CBG (CB.)

Previous Stock Tip

These companies are all previous recommendations from the Red Hot Portfolio that I have subsequently recommended and then sold from the portfolio at a later date. By no means are these companies intended to be buy recommendations for you to go out and invest money towards their shares. For the opportunity to start making serious money from the recommendations I am making now, just start your no obligation trial!

CBG (CB.): Taking Our Profit - Jan 2008

RHPS Recommendation – SELL

In a most unusual development CBG has launched a takeover offer for a moribund quoted company called PenMC, which appears to have nothing more than a cash sum of £290,000. CBG is offering £186,000 for the company, so it sounds like a bargain. But this does not take into account the expense of the exercise, likely to be well into six figures. The only purpose of this deal appears to be to allow shareholders of PenMC to exchange their untradeable shares for shares in CBG which can then be sold on the stock market. Given that several million shares of PenMC are held by CBG directors this deal seems to have been done with their own interests to the fore. The share price has held up very well but now it is time to sell.

CBG (CB.): Acquires Marcus Hearn - Nov 2007

RHPS Recommendation – HOLD

Continuing its very successful acquisition strategy CBG is buying Marcus Hearn & Co, a provider of specialist niche insurance products and general insurance broking services based in Shoreditch. Marcus Hearn is known for its twins and multiple births insurance scheme, and for a range of branded travel products. It distributes commercial and general insurance products through a network of approximately 450 brokers. CBG is paying a maximum amount of £2.7m and expects to benefit from cross-selling opportunities throughout its extended branch network.

CBG (CB.): 43% Profit Increase - Sep 2007

RHPS Recommendation – HOLD

Profits were 43% ahead at the interim stage. Exclusive of the impact of acquisitions, growth was 17% while earnings per share rose by 27%. My target price is 220p.

CBG (CB.): Expansion on track - Jul 2007

RHPS Recommendation – BUY

Having raised £3m through an issue of new shares, CBG has bought G F Baskeyfield & Company, a Macclesfield-based provider of general insurance broking and financial advisory services. This will extend CBG’s reach into Cheshire while also giving opportunities for cross-selling of other group products. I have moved my buy limit up to 150p and my 12-month target to 220p.

CBG (CB.): Profits Jump by 89% - Apr 2007

RHPS Recommendation – HOLD

CB has announced an 89% rise in pre-tax profits in 2006, and will pay a maiden dividend of 0.5p. Profitability is being boosted by cross-selling and more competitive buying of financial products.

CBG (CB.): Cherry Picking - Jan 2007

RHPS Recommendation – BUY

Here is one party game that you did not play on New Year’s Eve. Imagine you are the manager of the Ramada Hotel, Brighton. You have decided to organise a Murder Mystery Weekend, and want to advertise it on the internet. Time is short and you have tickets to sell. What do you do?

Until now the only answer has been to get down on your hands and knees in the IT department and beg. But wouldn’t it be much better if you could create your own advertisement on the Brighton Ramada’s website – and only have it denied if you are doing something that you shouldn’t? Like, for instance, not using the official corporate colour scheme, or failing to link your advertisement to other Ramada sites.

A work of art

In a nutshell, this is precisely what a nifty piece of software called Morello enables you to do. Morello was devised by a small AIM-listed company called Mediasurface, and you don’t have to take just my word for its efficacy. The Butler Group, an IT research organisation, has said “Morello should be considered by any organization looking to implement a specialist Web Content Management solution.” Another IT consultancy, Gartner Group, goes further. It says “Morello’s technology is sound, metadata, integration and digital asset management tools are strong, and the .NET-based rich client is a work of art.” While CMSWatch, which assesses content management software on behalf of potential buyers describes Morello as “a unique and spiffy Windows-based authoring and site management tool.” Now I don’t know whether the author of this has been reading PG Woodhouse, or if “spiffy” is a new technical term. But I think you get the point that Morello is pretty highly regarded by those who know.

Boys in blue

What is more important though, is that Mediasurface is actually selling Morello to some serious organizations. Take the Staffordshire Police for instance. It has chosen to use Morello, to “deliver standard features such as web pages for local policies, contracts, news, information on jobs and crime appeals. But additionally it allows the necessary secure access for the police force’s stakeholder groups and partners”. “The force will be able,” it continues, “to utilize some of the more ground-breaking features of Morello such as Instant Site, giving them the instantaneous power to launch mini-sites to support critical events or even major incidents. Sites that can be published minutes after the event and provide up-to-date information, contact details and press liaison information.”

This is very much in accord with the progress of the world-wide web, which is fast becoming one mega-blog. The vision is that content should be instantly created by the person on the spot rather than, after some delay, an editor. All that is required is that the new content is delivered in a way that conforms to the requirements of the system of the employer.

Right place, right time

So Mediasurface seems to be in a sweet spot, and to find out more about it I went down to Newbury to find it located in one of the town’s few offices not occupied by Vodafone. Like most executives of small software companies, Chief Marketing Officer Andy Peart and Chief Financial Officer David Deacon clearly think that their shares are undervalued, and in this case I agree with them. However, as with many small technology companies, the City’s perceptions are clouded by the recent past.

Mediasurface was founded in 1996, but by the time new directors came into the business in 2002 they found a company which had a technically sound product for creating and managing websites, but needed to come up with something different if it was to survive. So it developed Morello, and having seen a demonstration I can vouch for the fact that this software has “an interface that is massively intuitive”. In other words any idiot can use it, an essential quality if it is to be used by non-specialists down the organisation.

Morello contains pre-built templates, definitions of content types and all the other components necessary to construct a website. Anybody familiar with the Windows operating system will find it easy to navigate, but its crucial features are the workflow trail of authorizations and sign-offs, which mean that content created locally will only appear if it is permitted. Morello also makes it possible for users to collaborate on the creation or review of content, again something that is becoming increasingly important in large organisations.

Citigroup, EMI and New Star, to name but a few

Aside from the Staffordshire Police, Mediasurface has signed up several noteworthy customers including Citigroup, EMI, New Star, the Oxford University Press, and InterContinental Hotels, while in the public sector it has sold Morello to many of the largest central government departments including the Office of Fair Trading, the Home Office and the Department of Education. These are chunky contracts. The initial licence and implementation fee is upwards of £100,000 with 22% of this amount then billed as an annual maintenance charge, to cover helpdesk support and upgrades.

Contract worth £1.2m

Recent contracts include one for the Department of Transport worth £1.2m over three years, and a second for the Office of Deputy Prime Minister worth £750,000. But for real evidence of the strength of the product, last year Mediasurface won a deal with a top 10 global pharmaceutical company, which will use Morello to power its 300 global websites. The initial licence fee alone will be over £500,000.

Such a fee is obviously beyond the scope of small companies, and so for them Mediasurface has introduced Pepperio. This is a rental solution offered by Mediasurface’s network of accredited partners, and also by the agencies that typically design websites for small businesses. It allows the customer to run a professionally designed website without worrying about hardware, software, connectivity or other technical issues, all for a low fixed monthly fee.

Mediasurface sells both directly and through system integrators, and has offices in the Netherlands, the USA, India and Australia. Recently it has been adding to its sales team, especially in order to capitalize on November’s release of Morello 5.5. Until now the application of Morello has required an Oracle database, but this new version will support Microsoft ASP .NET, extending its reach into the vast Microsoft community.

Profits set to double

RHPS Verdict: First impressions are never more important than with a company’s website. If it is not user-friendly and up to date, then a potential customer will simply click away never to return. Morello and Pepperio enable websites to be up to the minute, while at the same time conforming to required standards. Morello has proved itself by winning major contracts against stiff competition, and the launch of Version 5.5 widens the field of potential customers. Profits are set to double next year, and the shares are just starting to move ahead. I rate the shares as a high risk BUY.

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The figures refer to the past and past performance is not a reliable indicator of future results. The past recommendation highlighted here is a small company share.By their nature, such investments can be relatively illiquid and, as a result, hard to trade. This makes such shares more risky than other investments. Please seek independent financial advice if necessary. These figures do not include the bid-offer spread, unless otherwise stated. Since the service began on 01/12/98 running through to 31/07/07, the average overall performance of the shares recommended is up 19.91%.All gains exclude dividend payments and dealing costs, unless otherwise stated. Profits from share dealing are a form of income and subject to taxation. Levels and bases of, and reliefs from, taxation are subject to change, and depend on individual circumstances. Full portfolio available on request. Fleet Street Publications Ltd is authorised and regulated by the Financial Services Authority. FSA No. 115234.

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