Voyager RNS Log WC 26/11/2017
Oh dear, the perils of train travel. My weekend trip to Crewe for the Hatters game had to be abandoned at Birmingham New Street station as the train arrived over two hours late due to a broken rail north of Leicester. So instead of football, I retrieved what I could from the day by visiting the Birmingham Frankfurt Xmas market; beer & bratwurst. The beer was nice but the sadly the bratwurst had all of the culinary delights you would expect from an emulsified pig. Still, such is life: now how about the RNSs that affect stocks within the portfolio over this week?
Monday 27th November 2017: No RNSs for shares held within the portfolio.
Tuesday 28th November 2017: D4t4: Mkt Cap £51m Interim Results
"As experienced in some previous years a higher proportion of our business is expected to close and be delivered in H2 2017. Despite a lower first half due primarily to a change in the timing of contract awards by comparison to the same period last year, the Board remains confident of achieving management expectations for the full year based on recent business wins and the depth and quality of the prospects pipeline."
The first half loss is primarily due to the timing of client contracts during 2017. The balance of business intake during the period has been similar to that experienced by us previously in FY2014-15, in that a large proportion of our business is expected to close and be delivered in H2 2017.
Ø Many of the contracts currently in negotiation (>80% by value) are with existing clients, who wish to increase either the footprint of our software or extend the use of our managed private cloud environments.
Ø Data and analytics recurring income has continued to grow and, we are currently in contractual negotiations with 14+ companies across the software licence sales, private cloud and analytical platform modernisation project areas of our business
Ø With the existing customer contracts forecast to close before the year end, recent new business wins and the depth and quality of prospects identified for both projects and software licence sales, the Board remain confident that the business will achieve a solid finish to the financial year which will be in line with management's expectations
My View: the loss in the first half of the year is a touch disappointing but of more of concern to me is the lack of a real feeling of confidence with the visibility of sales. Phrases such as “business (completion of orders) is expected to close and be delivered in H2 2017 “and “we are currently in contractual negotiations with 14+ companies” just don’t give me enough of a good feel or reassurance to continue to hold all of my position in D4t4 and I therefore, have carried out a very unemotional sale of 70% of my holding for a manageable 12% loss. Despite fairly significant director buying post interims, I feel there is just too much uncertainty for my comfort and have now greatly reduced my position.
Tuesday 28th November 2017: IG Design (IGR): Mkt Cap £260m formerly known as International Greetings.
Whilst cost headwinds are undoubtedly stronger than ever, our businesses are well positioned to combat these. A full order book and a strong performance in the first half of the year provides confidence that the Group is fully on track to meet full year market expectations for profit and other key underlying metrics.
My View: Punters got overly excited about IGR and unsustainably drove the price up by almost 10% just a couple of days before the interims. On the day of the interims, the shares dropped back due to probably a bit of profit taking and the gamblers waking up to a very good but steadily growing company that will not make them rich overnight: get rich quick is definitely not my style if investing; it only happens in Hollywood movies and the lottery. The results are in my opinion very good with increasing sales, increasing profit and organic growth supplemented by additional growth from the acquisition of the business Lang. Decent returns on capital and good cash flow/free cash flow; my kind of business and one that has given me handsome return since re-entering the stock at less than 180p in early April 2016. The closing price on 30/11/17 was 414p. A Happy investor who will continue to hold.
Wednesday 29/11/2017: Telford Homes: TEF: Market Cap: £314m: Interim Results.
We are firmly on track to deliver profit before tax in excess of £40 million for the year to 31 March 2018, in line with market expectations, having secured over 95 per cent of anticipated gross profit. We have also already secured over 65 per cent of the gross profit required to exceed £50 million of profit before tax in the year to 31 March 2019.
My View: Usually a phrase such as 2nd half weighted/H2 weighted rather concern me but not in the case of Telford a very well managed business that continues to deliver and to my mind is the most attractive of the builders based upon current valuations and it’s good prospects. I will continue to hold.
Thursday 30/11/2017: On The Beach: OTB: Mkt Cap: £580m: Preliminary Results:
Current trading and outlook
The first quarter of our financial year (calendar Q4) is historically the quietest trading period for the Group. The low cost carrier summer 2018 seat release came earlier than last year and in part helped to offset the disruption caused by the Monarch Airlines Limited failure and repeated flight cancellations borne out of air traffic control and pilot strikes. On many of the routes from regional departure points where Monarch had a higher proportion of the flight capacity we are already seeing replacement capacity being positioned. In calendar Q4 last year sales for summer 2017 were impacted by the tour operator currency hedge and the Western Mediterranean hotel price inflation. Neither of these headwinds have been prevalent in the start to FY18. In addition to this, consumer appetite for and capacity travelling to destinations in the Eastern Mediterranean are strongly up year on year and against this backdrop the Board is pleased to report that current performance is in line with expectations and believes the business is well positioned for the key trading period that commences in late December and continues into Q1 2018.
My View: A sound set of results for OTB having good returns on capital and usually very decent cash flow, reinvesting in the business and continuing to grow at a good rate: Revenue up 17.2%, PBT up 25% & basic eps up by 25%. I do rate OTB and they have done well for me and I rather expect they will continue to deliver. My only real criticism is one directed at myself as unfortunately, I dithered little too long back in the Autumn of 2016 before buying into OTB after having a good look at both the numbers and the quality of the product on offer on their website. I like the business and will continue to hold.
Glad I Am Not There (GINT): well so as not to be overly modest, how about a place where I was, D4t4; can’t get them all right but what I can do is mitigate risk and sell a large percentage of my holding. I am afraid one of the inherent risks of investing in small cap companies is often the visibility of earnings. Note, I am not condemning D4t4 but simply limiting my potential risk exposure.
No football travel for me this weekend as the dreaded BBC have switched the Hatters game away to Gateshead in the FA Cup to a Sunday 2 pm kick-off and logistics just prohibit that one for me. In truth, I am a southern softie these days despite my folks hailing from Wallsend in the frozen north.
Whatever you are doing, have a great weekend.