Voyager RNS Log WC 7/01/2018
After the pre-Christmas lull and the end of year festivities, it’s time for the first RNS log of 2018. Quite a few IT changes in the Whittler household firstly with a Microsoft Surface Pro, what a lovely little machine that is, and a new i7processor with SSD desktop with both machines getting me on the net within 15 seconds of startup and of course able to run ShareScope which along with SharePad, gets used a lot by me.
At the same time, I have moved to 200Mbps broadband and due to the thick walls on my very old property, have installed a mesh wifi with 3 three mini relayers. I now get absolutely crazily fast wifi that’s hard to believe in terms of speed and stability especially in the mountains of Cambridgeshire!
What’s all this got to do with share dealing and investments? Well, over the years I like most of us have had occasional poor broadband performance or indeed outage of the service. My last outage was with TalkTalk a couple of years ago and it took two weeks for them to get BT in to replace the broken line: I just can't operate as I wish in such an environment.
Anyway, enough of this IT waffling on, let’s get to some shares stuff starting with this weeks RNS’s that affect stocks within the Whittler universe:
Monday 8th January 2018: No RNS announcements affecting shares within the portfolio.
Tuesday 9th January 2018: RNS Persimmon: PSN: Trading Update:
Persimmon plc announces the following update ahead of its Final Results for the year ended 31 December 2017, which will be released on 27 February 2018.
Revenues for 2017 of GBP3.42bn were 9% higher than the prior year (2016: GBP3.14bn) with legal completion volumes strongly ahead by 872 new homes (6% increase) to 16,043 (2016: 15,171). The Group's average selling price increased by 3% to c. GBP213,300 (2016: GBP206,765).
Since the launch of our Group strategy in 2012 we have made a significant contribution to increasing UK housing supply by opening 1,189 new selling outlets and delivering 80,726 new homes to the market during which time we have increased our annual production by over 70%.
We continued to experience healthy customer demand for new homes through the autumn sales season and the value of our forward sales at 31 December 2017 of c. GBP1,355m was 10% ahead of the prior year (2016: GBP1,234m). Second half legal completion volumes of 8,249 were 455 stronger than for the first half of the year (H1: 7,794), an increase of 6%.
We anticipate our pre-tax profits for the year will be modestly ahead of market consensus.
My View: Nothing to get overly anxious about this trading update in my opinion and for me, it has been a Brexit beauty which has given me a well over 90% return since that wonderful day after Brexit. In my mind, a totally stupid referendum in asking people to vote on something about which they have little understanding of the implications or the economics and emotions rule the day. If the referendum was about which sauce you should have on your sausage sandwich, red or brown, then the issues would be easy for everybody to understand but that’s a sandwich; this if life for decades to come. Anyway, rant over and I am simply grateful on a selfish front to have loaded up with bargains post Brexit. Oh yes, back to Persimmon, I am happy to continue to hold.
Tuesday 9th January 2018: IG Design Group: IGR: Completion of Acquisition:
Acquisition of a leading Australian greetings card business
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 announce that it has completed the acquisition of the trade and certain assets of Biscay Greetings Pty Limited ("Biscay"), a leading greetings card and paper products business based in Australia, as previously announced on 21(st) September 2017.
The acquisition, made through Design Group's Australian Joint Venture Artwrap, was satisfied by a cash consideration of AUD8.9m using local debt facilities. The consideration represents 2.7x EBITDA for the year ended 30 June 2017 although an injection of working capital of up to AUD3m will also be required. In the year to 30 June 2017 Biscay generated sales of AUD13.4m with an operating profit before tax of AUD2.9m.
Biscay provides greetings cards and related products to an extensive base of almost 2,000 customers through regional, wholesale distributors, and independent retail channels across Australia and New Zealand. With an established and strong reputation for design and excellence in product and customer service that complements the existing attributes of Design Group Australia, this acquisition provides opportunities for even greater engagement and cross-selling with all key National and Independent retailers throughout Australia and New Zealand.
Commenting on the acquisition, Paul Fineman, Chief Executive, said:
"Following our recent announcement of a robust half year performance and strong profit growth in Australia, we are delighted to complete this acquisition which complements Design Group's existing operations in the territory.
"The acquisition almost doubles the Group's significant market share in the value channel of the Australian greetings card market, adds to our capabilities in this growing and higher margin category and further diversifies the Group geographically. At the same time, it provides cross-selling opportunities and thus an even more compelling proposition to existing and new customers "
My View: well not exactly new news as the proposed acquisition was announced to the market on 21st September 2017 but nevertheless it’s worth commenting again that the acquisition appears to be attractive for the further expansion of IGR. My view on this quality business has not changed since I commented on the interim results at the end of November 2017: I am happy to continue to hold the investment which has delivered a return of well over 100% for me in the last 18 months.
Wednesday 10th January 2018: RNS Taylor Wimpy: TW.: Trading Update:
We will report FY 2017 results in line with our expectations, and we expect to achieve further growth and performance improvement in 2018. For FY 2017 the Group will deliver an improved operating profit* margin of c.21.2% (2016: 20.8%) and a return on net operating assets** of over 32% (2016: 30.7%). We will pay a total dividend in FY 2018 of c.GBP500 million, subject to shareholder approvals, and reiterate our intention to make further material capital returns in 2019 and beyond, with details to be provided at our Strategy Day scheduled for H1 2018.
We start this year in a strong financial and operational position with significant embedded value in our short term landbank and strategic pipeline. Whilst we are aware of potential political and economic risks, we expect to demonstrate further progress in 2018 against our medium term financial targets, whilst also driving further operational improvements where we can add value, including customer service and product quality.
My View: well looks solid if not explosive but as ever some investors may have been looking for something a touch more exciting. I rather expect TW., PSN and other housebuilders to fluctuate for a while but feel happy enough to hold for the moment and continue to take the very attractive dividends whilst at the same time, being mindful of the cyclical nature of the business.
Wednesday 10th January 2018: RNS Amino Technologies AMO Contract Win:
DELTA selects Amino for end-to-end multiscreen cable to IP service transformation
Amino Technologies plc (LSE AIM: AMO), the Cambridge-based provider of digital entertainment solutions for IPTV, Internet TV and in-home multimedia distribution, today announces that DELTA, the Netherlands-based provider of internet, TV, telephony and energy, is deploying Amino's MOVE TV delivery platform to provide a full end-to-end solution to deliver multiscreen entertainment services.
My View: Now technically the news makes interesting reading but it’s difficult to judge what impact the contract win will have in terms of profits. All we know is that AMO tell us “this contract will not have a significant incremental impact on the Company's revenues in the current financial year”. Maybe not the most helpful of RNSs just a little guidance would not have gone amiss.
Wednesday 10th January 2018: Frontier Developments: FDEV: RNS Trading Update and Notice of Results
For the six months to 30 November 2017, the Board expects to report a sustained level of performance compared to the record results achieved for financial year 2017 (the twelve months ended 31 May 2017), with revenue of approximately GBP19 million in the period compared to GBP18.1 million for the six months to 30 November 2016 and GBP19.3 million for the six months to 31 May 2017. Both Elite Dangerous and Planet Coaster continue to perform well.
Frontier released Elite Dangerous on PlayStation 4 in June 2017. The launch was smooth and stable, which the Company believes illustrates the capabilities of its development and publishing teams, and the scalability of its infrastructure, such as the proprietary COBRA game engine. The successful launch boosted sales of Elite Dangerous, contributing to strong revenue generation during the period. The Company also released content updates for Planet Coaster and Elite Dangerous, and hosted a well-attended first Frontier Expo event in October 2017. Trading through the holiday period (Thanksgiving and Christmas) was in line with the Board's expectations, with both Elite Dangerous and Planet Coaster performing well in price promotion events.
Taking the above factors together, the Board anticipates that Elite Dangerous revenue will normalise down from the first half to the second half of the financial year as PlayStation 4 sales settle to a post-launch run-rate, but that underlying run-rate sales (including downloadable content) will sustain at healthy levels. As a consequence, the Board remains confident about achieving its expectations for the current financial year ending 31 May 2018.
My View: FDEV is a highly rated share in terms of price and maybe the impatient trading types were looking for “above market expectations”. FDEV can be somewhat of a volatile stock and initially the traders probably sold a few but the stock ended up the day 4.4% down. I don’t have a massive holding of FDEV in my special situations portfolio and whilst it has done fairly well, I feel it is a tad too risky/elevated to add any more at the moment.
Thursday 10th January 2108: RNS boohoo.com: BOO: Trading Update:
Group revenue growth for this financial year is now expected to be around 90%, ahead of our previous guidance of around 80%, which was raised from 60% at our interim results in late September. We now expect group adjusted EBITDA margins to be between 9.25% and 9.75%, narrowing the range from the 9% to 10% as guided at our interim results.
Mahmud Kamani and Carol Kane, joint CEOs, commented:
"We are delighted to report another set of strong financial and operational results, with record sales in the four months to December across all our brands. The Black Friday period was our most successful ever and we traded well throughout the period under review. boohoo has continued to perform well, delivering strong revenue growth on increasingly challenging comparatives last year. PrettyLittleThing has continued to deliver exceptional results and Nasty Gal is making excellent progress in its first year. Our focus remains on the customer proposition: offering the best range of the latest fashion at affordable prices, coupled with great customer service."
Note: I will not attempt to go into the full details of the TU here but rather refer readers to the notes of the excellent Paul Scott who is an expert commentator in the sector and has a substantial holding in the business: LINK: www.stockopedia.com/content/small-cap-value-report-thu-11-jan-2018-tsco-mks-john-lewis-boo-gmd-card-ao-gmd-lrm-296228/
My View: I repurchased back into BOO a couple of weeks before Christmas. I had made decent profits on BOO earlier but jumped off the ride way too early and had been toying with the idea of reinvesting; hence the purchase after a drop of over 30% since the September 27th interims, mentioned above in bold. Whilst at the time of December repurchase, I did not see the stock as a totally compelling purchase, it nevertheless warranted inclusion in my special situations portfolio: so let’s see what happens from here. Undoubtedly BOO has been demonstrating exceptional growth in terms of revenue and profits the valuation has continued to be dramatically high. If the company continues to grow, then the valuation will be justified but as is the case with many stocks on mammoth valuations they have to continue to deliver to justify the share price.
Friday 11th January 2018: RNS XP Power: XPP: Trading Update:
The Company had a good finish to the year, in line with the Board's
expectations, as the strong order intake reported in the third quarter drove
robust revenue growth in the final quarter. Encouragingly, the momentum in
order intake continued into the fourth quarter and geographically, both order
intake and revenue growth has been strong across all regions.
Order intake in the fourth quarter of 2017 was GBP46.8 million, 24% ahead of Q4
2016 on a reported basis or 32% ahead in constant currency. This resulted in
order intake for the twelve months ended 31 December 2017 being GBP184.3 million,
an increase of 38% over 2016 on a reported basis, or 31% in constant currency.
Revenue in the fourth quarter of 2017 was GBP43.2 million, 16% ahead of Q4 2016
on a reported basis, or 23% in constant currency. Revenue for the twelve
months ended 31 December 2017 was GBP167.0 million, an increase of 29% over 2016,
or 22% in constant currency.
We are encouraged by the continued strong order intake experienced across the
business during the second half of 2017 and the overall book to bill level for
the year. We enter 2018 with positive momentum and therefore expect to grow
orders and revenue in 2018 above that in 2017.
My View: Note the company also goes on to say that the acquisition Comdel, is performing in line with management expectations. I like XPP and originally wrote about the company back in April 2016 marking out what really attracted me to the business. Since that original purchase, the price has appreciated by well over 100% and I continue to feel comfortable in holding the share that continues to demonstrate good returns of capital invested and good free cash flow.
Friday 11th January 2018: RNS: Somero: SOM: Trading Update
The Board is pleased to report that the Company delivered strong, profitable growth and healthy cash generation in the six months since 30 June 2017 exiting 2017 with its strongest trading month of the year. As a result of the strong H2 performance, the Board now expects 2017 revenues will be slightly ahead of market expectations of $84.7m, EBITDA will be comfortably ahead of market expectations of $26.0m driven by the volume increase and effective operating cost management, while net cash at 31 December 2017 is expected to be not less than $18.5m, well ahead of market expectations of $16.5m.
Following record results in 2017, the Board is confident in the Company's ability to deliver another year of profitable growth in 2018 as the underlying market conditions in our core markets remain positive and as the Board continues to see significant growth opportunities in our other territories. The Board's confidence is further supported by recently enacted pro-growth US corporate tax law changes which are expected to stimulate increased economic activity in the Company's largest market.
In addition, considering the Company's continued, healthy cash generation and strong year-end financial position, the Board plans to review the Company's cash position alongside cash requirements for 2018 as part of its review of the final dividend for 2017. While no decision has been made with regard to future dividends, including any special dividends, the Board has concluded the growth and increased complexity of the business necessitates an increase to the level of net cash to be maintained by the Company to a minimum of $15m at 31 December each year going forward. A decision on the use of excess cash above the increased net cash reserve will be announced as part of the 2017 earnings announcement scheduled to occur on 14 March 2018.
My View: what a dull boring business SOM, you just can’t get less exciting that pouring flat concrete surely. Yet it’s the numbers that drew me to SOM back in 2015 with again good returns on capital, decent cash free flow and a well-covered dividend; at that time the price was around 100p. I suspect there is also a special dividend to be announced by SOM within the next few months. The business looks to be well on track to deliver again in 2018; a good company that I am happy to continue to hold.
That’s all for this week and moving into the weekend, I am off to Chesterfield to see the Hatters; a few years since I have been to Chesterfield and they have a new stadium since my last visit. I wish a good weekend to all readers and as ever, happy investing.