Ilx Group (LON:ILX) (ILX, 23.0p, £5.42m), the provider of e-learning software and business training, has decided to cancel the proposed dividend of c.1.5p per share. The c.£0.35m saved from the withdrawal of dividends, will instead be used to fund the international growth of the business. We are disappointed by this, but the Board expect to resume the dividends, at the current levels, within 12 months. Financial training in the UK remains depressed, a number of customers are taking longer to pay and the impact of the public spending cuts is unknown. The group’s current banking facility cannot support international growth. A revised banking facility, expected to commence towards the end of September 2010, will provide additional working capital and more appropriate structure required to capitalise on the increasing opportunities within the Group for growth, particularly overseas. The group is currently trading in line with market expectations for the year ending March 2010. The stock is rated on 5.4x 2011 earnings falling to 4.3x in 2012. We have previously been buyers of the stock due to the compelling high yield. We believe the stock is less attractive. If investors purchased the stock as a yield play, we recommend investors to SELL. The share price is no longer supported by the yield.  On a fundamental basis, the stock is fairly valued, given the exposure to the weak UK economy. HOLD  

Norcon (LON:NCON) (NCON, 73.0p, £35.07m), Trading for the 6 months to 30 June 2010 are broadly in line with market expectations. Revenues for the period are within 5% of the Boards expectations. Client retention remains strong and the group has expanded into new target sectors and geographies. The development of additional projects in the pipeline has been promising, albeit with some delays due to operators evaluating technologies and negotiating license terms. Following the fundraising net cash increased to US$8.5m. We continue to believe the stock is undervalued, rated on 6.3x 2010 earnings with a high yield of 7.8%.  This is a yield play. We reiterate our BUY recommendation with a target price of 97p.  

Proactis Hldgs (LON:PHD) Holdings (PHD, 30.0p, £9.32m) Profits for the full year ended 31 July are in line with market expectations. A strong performance in consultancy services and strong recurring revenues from maintenance and support drove revenue growth. The weak UK economy led slower than anticipated new license deals. Nevertheless…

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