UBC Media, Trakm8 and Synety

On Monday UBC Media confirmed the reports that had appeared in last Sunday's Telegraph.

They have now signed Heads of Terms with 7digital, outlining the detailed material terms of the potential acquisition of 7digital by UBC. A period of exclusivity exists up to 4 April. Whilst UBC's shares remain suspended until the end of May or the deal falls through, shareholders should at least receive more detail on the acquisition in two or three weeks time. The aim of the merger is  to create a new public company via 7digital which will be perfectly placed to exploit the rapidly developing market for online and mobile music services.

Potentially, the new entity could be very exciting, particularly if 7digital can maintain or even improve upon it's current growth rate. 7digital have grown revenues 289% over the past five years:-

http://about.7digital.com/news/7digital-ranked-deloitte-technology-fast-500-emea-2013

In the same announcement UBC revealed that Audioboo is also to list on Aim via a reverse takeover of One Delta. UBC shareholders will retain a 20% holding in the company should the reversal successfully go ahead. Audioboo currently boasts 2.3m registered users, up from 600,000 less than 18 months ago.

It will be interesting to see the market reaction to Audioboo's listing where its initial market cap. will be modest in the extreme when compared to the multi-billion dollar listings of the big name social media sites such as Twitter and Facebook.

Also of interest will be whether Audioboo or 7digital lists first (assuming either go ahead as planned)? Of course if it's Audioboo and they receive a positive response, it will have a material impact on sentiment when 7digital lists.

As a shareholder in UBC Media, I am hoping for a positive response to the developments and remain cautiously optimistic. I await further details.

Trakm8 released news of a further contract win this week from a leading UK wireless security and safety provider with a significant hardware order to manufacture remote wireless fire monitoring products.

The contract is a £680,000 hardware order for remote wireless fire monitoring units with all of the revenues expected in their next financial year commencing 1 April 2014. This hardware order is part of a recently signed supply agreement that is expected to lead to revenues in excess of GBP1m per annum.

This RNSNON may have been missed by many investors, and the company probably still lies well below the radar of many investors.

Significantly, John Watkins, Executive Chairman of Trakm8 commented:
"The scale of this order also underpins our financial expectations for the coming year."

I have high hopes for the future of this excellent little company that is still only valued at around £16.5m.

Finally, Synety released their full year results on Friday which show remarkable growth, albeit from a low base. Whilst this is a highly speculative investment, the signs at this early stage look very encouraging, not least their constant referral to accelerating growth, and 'pushing on an open door' when referring to sales. This confidence has now been backed up by the company promising to provide quarterly updates regarding their KPIs (Key performance indicators). The next one due in less than three weeks time.

Particularly exciting is their entry into the US market where they already have a number of customers using CloudCall. They appear to be 'pushing at an open door' here as well, and I certainly don't recall having invested in any UK company before where US customers are pulling them into their territory.

Early days still with Synety, but potentially very exciting.

At the same time that Synety announced their final results, they also announced a fund raising for £5m through a placing and open offer. The placing and offer is at £2.50 per share which may have appeared a steep discount to the prevailing share price on Thursday evening. However, perspective is everything, and since you could buy the shares at £1.50 or less in the open market less than five months ago (as I did) then to be able to place shares to institutions at a 67% premium to this price in such a short space of time gives you some idea of the rapid progress and confidence they are building. Quite frankly if any company I hold shares in needs to raise capital at a double digit premium to the price I paid just a few short months ago then I'll be quite happy. Of course I always prefer companies to grow without the recourse to capital raisings and the subsequent dilution, but in cases such as Synety's it's a necessary evil. Besides, whilst the share price initially dipped in response to the fund raising, by the end of the day the bid price was back to where it started as investors concentrated on the more important growth figures and outlook statements that had been reported.

I shall continue to hold my shares in this company, and share the Directors confidence in the future.

Audioboo to list on Aim?

Readers will remember that some time ago I invested in  company called UBC media.

http://michae1mouse.blogspot.co.uk/2013/08/ubc-media-where-lots-of-boos-are-very.html

In November, the shares were suspended following the announcement of a possible reverse takeover of 7digital, a leading digital music technology platform.

In today's Sunday Telegraph, after a wait of nearly 4 months, it appears that UBC will shortly disclose details of the merger between the two companies.

Furthermore, the Telegraph also suggests that Audioboo, the audio social network platform, is set to list on Aim also via a reverse takeover. UBC is a major shareholder in Audioboo and if they converted their current loans into equity, UBC would hold 52% of the ordinary share capital of Audioboo on a fully diluted basis.

http://www.telegraph.co.uk/technology/news/10700711/Audioboo-to-list-in-London.html

Potentially it all sounds very promising and exciting to me. Will Audioboo be the first social media company to list in London or are there others?

I think the combination of UBC, 7Digital and their shareholding in Audioboo is a very attractive space to be in at the moment, not to mention the possible synergies between the three.

If indeed Audioboo is the first social media company to list in London then I would guess that investors will be hungry to snap up some of their shares.

Anyway, fingers crossed, the devil is always in the detail.

Belgravium Technologies and Synety

A very brief update from me this weekend.

Firstly, Belgravium Technologies, a company in which I hold shares.

http://michae1mouse.blogspot.co.uk/2013/08/13-rise-for-belgravium-technologies.html

Belgravium released their final results last week.

In my view the results were encouraging and confirm my conviction that the shares are still cheap.
The bull points are quite straightforward. Adjusted EPS came in at 0.4p putting the shares on a p/e ratio of 12 with an outlook statement that reads positively, " 2014 will prove to be a significantly more successful year". The predicted forward p/e ratio is around 8 for 2014.

The dividend was held at 0.1p giving a current yield of 2.1%, but broker forecasts suggest a doubling of the dividend next year to 0.2p and hence a forward yield of 4.4%.

Significantly gross margin has jumped from 45.3% in 2012 to 49.6% in 2013.

Last year Belgravium acquired a company called Feedback Data which is already contributing to profits with a gross profit £535,000 and operating profit £95,000. The balance sheet remains debt free.

Their quest for organic growth continues, but they do hint at the possibility of further earnings enhancing acquisitions. Given the quick and successful integration of Feedback, I would view this as a positive step should a suitable target be identified.

Overall, I view the results and outlook very favourably and shall continue to hold.

Another company in which I hold shares is Synety. This was a speculative purchase which I reported on back in November.

http://michae1mouse.blogspot.co.uk/2013/11/synety-very-promising-speculative-stock.html

The company continues to deliver on it's promises, and most recently announced details of a significant customer win and CRM integration with SSP.

Simon Cleaver, Executive Chairman of SYNETY Group Plc commented:-

"SSP's customer base includes many large and prestigious companies which are well-known household names. Our partnership with SSP to offer integrated services to this customer base represents not only a huge and exciting prospect, but is also an enormous endorsement for CloudCall and SYNETY."

This is just the latest in a series of extremely encouraging updates from the company.

On pure value metrics, and at this early stage in it's development, you could strongly argue that Synety looks overvalued. However, the company believes that it can "capitalise on its first-mover advantage and land grab a market niche where the Directors believe there is limited competition and significant potential." That's exactly what they appear to be doing at the moment, and although the market cap. at £18.6m may appear expensive, given the current valuations of other companies in a similar space, and Synety's considerable potential and current growth rate, you could equally argue that the shares are undervalued.

I'm certainly hanging on to these for the foreseeable future.