The Voyager RNS Log: Week Commencing 24/09/2017
Note: as ever nothing I write here is in any way a recommendation; well apart from the superb meze. Just view this as me meandering through my thought process concerning various regulatory announcements and sharing my views.
Well having returned from my routine September visit to my favourite restaurants in Kyrenia; I just love authentic meze. However, it’s nice to get back behind the keyboard; and so refreshing not to even look at share prices over the last couple of weeks but just kept an eye on RNSs via a distinctly awful wifi and costly 3G. I have to say that Erdogan’s antics are likely to prevent me from flying via Istanbul again; can you believe four baggage x-rays, a compulsory change of plane and a body search with swab tests on my IT kit just to get back home; Erdogan seems a total paranoid madman.
Anyway, a couple of RNSs to catch up on before I touch on this week’s events.
Tuesday 19/09/2017: Keyword Studios: KWS: Half Year Report and once again another very solid picture of growth emerges with adjusted profits up some 60% and adjusted eps up 55%. Note: the nature of the adjustment is integration expenses of EUR0.5m (H1 2016: EUR0.7m), share option charges of EUR0.4m (H1 2016: EUR0.3m), amortisation of intangibles of EUR1.2m (H1 2016: EUR0.6m) and foreign currency loss of EUR1.96m (H1 2016: EUR1.77m). Now adjustments are without doubt a pain in the bum for us private investors so what does the profits growth look like when stripping back these adjustments? Well, to my “fag packet calculation” it looks pretty blooming good.
Has the share price got a touch ahead of itself? Well, that’s the perennial question with all growth stocks that prove popular with investors and see their share price appreciation in such a dynamic way. In my case KWS has appreciated about 4 to 5 fold since my original batches purchased and to mitigate a touch, especially as KWS was becoming a touch heavy in the portfolio, I sold some shares that covered my entire initial investments value thus leaving a very significant amount of stock riding “for free” within the folio. Hang on, “riding for free”, what a silly concept/quote that I remember seeing in share tip sheets in the late 90’s. Whatever does it mean? Whoopee, a profits warning but that won’t hurt me as they are riding for free!
My View: I am very happy to continue to hold what seems to be an ever-increasing weighting in my portfolio even after the recent sale of my original investment in £. Incidentally, surprisingly I managed to sell that part holding at the top of the market; now that does not happen often! Is the share currently expensive? Well, difficult one to answer after such a great run but the measures I like, ROCE, CROCI, Free Cash Flow Conversion look so attractive as does the forecast growth rate in eps. Another aspect that attracts me is the huge addressable market where gaming companies outsource such services as those offered by KWS. Also, KWS appears to have a good reputation with its customers, an impressive client list and confidence in the continual expansion of the business. I personally see this one as a 3-5 year hold in which you have to acknowledge the risks associated with such an acquisitive company but worth “sensibly” tucking away in my opinion.
Thursday 21/09/2017: Revolution Bars: RBG: RNS ruling from takeover Panel ruling that Ranimul, the parent company of Deltic the other bidder competing with Stonegate for the acquisition of RBG, must announce by 5 pm on 10/10/2017 if they intend to make an offer for RBG. Interesting times and I feel a rather happy investor.
Thursday 21/09/2017: IG Design Group: IGR: RNS Re: Acquisition of a leading Australian greetings card business:
In the year to 30 June 2017 the business generated sales of AUD13.4m with an operating profit before tax of AUD2.9m. The total transaction and restructuring costs are estimated to be AUD0.6m (GBP0.4m) which will be treated as exceptional costs. While of negligible impact to underlying earnings in 2017/18 due to the timing of completion, the acquisition will be earnings accretive from the next financial year underpinned by synergies in sourcing, design and logistics net of amortization of intangible assets.
My View: anybody who reads my various notes about IGR will no doubt already be aware that I consider this to be a well-managed business that has delivered in recent years. Is it expensive or not? Well, you may well know that I just don’t have much faith in easily manipulated PE values preferring to consider returns on capital invested whilst looking for an attractive entry point. In this case we have a decent CROCI and IGR nicely converts profits into cash. Overall I am happy to happily hold IGR which has doubled my original investment over the last 18 months. Dashboard from the excellent SharePad:
Monday 25/09/2017 to Wednesday 27/09/2017: only a few routing RNSs for stocks within the Whittler universe/portfolio.
Thursday 28/09/2017: Air Partner AIR: Interim Results and to my eye a very good set of interims with the headlines shown below:
So with the numbers, all looks to be very encouraging as is the outlook statement:
Outlook: The new financial year has started well and we are making good headway against our strategic objectives. Trading since the period end has remained solid. We enter the second half with continued confidence that our expectations for the remainder of the year will be met, whilst the final quarter of the financial year can be the most challenging.
We have built a strong platform from which to continue to grow the business. Our long-term objective to create a more equal balance between our two divisions, Broking and Consulting & Training, will deliver higher quality and increasingly visible earnings to our shareholders and will further align us to the needs of our global customer base, enabling us to continue to provide exceptional service and value.
One part to keep an eye on in the next update/results will be the progress with Clockwork research which has had a challenging first half since it’s recent acquisition by AIR: At the end of 2016, we acquired fatigue management consultancy, Clockwork Research. First half trading has been challenging, but with a good pipeline of projects we are confident in the longer-term prospects for the business. We have undertaken work to further strengthen this pipeline and leverage the Baines Simmons offering. An encouraging example of the cross selling opportunities that have arisen following acquisition, is that Clockwork Research is now carrying out work within the rotary sector with a Baines Simmons client.
On the same day as the interims, AIR announced that it had paid £3m to acquire SafeSkys Limited: On 27 September 2017 Air Partner plc acquired the entire share capital of SafeSkys Limited for a total net of consideration of £3.0m, obtaining control of the company on that date. SafeSkys Limited is a leading environmental and air traffic control services provider to UK and international airports. The acquisition has been funded from the Group's cash resources. Due to the proximity of the transaction to the reporting date, the purchase price allocation accounting has not been finalised. Details of the acquisition accounting will be provided in the annual report for the year ending 31 January 2018.
The acquisition of SafeSkyes was itself the subject of a separate RNS on 28/09/2017:
Air Partner plc ("Air Partner"), the global aviation services group, is pleased to announce the acquisition of SafeSkys Limited ("SafeSkys"), a leading Environmental and Air Traffic Control services provider to UK & International airports.
The acquisition has been funded from Air Partner's existing cash resources, aligns to Air Partner's long-term strategy and objectives, and is expected to be earnings enhancing in its first full year of ownership. SafeSkys reported revenue of c. £1.8m for the year ended 31 July 2016.
SafeSkys was founded in 1993 by Richard Barber, and over the past 24 years of his ownership, has grown to be recognised as a leading provider of Environmental and Air Traffic Control services working across 16 civilian and military airports in the UK, employing over 80 trained staff working every day onsite at the customer airport.
Hopefully we will have some more details provided about this acquisition at the time of the finals and certainly AIR must be confident having paid £3m for a company with a current turnover of £1.8m; digging around at companies house I also gleaned some information from the latest accounts for 2016, SafeSkys have net assets of £637k which included £223k of cash. From what I can deduce from the SafeSkys site, they seem to operate almost as an agency style of operation so extrapolating the 80 staff to the £1.8m turnover can give a duff figure of salary estimate per employee.
Friday 29/09/2017: no RNS significant to stocks within the Whittler universe/portfolio.
My View: a very decent set of interims accompanied by the interesting acquisition of SafeSkys all make the company look very attractive to my eye and I will continue to hold plus may be tempted to make further additions on the inevitable turbulence that AIR encounters on its flight path to hopeful continued success (hell, that was a cheesy line Whittler). I have been invested in Air Partner since mid-2015 and have made a series of top ups since that time. Happy to say that the investment, which also provides a healthy >4% dividend, is working rather well for me.
Not quite in the Glad I am not here category but nevertheless, a share a keep a dubious eye on having once held and sold after becoming a touch concerned about the management of the business (issues with tied in suppliers & market understanding), is Sprue Aegis: SPRP who posted their half year report on Monday 25/09/2017. Strange in a way because I suspect that SPRP is overall a decent enough business. However, I still feel concerned about the allocation of revenue to capex which just seems to increase all the time and is running at 6 to 7 times the D&A. The allocation of costs to capex is just a touch worrying when compared to both the D&A & EBIT: maybe it’s fine but if I were a shareholder I would dig a lot deeper just to make sure I was comfortable. However, as I am no longer a shareholder, I will leave that one there and dig around elsewhere: whoops, I mean studiously investigate elsewhere.
Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). Congratulations to multi-award winner Telit Communications whose shareholders either need nerves of steel or a bottle of gin! On Thursday 28/09/2017 an RNS suggested that the smoke generator may have run out of fuel and the mirrors developing cracks. The announcement advises of some downward revisions of forecasts and also an advance waiver for any potential breach of a covenant; thankfully I don’t hold TCM neither do I like gin!
Finally, what a nice bunch of people private investors can be; well that’s certainly my view of the large number I have come across over the many years I have been investing. I remember that for years I just did not like the Twitter style of social media and indeed only ever used Twitter at the time to see how depressing the Hatters team news would be: I should explain that Twitter carries football team lineup news at around an hour before kick off when I am enjoying a pre-match pint. Strange but how wrong I turned out to be because about three years ago I started using the little tweeting birdie to exchange a few thoughts on shares. Amazingly this opened a whole new world of Twitter buddies, blogs etc; all in all really enjoyable. Last weekend, although I did not attend as away on holiday, one of those dubious ringleaders, Wheeliedealer; a top bloke incidentally, organised a summer bash which was attended by many from quite considerable distances even the frozen north of Scotland and a few outside of the UK. What a superb community or indeed set of communities there are available out there for us private private investors with the likes of sensible types on Twitter, ShareSoc & events such as those organised by David Stredder, Of course we also have such excellent writers such as Phil Oakley on SharePad/Sharescope and of course the unique style of Stockopedia’s Paul Scott plus the great Conkers Corner. There is plenty of good stuff out there for the open-minded PI to learn from if they so choose.
Next week: we have preliminary results from Revolution Bars Group, there may be a trading update from Amino Technologies but I suspect that will be the week after; the same applies to Zytronic where I expect to see a trading update within the next 2-3 weeks.
Have a great weekend and as ever, happy investing.
Week 9 of The Voyager RNS Log: Week Commencing 03/09/2017
Firstly a bit of sampling the product from Cake at the Lincoln Patisserie Valerie: I dropped in ahead of the Hatters game with Lincoln City and as I detest cakes as such we decided to go for Eggs Royale & Eggs Benedict: the food was good & also the coffee was good but the establishment looked a little tired to be honest and maybe a tad on the expensive side. The city of Lincoln around the Cathedral was buzzing with tourists but sadly not this branch of Patisserie Valerie; lots of unoccupied tables. It did concern me a touch when I also noticed that a queue was forming from people actually trying to get into a local patisserie/coffee shop. Then pre-match I met up with some friends and their partners for a couple of pre-match beers and the discussion got around to my visit to Patisserie Valerie. The conclusion based on their visits in other towns was that the offerings were priced a touch high for acceptable quality. After a few days consideration, on Wednesday morning I jettisoned my holding in CAKE for a total return of around 20%: live market research at its best! Note: see my notes on Fulham Shore.
Monday 04/09/2017: Bioventix: BVXP: Market Cap £130m: RNS Trading Update: and what a splendidly boring update it was:
Bioventix plc (BVXP), a UK company specialising in the development and commercial supply of high-affinity monoclonal antibodies for application in clinical diagnostics, announces a trading update.
The Board is pleased to report that revenues for the financial year ended 30 June 2017 are expected to be marginally in excess of £7M (2015/16: £5.5M). Since the cost-base of the Company continues to follow a similar shallow trajectory as in previous years, both revenues and profits before tax are expected to be ahead of market expectations for the year ended 30 June 2017.
Now I say boring as the seductive words “ahead of market expectations” appear so often in BVXP trading updates.
I have quite a long relationship with BVXP going back to 2014 and have added on a few occasions since my 700p purchase three years ago: in fact, looking at my records, the last top up was at around 1900p at the end of July. BVXP is now one of my top 5 holdings in terms of portfolio value. Really what a lovely solid business this is with a relatively low-cost base and totally superb ROCE & CROCI.
My View: This is a total gem of a company, in fact, it’s the type of company that you so rarely come across: I intend to continue to hold and will consider further top ups in the future.
Tuesday 05/09/2017: IQE: Market Cap £240m: Interim results:
A lot of punters and indeed some investors had great hopes that these results would maybe contain the Apple word; hardly a sound reason for investing; best stick to the transformational nature of the business in my opinion.
Possibly the numbers quoted in the interims are not as key as the rather wordy commentary which is where I pitch my attention:
Dr Drew Nelson, IQE Chief Executive, said:
"The compound semiconductor industry is moving through an inflection point. Many of the key innovations that are taking place in the technology world would not be possible without the advanced properties of compound semiconductor materials. Indeed, compound semiconductors are the fundamental enabler of innovations such as 3D sensing, biometric sensors, electric and autonomous vehicles, high speed wireless and optical communications, and advanced manufacturing.
"IQE has developed an unparalleled breath (SW, I think they meant breadth) of materials IP, which position it to prosper from the inflection that is taking place in our industry. Our broad portfolio of IP is a powerful competitive advantage which is enabling us to differentiate ourselves in the marketplace. The strength of our IP has enabled us to broaden our direct engagement with OEMs from single points of engagement a few years ago, to multiple programmes enabling a number of next generation mass market technologies.
"IQE's outlook has never looked better. The broad range of customer engagements across multiple technologies and multiple end markets, provide a clear path to increase revenue diversity and accelerate growth over the coming months and years ahead. The breadth and depth of customer engagement underpins the Board's confidence in approving the capacity expansion plan, which provides a flexible and cost effective route to significantly scaling up in our business over the next few years"
My View: I don’t see IQE as a punt and maybe that’s because after such a great few months the shares will stop their rise and consolidate particularly as the punters get bored. With many shares, investment is a long haul game and I see this with IQE. I would suggest that it will go on over the 1-3 years to be a fairly exciting growth business and maybe fall to a predator as others have done in the area of the market. Initially, after these results, the shares lurched down into the low 120’s as those with great expectations and little patience bailed out but then bounced. I will be patient and happily, as I am well into profit, continue to hold: maybe the punters have temporarily left and the investors remain?
Wednesday 06/09/2017: Somero: SOM: Market Cap £160m: Interim Results:
My View: although I have had a great relationship, but not love, with this stock since the early days of 2014 and greatly respect the SOM management, three things continue to make me feel that the superb share price rise over the last three years is just slowing down a touch:
The stock is simply due to its sector, cyclical in nature.
Although undoubtedly a high quality business it’s moat is really built on excellent customer service; the technology is not patented and an abundance of copies are available in China.
The hoped for market penetration in China has not materialised.
As mentioned in an earlier RNS log, I still retain a reasonable holding in SOM but had previously decided to take some money off the table at just over 300p. A lovely company but in my opinion during the summer it was, time for me to bank some substantial profits and reduce my holding. I still maintain a holding in the quality business.
Wednesday 06/09/2017: Fulham Shore: FUL: AGM & Trading Update
The Update Reads:
We are currently building two more Franco Manca pizzeria, in London and in Bristol, which are due to open later this autumn. The Group continues to anticipate opening 15 new restaurants in the current financial year, in line with expectations (10 have been opened so far, the latest two being Franca Manca Oxford and The Real Greek Dulwich Village). However, given an increased availability of sites for sale due to the well-publicised pressures on other restaurant operators, we have decided to review our opening pipeline and to seek to improve terms with landlords of new sites we had already identified. This may delay some of our openings to later in this financial year.
In March 2017, the Company announced that it was reviewing the progress of its third business, a single franchise of the Bukowski Grill. In order to simplify operations and focus on the Group's core brands, Fulham Shore has taken the decision to sell its Bukowski franchise and site in D'Arblay Street, Soho. A further update will be announced in due course.
Despite hitting our Group targets for the first quarter of this financial year, during the holiday season in July and August the Group has seen a slowdown in trade, primarily from our restaurants in London suburbs. We believe this is a sector-wide trading pattern and not unique to our brands.
In addition to this slowdown in revenue growth, as previously indicated, the Group is experiencing a higher fixed cost element to support its increased level of operations, especially in The Real Greek.
As a result of these two factors, the Board expects that, while Headline EBITDA (as defined in the Company's accounts) for FY18 will be significantly higher than that achieved in FY17, it is likely to be less than current market expectations.
My View: lovely business in terms of product, tried it myself, but it’s in a very crowded market place and despite its differential, it has not been able to withstand the overall pressures felt by the restaurant sector in recent months. In common with my usual approach to a profits warning this stock was sold by 08:10. The original tiny purchase (much less than 0.5% of folio) I made in FUL was always going to be a touch of a risk and really demanded continued roll out and increasing returns. As the company has hit a bit of a bump in the road, as shown by the curtailed expansion programme and profits warning, the action for me was to sell at the opening bell. I appreciate that after this RNS some directors bought what on the face of it seems like substantial numbers of shares. However, they held such a vast number of shares already; it was like taking a £5 note from a cash machine to top up your wallet already containing £2000 in notes if you get my drift.
Wednesday 06/09/2017: Severfield: SFR: Market Cap £204m: AGM Trading Update
Current trading and outlook
The Group's trading performance and financial position remains in line with management expectations and the outlook for the year ending 31 March 2018 remains unchanged. As a result of the current phasing of contract works, the results for the full year are expected to be more first half weighted than in the prior year.
My View: The wording of the trading update heavily suggests to me that the contract income & profits are now slowing down after that very rosy place SFR enjoyed over the past 12 months. On 25/11/2016 SFR in an RNS declared that the company’s order book was trading ahead of expectations. On Wednesday 06/09/2017 the TU tells us that the results are to be more weighted to H1 than H2. The implication is that in previous years H2 was greater than H1 so do I smell a “things are slowing down guys” message.
So, it’s straight out with the fag packet calculation: I have not smoked for over 30 years but affectionately hold on to that fag packet term as most of my bookies odds on the gee-gees were calculated in that way. The H1 & H2 over the last couple of years looks like:
Rev PBT Ratio (H2-H1)/H1
H1 2005 97.4 3.0
H2 2015 201.5 8.3 1.77
H1 2016 117.1 4.8
H2 2016 239.4 13.2 1.75
H1 2017 118.2 8.1
H2 2017 262.2 19.8 1.44
For 2018 > 1.O?? As suggested by latest RNS: H1 weighted more than H2
My early conclusion was that revenue and PBT have now peaked and are indeed slowing down: just my take on the numbers but that’s what investment is about, opinions. I sold very close to 08:10 hrs this morning: still a good company but the original attraction has now diminished.
Wednesday 06/09/2017: ULS Technology: ULS Market Cap£77m: New Conveyancing Service:
ULS Technology plc (AIM:ULS), the provider of online B2B platforms for the UK conveyancing and financial intermediary markets, announces the launch of a new conveyancing service developed for the mortgage lender Magellan Homeloans ("Magellan").
My View: I purchased ULS back in April 2017 after an encouraging trading update and to be honest it was never more than a momentum play and although it has served me well over this 6 month period I was happy to take my 15% profit and move on. As often is the case with these small cap AIM stocks, the sale had to be done in a couple of chunks in order to get a “non-blind” price that I felt comfortable with.
Thursday 07/09/2017: Dart Group: DTG: Market Cap £765m AGM Trading Update:
Annual General Meeting Statement
At the Company's Annual General Meeting later today, Philip Meeson, Executive Chairman, will make the following statement:
"The satisfactory start to the financial year as reported in our Preliminary Results Statement of 13 July 2017 has continued, with Leisure Travel bookings growing in line with our 41% summer 2017 seat capacity increase. Demand for our higher margin package holiday products remains strong and holiday customer numbers as a proportion of total departing customers have increased slightly. It is particularly encouraging to report that our new London Stansted and Birmingham Airport operating bases are already proving popular, with over 1.3m passengers booked to fly with Jet2.com this summer, of which close to 50% have chosen a package holiday with Jet2holidays.
Continued progress is being made at Fowler Welch, our Distribution & Logistics business.
Despite our airline ticket yields being lower than those achieved in summer 2016, overall the Board expects the Group to meet current market expectations of underlying profit before taxation for the year ending 31 March 2018 and will provide a further trading update on publication of its interim results on 16 November 2017."
My View: this is an old favourite and one that I have written about on a number of occasions and a fine example of “maybe you have not missed the boat”; well plane in this case! I honestly thought that this one had got away from me a few years ago when the price hit 200p but it has prospered for me very nicely as the company has grown. Today’s “meet expectations” update looks fine to me although when I read the RNS on the iPhone whilst sitting in a humid pool changing room, I did wonder if the market would go negative on the lower ticket yield line. I will continue to hold.
Thursday 07/09/2017: Frontier Dev: FDEV:Market Cap £420m: Final Results
This was a new purchase for me this week and comes into my special situations category: I have already benefited in this area with KWS and so felt quite comfortable in buying into FDEV. Anyway, the RNS reads very well and below I have included the rather meteoric financial numbers:
What a lovely set of results they are but why include the * note to explain EBITDA? The outlook, I have included the full text as it’s rather exciting and worth a read, goes on to say:
Current Trading and Outlook
The Board have been encouraged by trading since the year end (31 May 2017). The number of players of Frontier's games continues to grow. In August 2017, Planet Coaster, which launched in November 2016, passed 1 million cumulative franchise units, and Elite Dangerous, which launched in December 2014, exceeded 2.75 million franchise units.
We have further expanded the addressable audience for Elite Dangerous by launching on PlayStation 4 in June 2017. During the summer Planet Coaster and Elite Dangerous participated in successful price promotions on our major distribution channels with the Steam & Xbox Summer Sale events. These events were in turn supported by major updates for each game as we followed our strategy of continuing to further enhance the experiences the delivery.
We launched our first in-game Paid Downloadable Content (PDLC) for Planet Coaster in July 2017, and announced that Elite Dangerous 2.4 'The Return' will be released in September 2017 which supports the on-going story arc related to Thargoids, the franchise's first alien species.
In August 2017 we announced that our third franchise, Jurassic World Evolution, will launch in summer 2018 on PC, PlayStation 4 and Xbox One simultaneously. In 2015, Universal Pictures' Jurassic World became one of the biggest blockbusters in cinema history, grossing more than $1.67 billion at the global box office on its way to becoming the third-highest-grossing film of all time. Jurassic World Evolution will launch in the year that Universal Pictures' celebrates the 25th anniversary of the original Jurassic Park film, and the next chapter of the franchise Jurassic World: Fallen Kingdom will be in theatres June 2018.
We anticipate that the next step-up in our financial performance will be delivered by the launch of Jurassic World Evolution in summer 2018. The Board currently expect that the majority of initial revenues from this new franchise will fall into the financial year ending 31 May 2019, as the Jurassic World: Fallen Kingdom movie is released in June 2018. The Board therefore anticipates that trading in the current financial year, the twelve months ending 31 May 2018, will principally be based on sales from the Elite Dangerous and Planet Coaster franchises.
The Board is excited about the growth opportunities ahead in the coming years, as existing franchises continue to be strengthened and new franchises are developed and launched. Frontier is developing, evolving and investing in our people, organisational structure and facilities to effectively create, develop, market and sell even more distinct franchises aimed at different audience segments to achieve the Company's ambition to create a self-publishing multi-franchise success story.
My View: personally I simply can’t stand video games or anything similar: stick cricket is about my limit! However, you don’t have to like the products to invest in something: I have no real need for laser flat concrete (SOM) but the company is attractive.
This is what I classify in my in my terms as a special situation with the potential for exciting growth over the next few years: yes, it has its associated risks of fashion and competition but for now its an interesting addition to the portfolio.
Friday 08/09/2017: No RNSs for companies within Portfolio
However, I do note another profits warning from SafeStyle: SFE. I have never held the shares but did write a cautionary note about them being a householder discretionary purchase in the RNS Log of 21/072017 when they first warned on profits. Probably a decent company but you do need that element of housholder/consumer confidence and spare dosh so in my view, not one for now.
RNSs for a couple of shares I held relatively recently and took profits. Firstly G4M which had become rather overheated for my taste and I sold at 800p in early June to take a very, very healthy almost silly profit. Anyway, they issued a trading update on 05/09/2017. Myself, I just felt the share price had got somewhat ahead of itself but nevertheless have kept an eye on the shares since as I am keen to see how sales are developing in Europe & the rest of the world as the UK stuff seemed to be slowing down a tad. Today’s update shows that the UK has a sales increase of 31% (is that bad?) compared to the same period in 2106 and that Europe & Rest of the World (ROW) has shot up by some 70%. I would suggest that in a year’s time that Europe and ROW will be in line or ahead of UK sales. So my feelings are that I will keep a close eye on this one and definitely be looking to buy back in on a pull back.
Secondly, my old friend Cambria Automobiles: CAMB issued a trading update on Tuesday 05/09/2017 which was a touch cautious with sales of new cars under some pressure due to consumer confidence and the weak pound affecting imported cars. Now I should say that in my view Camb are a well managed class act albeit in a very low margin business. The nature of their business is cyclical and linked very much to consumer confidence and that confidence has been in something of a decline since the shares hit around 90p some 18 months ago. CAMB have been very kind to me having sold the stock back in January 2016 and like any quality business I owned stock in, I keep a watchful eye on their performance. I am sure I will buy back in sometime but I don’t feel that time is here just yet.
Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). Well one I was there this week although an overall decent company with good management is Fulham Shore; see RNS notes above. As I say just about every week in this Voyager RNS Log, your next profits warning may be just around the corner; simply part of the life of a private investor no matter how clever or careful you try to be. You can mitigate the risk of profits warning by going for what I perceive as quality but even then, you will get bitten by a PW now and again. The trick is to act according to your plan, whatever that may be, and don’t beat yourself up; accept that PWs happen! Take a look at the Telegraph article on Neil Woodford’s apology to investors after his “fortnight from hell”: http://www.telegraph.co.uk/business/2017/09/06/neil-woodford-right-criticised-sorry/?WT.mc_id=tmg_share_tw
Maybe the nomination for the Glad I’m Not There award this week should be Interquest Q: ITQ, who have been right royally shafted their faithful and long suffering shareholders. On Wednesday they announced that they will effectively be suspended from AIM on 09/09/2017 following their dismissal of their nominated adviser and broker Panmure Gordon. When will they return? So, the long suffering shareholders saw the stock fall by 22% on the day of the RNS. In fact the shares have fallen 67% in the last 15 months. On the fact of it you may get the impression that this is simply terrible and incompetent management of the business: indeed it is but sadly it’s far worse that that. It appears that the owner & some fellow directors, who failed in an attempt to buyout the company some time ago, have rather engineered this situation that will lead to the companies expulsion from AIM; I wonder who will be the beneficiary of that expulsion, certainly not the shareholders. It is the sort of behaviour that gets AIM an often unjustified bad reputation. Yes, there are some dodgy businesses listed on AIM & I have written about some of them recently. However, let’s not lose sight of the fact that AIM contains some very wonderful well managed companies and a significant percentage of my capital is invested in them. I did actually write a blog article “Surviving On The Hostile Planet AIM” back in back in August 2016: http://stockwhittler.weebly.com/blog/archives/08-2016
Over the next couple of weeks the RNS log may possibly take a bit of a breather as I am taking what I feel is a well earned break for a few days in Kyrenia; I always manage a break around this time of year. I will try to get a Voyager RNS Log out next Thursday and then maybe some awfully brief ramblings the following week with a return to normality at the end of the month.
Next week: the only planned RNS I can see scheduled within the folio is GFRD finals on 13/09/2017. However, there may be further news on RGB takeover and who knows what trading updates may arrive: as ever, always remember that the next profits warning may just be around the corner.
Have a good weekend and as ever, happy investing.
Week 8 of The Voyager RNS Log: Week Commencing 27/08/2017
Monday 28/08/2017: London Markets closed for Bank Holiday but children playing with fireworks in Korea proved a market distraction.
Tuesday 29/08/2017: IG Design: IGR: Market Cap £242m: RNS Trading Update for 1st Qtr of financial year.
IG Design Group plc, one of the world's leading designers, innovators and manufacturers of celebration, gifting, stationery and creative play products, is pleased to provide an update on the first quarter's trading period ending 30 June 2017.
-- First quarter trading is in line with management expectations with a strong pipeline built in all regions
-- Tangible benefits from recent initiatives include:
-- the unification of the Group's three UK businesses under a single leadership team;
-- the synergies resulting from our acquisition of Lang in the USA; and
-- the National all store "roll out" of our single greeting card range with Australia's largest discounter
Group sales during the first quarter, combined with overall customer order levels already received for the balance of the year, give the Directors confidence in the outcome for the full financial year.
Sales volume growth together with product mix is continuing to enhance margins across our broadening customer base. The region has achieved noteworthy momentum in the Creative Play categories.
The investment in state-of-the-art gift wrap converting facilities continues to deliver production efficiencies.
The region is also benefiting from further significant synergies from the Lang acquisition, in line with management's plans.
As previously announced, having unified our three UK based businesses under one leadership team we have enhanced our ability to deliver a coordinated offering of product and service solutions to our broad base of customers, whilst retaining product and commercial expertise. Following the reorganisation, the region is trading in line with expectations with synergy benefits flowing though.
Our investment in the manufacturing of not-for-sale-consumables is fully on schedule and on budget. Our order book for these new products is building strongly and our initial shipments are scheduled to take place in the second half of the year.
The region is on course to achieve record sales and production levels across the Group's core gift packaging product categories. The Group's second efficient and environmentally friendly printing press is on schedule and on budget to be installed in time for our main production in FY19.
Additionally, sales of both stationery and gift products are encouraging especially to our existing base of Europe's strongest and growing multiple retail customers.
The region has seen particularly strong growth in the higher margin independent store sector.
Having won a major new contract for the supply of every day greetings cards with Australia's largest discounter, we are benefitting from the economies of scale that this opportunity presents, particularly leveraging our logistical capability and scale.
Paul Fineman, Group CEO, commented:
"We are pleased with the progress made in the first quarter, particularly with regard to the various incremental growth initiatives highlighted at the Group's results.
Alongside this, our order book is yet again at record levels with strong momentum fueled by excellent product innovation and ever closer relationships across our broad customer base.
Organic growth opportunities exist in all regions, and our strong balance sheet is also providing the flexibility to continue to evaluate M&A opportunities."
As mentioned in an earlier blog article, I had previously done fairly well in IGR holding over the 2004/05 period and thankfully dodged the bullet that was to come along in 2007/08 when IGR or International Greetings as it was once called, got badly beaten-up during the financial crisis as their share price collapsed by over 95%. However, these days the company seems to be in safe hands with Mr Fineman in the driving seat. I have to admit that after the previous massive declining in the share price of IGR, I was a touch slow in buying the shares again having been very tempted in April 2015 after a great TU when the share price was 112p but I finally bought at 180p some months later after another fine TU; sometimes you do kick yourself don’t you! Since that time I have made further top ups as the good news “ahead of current market expectations” continued to flow.
Learning Point From My Experience That I Am Happy To Share
A learning point that has served me well over the years: If you find a share that looks very attractive, the numbers appear solid and the RNS good news continues to back your initial interest, don’t think you have missed the boat just because the SP has gone up by x% whilst you dithered. Provided the price is not silly, you often get other chances to buy but remember that sometimes you simply have to stump up the cash for quality!
My View: I really do like IGR and it’s what I consider to be a very well managed AIM company. I rather trust the CEO, Paul Fineman who was appointed as Group MD in January 2008 and a year later became the company's CEO. Today's trading update reads well and suggests the company is both continuing to grow and is in fine form.
Wednesday 30/08/2017: WH Smith: SMWH: Market Cap: £2045m RNS Pre Close Trading Update:
PRE CLOSE TRADING UPDATE
Prior to entering its close period ahead of reporting its preliminary results for the twelve months ending 31 August 2017 on 12 October 2017, WH Smith PLC announces the following pre-close update.
Our Travel business continues to deliver a strong performance with good sales across all of our channels and our new store opening programme both in the UK and internationally is in line with our plan. We have now opened our first three stores in Italy - in Rome's Fiumicino and Ciampino airports, and one in Turin airport. We continue to see further opportunities in the international news, books and convenience travel market.
Our High Street business continues to perform in line with expectations. Cost savings and margin improvements have been delivered in line with our profit focused strategy.
WH Smith PLC expects the outcome for the year to 31 August 2017 to be in line with expectations.
It’s actually quite beneficial for me writing these notes as it pushes me to be a touch more analytical with my trading history. In the case of beautiful boring WH Smith, I bought the 1st tranche of the current holding in October 2014 and made a more significant purchase a few months after the Brexit vote when the shares had been a touch overly clobbered. What I like about SMWH in addition to the published numbers, is the way they have grown their travel side of the business. I always drop in at an airport or service station and happily observe the footfall; nice!
My View: I love them, they are a big market cap company and one that has continued to deliver over recent years. In addition, they offer a modest but handy dividend that is in common with my investment approach, I reinvest in the stock hopefully compounding my return. It's good to have a number of truly boring stocks in the portfolio and you don't really get much more boring than WH Smith.
Thursday 31/08/2017 & Friday 01/09/2017 no significant RNS for portfolio shares
Fourth Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own).The Real Good Food company has been at its tricks again this week (I did comment on this company a couple of weeks back). On 29/08/2017 they issued their 2nd profits warning within four weeks. Now the optimists among us may claim that we should be thankful for a few weeks of stability but to my mind, they remain totally uninvestable due to lack of management credibility; thankfully I never got near to them. Maybe for the punter, this will be the time to buy as I assume they have done a kitchen sink job and all the bad news is out there; so who knows they may improve from here. However, I don’t personally care much for punting.
On 30/08/2017 we had an awful RNS from HSS stating that a profit of £2.2m in H1 last year would compare to a massive loss this year at H1 of £14.2m. Now if that is not bad enough let's throw in the absolutely massive debt that the company has been saddled with since IPO. The net debt stands at over £200m and totally dwarfs any claimed profit: simply an almost uninvestable situation even before Wednesday's profits warning. Like other investors who write a diary or form of Internet blog, I do not offer advice but in the case of IPO’s I often suggest that people take great care when a company is floated or refloated and laden with debt by the charitable sharks who previously owned the entire business. I am afraid that HSS was simply an accident waiting to happen and now the share price is about 20% of it’s flotation price. If things go well for a business stacked up with IPO legacy debt then ok, you just might get by in the good times but simply why take the risk as massive debt may simply prove to be unsustainable for the survival of the business.
Turning to next week, the portfolio has results from IQE on Tuesday 05/09/2017, SOM on Wednesday 06/09/2017 & SFR holds their AGM on Wednesday 06/09/2017 and it is their usual practice to give the market a trading update at their AGM.
Tomorrow it’s off to the fair city of Lincoln for the Hatters next confrontation within football basement planet of giants; oh why does the LTFC manager buy a lorry load of dwarfs for the midfield; just can’t work that one out; this is L2, the world of giants for heaven's sake! Anyway the plan is to arrive early, breakfast in Patisserie Valerie, well why not as I hold the shares, followed by the sights of Lincoln and finally a pre-match beer. Oh yes, and the game, how could I possibly forget that?
Have a great weekend & as ever, happy investing.