to a large number of customers resulting in potentially high volume sales of the LC Devices on a worldwide basis. As a result, the Company believes that the Collaboration will further improve its competitive position and increase revenues from its core business, particularly in emerging markets where the LC Devices are expected to show a strong competitive advantage.’ 

This is an interesting move by Synchronica and could help it to capitalise further on the expansion of mobile email. There will however be extra costs in the short term and the new placing shares represent considerable dilution, being 33% of the enlarged share capital.  Equity Development issued a note in connection with this news. The note highlights the considerable potential of this deal with global handset sales  around 1 billion per year. Equity Development has however, reduced its forecasts not only in respect of the short term costs for this agreement but also because of recent adverse currency movements. Read the full Equity Development note here

We look forward to reporting further on this agreement in the near future.

Scotty Group

global handset sales around 1 billion per

year

On 8 June Scotty issued a Trading Update which included details of a further phase of their EuroCopter project worth 8.4 million Euros over the next three years. However, the Group also reported that the speed of conversion of some of its orders has been slower than expected and that consequently the pre-tax profit for the current year will be less than last year.

The statement went on to say:

‘The projects in question are not lost to competition or cancelled; they are merely delayed beyond the 2008/9 financial year-end and we anticipate a corresponding beneficial effect on next year's results.’

'Whilst the speed of conversion to orders means that less revenue than expected will fall this side of the financial year-end on 31 July 2009, nonetheless we are extremely pleased with the number of new projects that are in the course of negotiation and the positive progress being made on these contracts.’ 

Shareholders were understandably disappointed by this news and the shares have fallen during June eroding much of the gain made in the year to date.

Spending by governments is bound to come under pressure in the current economic environment and delays reported by Scotty are not surprising. Aimzine believes that Scotty Group is nonetheless well positioned with exciting potential over the medium term and we will accordingly continue coverage of the Group.

Aimzine believes that Scotty Group is .... well positioned with exciting potential

Image Scan Holdings

This x-ray imaging specialist issued interim results for the six month to 31 March 2009 on 17 June. These showed a loss of £355,000 on reduced revenue of £743,000 (from £1.12 million). Period end cash was £929,000.

Gilbert Chalk, Chairman of Image Scan, commented:   

'Sales in the period suffered from a low order book at the beginning of the financial year, coupled with a downturn in sales and enquiries from the industrial sector. Sales of security products have remained stable, largely on the back of the follow-on Chinese contract which is currently in the process of being fulfilled and delivered. The Company is focused on developing additional routes to key markets in order to capitalise on sales into territories where high performance is the priority.  As part of this process we have appointed an additional sales executive with strong experience in these major potential export markets, and Brian Emslie has joined the Board to further develop and bring a new lead to the sales and marketing strategy for the Company.'

The Company had stated in its AGM statement in March that it had experienced a slow down in orders and hence the weak results were not surprising. We wish the Company well in securing the much needed orders over the coming months.

we wish the company well in securing the much needed orders over the coming months

Imaginatik

This ‘provider of enterprise collaboration software’ issued a good set of results for the year to 31 March 2009 which showed turnover up 45% to £4.58 million along with a maiden operating profit of £0.13 million. Cash and cash equivalents at the year end were £1.14 million.

The Company’s recently appointed house broker, Arbuthnot Securities, has subsequently issued forecasts for Imaginatik. These show the company at around break-even in 2010 and moving to a pre-tax profit of £0.33 million in 2011 with further growth therafter. At the current share price of 5 pence Imaginatik has a market capitalisation of £6.6 million.

Dowgate Capital

The board of Astaire Group (formerly Blue Oar, Corporate Synergy, Abingdon Capital and Mountcashel – all company names from the last seven years) has made a formal cash and shares offer for Dowgate. The offer values Dowgate at approximately 7.5 pence per shares and has not been recommended by the board of Dowgate. Dowgate issued an RNS on 22 June saying that they were assessing the terms of the offer and a further announcement will be made in due course. Perhaps if the offer goes through it will give Astaire Group the opportunity to change its name – again!

Astaire Group were also in the news this month because they were fined £225,000 and censured for breaches of AIM Rules in their role as Nomad to Wothington Nicholls Group. Read the full Stock Exchange Disciplinary Notice here.

Perhaps if the offer goes

through it will give

Astaire Group the opportunity

to change its name – again!

In Brief

Dawmed issued a short statement on 11 June to say that talks in relation to a potential offer for the Company have terminated. Having reached 12 pence at one point the shares have fallen back to 6.5 pence since this announcement. Datong announced that it was delaying the issue of its Final results until 28 July as it awaits the outcome of a hearing into its on-going patent infringement litigation. Aimzine will comment on these results in next month’s edition.

STOP PRESS: Westminster Group issued a statement on 30 June announcing that it had raised £1.2 million by the issue of convertible loan notes. A general meeting will be held on 23 July to approve the issue. Westminster gave the following reasons for the capital raising:

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