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A Couple From Today 23 June 2014



I was up pretty early this morning, to duly catch the preliminary results from ACCUMULI, while also keeping an eye out for any other interesting pieces of news.


As for Accumuli’s numbers concerning the year to 31 March 2014, they were, as it was, very much as anticipated.


That isn’t to downplay the results, as once again the IT Security Business Group demonstrated an ability to grow the business and generate cash, which improved to give a solid net position of £3.6m.


While that was of course lower than last years £7.2m figure, the acquisitions of both Signify and Eqalis have to be factored into the equation.

And those bolt-on purchases of course are reflected in the headline figures, which along with reorganisation charges give the immediate and for some the overriding impression that Accumuli slipped into a loss.


In terms of overall performance and the bedding in of those acquisitions though, all appears to be on track as expressed by a raising of the dividend, with a 15% increase announced today.


And on the numbers, EBITDA increased to £2.9m against last years £2.2m while revenue jumped to £16.6m up 18% on the previous £14.1m.

Catching up for a few words with management today they certainly appear as always focused and bullish enough, citing the cash generative model as assisting the progressive dividend policy.


On acquisitions, they confirmed that they have been and indeed are tracking particular companies, including overseas targets.

One would therefore perhaps be forgiven for assuming that it is more a question of when, as opposed to if, in terms of the board making another bolt-on purchase.  Although it has to be said once again, the team here are pretty shrewd emphasising the point that any target would need to be meet the right criteria and provide the correct mix.


Clearly though there would seem to be plenty of mileage ahead for the sector and indeed the company where management talked today of cross selling opportunities ahead, with additional products to fuel growth.

As always the revelation of particular clients of notable size cannot be disclosed, although it would appear various wins have been secured with other services subsequently added.  


So thus far, the company has performed well and there isn’t anything apparent from today to cast doubt on continuing that potential further down the line.

Accumuli has now moved towards higher – margin services rather than product sales and will no doubt look to extend and make further progress.

On the matter of recurring revenue which looks pretty impressive at 61%, this is, according to the board likely to remain around such levels which would ensure the maintaining of the right blend.


 The company also certainly appears well set to win new business and expand on the already large existing customer base as the nature of its business continues to present further opportunities.

It currently has some 740 customers of which it has now highlighted 160 for significant penetration, which would perhaps go some way to underpin the longer term story.


With some 72 million malware samples alone created in 2013 an increase of 118% on the previous year, the requirement for the likes of Accumuli’s services not only remains constant, but should create further opportunities which can be supported by an already sound base of recurring revenue.

The shares initially opened up this morning, before quickly dropping off a couple of pence, as I suspect some elected to take profit, while others may have been spooked by the headline numbers.


By the close of play, the shares finished  at 27.5p, down 1.25p on the day, which I guess is fair enough given they have performed well of late.

On future expectations, Broker FinnCap has now raised its target price on the stock to 33p against the previous 27p, along with pencilling in some interesting numbers for the next couple of years.


These may appeal to those with a longer term view, who have already seen the share price perform well, over the last 18 months.

I hold here and continue to do so, the first entry point being around 10.5p.

For 2015, revenue is anticipated rising to £20.7m with adjusted pre-tax profits of £3.4m, with EPS of 1.7p, while for 2016 the same Broker forecasts £22.4m in revenue, with the profit moving up to £3.7m and EPS of 1.8p.


Also worth noting is the level of net cash expected, which is pencilled in  at £4m for next year, jumping to £4.9m by 2016.


On other ratios, the return on capital employed is set to improve from a current 14% to 23% with continued strong cash conversion being a continued theme.

Certainly Accumuli will not appeal to everyone and on a forward PER of 15 may appear priced fairly at these levels.  


Others however, will continue to warm to the story, factoring the strong cash position in to the wider picture.   

Whichever side of the camp you sit though, the company is certainly well placed to capitalise further on previous progress in a continually growing market, and the shares may be worth keeping an eye on for both the medium and longer term.  





A few weeks back I took a look at troubled Cambridge based ELEKTRON TECHNOLOGY where Microgen had expressed an apparent interest in either making an investment or acquiring the entire issued share capital.


While that came to nothing and Microgen effectively walked away,  Elektron today announced that it had raised £2.3m through the placing of 46.8m new shares with existing investors at 5p each, following a review of its business.


Additionally, it plans to raise a further £1.2m through an open offer at the same price.

The proceeds of the Placing and open offer are expected to be used to reduce borrowings and fund working capital along with investment in new products.

Alongside the announcement Elektron also delivered its full year results for the period ending 31 January 2014.

This saw a widened pre-tax loss of £5.3m against the previous £1.1m on declining revenue.


Perhaps more worrying for holders was the significant rise in net borrowings, which peaked at £8m, being up from last years £5m.


As a watcher from the outside I can’t quite see why any existing retail holders would want to buy further into what has been a poor performer for some time now.

And given the amount of money actually being raised, it surely also raises the question as to whether this, in light of the recent performance, will be adequate to shore up the balance sheet.


Each to their own of course and maybe management will turn it around after its review.

However, I am sure I am not alone in thinking some fresh blood as would have transpired had Microgen been successful with its approach, wouldn’t have gone amiss perhaps giving the company better scope for a turnaround.

Elektron shares closed the day at 4.75p.     





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