HB Markets Daily Smallcap Newsflash including Abbeycrest, Arena Leisure, E2V, Nexus Management and others

Abbeycrest (ACR, 7p, £5.15m), the international jewellery designer and manufacturer, has paid £0.95m to Agilo Master Fund in full and final settlement of all amounts due to Agilo and releasing all related security over the Group's assets. In addition, the group has repaid in full £1.6 million which was due to HMRC. Trading for the year ended 28 February continued to be steady. We retain our HOLD recommendation.

ANT (ANTP,  30p, £7.29m) Finals to December 2009 saw revenues rise to £4.7m (£3.74m) and a reduced loss before tax of £0.63m (loss £1.01m), reflecting a move into operating profits in H2 of £0.18m. During the period it signed Galileo into the high volume digital TV arena of satellite and cable and started shipments to the Free to Air market in Germany. With net cash resources of £5.05m, reflecting usage of just 30.6m, and established tax losses of £10.5m the group is financially stable and will see profits drop efficiently to the bottom line. ANTP remains a year tip and a SPECULATIVE BUY.

Arena Leisure (ARE, 26.75p, £97.42m) Finals to December 2009 saw revenue flat at £65.2m (£64.8m), a PBT of £4.1m (£4m), EPS of 1.16p (1.12p) and a resumed DPS with 0.38p (nil). Arena staged 370 fixtures (26% of all UK racing fixtures) and saw a 2 % lift in attendance at 630,000 (629,000). The At The Races shareholding of 45.85% delivered a 66% increase in post tax profit contribution of £0.5m (£0.3m). During the period the group renewed its licence which will see a doubling in its SIS related income. The group has seen its Folkestone Racecourse included in Shipway Council’s consultation document regarding mixed use redevelopment and its Lingfield Park Marriott hotel is on-course to be fully operational by May.  The group remains well up with events and we maintain a HOLD recommendation.

British Polythene (BPI, 285p, £75.52m) Finals to December 2009 saw sales of £425m (£481m), reflecting lower volumes in the construction sector and a slowing of the decline in H2. However the group achieved a £19m (£12.6m) operating profit, a PBT £11.8m (£3.9m) with EPS 38.6p (25.53p) and a second interim dividend of 7.5p, making 11p DPS for the year (14.5p). Group borrowings fell to £52.2m (£76m). Total production was some 275,000 tonnes (305,000t).  As previously highlighted by the group these results were at the tope end of expectations and puts them in for a £15.5m PBT or thereabouts – implying a 39.5p EPS or a 7.2x PER. We do see upside to around 8.5x, a price target of 335p for the year, so it moves from a Hold to a BUY.

E2V (E2V, 37.25p, £80.03m) has updated on its restructuring and trading outlook for March 2010. Industrial action at its Grenoble facility has resulted in material disruption, resulting in a £7m turnover reduction – with a material impact on profitability (at the interims gross profit margins were 27.6%  - which would hit gross profits by some £1.9m). The group has completed its consultation process that will see the closure of its Lincoln site, the establishment of an engineering centre and the transfer of manufacturing operations to the Chelmsford facility. Implementation is underway. We remain concerned that further updates are still to come regarding restructuring, the group should materially benefit from the cost cutting programme that will save some £26m annually. We are concerned regarding the danger of an equity issue to reduce borrowings further. However the group has declined well below our previously published Sell target of 45p – so it is a moved to a HOLD.

Goals Soccer Centres (GOAL, 146p, £70.9m), the operation of outdoor soccer centres, reports prelims to 31 December 2009 are in line with market consensus. Revenues up 10% to £26.2m (2008: £24.0m), PBT up 7% to £8.8m (2008: £8.2m), EPS up 2% to 13p (2008: 12.8p) and DPS up 3% to 1.85p. Net debt stood at £37.7m. The group currently operates 34 centres, with 11 added in 2010 (including one in the US) and a minimum of 6 in 2011. The adverse weather conditions have impacted trading in the current financial year, but management are confident the football World Cup will drive revenues from corporate events and birthday parties. The market forecasts 2010 PBT of £9.8m, EPS of 11.8p and DPS of 1.97p. The stock trades on a 2010 PER of 12.4x and a yield of 1.3%. We reduce our Buy recommendation to a HOLD.

Mirada (MIRA, 24p, £4.76m) has been selected to provide a key interactive navigational interface to a leading telecom vendor for its Internet Protocol television (IPTV). The group will receive a global licence fee and a royalty on each unit. We maintain our SPECULATIVE BUY recommendation, based on the momentum the group is building for sales next year.

Mobile Doctors (MDG, 35p, £5.9m), the provider of medico-legal reports for personal injury claims, reports prelims for the year ended 30 November 2009. Revenues up 27% to £27.6m (2008: £21.7m), PBT up 60% to £0.8m (2008: £0.5m), but a higher tax charge led to EPS growth of  19 to 3.1p (2008: 2.6p). Working capital remains high and net debt has risen to £16.1m (2008: £15.9m). The group remains highly geared, but debt levels are manageable. In the current financial year, the market faces a potential period of adjustment due to legislative changes as a result of the Ministry Of Justice reforms due to take effect from spring 2010. The main focus of the reforms is to improve the speed of resolution of fast track low value motor claims by the introduction of a standardized web based process which automatically links insurers with claimant lawyers. The group’s low cost base combined with variable transactional base suggests they are better placed than many of their peers to benefit from any changes. There are no forecasts in the market, but the business trades on a historic PER of 11.3x. We initiate with a HOLD.

Nexus Management (NXS, 0.505p, £5.29m) NXS continues to announce significant contract wins, this time its subsidiary Resilience Technology Corporation has won further firewall orders from NASA, the US space agency. Resilience has also won its first continuous support order from one of the largest North American telecom providers. It has won an order for thousands of units for its firewall solution for a major Canadian retailer for its thousand plus network of corporate and franchise stores. Lastly a Caribbean banking institution has selected Resilience’s end-to-end security solution. Theses contracts are worth several hundred thousand US dollars, will fall into the current year and lead to repeat revenues. We maintain our SPECULATIVE BUY recommendation with a repeated 0.77p target price.

Physiomics (PYC, 0.35p, £3.50m) Interims to December 2009 saw disappointing sales of £0.117m (£0.211m) and a loss before tax of £0.11m (breakeven).  A placing of £1.11m and the conversion of all outstanding debts left the group with net cash of £1.17m. The decline in revenues is described as temporary as its client base rationalisation costs, including the loss of people with whom the group had been negotiating. The group is in discussion with a number of potential clients, including a new business model, which should see results in the second half. The funds raised are being used to expand the sales force and accelerate the validation of the technology. Clearly the outlook, which suggests H2 will see little revenue benefit of the investment programme, is disappointing. However the price has fallen since we backed the business and we still see upside. Given the de-rating that has already occurred we maintain our SPECULATIVE BUY recommendation, though share price appreciation will be driven by new customers whose timing is unpredictable.

Southern Bear (STBR, 1.125p, £9.27m) In a terse statement on Friday night the group warned results would be significantly below market expectations for the year to March 2010, blaming customers deferring sales, adverse weather conditions and the poor performance of units slated for disposal. The group made £1m PBT at the half year, so a forecast of say £1.5m would imply the group is on a 8.8x PER to March 2010 – though one has to be concerned that the rating may even be higher for the following year. Until the trading conditions are more clear we drop the shares to a cautious HOLD, though the group does state it is funded.

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