Voyager RNS Log WC 03/06/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Great news and on my birthday as well as I received a letter confirming my successful appeal against my council tax banding and a fairly substantial refund going back to 1999; happy days! Incidentally, my request for a re-evaluation was rejected at first but after more legwork, I was able to provide sufficient evidence for the process to begin. If anybody else is considering this approach then I suggest you give it a try & link guidance: https://www.moneysavingexpert.com/reclaim/council-tax-bands-change. For my birthday meal with family, I relaxed my low salt diet and had a very tasty if salty, Lamb Rogan Josh. Incidentally talking of salt, I remain convinced that if the general public reduced their salt intake on a daily basis to less than 6g then the profits of the pharmaceutical companies would decline as the blood pressure of the population reverted towards something more like 120/80. On a general note, often when I sell a share especially if I do so as I see something I don’t immediately like yet still feel the business if of decent quality, I will not be averse to buying back in either as a spread bet or as shares once I deem that the fall is complete and I see a bowl of recovery on the chart. Two very recent examples where I bought back in via spread bets are RWS & OTB and pleasingly after both had been heavily marked down they are both rapidly heading upwards. The reasons for my earlier sales of both RWS & OTB which of course were RNS catalysed, can be found in earlier RNS weekly logs on this site: as ever if I see a doubt I either get out or substantially reduce my holding. I suppose it makes me sound like a trader but that’s not how I work: once I see a risk, I take action to either diminish or remove that risk and should an attractive opportunity occur again with that company, then I will happily re-enter. In the case of RWS & OTB, both of which I consider as quality companies, they really to my mind became oversold and hence sufficiently attractive to me after their price falls. Anyway, onto this weeks log which I apologise in advance for being possibly a touch less in depth as I have been away from the office for so much of the time. Monday 04/06/2018: Xpediator: XPD: Mkt Cap £71m: Acquisition of Anglia Forwarding: Xpediator, (AIM: XPD) a leading provider of freight management services across the UK and Europe, is pleased to announce it has entered into an agreement to acquire the entire issued share capital of Anglia Forwarding Group Limited ("AFGL"), a UK-based international freight forwarder with road, sea and freight capabilities (the "Acquisition"). The initial cash consideration payable upon completion is £1.5 million, plus a further cash payment reflecting AFGL's surplus working capital position at completion estimated to be approximately £700,000. Deferred cash consideration of up to £2.0 million may also be payable contingent on profits generated by AFGL over the two years ending 31 May 2020. My View: to my eye, the acquisition of Anglia Forwarding for £1.5m plus deferred cash of up to £2m; looks a very sound purchase. Looking at the numbers provided it looks a reasonable enough acquisition for XPD and I suspect that more acquisitions will follow. The EBIT margin of XPD is by nature of the sector, not massive but from what I can put together it suggests that the margin will slightly increase as these bolt-on acquisitions come into play plus of course other synergies offering cost saving and contract opportunities. XPD is at the moment is only a small starter position within the folio. Monday 04/06/2018: Amino: AMO: Mkt Cap £149m: Kabelnoord rollout and on Wednesday 06/06/2008 a Trading Update Kabelnoord, the leading Dutch cable operator, is to deploy Amino's MOVE end-to-end multiscreen video platform. This will allow Kabelnoord to offer next generation TV services as part of a major rollout of its fibre-to-the-home (FTTH) network. Then the TU: Amino entered the current financial year with a strong order backlog and during H1 2018 booked over 40% more orders than in the first half of 2017. This, along with good pipeline coverage, means that the Board's expectations for the full year remain unchanged. As communicated previously and following the change in phasing of orders by one of our major customers, we expect to return to our normal seasonality in the current financial year, with revenues weighted to the second half of the year. Consequently, we expect revenue for H1 2018 to be lower year-on-year at approximately $41 million (H1 2017: $49.8 million). (Sterling equivalent H1 2018: approximately GBP30 million revenues; H1 2017: GBP39.9 million revenues). We continue to see momentum in areas of strategic priority, such as software and recurring revenues. Earlier this week we announced that Kabelnoord, the leading Dutch cable operator, is to deploy Amino's MOVE end-to-end multiscreen video platform in the second half of the year. Revenues from software and services sold on a standalone basis continue to increase and are expected to be 12% of total revenue in the period (H1 2017: 8%). Exit annual run rate recurring revenues increased in the period to circa $5 million (H1 2017: $3.7 million). (Sterling equivalent H1 2018: GBP3.8 million revenues; H1 2017: GBP2.9 million revenues). Net cash at 31 May 2018 was $15.1 million (31 May 2017: $16.8 million). (Sterling equivalent 31 May 2018: GBP11.3 million net cash; 31 May 2017 GBP13.1 million net cash). My View: well the roll-out contract win sounds encouraging but no real financial numbers can be offered and I can’t offer even a rough scratch calculation on the revenue significance; so, we will just take it as encouraging. However, what did not strike me as quite so encouraging is the required stretch from H1 revenues ( as predicted in this RNS) to H2 full year expectation. I am not saying it's not achievable or indeed doubtful but to my view simply looks a touch more challenging than I would feel comfortable with. I note that AMO tell us that expectations for the full year remain unchanged but a quick dig into the current H1 prediction & the full year expectation does worry me a tad; they may well make the numbers but after looking at recent historic H1/H2 ratios for AMO, it just looked a bit risky to me. My Action: I did try to sell 50% of my holding at the market open but as is so often the case with small-cap/AIM stocks, a decent trade selling price can be difficult to achieve on screen. However, I did take profits on 50% of my holding the following morning. My reasoning for this 50% sale was simply to control risk and AMO, which still looks a decent attractive business, is now demoted from my top 10 holding. Monday 04/06/2018: IQE: Mkt Cap £856m: Not an RNS as such but an AGM statement that can be found on the companies We are pleased to confirm strong wireless activity and that we are actively engaged in VCSEL qualification programmes with over 10 additional key VCSEL chip manufacturers, which are progressing in line with the board’s expectations. We confirm our guidance for a 40:60 revenue split H1:H2 2018, with a shift back from wireless to photonics as we enter H2 2018. The commissioning of the new Newport Foundry is progressing to plan, with the first five reactors now all on site and in various stages of acceptance testing, commissioning and qualification. The second five reactors are expected to be delivered on site commencing Q3 2018, with acceptance testing, commissioning and qualification during the rermainder of 2018. “Our new technologies portfolio, including GaN on Silicon, NanoImprint Lithography (NIL), Crystalline Rare Earth Oxide (cREO), and Quasi Photonic Crystals (QPC), is rapidly gaining strong traction and engagement with key customers around the globe for a wide variety of high volume applications.” The Group will announce its Interim Results for the six months ended 30 June 2018 on Tuesday, 4th September 2018. An analyst briefing will be held later that day at a time and venue to be announced. My View: firstly I wish companies would spell check in a better way as even a word blind dyslexic such as me can spot errors; that’s disappointing. I took profits of a recovery stock The Restaurant Group and bought back into IQE today having previously made some very decent profit on my sale of IQE earlier in the year. In fact, my association with IQE goes way back some 8 years but sadly I took time away from IQE for some of that time and missed the rise form the 20’s to the 70’s but at least I re-entered to catch a nice special situation that went on a charge through just about all of 2017 (half of that charge was better than no ride at all). Since that time and my sale in the 140’s, the share price has drifted down significantly after periods of ramping and negative ramping/excessive shorting in the investment community. I thought that the AGM statement was positive enough for me to buy back into what I tend to classify as a special situation stock. It’s not without risk but does contain a substantial amount of promise. From what I can see, the AGM statement has also been received well by the brokers. Tuesday 05/06/2018: No RNS of impact to Voyager Wednesday 06/06/2018: Amino: AMO: Mkt Cap £149m: Trading Update: SEE AMO Notes above & sale of 50% of holding. Thursday 07/06/2018: Ramsdens: RFX: Mkt Cap £57zm: Final Results: My View: maybe I should start by saying that morally I don’t usually invest in the likes of pawnbrokers, loan-shark companies, tobacco companies, cheap booze companies etc as the exploitation of the less affluent is not something that I choose to profit from. However, I just about convinced myself that RFX was only partly a pawnbroker, conscience somewhat cleared, and therefore in recent weeks have been steadily building up a position in RFX with an average buy price of 188p. I like the financial numbers and ratios and indeed I see that Stockopdeia has given it a stock rank of 91. I should say apologies for the limited notes here as my office time is very limited this week; simply suffice to say that I see RFX as a decent quality business progressing well and it’s first set of full results since joining AIM look impressive to me. Indeed, I was very taken by these results which fractionally beat expectations (I think they are only covered by one broker but anyway, so the expectation does suffer from bias) and took a further slice of RFX and it now replaces AMO in the top 10 list. The strength in the numbers comes from their FX service, up 26% to £11.3m & Jewellery which was up 35% to £8m. The EBIT margin looks encouraging according to my rough fag-packet increasing from 13.2% in 2017 to around 15.8% in 2018. Friday 08/06/2018: Games Workshop: GAW: Mkt Cap £986m: RNS Trading Update: TRADING UPDATE ON CLOSE OF FINANCIAL YEAR ENDED 3 JUNE 2018 Games Workshop is pleased to announce that the sales and profit growth, which was discussed in the trading update released on 4 May 2018, has continued in the period to the end of the financial year. Sales growth has been across all sales channels. We expect the Group's sales for the 53 weeks to 3 June 2018 to be approximately £219 million and the Group's profit before tax to be at not less than £74 million. Royalties receivable from licensing are c. £10 million. In recognition of our staff's contribution to these results, we paid during the year a bonus amounting in total to £5 million. This was paid equally to each member of staff. My View: it looks a very decent trading update to me and I particularly like the bonus arrangement for all staff sharing in a £5m pot; that to my mind is excellent and really get employees feeling that they are more than just a servant to the company. The end of year figures look bang on the brokers and that leads me to a couple of thoughts: Firstly with a company doing as well as GAW and approaching a market cap of £1b I would have thought that more brokers would commence coverage of GAW. Secondly given the very positive newsflow from GAW including the introduction of new offerings and the royalties stream of income, I would think the forecasts would be moved upwards a touch for 2019 as at present the broker suggests a drop of 5% in revenue and a drop of 22% in pre-tax profit. Interesting times; I am happy to continue to hold and may add further on future share price weakness as profit taking sets in.
Whats On the horizon next week: Results: Finals from IG Design Group: IGR on 11/6/18 & Finals from Norcros on 14/06/18. Oh yes, also maybe AIR on 11/06/2018 if they complete the accounts worked then return from suspension. Possible Trading Updates? BOO & SOM. This weekend I intend to enjoy a nice family BBQ, fillet steaks marinated in kampot pepper/Lime/olive oil & chicken marinated in ginger/garlic/lime/soy sauce all cooked over charcoal and maybe washed down with a little red! Whatever your plans, enjoy the summer while it lasts! Happy investing; catch you all next week
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Voyager RNS Log WC 25/05/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Only a short week with the bank holiday and a very quiet one at least to start with as there was very little RNS news on Tuesday apart from the market jitters as Italy and Spain struggle with their economies and the thankless individuals collectively called politicians struggle with a way forward. In truth, I have never been a political animal and feel fairly convinced that I could have found a way to prosper even in the likes of Albania in the 90’s. Anyway. Let’s hope Mr Market does not become overly upset over the next couple of months but if he does, I have a very healthy reserve that may be called on should any anomalies be chucked up for the better quality companies. Conversely, rubbish will be rubbish no matter what the market is doing. Onto this week's log: Monday 28/05/2018: Bank Hol, Markets Closed: Tuesday 29/05/2018: No RNSs relevant to Voyager portfolio. Wednesday 30/05/2018: Telford Homes: TEF: Mkt Cap £346m: Finals RNS: Total profit before tax in the year to 31 March 2018 increased by nearly 35 per cent to £46.0 million (2017: £34.1 million) [1], ahead of original market expectations. This strong performance was reflected in an improvement in our adjusted gross margin of 4.2 percentage points and a 3.3 percentage point increase in our adjusted operating margin, up to 16.7 per cent (2017: 13.4 per cent). The margin improvements are partly due to the mix of developments that completed during the period but also a combination of other factors, particularly some prudent estimates for build cost inflation that were not realised. I am also delighted that we have been able to declare a final dividend of 9.0 pence per share, making a total of 17.0 pence per share for the year, an increase of 8.3 per cent compared with the previous year (2017: 15.7 pence). We expect to continue to pay at least one third of our annual earnings to shareholders in dividends. Outlook Telford Homes has delivered significant profit growth over the last three years with total profit before tax increasing from just over £25 million in 2015 to £46 million in 2018. Furthermore, we are well placed to achieve our stated goal of exceeding £50 million of total pre-tax profit for the year to 31 March 2019 which will represent a 100 percent increase over four years. Having arrived at this point in a short period of time the challenge now is to establish the business consistently delivering over £50 million of profit every year and furthermore to generate and sustain the next significant growth period. Without the advent of build to rent we would not have been able to achieve consistency of profits and would instead have fluctuated around an overall upward trend. Our industry is very capital intensive and the business would have required sustained injections of new capital just to maintain the profit levels achieved in the last few years on an ongoing basis. However our increasing success in the build to rent sector means we expect to consistently deliver profit in excess of £50 million over the next three years predicated on a certain level of new build to rent business. We also expect to set a platform for delivering the next significant phase of profit growth in the medium to longer term. The level of build to rent business we are able to secure will be crucial to achieving our ambitions and to outperforming them if the opportunity arises. The strength of our position and our ability to capitalise on the exciting possibilities ahead are a result of the hard work and dedication of the whole Telford Homes team. I am exceptionally proud of the customer recommendation and employee satisfaction scores we achieved last year and I am confident there is a relationship between them. I look forward to us building on the solid foundation we have created for Telford Homes both in the year ahead and beyond. My View: another very sound set of results from TEF which as I have said before, is my favourite stock in this sector as it’s simply geographically concentrated in the right place, London where there is a massive shortage of reasonably priced housing & the rental investment is flourishing; a large part of TEF work is in the buy to rent segment where they carry out the entire process to completion before handing over to large investor landlords. I just can’t really see that need, which makes this stock low risk, ever really going away. I see TEF as a very well managed business that manages expectations and simply delivers almost constantly at the top end of those expectations or even above them. For fellow TEF investors, here is a link to a video where Jon Di-Stefano, TEF CEO, and his FD talk through the results: Video: www.brrmedia.co.uk/broadcasts/5b06e7139e3d657120be37ee/telford-homes-full-year-results I view TEF as a very long-term hold and that I am happy to continue to treasure within the portfolio and likely add further on any share price weakness in the following months. Yes, it is an incredibly boring stock & not one for the “get rich quick mob” but I can’t help but like boring predictable stocks. Wednesday 30/05/2018: Bodycote: BOY: Mkt Cap £1770m: AGM Trading Update RNS: Trading Update Current trading Group revenue for the four months ended 30 April 2018 was £243m, 7% higher than the same period last year and 10% higher at constant currency. On a divisional basis, ADE revenues were up 5% to £94m (up 10% at constant currency), while AGI revenues were up 9% to £149m (up 10% at constant currency). Within the overall Group result, Specialist Technologies' revenues grew 12% at constant currency. The following review of the Group's markets quotes all movements based on growth against the same period in 2017, at constant currency. Car and light truck revenues grew 8%, with continued strong growth in Emerging Markets and good growth in Western Europe, while North American revenues were down slightly. Civil aerospace revenues grew 4%, held back by restrained demand in France stemming from capacity shortfalls in the aerospace industry supply chains. Overall growth of energy revenues was 24%, with continued strong growth in onshore North American revenues, as well as early indications of an upturn in Western Europe oil & gas revenues. Large frame industrial gas turbine (IGT) revenues were down in North America in line with the cut backs in IGT production announced by the OEMs at the end of 2017. In Western Europe, the IGT declines were more than offset by the increase in business from the new Long Term Agreement with Doncasters. General industrial revenues were 11% higher with good growth across all geographies. Margins have continued to improve although the profit drop-through from incremental sales has been partially offset by increased investment in business development. Financial position Net cash as at 30 April 2018 was £45m compared to £40m at 31 December 2017, reflecting continued strong underlying cash generation in light of the typical working capital outflows in the first few months of the year. The Board will pay a final dividend of 12.1p per share and the special dividend of 25.0p per share on 1 June 2018, at a total cost of £71m. Summary and Outlook We have seen robust growth in the first four months of the year in spite of the foreign currency headwind. At this early stage, and notwithstanding the Group's limited visibility, the Board now expects full year revenue to be higher than previously expected and headline operating profit to be slightly ahead of current analysts' consensus. My View: it seems to me that revenues are up some way more than forecasts & the fag packet looks quite encouraging: All in all, quite an upbeat trading update from one of my top 10 holdings: it will never be the most exciting company but to my mind, a portfolio loaded with such steady well-managed companies would not be a bad portfolio. Wednesday 30/05/2018: Keywords Studios: KWS: Mkt Cap £1080m: Acquisition of Fire Without Smoke RNS: Strengthening the Group's Art Services Line Keywords Studios, the international technical services provider to the global video games industry, today announces that it has acquired Fire Without Smoke Ltd ("Fire Without Smoke") for a total consideration of up to £5.2m from the founders Will O'Connor, Michael David Thomson and others (the "Sellers"). Headquartered in London and with a studio in Montreal, Fire Without Smoke provides a full suite of creative and marketing services to game publishers and developers, creating assets such as game trailers, marketing art and materials for esports events, and providing marketing consultancy and general design services to the video game industry. Founded in 2013 and now with [40] staff between London and Montréal, Fire Without Smoke works with major game publishers such as Sony, Square Enix, Riot Games, Deep Silver, Sega, Capcom and Ubisoft. For the year ending 31 May 2018, Fire Without Smoke is expected to have revenues of £2.8m and adjusted profits before tax of £0.7m. Under the terms of the acquisition Keywords is paying a consideration comprised of £3.85m in cash, £0.5m of which is deferred until the first anniversary of acquisition and subject to certain performance targets, and the issue of 77,006 new ordinary shares in Keywords, which will be issued to the Sellers on the first anniversary of the acquisition and will then be subject to orderly market provisions for a further 12 months. My View: yet another deal by KWS as it builds its global offering: a quick fag packet calculation: From what I can gather, two brokers have today have raised their price target for KWS to £21. I don’t place much faith in brokers price targets but anyway, that implies about a 20% upside from where we stand now. The Outlook statement that accompanied the finals on the 09/04/18 was very positive yet the shares may well drift a touch ahead of the next trading update which I expect to see around the end of July/beginning of August. Overall, I am happy to continue to hold this rather exciting company but as ever, the managing of all of these acquisitions does worry me a tad.
Thursday 31/05/2018: Air Partner: AIR: Mkt Cap £52m: RNS Finals for 2017: Temporary suspension of share trading Further to the Company's announcements of 11 April and 25 May 2018, the Board of Air Partner has agreed with Deloitte LLP, the Company's auditor, that the Company will not be in a position to publish its annual audited accounts for the year ended 31 January 2018 by close of business on 31 May 2018. The Company is working together with Deloitte LLP to finalise the audit and expects the audited accounts will be published no later than Monday 11 June 2018. Accordingly, the Board has requested that trading in the Company's ordinary shares on the London Stock Exchange be suspended with immediate effect pending publication of the audited accounts, following which the Company will request the suspension be lifted. This unforeseen delay is a result of the volume of work required to complete the accounting review and its impact on the financial year audit and the prior year restatements. It is in no way related to the Company's current trading, cash flow, banking arrangements or any underlying issue. Peter Saunders, Non-Executive Chairman of Air Partner, said: "The delay to the publication of our full year accounts, and the resultant trading suspension, is extremely frustrating and hugely disappointing for all connected with Air Partner. However, it is a reflection of the volume of work, which began 7 weeks ago, to conclude a transparent, thorough, and exhaustive internal review and audit. This delay is not related to the Company's current trading, cash flow, banking arrangements or any underlying issue. We thank our shareholders for their continued patience and support." My View: I did up until early April this year have a fairly chunky holding in AIR and they were very considerably up on my original investment that is until that RNS about their “accounting oversight”. On the first sniff of doubt i.e. that early April RNS, I immediately sold. In truth, it was a still a very profitable investment and as the share price continued to head downwards, my sale turned out to be a wise move. An RNS “things are not so bad” was released a couple of weeks later and I reentered at a new but very small starter position using a portion of my profits from the earlier holding; in fact the smallest position by some way in the portfolio. The reason I bought this fresh starter position was that I felt there was a real possibility that the accounts issue was historic in nature and a release of the promised results would once again confirm confidence in the business with the promise that things were under control. We then have two RNS’s the most recent one being 25th May (only 5 days ago) confirming that the year-end results would be issued on 31st May. So, after my swim, I got onto my iPhone & SharePad to have a quick look at the results but nothing there @ 7:15 but nothing; ok, I will ditch what I have as soon as the market opens, I decided. Whoops, hardly finished towelling myself dry when we have an RNS from AIR telling us that the shares are temporarily suspended but hey, everything is fine as “delay is not related to the Company's current trading or cash flow etc”. Now, it may well be that the delay is simply getting sustainable security and closure of the accounting issue or alternatively the audit may have found a few more unfortunate accounting issues when they lifted a few carpets around the place. Either way, I feel the company has really lost some trust and credibility which they may possibly have avoided had they more astutely funded the audit into the “anomaly”. Once they return from suspension I will likely sell the few I own. Friday 01/06/2018: No RNSs relevant to Voyager portfolio. Can’t help myself: A New Purchase: An addition to the portfolio: Purchase of Softcat: SCT: a FTSE 250 stock of £1.3b Mkt Cap. Bought at 724p. Briefly what I like about Softcat:
Softcat plc ("Softcat", or the "Company"), a leading UK provider of IT infrastructure products and services, today releases a trading update for the quarter ended 30 April 2018 ("the Period"). The Company has continued to trade well across all segments during the Period, maintaining momentum from the first half and reflecting further successful execution of its strategy. Market conditions and customer demand have both remained strong. Outlook The Board is confident that the Company will deliver full year results that are ahead of expectations. Glad I Am Not There ( GINT): I should say these are not “clever dick” notes just simply an attempt to help investors learn from their mistakes and let's face it, we all make mistakes and I am probably a graduate of the University of errors: the crucial point is what we learn from those mistakes. Photo-me International: PHTM: For investors, a very disappointing update and as PHTM say, Japan hasn't performed as expected. The outlook says “below current market expectations”. The stock was really bashed by the market falling about 25% and then fell again on the following day. Simply horrible things profits warnings but to my mind, every investor should have a plan of how they deal with them and that’s most certainly not burying your head in the sand. PHTM simply just one of those stocks that never really hit the spot for me i.e. I just never got what PHTM was about with its mix of photo booths and laundrettes seemed to be in something of a 1990’s time warp. I just was never overly impressed by the management sales pitch or presentations to investors. Whilst I agree they have no net debt and indeed have cash on the books, that very generous dividend of 7.7% has not been covered by FCF since 2014 and whilst they intend to pay that dividend this year, it looks to be in for a cut in the future. Note: the conventional dividend cover of eps/dps suggests all is well but looking at the free cash flow suggests otherwise and has done for a few years. Thankfully due to my overall feel for the stock and the quality of the cover, it just never tempted me to buy. Whats On the horizon next week: I can’t see much pencilled in for next week but expect to hear a trading update accompanying the Somero AGM and suspect a trading update will come from Amino (AMO) & Dart (DTG). Have a good weekend & as ever, happy investing; catch you all next week. Voyager RNS Log WC 20/05/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Well, that’s the Royal wedding out of the way and I suspect that although it cost the country a fair bit to stage it probably brought in its own way, brought much more income to the UK. In reality, I can’t claim to be a royalist although I do appreciate the work that they do particularly in charitable areas. Still, I guess that many folks had a good day out in the sunshine enjoying a peaceful day and that can’t be bad. This week I have been doing a bit of an audit looking at the top 10 current holding ranked by value in the Voyager; it’s just a bit of an exercise really as I sometimes think that I should really slim down from the current 24 holdings to say 10 to 15 but that’s maybe work in progress. As for the top 10, the average return over the last 18-24 month period has very substantially exceeded the fairly challenging benchmarks I use (see earlier article about my approach to benchmarking my portfolio NOTE: it’s not benchmarking as in tracking but simply me saying “if you can’t beat great guys such as Terry Smith, Giles Hargreave, Gervais Williams then maybe it’s time to let them manage your investment). Indeed, it has truthfully been a very profitable period yet such fertile times don’t come around year after year and that’s the reason why I believe that it’s best to assess one's performance over at least a five year period. How long will these fertile times last? Well, I suspect that most investors found the going to be tougher during the last quarter of 2017/18 compared to earlier in that FY but, that’s investing. Of course, I have “RNS Managed” the portfolio by continually adding to the winners and jettisoning any positions that carried a risk to my capital e.g. on lesser news/profits warning, 95% of the time I simply kill the risk and sell. My reasoning for any decisions or actions that I carry out are all briefly discussed within the Voyager RNS Log. Many of those decisions arise from my “RNS fag-packet calculations” giving me an instant early view of short term to medium term prospects for a particular holding based on my assessment of the latest news: as an examples see last week’s RNS log for PMP and a week or so earlier the fag-packet on OTB. I intend to supplement this log in future by including the fag-packet as a regular feature; I may also produce a short dedicated article to introduce the fag-packet. Anyway, on to this week's Voyager: Monday 21/05/2018: No RNSs of significance to the Voyager Tuesday 22/05/2018: No RNSs of significance to the Voyager Wednesday 23/05/2018: Restaurant Group: RTN: Mkt Cap £630m: Trading Update RNS. Current trading Our strategic initiatives are driving improved performance in our Leisure business in a market in which like-for-like sales remain challenging. Like-for-like sales for the 20 weeks ended 20 May 2018 declined 4.3% and total sales declined 3.1%. Trading in the period was heavily impacted by the adverse weather and on an underlying basis, excluding the impact of snow, like-for-like sales were down 3.1%. In the first seven weeks of the second quarter like-for-like sales declined 1.8% as we began to lap the significant price investments made last year in order to re-establish our value credentials in our Leisure business. Our Pubs and Concessions businesses continue to outperform the market. Property During the first 20 weeks we have opened nine new units. The pipeline of new openings within our Pubs business has been further strengthened with the acquisition of four pubs from Ribble Valley Inns. Including these we now expect to open around 10 pubs this year. Strong progress has been made in our Concessions business with expansion into new travel hubs. We now expect to open at least 12 new concession sites this year. We have successfully exited a further five closed sites in 2018 bringing the number of sites exited to 26 out of 41 closed sites. Outlook We are comfortable with the performance in the first 20 weeks of the current financial year and expect to see further benefit from our strategic initiatives as the year progresses. We expect to deliver results for the full year in-line with current market expectations. My View: In terms of a recovery stock and the market reservation that things may not be gradually improving i.e if the decline were getting worse, there were no unpleasant shocks in the trading update. Also, reassuringly the comment “we expect to deliver results for the full year in-line with current market expectations”. The market certainly seemed to be quite taken by the results and the shares rose a few %. Personally, I feel the recovery will continue for some time yet and whilst it does, I will enjoy the 5%+ dividends which are well covered by free cash flow. In my view apart from utility stocks or pseudo utilities, FCF dividend cover is the measure investors should use for a sustainable dividend security. Conventional dividend cover of EPS/DPS can be a touch risky especially if the company is having to reinvest stacks of capital back into the business over a period of time. Note: I did a brief write up on RTN in the Voyager for week commencing 15/04/2018. Wednesday 23/05/2018: Medica Group: MGP: Mkt Cap £148m: AGM Statement RNS: Medica's Chairman, Roy Davis, will provide the following update at the AGM: 2018 has started well. Medica is performing in-line with the Board's expectations and recruitment of radiologists has continued to be strong. The anticipated full year 2018 results remain in line with the Board's expectations. My View: Well what does that mean? Let’s have a look at expectations as far as the brokers are concerned: So, what I like about the statement is that firstly it tackles the worry some folk may have had about recruitment of radiologists; excellent, no problem there. Secondly, it reassures that with almost 5 months of the FY passed, the board anticipates results being within their expectations (we have to, of course, assume that the board's expectations are aligned to market expectations; why not just say in line with market expectations: always a bit frustrating). All in all, comfortable enough in my opinion for this stock that was hit overly hard in mid-January: see write up in last weeks voyager regarding my recent attraction and purchase of MGP. The market reacted well to the results initially up 5% but there still seems to be a touch of late in the day selling as possibly one large holder gradually exits their position.
Thursday 24/05/2018: No RNSs of significance to the Voyager Friday 25/05/2018: No RNSs of significance to the Voyager Whats on the horizon over the next week or into early June? I suspect we will hear trading updates from AMO, BOO, BOY & GAW. We also have finals from my favourite housebuilder, Telford, on 30/05/2018. Then the following day, 31/05/2018, finals from AIR whose results were delayed following the discovery of a touch of creative accounting; previously covered in this log. Have a great weekend and for sports lovers, there is plenty to entertain with Real Madrid v Liverpool, the various playoff finals and just to dampen the spirit, the test match. As ever, happy investing & hope to catch you next week. Voyager RNS Log WC 13/05/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. It’s a tough life being a sort of full-time private investor, you can simply finish work so very early and I mean really early. So, as well as enjoying time working in the gardens especially in this warmer weather, I have been entertained by the playoff competitions in the football league and whilst its entertaining especially for the neutral, it’s become a massive commercial exercise. Sadly I suppose that our national game is now owned by SKY/BT and rich overseas folk who become somewhat bored with lower profile pastimes. I have to say though what was so nice in watching the Villa games was the form of Jack Grealish. He is a lad who has really turned his life around after previously been a touch astray with social temptations. It’s just not easy for a youngster who becomes wealthy almost overnight and has bags of money, free time, away from home and hangers-on who take advantage of them. They really do need some social care and parental mentoring by the clubs that employ them. Then, of course, we have the parasitic agents who have zero interest in what is best for a young rising star and only wish to take their fee for arranging a move: modern football! Anyway, on to this week's Voyager: Monday 13/05/2018: Spectra Systems: SPSY: Market Cap £49m: G20 Central Bank begins Funding Sensor Development RNS: Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication and brand protection technologies, announces that it was engaged on Friday to commence Phase I of a four-phase funded sensor development with a G20 central bank for use with polymer banknotes. The successful completion of all phases is expected to result in a long-term Sensor and Materials Supply Agreement commencing around 2022. Dr. Nabil Lawandy, Chief Executive Officer, stated: "We are excited that one of our polymer security features is on track for adoption by a G20 central bank. Once completed, this will be a decade or longer direct sale rather than a license and supply arrangement through a partner. We expect that this will firmly establish our capabilities and products for use in the growing polymer banknote segment of the market". My View: Reference to the new security feature was made in the finals RNS on the19th March 2018. Once again one of the major attractions this builds upon is in the next few years, post-2022, is the predictable licence income for a good number of years. At this stage, no quantification is given for future revenue enhancements. I know the business has some risks including the dominance of the President/CEO but I see he still owns just over 4% of the business. I doubt this one will become one of my top 10 holdings and I also doubt that the steady future income streams will either be picked up by or excite many investors. For now, I see SPSY as a steady business that may slowly appreciate in its share price over time; happy to stay on board and enjoy the ride & will try to pick up a few more on the next dip to 100p. Tuesday 15/05/2018: Gear4music: G4M: Market Cap £151m: Final Results RNS: A transformational year of growth and investment Commenting on the results, Andrew Wass, Chief Executive Officer said: "This has been a transformational year of investment for Gear4music. During the year we raised an additional £4.2m of growth capital, our European distribution centres became fully operational, and we moved into our new Head Office. We accelerated investment in our employees, systems, marketing and customer proposition, to firmly establish ourselves as one of Europe's leading online retailers of musical instruments and music equipment. In my report last year, I explained that FY18 would be a period of targeted investment, and that would have short-term profitability implications. FY19 will be focused on achieving returns resulting from these investments, with the objective of delivering strong and sustainable revenue and profitability growth. As a result of the significant efforts of our team, and the investments we have made during FY18, we move into the new financial year with a market leading e-commerce platform, infrastructure and customer proposition. Whilst still early in the financial year, I am pleased to say that trading to date is in line with expectations and we are confident of achieving our objectives and hitting expectations for FY19." Outlook Whilst FY18 profitability reflects the investments made in our European operations and customer proposition to drive market share, we remain confident in our outlook for the new financial year. As we continue to implement our long-term growth strategy for FY19, we expect to see ongoing strong revenue growth, alongside increasing profits and cash generation. My View: If you look at the results and the consensus forecasts, they are pretty spot on; so although at first sight, a fall in profitability may have looked an “ouch” it actually was expected due to the expansion activity of the business. The G4M turnover in the UK continued to increase by 27% and the international revenue increased by an impressive 69%. Note in 2017 international sales accounted for 38% of revenue and for 2018 this had risen to 45% of revenue and to my mind should all being well, increase appreciably in 2019 as the European distribution centre kicks in further. Now, I should say that I originally bought G4M at the end of 2016 and again in early 2017 but took profits after a dizzy rise to over 800p. I then repurchased again when the share price cooled and to be clear, this is one of my special situation purchases and not the base Capital Return/FCF that is more usual in the Voyager. In fact, as I said last week, good capital return/FCF/increasing revenue/profit companies are becoming a touch harder to identify so, maybe the special situations will even become dominant in the next few months. Overall, I appreciate the high PE rating may not sit well with some yet anybody who regularly reads my text will know that I am not a big PE fan yet at the same time, I do recognise that a stock rated as highly as G4M could easily tumble on “below expectations” or even if the overall market cools hence I doubt it will become one of my top 10 holdings due to my risk management. For now, though, I am more than happy to continue to hold. Tuesday 15/05/2018: Xpediator: XPD: Market Cap £71m: Final Results RNS: CEO Statement 2017 has been a transformative year for Xpediator and it has been a pleasure to be a part of the business's growth. We achieved many of our objectives in terms of the stock market listing and expanding the scale of the business but most importantly we are well placed to continue to grow. Demand for transportation services in our core markets of the UK and Eastern Europe is strong and is being further enhanced by the significant increase in e-commerce activities. These trends match the services we provide and this makes Xpediator well placed to take advantage of these opportunities. We have clear expansion plans for all three divisions and a pipeline of potential acquisitions, which we anticipate will further support the growth of the business. Outlook The markets in which we operate are in growth mode. Demand for road transportation is increasing across Europe, supported by economic stability together with a burgeoning e-commerce sector. Xpediator is well placed to capitalise on this positive market environment and has invested behind the existing business and in complementary acquisitions to capture an increasing share of the freight management market in Europe and further afield. We look forward to a further year of progress in 2018. My View: This company first came to my attention in February with a particularly encouraging trading update signalled rather positive progress with XPD which had only come to the AIM market in August 2017. Unfortunately, a couple of unforeseen events in life necessitated me taking some time out from investing and writing; these things happen. So, the opportunity in February 2018 passed me by but nevertheless, my interest was rekindled by the recent PI World Mellor presentation organised by that absolute angel Tamzin; honestly, Tamzin does some wonderful stuff for us PIs and I can’t let the moment pass without congratulating the excellent David Stredder who continually organised events bringing private investors and companies together. One watching the presentation I reminded myself “wake up you dozy bugger, you should have bought this a couple of months ago”. A quick calculation on the fag-packet to get a feel for organic growth versus acquisition growth: Acquisitions: Benfleet 22/10/2017 RNS: Year to 31/03/2017 Revenue £21.0m PAT £1.35m: Pro Rata: £3.5m & £0.22m Reg Fleet Express06/11/17 RNS: Year to 31/03/2017 Revenue £6.0m PAT £0.2m: Pro Rata: £1.0m & £0.04m We also have EMT but PAT figures are estimates based on recent acquisition cost/PAT ratio and I estimate for the 9 months of 2017 the PAT contribution was £0.75m So, lets roughly say acquisition accounted for extra PAT of £1.0m. Then that gives us a rough feel that acquisitions contribute 30% to PAT during the FY 2017 i.e most of the growth was organic at 70%. As I say, a fag-packet estimate but I don’t think it will be too far out and at least gives a feel for how the profits were routed from and the comfort of knowing that about very roughly 70% of profits are organic rather than via acquisition. Overall, the company looks quite a promising one and I bought a starter position @ 61p at the end of April 2018. I think that it’s had its gallop of late and suspect that it will now consolidate in price for a while now so that fairly small starter position will do for now. Tuesday 15/05/2018: Amino: AMO: Market Cap £150m: RNS Amino selected for 4K UHD service in Slovenia: Amino selected for pioneering 4K UHD service rollout in Slovenia Amino Technologies plc (LSE: AMO), the global provider of digital TV video solutions to network operators, is to support T-2, one of Slovenia's largest multi-service telecoms operators, in its launch of the country's first 4K UHD TV services. Working closely with T-2, Amino is deploying technology that will underpin a major service upgrade, which will expand T-2's service to include 4K UHD content and value-added Video on Demand and Subscription VOD services. My View: Sounds reasonable but as so often with such RNSs, no quantification is given in terms of what this could mean financially to the business. So, a quick search tells us that the population of Slovenia in 2016 was 2m and 0.6m of the population were connected to broadband; maybe this has increased to 0.7m by 2018. T-2 are one of the larger broadband providers and given that this is the first 4K UHD TV service in Slovenia, the fag packet would assume that it’s probably a nice little earner rather than a game changer in terms of revenue: I am happy to continue to hold. Wednesday 16/05/2018: No RNS relevant to the Voyager portfolio. Thursday 17/05/2018: Portmeirion: PMP: Market cap £121m: AGM Statement Trading Update RNS: "Total Group sales are up 15% for the four months ended 30 April 2018 relative to the same period last year, driven by strong growth in both ceramic and home fragrance product divisions. On a constant currency basis total Group sales are 20% ahead of last year. We are delighted with the start to the year, however due to the seasonal nature of our business and the importance of second half trading we continue to expect full year profit before tax to be in line with market expectations." My View: at first sight a simple “in line” update but let’s dig a little further: a quick rough calculation of what these numbers may actually mean come the end of the year. What we know is that PMP’s H2/H1 ratio is always biased towards H2 so I am fine with that being a comment in this RNS i.e. the usual H2 weighting fear does not apply. In fact, over the last four financial years, the finals have shown a year end turnover averaging 2.55 x the interims turnover and the range of those 4 years of Finals Revenue/Interims Revenue is 2.46 to 2.69; so that’s a fairly reliable historic guide ratio. The update tells us that the turnover is 15% ahead of the same first 4 months of the FY period last year; let’s forget constant currency stuff as we will come on to that a bit later. So, let’s estimate this years H1 turnover as H1 2017 of £33.1m x 1.15 = £38.0m Now apply the full year/H1 turnover average of 2.55 and we come to a fag-packet estimate for the fully FY of a turnover of £97m which appreciably exceeds the current analyst's expectations of turnover £87m. The average EBIT margin over the last 4 years has been 11.85% (it has not dramatically varied over the 4 years); then using this against my projected turnover gives an EBIT of 11.5 which is quite a bit ahead of year-end the consensus of 10.5; see below: Suffice to say that I am sufficiently impressed to very significantly increase my holding early on the morning of the RNS. Note: if you apply the constant currency quote of 20%, then its even more impressive but I have stuck with the 15% figure. I expect analysts to revise their expectations upwards shortly; quite a decent business PMP with a decent yield of just over 3% and for stock rank fans, it comes in at an SR of 90. Also EV/EBIT of 10.8, ROCE 17.4%, CROCI 13.4 (I usually work on the last 3 years average with CROCI & this is a healthy 13.3%) and gross margin of 56% (I have of course used EBIT margin in the above estimate). There are just so many numbers/ratios there that I like. As for my fag-packet estimates, that’s all they are my rough estimates but based upon what we know of the first 4 months of the current FY. Notes on a New purchase: Medica: MGP: Mkt Cap: £148m What do they do: well they provide outsourced teleradiology services; so, that’s simple enough. Actually, it’s a simple enough idea but requiring specialist interpretation & that’s sometimes where things can slow down and hence the market space Medica is trying to fill by operating a team of leading UK based consultant radiologists to interpret imaging such as CT, MRI, nuclear medicine, mammography, CT Colonography and also offer an emergency service called Nighthawk with a 24/7 routine capability. Now given the pressure on NHS funding and targets for patient care, it seems an ideal opportunity for an occasional outsourcing service for such expert services particularly out of routine working hours. You simply don’t waste resources by having an excess of locally based expert waiting around either in normal or outside of hour just in case they are needed, you simply use IT to send the images to on-call experts for rapid determination. I don’t envisage it would ever replace the local consultant radiologist but merely supplement the service or peak-lop if you like. I do like the model and I rather like the financial numbers: The risks: I always like to consider the risks & downside, in fact, I spend quite a bit of time on risk & risk mitigation. Medica seems to have thought through the risks well and as much as they can, have reasonably mitigated the risks. Of course, the risk of NHS funding availability will forever be a risk. Looking at the numbers that attract me: Director Talk From RNSs in past 4 months: The Mild Profits Warning 16/1/2018: Overall the Board expects the Company's performance to be slightly behind market expectations. The Outlook Statement from the finals on 12/03/2018: Looking forward to 2018, the year has started well, with trading in line with the Board's expectations. The prospects for new work from existing and new clients and the pipeline for recruiting radiologists in the new financial year continues to be strong which gives me confidence in our outlook for 2018. As the market evolves the Board is confident that, in the short- to medium-term, Medica will continue to grow revenues at a double-digit rate similar to that seen in 2017. Yet the market was not impressed and the share price continued to drift bottoming out at about 120p which is a 33% discount to its debut on the official list in March 2017. The market worry is probably centred around the availability of budget for its main customer, the NHS. I bought an initial holding this Monday at 131p as the shares were demonstrating some momentum recovery. As ever, this is just me sharing my thought process and should not be seen in any way as a recommendation to buy shares in Medica. Reading the tea leaves, sorry, I mean technical analysis: Friday 18/05/2018: No RNS relevant to the Voyager portfolio.
I should also say that an old friend from the past, Zytronic (ZYT) issued what was possibly an expected less than sparkling set of interims. I did write that back in February I sold the residual shares I held in ZYT after what I felt was a very mild profits warning “broadly in line with the equivalent period last year". I had also heavily top sliced this old favourite I had held for a while, that heavy top slice was taken when they had raced away towards the £6 mark. Now I tend to feel the share price will drift to maybe 360-380p when I might, but only might be tempted to buy back in but as ever with ZYT, the company is so reliant on a handful of customers. However, having said that, I do expect the company with it’s sometimes “lumpy” order book to pick up in the coming year: note they have stacks of cash on the books and currently an EV/EBIT of 8.3. Why don’t I quote PE ratios very much? Well anyone who reads my stuff will know that I am most definitely not a fan of the ubiquitous PE ratio; too easily manipulated by the CEO/CFO, nothing to do with their bonus payments of course, and takes no account of debt/cash on the books. Incidentally, there are a couple of expressions, among many that reside on my red flag list, that I am not that fond of in an RNS, they are: Broadly in line with expectations: I take this as at the lower end of expectations i.e a mild profits warning. In a trading update or at interims: Results will be weighted to H2. There are exceptions of course with the likes of Telford where there is strong contract/completion visibility and also companies whose profits are historically weighted to H2, see PMP above, but generally, H2 weighted really does up the risk of an earnings miss. Another classic is the CFO leaving with immediate effect; always one to make you sit up and think. Glad I Am Not There: SPRP: the ongoing car crash has now passed the 2-year mark; surely the directors are a touch worse than just simply accident prone. I don’t hold but I do feel for the many private investors who have remained loyal to SPRP. Sadly I feel that the directors are simply not fit for purpose as they drag their mistakes toolkit along with then each financial year. I did own these back in 2016 but sold for two reasons. Firstly my usual action on a profits warning is to say goodbye 95% of the time unless there was a compelling reason to stay & in SPRPs case director “bad luck” suggested simply sell. Secondly, the more I continued to occasionally dig a little since 2016, the more I got a picture of almost a masterclass of incompetence where the directors demonstrated an ongoing mastery of continually snatching failure from the jaws of success: IF IN DOUBT GET OUT. I did write about SPRP and my further concerns in both March and April of this year and to my mind, the red flags just kept appearing including as I said at the time the “oh dear!” with the finance director leaving with immediate effect. Having a quick scan of the results does to an extent explain the drawdown of £3m from the credit facility with HSBC at the end of March 2018. I have to ask within the 2017 numbers how did the company squander £11.3m from its £14.3m cash pile? Sadly, I honestly feel that far more than the FD need to go from this inept BOD: definitely not one for me as it just has bungling and unacceptable risk written all over it. As I have written about SPRP on many occasions, I feel justified in saying that for any investor there were to my mind, just so many red flags suggesting “time to head for the exit”. I have not held any position long or short in SPRP since April 2016. What may be coming up next week: at the moment there appear to be no scheduled announcements for stocks within the Voyager. Have a great weekend & as ever, Happy Investing! Voyager RNS Log WC 06/05/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. It's becoming increasingly difficult to find attractive companies that meet my cash flow requirements and are on offer at reasonable entry prices. Also, it’s getting a bit thinner on the ground in terms of special situations, those oh so rewarding companies where something may be changing that causes them to move up a gear or two. Is all of this a sign that overly stretched optimism may be priced into the market? There are certainly some very attractive companies on the market but in most cases, you really have to pay high rated prices to purchase them. I suppose if I were to be really brave then I could search much deeper below my £50m market capitalisation threshold but then the problem on the normal market size and thinness of the order book can so easily bite you in the bum particularly if bad news strikes and you decide to make a rush for the exit. On another financial front, I am challenging the council tax banding of my property. In honesty, this is something I should have done 18 years ago when I moved in but as ever, I guess I am just a touch to laidback. It’s a very nice property and I certainly don’t have any complaints on that score as it’s a few hundred years old and certainly has character but why it should be rated so much higher in council tax band terms, I really can't fathom out. Anyway, after first being refused by the powers in charge, I provided sufficient evidence for them to at least initiate a review. If that does not do the trick then I will take it to an appeal tribunal which I am familiar with having conducted one for my Laboratory which yielded over £1m return of overpaid council tax; maybe if I can get upwards of £10k back for overpayment over 18 years then that would be a result. Turning to a review of RNS for stocks within the voyager, last week was a very quiet week and this week seems only a touch more active. One to catch up on from last week is Games Workshop; bizarrely a stock I first identified as a buy some 15 months ago but my prejudice regarding the surreal practice of adults playing war games with toys, just kept me away from the early ride. Strange really, in that I can't stand video games yet went in heavily to KWS but I suppose seeing my two sons keep faith with the pastime these last 25 years gave me a better acceptance if not tolerance. Anyway, the GAW trading update was “ given the high operational gearing of the business, profits for 2017/18 to date are therefore slightly above expectations.”. The market did not react dramatically and I suppose some punters were again looking for “greater than expectations” buy so far, so good. Of course, the operational gearing is something to keep a close eye on at the first sign of change in fashion for the GAW products; probably a fair risk in my opinion. This week’s RNSs for the Voyager: Tuesday 08/05/2018: No RNS significant to the portfolio Wednesday 09/05/2018: No RNS significant to the portfolio Thursday 10/05/2018: ITV Mkt Cap: £6.5b: RNS 1st Qtr Trading Update: Carolyn McCall, ITV Chief Executive, said: "We have started the year well both on and off screen. Total external revenue increased 5%, driven by 11% growth in ITV Studios revenue and 41% growth in online revenue. ITV total advertising which includes NAR, online and sponsorship was up 3%. "Our strong viewing performance has continued, with total minutes viewed across the ITV Family up 4%, share of viewing up 6% and time spent viewing online on the ITV Hub up 31%. This reflects the strength and breadth of our schedule across our platforms. Highlights include strong performances from Coronation Street and Emmerdale, the successful return of Dancing on Ice and both Saturday Night Takeaway and our long-running drama Vera delivering their best series ever. And we have an exciting schedule for the rest of the year including Britain's Got Talent, the Football World Cup, the return of Love Island and our new period drama Vanity Fair, from the producers behind Victoria and Poldark. "ITV Studios has delivered a strong performance with organic revenue up 9%. We have a solid slate of new and returning programmes internationally for both broadcasters and OTT platforms with Unforgotten, The War of the Worlds, Snowpiercer, Good Witch, Suburra, The Voice, The Chase, Big Star's Little Star, Queer Eye for the Straight Guy, The Four and Forged in Fire. "While the economic environment remains uncertain online advertising continues to grow strongly. We expect ITV total advertising to be up 2% over the first half, but profits will reflect the timing of the Football World Cup. Over the full year we are on track to deliver double digit growth in online revenue and good organic revenue growth in ITV Studios. "The strategic refresh is progressing well with great input and engagement from ITV people across the business. I look forward to sharing an update at our interim results in July." My View: encouraging enough words from Carolyn McCall and revenue streams are all just about moving in the right direction. My simplistic view is that ITV has made a decent start with this first quarter and should be on target to meet expectations and I eagerly await their interims in July to see how profits are panning out. I will continue to hold but still just a little underwater with this one; great potential but will Mrs McCall be able to steer the cast of Coronation Street and the appalling Love Island to apparently safer waters to be possibly gobbled up by a predator? Thursday 10/05/2018: On The Beach: OTB:Market cap £710m: Interim Results RNS: My View: Since the turn of the year, OTB has been a phenomenal performer with the share price possibly getting a touch beyond itself. Again applying my trusty fag packet (incidentally it’s decades since I smoked) I tend to think that they may well have to really stretch to meet the market expectations for the year. It’s just simply that my quick calculation suggests that in the most recent ½ years, that’s discreetly H1 & H2, their turnover has been in £m:
2016: 35.5, 35.8: Ratio H2/H1 = 1.01 2017: 38.1, 45.5: Ratio H2/H1 = 1.19 2018: 45.3, forecast 57.4 : Ratio H2/H1 required to meet expectations = 1.27 Note: the Sunshine Holidays acquisition (The Board believes that the acquisition will be earnings enhancing in the current financial year to 30 September 2017 because of the Group's ability to quickly leverage its modular technology platform) we were told was earnings enhancing from financial year ending September 2017 so you would expect to see a really significant effect in FY 2018 and that will be built into the consensus/expectation for a turnover of £102.7m. From my fag packet, see above, that looks a bit of a stretch to meet turnover expectations. Given the fact rather high valuation of the business, I just think that the lurking chance of a mild profits warning in the October 18 trading update (“at the lower end of expectations”) exposes me to too much downside. Now, without doubt, OTB is a quality business but I now suspect there may be a touch of short-term risk as an investment; it’s simply travelled so far in a short space of time and given the interims, may just be overstretched. It was also bought as a special situation whilst also having some attractive ROCE figures which are in truth a bit flattering/unreal as it is really an asset-light matching service; matching ticket flights from the various airlines with hotels. So as ever, relying on the trusty fag packet calculation, I sold on the morning of the RNS for a very decent profit of well over 60%. I will keep an eye on OTB and maybe buy back in at some time but for now, thanks for the ride. If in doubt, get out and protect your capital. Thursday 10/05/2018: XP Power: XPP: Market cap £668m: Acquisition RNS: Acquisition of Glassman High Voltage Inc. Glassman, based in New Jersey, USA, supplies the industrial and technology sectors with a range of standard, modified and custom high voltage, high power conversion products, which are generally used in applications involved in the ionization and acceleration of particles. Typical applications include semiconductor manufacturing equipment, vacuum/plasma processing, analytical instrumentation, medical diagnostics and test equipment. Glassman has the most comprehensive standard product portfolio in its sector, with the capabilities to also provide customer specific power solutions. In the fiscal year ended 31 December 2017, Glassman recorded sales in the US of US$17.3 million (£12.4 million), profit before tax of $2.9 million (£2.0 million) and had gross assets at the year end of $9.5 million (£6.8 million). The Acquisition also includes the purchase of Glassman’s small European sales business. Total consideration of US$44.5 million (£31.8 million) will be paid in cash on completion which is expected to be effective in May 2018. The Acquisition is on a debt and cash free basis and was funded with a US$45.0 million extension of the Group’s existing revolving credit facility. The Acquisition is expected to be enhancing to XP Power’s earnings in 2018*. My View: well it looks a decent acquisition, not massive relative to the current XPP turnover but overall quite attractive as Glassman made $2.9m PBT on a turnover of $17.3m. XPP are paying $44.5m and that suggests they are getting Glassman for about 15x PBT which in takeover terms, seems decent enough. The earlier acquisition of Comdel was at about 13x PBT & XPP itself trades at around 20x profits. The change in the net debut situation again seems quite manageable and the trusty fag packet suggests that after the acquisition debt won't be a show stopper at 0.7xEBITDA. Also, I reckon that EPS should be enhanced by 3 or 4 % this FY by Glassman. All in all, it looks a decent acquisition and that aligned with the good track record of XPP’s management give me confidence to maybe top up a little on the dips. Friday 09/05/2018: No RNS significant to the portfolio What’s on the horizon next week? Well, not a great deal; at the moment I can only see one of the Voyager stocks with a scheduled RNS; G4M year-end results on 15/05/18 but you never know, so let’s see. As ever, it pays to remember that no matter how diligent you may be, the next profits warning may just be around the corner. On that cheery note, may I wish you a great weekend and as ever, Happy Investing Voyager RNS Log WC 22/04/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Starting with a Green: what I would say about these notes are that they are honestly and simply my interpretation of the newsflow RNS issued by companies within the Voyager portfolio. If I think something is encouraging, then I will say so. Equally, if I feel a company has temporarily gone off the rails, again I will say so as honestly as I can. Oh, what a Saturday at Carlisle as the Hatters gained promotion into League 1; such joy. I absolutely love the passion in football, the emotions, the highs, the lows and also having a couple of beers with friends and local supporters on my travels. I think that something like this actually helps an individual as an investor as in my case the drainage of the emotional side of my brain with sport leaves no emotion for stocks which is a good thing in my opinion. Stocks are simply vehicles that after hopefully diligent research, will in maybe half of the purchases, react well whereas those that appear as one of my less worthy decisions are jettisoned with barely the shrug of a shoulder. Why am I such a fan of RNSs? Well, simply they are my rapid window into what is happening within the business. Companies provide so much valuable information and whilst you have to sometimes dig through the director speak clutter & CFO “adjustments”, it’s not that hard to do and all there for free without the personalised interpretation of a journalist. Also RNS’s are great as with a bit of sifting you get as close as you can to the real vibration of what’s going on in the business. Why is this important? Well for absolutely years now I have been banging on about “investment noise” you know the stuff we see in newspapers, investment magazines, social media etc: there is just so much of it these days that bombards the PI with advice and tips. I honestly feel that PI’s should Do All They Can To Tune Out The Noise it simply a distraction; apologies for shouting! To supplement the RNS service, the private investor has the opportunity if they so choose, to attend AGMs, exhibitors, ShareSoc events etc to talk to the directors of a business. However, just a cautionary word that such events would be absolutely invaluable if the senior directors were all fitted with polygraphs calibrated to detect fibs and misalignment of claimed prospects with reality; it’s just the odd few fibs as sometimes CEO can just become blinded by their tunnel vision, so, take care as you can't naively believe everything you are told. Having said that, once you are comfortable with the honesty and integrity of a companies directors such as Somero, then really listen to what they have to say. This week we have Mello 2018 but that is not what I would define as noise; it’s much more sound educational mentoring from well-respected investors who are speaking at the event. Incidentally, a great deal of the mentoring I received back in the late 90’s early 2000’s was from one of the smartest investors I have known, Jim Slater and believe me, this type of learning is invaluable. Before we go onto this weeks RNS review, I will reiterate possibly the most important lesson I have learnt in 30 years of investing and I will do it in the form of a straight copy & paste from the 2017/18 review article on the blog page of this site: Onto the RNS news flow: Monday 23/04/2018: D4t4: Mkt Cap £50m: Year End Trading Update RNS: My View: A fair bit of waffle in the TU in my opinion and whilst in overall terms things look reasonably decent, I note that that the revenue is seen as £20m compared to analysts expectations of £23m: something to keep an eye on and this combined with a touch of profit-taking probably depressed the share price by a few %. We of course have the almost obligatory adjustments profits to paint the rosiest of pictures which is downright annoying when the adjustments include share-based payments; is not that a company cost i.e directors total remuneration package? The TU is mo more than reasonable in my view but for now I am tempted to continue to hold. Also, a quick move early on Monday morning to close my AA spread bet for a nice profit. Tuesday 24/04/2018: RWS: Mkt Cap £1254m: RNS Trading Update: Half Year Trading Statement RWS Holdings plc ("RWS", "the Group"), one of the world's leading language, intellectual property support services and localisation providers, today provides an update on trading for the half year ended 31 March 2018 ("the first half"), ahead of the announcement of its half year results on 7 June 2018. Trading & Financial Update RWS has performed well during the first half, albeit has faced significant exchange rate headwinds as flagged in our AGM statement in February 2018. Notwithstanding these headwinds, the business has achieved revenues of GBP139.6 million for the first half, compared to GBP76.6 million in the first half of 2017, broadly in line with our expectations. The Group expects to achieve Adjusted PBT of at least GBP30.0 million in the first half on a constant currency basis, broadly in line with our expectations for the full year which continue to anticipate a second half weighting. However, the average exchange rate for the first half was $1.37: GBP1, compared to an average of $1.24: GBP1 during the prior year, meaning that we expect the Group to achieve Adjusted PBT of at least GBP28.3 million including the currency effect. The Board will continue to monitor exchange rates over the remainder of the year. However, if the current rates prevail, we would expect a profit outcome slightly below market consensus. This first half saw a steady performance from our Patent Translation & Filing division, following its record performance in 2017, reflecting a strong contribution from our Worldfile product offering and good growth in our Chinese operations. Patent Information continued to perform well (+11%*) and Language Solutions has seen the benefits of last year's restructuring (+11%*). We also saw an excellent first half from our Life Sciences division (+9%*). The successful integration of our two US acquisitions in the space, LUZ (acquired in February 2017) and CTi (acquired in November 2015), has delivered very positive results and enabled the division to grow revenue with several key customers. Our acquisition of Moravia, which completed in November 2017 for a cash consideration of US$320 million, has brought the Group a leading European provider of technology-enabled localisation services to some of the largest technology companies in the world. The acquisition enhances RWS's global presence, adding operations in the Czech Republic, USA, Japan, China, Argentina and Ireland; provides further geographic diversification; and adds an additional profitable, cash generative division of scale to the Group. Since acquisition, Moravia has continued to grow its relationships with its existing major technology clients; however, with over 95% of its revenue in USD and the majority of the cost base in Euro/CZK, the business has seen foreign exchange headwinds. In addition, its performance has been held back by a lower volume of activity than expected from a few clients. Despite this, we are encouraged by Moravia's first half client wins and its pipeline of new opportunities. The integration process is proceeding well and, in particular, a higher level of synergies has been identified which will deliver additional annualised cost savings. My View: well quite a few things that make me feel uncomfortable as follows: albeit has faced significant exchange rate headwinds: Normally I am not overly bothered with exchange considerations especially if I intend to hold a stock for a long time but it just concerns me that this is the very first thing mentioned in the trading update: possibly to divert us and buy a little time. achieved revenues of GBP139.6 million for the first half, compared to GBP76.6 million in the first half of 2017, broadly in line with our expectations: Now that’s director speak to say income will be at the bottom of analysts expectations or in my words let’s say likely not to meet market expectations in turnover. Adjusted PBT of at least GBP30.0 million in the first half on a constant currency basis, broadly in line with our expectations for the full year: Again, that’s director speak to say profits will be at the bottom of analysts expectations or in my words let’s say an almost mild profits warning. Maybe not such as issue if the share traded on a PE of let’s say below 15. Then the RNS goes on to give a further little warning: However, if the current rates prevail, we would expect a profit outcome slightly below market consensus. So, profits in the second half of the year could not be a little less than needed to meet today's TU which in itself is a mild profits warning. Then we have: In addition Moravia, its performance has been held back by a lower volume of activity than expected from a few clients. So, another possible pothole to rock the cart if things don’t improve in the second half of the year. Finally on my don’t like list, based on this TU, RWS is, in my opinion, going to have to motor ahead rather fast and have a good H2 in order to reach brokers consensus forecasts. All in all, whilst I accept that RWS is a quality business, it may have temporarily be having a little wobble, maybe a touch of indigestion after swallowing Moravia, which leads to uncertainty and with a share that is highly rated in PE terms, that just does not give the market's confidence. I did a very quick “first impression” of the TU on the iPhone whilst drying off after the morning swim (it was only 0725 in the morning and it caught me with my knickers down if you follow; my changing room reading of the RNS); got home before the market open to dig a little more and as is normal for me in these circumstances decided to sell as early as I could. Overall, I got a decent price and took a fall of 11% on last nights price. As I always say, you are not going to get all of your stocks going in the desired direction and that’s just not within your control but you can manage downside risk by jettisoning a stock from the portfolio, in this case the Voyager, when risk is identified. Tuesday 24/04/2018: AB Dynamics: ABDP: Mkt Cap £178m: RNS is about: Tony Best, Chairman of AB Dynamics, commented: "We are pleased to report on an excellent start to the current financial year based on a strong commercial performance. We have built a good forward order book, both for the remainder of 2018 and into next year which gives us confidence in meeting market expectations. The Group continues to invest in its people, products and facilities, and we now have 130 employees, an increase of 41% over the last year. We continue to evolve our structure to support a large and growing installed base of equipment and systems across the world, whilst also ensuring we carry on delivering the innovative new products and services that our customers expect. During the period, we established a new operating entity in Germany which will provide improved customer support and a local engineering resource. The Board is pleased to announce the increased dividend to shareholders of 1.465p per ordinary share that is supported by the strength of our business and future prospects." Tony Best went on to say: We are pleased to report that the forward order book provides a sales pipeline for the remainder of this financial year and into the next and we look forward to the full year with confidence. My View: a very sound set of results with revenue up by 39% and PBT up by 34%. Oh yes, once again we have the adjustments for the dreaded “share option costs” this is really part of the remuneration package which is simply part of the cost of running the business so should be accounted for within Cost Of Sales. Apart from that, nothing I can see there to cause concern in fact quite the opposite, they instil confidence. If you strip out the share options costs from H1 for 2017 & H1 for 2018, we have operating profit @ H1 increasing from £1.6m in 2017 to £2.9m in H1 of 2018 which is a very appreciable rise. Doing a quick fag packet set of calculations based on the half-year results and the broker's consensus full year, these are very good H1 results and I rather expect that they will comfortably beat the current consensus forecast for 2018. An innovative quality company delivering a very good ROCE and high-profit margin. In my opinion, it’s making splendid progress and I am very happy to continue to hold plus I will be looking to add further should we see a price dip in the coming weeks. Wednesday25/04/2018: Persimmon: PSN: Mkt Cap £8.3b: Trading Update RNS: Persimmon plc ("the Group") announces the following trading update covering the period from 1 January 2018 to date, ahead of its Annual General Meeting ("AGM") which is being held at 12.00 noon today. Since the start of the year has been encouraging with the Group's total enquiry levels running c. 13% ahead of the prior year. The Group's forward sales position remains very strong with total forward sales revenue, including legal completions taken to date in 2018, of £2.76 billion, being c.8% higher than last year (2017: £2.56 billion). As announced on 27 February 2018, additional payments under the Plan of 125p per share will be paid over the next three years in late March/early April each year. The first of these additional payments of £389 million, was paid to shareholders as an interim dividend on 29 March 2018. At the same time the Board recommended that the scheduled return of 110p per share, or c. £345 million, will be paid to shareholders on 2 July 2018 as a final dividend. With the scheduled payment on 2 July 2018, the total value of the capital returned by that date of £2.22 billion will be £1.36 billion greater than that originally planned at launch in 2012. The additional payments over the next three years will bring the total value of the Plan to £13.00 per share, more than double the £6.20 per share original commitment made by the Board in 2012. The total value of the Plan is now c. £4.07 billion. My View: listed above are a few selected snippets from the trading update and whilst accepting that PSN operates in a cyclical market, that direction on that market still favours the patient shareholder. Absolutely no complaints from me with a near 100% return on a generous slice of PSN tucked away into my ISA immediately after that surreal Brexit referendum in mid-2016. Can’t see any reason not to continue to hold at the moment. However, I feel that the proposed £75m bonus even if it is to be offered in shares to the CEO, is simply outrageous but I suppose that when it rains gold from the skies, the hard working CEO’s put their buckets out to catch the free gold. Anyway, maybe the greedy grabbers won't get the buckets of gold, after all, see link: www.moneymarketing.co.uk/aberdeen-standard-votes-excessive-pay-persimmon/ Wednesday25/04/2018: Boohoo: EPIC: Mkt Cap £1775m: Final Results RNS: Outlook and guidance
Trading in the first few weeks of the 2019 financial year has made a strong start. Group revenue growth for the next financial year (FY19) is expected to be 35% to 40% with adjusted EBITDA margin between 9% to 10% and capital expenditure of £50 to £60 million. Looking beyond the current year we will continue to lead the market on value, service and proposition in all our key geographies. Whilst this will require a continued investment in people and infrastructure, we believe that the benefits of our investments in marketing and warehouse automation will generate economies of scale to allow us to drive sales growth of at least 25%, whilst maintaining a 10% EBITDA margin. My View: As a previous holder who enjoyed a comfortable profit albeit maybe an overly early exit on BOO in the past, as I wrote last week after much deliberation waiting to re-enter as the price continued to fall, I bought again last week well aware that there was a risk involved just one week ahead of the year-end results. The Free Cash Flow (FCF) has increased from £5.4m for 2017 to £29.8m for 2018 whilst the ROCE still hovers around 30%: it all spells out as a quality business very much enjoying its moment in the sun. The results have been well received by the market and I am sure that as this one is such a darling of private investors having been championed by the very worthy Paul Scott in the past; there will be some relieved investors today. I am happy enough and will continue to hold. Thursday 26/04/2018: Taylor Wimpey: TW.: Mkt Cap £6.3b: Trading Update RNS: UK current trading The underlying housing market has remained stable in the first four months of 2018, with continued good accessibility to mortgages at competitive rates. During the first few weeks of March, the poor weather conditions had a noticeable impact on sales and build rates but activity has since recovered. Solid consumer demand continues to drive a healthy sales rate against a very strong comparator. Average private sales for the year to date were 0.85 per outlet per week (2017 equivalent period: 0.93) in line with our expectations. Cancellation rates remained low at 13% (2017 equivalent period: 10%). As at 22 April 2018, our total order book value stood at approximately £2,155 million (2017 week 16: £2,210 million). This represents 9,050 homes (2017 week 16: 9,219 homes), excluding legal completions to date. My View: a rather uninspiring update I felt and decided it was time to take profits so sold on the morning of the RNS; whilst my sale was some way off the top of the market price of 210p back in early January, the fact is that in a long career of investing I reckon I have only sold at the top on a handful of occasions: Never feel you are clever enough to buy at the bottom and sell at the top; it just doesn’t happen apart from the “smart crew” on bullectin boards & we all believe them don’t we! TW was one that has earnt its keep in the high-yield portfolio (that massively unexciting stuff) delivering a return of over 15% in the year but I felt that the update may lead to some drift and really time to move on as I have plenty of housebuilder exposure in a PSN & also the TEF a company as I rate as the most exciting in that sector. Friday 27/04/2018: Air partner: AIR: Appointment of Interim CFO RNS: Air Partner PLC is delighted to announce the appointment of Chris Mann as Interim Chief Financial Officer. Chris is a chartered accountant who has worked in finance positions at senior level within a range of listed and private companies, most recently with KONE Corporation and Gatwick Airport Limited. Chris will remain with the Company until a permanent Chief Financial Officer is appointed in due course. He will not be a director of the Company, nor a member of the Board. My View: decent move and an apparent safe pair of hands to draw a line under the previous accounting issues and hopefully swiftly move on. Whats On the horizon next week: To be honest, next week looks a little dull and I can’t see any Voyager companies with H1 or H2 results pencilled in or for that matter and trading updates that coincide with the same period as last year. This weekend sees the Hatters final League 2 home match for hopefully some years and then it’s onto League 1 for next season. Strangely in football, I have always had this theory that clubs get promoted to reach an equilibrium between competence and incompetence so let's see what next season brings. Certainly, there will be lots of different town & cities to visit and for me, that’s all part of a great day out. I am already looking forward to the Stadium of Light in Sunderland which will give me an excuse to call into Hartlepool for a couple of swift ones in that superb real ale bar called The Rat race. Happy investing; catch you all next week Voyager RNS Log WC 15/04/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. I see that early in the week that Tim Martin, the very unique character and chairman of Wetherspoons decided it was time to pull the plug on his companies involvement with social media; good for him I say. I appreciate Tim’s reason were other than my comments that follow but I really feel that the likes of Facebook messaging and telling the local burglar that you are out for the night partying, has a lot to answer for. A couple of months ago in a really fine pub in Rydal Cumbria, a family of four, parents plus two young teenagers and also a rather nice dog, came in for a bar meal. The parents tried to start a sibling inclusive conversation but the two teenagers remained totally glued to their smartphones and the only conversation that came from their lips the entire time they were there was a “yes” when asked if they would like ice cream for dessert. The dog who did not have a clue about smartphones or Facebook was very social: what a world! Where has conversation gone? Is it just in cyberspace? I quick thought on last weeks benchmark blog: just to be clear, I certainly don’t mean tracking an index or fund but really just my encouragement for private investors to continuously try improve their investing by looking at what the quality boys do and over say 5 years. If they are continually ahead of you and you simply can’t change your habits and importantly assuming you invest to increase your wealth, then think about giving up and asking a successful manager to look after your pot. On to this week's log: Monday 16/04/2018: No RNSs relating to Voyager holdings: Tuesday 17/04/2018: No RNSs relating to Voyager holdings: Wednesday 18/04/2018: IG Design: IGR: Mkt Cap £275: AIM Market: RNS is about: Increasing revenue and improved margins driving strong growth IG Design Group plc, one of the world's leading designers, innovators and manufacturers of gift packaging, greetings, stationery, creative play products and giftware, announces a trading update in relation to the year ended 31 March 2018. The Group's trading accelerated in the second half of the year with all regions delivering strong revenue growth and increased profits. As a result the Board anticipates a full year of overall progress and financial performance in line with management expectations. The Company's results for the full year to 31 March 2018 will be announced on 11 June 2018. Highlights - The Group's gross and net margins have increased driven by strong performances across all of the Company's global operations, with the previously flagged cost headwinds having been effectively mitigated - Net cash ended the financial year positive, after having completed the acquisition of Biscay Greetings in Australia, the disposal of part of the Hirwaun site in the UK and with record levels of capital expenditure invested during the year - Average leverage during the year is expected to have been below 1.5 x EBITDA (FY17, 2.3x EBITDA) - The Board remains committed to its progressive dividend policy and is considering increasing the Company's earnings pay-out ratio in future periods, to reflect both the improved financial performance of the Group and the positive outlook of the Directors. My View: IGR is one of my major holdings as there is just so much I like about the company: The company is run by competent management who understand their market. Senior directors have a good level of share ownership. IGR makes real profits increasing year on year. The company makes decent returns on capital. The dividends whilst being a touch mean as the company has invested should appreciate in the future according to management. The newsflow from IGR continues to be very encouraging. The table below from SharePad gives a nice summary of some key numbers as we stand and the key ratios which already look interesting will be updates when the finals are published in June. Taking a look at risk: Just need to keep an eye on net debt over the coming months. For those who like the security of a high Stock Rank, IGR comes in at an impressive 85. All in all, I am happy to retain my holding and may be tempted to but a few more on a share price dip. Having said that, I see this stock as a nice quality steady growth company that will appreciate over time; I doubt it will move like a rocket but that will do nicely for me. An interesting PI video recorded on Monday this week (PI World offer an excellent service): www.piworld.co.uk/2018/04/18/ig-design-group-igr-investor-presentation-april-2018/ Wednesday 18/04/2018: Telford Homes: TEF: Mkt Cap £320m: AIM Market Stock: RNS Trading Update: TEF tells us that they have had a “Strong performance reflected in circa three percentage point improvement in gross and operating margins”; all sounds rather good to me. Incidentally, the comparative table shows why I rate TEF so highly compared to other more popular building stocks: My View: whilst this housebuilder has done nothing like the return that my other builder PSN which has kindly given over 100% return, TEF has more than earnt it’s keep in the portfolio yet seems to be somewhat overlooked by the markets despite having a first-rate management in charge. \for those who like Stock Ranks, Telford scores an impressive 89. Until the cyclical housing downturn kicks in, which it will, of course, one day, I am happy to hold this niche builder who concentrates on the chronic housing shortage in London. Wednesday 18/04/2018: Bodycote: BOY: Mkt Cap £320m: FTSE 250 Stock: RNS Contract win to supply Rolls-Royce: Bodycote, the world's largest provider of heat treatment and specialist thermal processing services, announces that it has signed a 15-year contract with Rolls-Royce's Civil Aerospace business. The contract is expected to be worth over GBP160 million in incremental revenues over the 15-year period. Sales will ramp up over the next five years. My View: yes another one of my exceedingly boring companies but as readers will know, I simply love boring companies. A decent and encouraging contract win to supply Rolls-Royce with over £160m over a 15 year period. Now in terms of turnover, the current BOY turnover is around £690m so that’s a pleasing but not massively significant £10m or so a year but it all helps. Thursday 09/04/2018: D4t4: Mkt Cap £55m: RNS Press Release: Essentially the statement is about encouraging progress with Celebrus. The RNS came out at 09:00 and the share price responded immediately adding a further 5%. Not much more to say really but looking rather decent and I look forward to their year-end results. Friday 20/04/2018: Bonmarche:BON: Mkt Cap £45m: RNS Trading Update For Year Ending 31/06/2018: The Company is pleased to confirm that, reflecting the good progress achieved during the financial year, the FY18 profit before tax will be in line with the Board's expectations. Online sales maintained the strong growth seen throughout the financial year, against comparatives that became more difficult in the fourth quarter. Store sales performance was disappointing, reflecting the issues more widely reported in the clothing market. Whilst total sales for the year therefore declined slightly, the gross margin percentage was resilient. The lower headline gross margin that had been anticipated due to adverse FX movements, was largely mitigated through tight stock control and improvements to the loyalty scheme, which led to lower discounting. There were also significant overhead cost savings, delivered through improved operational efficiency and reduced, but more effective, marketing expenditure. Helen Connolly, Chief Executive Officer of Bonmarché, said: "As anticipated, trading conditions in the final quarter of our financial year remained challenging and, against this backdrop, I am pleased that we have delivered an increase in the FY18 profit before tax compared to last year. "Whilst we expect the market to remain difficult, our focus will be on continuing to improve our proposition to customers through a number of self-help initiatives, which we expect to drive further progress for the business during the new financial year. My View: At BON and in common with a lot of other retailers, the high street continues to experience fairly tough times. However, I think that Helen Connolly is doing a good job at BON since her arrival. The interesting part is the continuous percentage increase in LFL sales of the online offering yet against this we have to balance that online was accounting for about 10% of total turnover at the half-year report; if on-line contributed say 30% of total sales then I would feel much more positive about the stock. This is in truth only a very small position for me and bought in May last year as a recovery situation and it may well be one that I have got wrong even though it’s just about cost neutral with that generous 8% yield. Probably time to move on with this one; you can’t win them all! Other Thoughts On Previously Held Stock: I thought I would offer a few comments on stocks where I sold once I saw bad news breaking, each of these companies has released an RNS during this week: Galliford Try: GFRD: Not really an RNS but those mean chaps Peel Hunt has reduced their price target for Galliford Try down to 1165p even by my standards that’s a touch mean and over a £ less than I got in my sale following the RNS on 15/01/2018 informing up about their Carillion liability. Now whilst GFRD does not tick the boxes as a buy for me at moment, I rather think that Peel Hunt are a touch pessimistic long term. A decent company in their in my opinion but maybe I am being overly sentimental having had a long association with them back to the time they were under £3. I reckon that in the medium term GFRD will be fine: I do not currently hold a position either long or short in GFRD but do feel slightly tempted as I can see a 20% total return on these over the next 12 months. SPRP: A couple of years back I sold my holding in SPRP on the morning of their trading statement on 18/04/2016 relating to battery issues and have never been tempted back since. The RNS of 19/04/2018 “The Company continues to take legal advice, and is in communication with BRK, with regard to the Termination for Breach Notice, the allegations made by BRK and its position. The Company disputes the allegations made by BRK. A further announcement will be made in due course. The gross book value of the disputed stock of unsold BRK products was GBP4.3m as at 31 March 2018. Whilst discussions with BRK continue, the Company is unable to confirm the expected date for release of its audited final results for the year ended 31 December 2017. A further announcement will be made in due course. The Company announces that in late January 2018, it entered into a committed 3 year revolving credit facility with HSBC Bank plc for GBP7.0 million to fund the Company's working capital. On 29 March 2018, the Company drew down GBP3.0 million of this facility”. Apart from the destruction of investors wealth, this situation as SPRP is really looking a bit of a muddy mess with simply insufficient clarity as to what is really going on. In addition, sadly, I simply don’t think that the management are strategically that switched on; simple as that. In order to invest in a business, I have to have confidence in the management and SPRP don’t really give me that confidence; I don’t think they cook the books but as I say, they just strike me as strategically naive and rather accident prone. However, having said that, if I were an investor, I would dig into the detail a touch in order to reassure myself that the high Capex/D&A ratio is sound and not a cause for concern; as I am not an investor in SPRP, I can’t be bothered to dig. Just to add to the lack of confidence, the group finance director resigned with immediate effect in March; see the 5th March RNS: it always worries me when I see the poor old CFO or CEO for that matter, leaving with immediate effect; walking the plank to be fed to the sharks! Also they have just drawn down on a £3m debt facility with the banks which I can’t quite understand as the most recent accounts claim to have something like £10m cash available on the books!! They really need to explain to shareholders the cash position in my opinion. With SPRP, it may all be perfectly innocent and part of the grand strategic plan & will no doubt be made a touch clearer in a future RNS. Incidentally investors will have a chance to put a few relevant questions to SPRP at Mellor next week. I do not hold a position either long or short in SPRP. Gattaca: GATC: If you forgive the expression, “when you smell a rat, get out” and sadly this has been the case for the perennial destroyer of investors capital and again I see it as a case of poor strategic management. You may remember that they were originally under the sensible name of Matchtech and whilst under that name their share price rose from 240p in early 2013 to 640p a mere eighteen months later. Then it seems that management simply lost it sadly at a time when others in their sector continued to prosper. They probably paid vast sums to some image consultants to advise them in making that dreadful name change to Gattaca; just what the heck does that name mean? I sold my shares back in 2016 when I just simply no longer felt I had confidence in the management of GATC; since that time the share price has constantly dwindled down to Thursday mornings 145p. As I always say, if in doubt, get out. Note: investors had plenty of red flags including the immediate resignation of the CEO in early February and a sale at that time would have at least protected an investors capital a touch more than today's share price. I do not hold a position either long or short in GATC. Finally, an RNS from another incredibly boring business but this time one I sold back in early 2017 when the share price just about tripled my original investment yet there was still a little more to come but that’s investing! The company in question is Trifast: TRI and again a very well managed business but at the time, I felt that its valuation was becoming maybe a bit stretched yet since I sold it has put on another 20%, so what do I know? On Thursday they released an encouraging RNS “slightly ahead of expectations”. TRI still ticks a lot of boxes for me as it is a class act but I doubt I would return unless that really did something about that measly dividend of 1.4%. Also this week, I have been busy topping up Somero (SOM), buying back into a previous “profits taken holding” BOO and actually purchasing a share from the past that at one time did very well for me, Restaurant Group (RTN) plus taking a spread bet in AA; you may remember I wrote about the sad demise of AA a couple of months ago. So why am I buying into these two losers you may well ask (in fact, I may well be asking myself that question in a few months time, plenty of time to get egg on my face). In the case of RTN, since the finals on 07/3/18 the CEO and CFO have been buying very significant numbers of shares; £170k worth between them, the still generous dividend looks to be covered by FCF although this could be cut should they need more capital (might be a sensible move). Finally, the chart looked rather compelling and I bought in on Monday: In the case of the AA, I opened a spread bet on Monday: again really significant CEO & CFO purchases of shares in recent days again at a combined value of £170k. Once again the chart was looking rather compelling: Whats On the horizon next week:
Results: AIR, ABDP & BOO (I have just taken a modest position in BOO after the rather the >40% fall in share price over the last 6 months: will I regret it?). AGMs with TU’s from PSN & TW. Ex-Dividend: LGEN & PMP This week I have been just a bit to busy enjoying the nice weather and revamping a few items in the garden; so, sadly no walking in the lakes. Instead, I will head for Cumbria, Carlisle, leaving home about 5:00 am on Saturday morning to catch the 06:40 direct service to Carlisle. A win for the Hatters will see us back in League 1 but in truth, we only need two points from the remaining three games and that’s IF the other hopefuls each win their final three games: I reckon we are nearly there! Have a great weekend and enjoy our summer which usually lasts for about five days! Happy investing; catch you all next week Voyager RNS Log WC 08/04/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Oh, What A Noisy World! Twitter: I do like Twitter and it’s a great place to keep in touch with fellow investors but without care, it can become very hungry on one’s time. On the pro side you can get very rapidly the thoughts of other respected investors but on the con side, unless you really manage your Twitter time well, you could get sucked into a black hole of noise. It’s something that I have become increasingly conscious of these last few months. In some respects, the time reading on Twitter may well be a compliment to the very readable comments made by other investors and certainly, the links often posted are first class. However, like most things in life its quality of information rather than quantity that counts: with shares you can easily sieve characteristics to get to the stocks that may be of interest to you but with Twitter with those that you follow, there are no real shortcuts; well at least not any that I am aware of. Thankfully some of the most respected successful investors are relatively infrequent Tweeters and when they do tweet you really take notice of what they have to say. It's really just an observation and one that runs alongside the drum I have been beating for years now about cutting the market noise. Incidentally, the idea about market noise first came to me many years ago whilst flying to Australia. The plane was an old QANTAS beast and noisy as hell until I put on my “oh so flashy” noise reducing headphones: bliss, I could think again as I deliberated Sharescope on my laptop. That’s when I thought how great it would be to cut out market noise and that’s what I do with a passion these days; I honestly can't recall the last time I bought IC magazine or similar; not knocking them but they just simply add to the noise. For me, decision making within investing is about the financial numbers & ratios, the RNS flow from the companies that make it to the Voyager universe and a mandatory need to have as far as we can tell, a credible CEO & CFO running each particular business. On the other hand, I do read the comments of some of the thoughts of a number of very astute investors on the Twitter and also regular articles posted by excellent commentators including such as Paul Scott (Stockopedia), Phil Oakley & Richard Beddard (both on SharePad): these guys actually try to educate the private investor with relatively infrequent but quality analysis. It’s then up to the individual investor if they choose to be spoon-fed or learn from mentors and make their own investment decisions. As for managing my time on Twitter, I now try to limit myself 15 minutes in the morning and 15 minutes in the evening or at least that’s what I try to do until somebody includes a useful link that I simply can’t resist reading: blast, there I go again, time ticks away with Twitter. Anyway, let's have a look at what’s being going on in the Voyager Universe this week. Monday 09/04/2018: Keywords Studios: KWS: Mkt Cap £1060m: RNS’s are about:
Financial overview: Group revenue (including effect of acquisitions) increased by 57% to €151.4m (2016: €96.6m) Adjusted EBITDA* up 57% to €26.3m (2016: €16.7m), representing a margin of 17.4% (2016: 17.3%) Adjusted profit before tax* increased by 55% to €23.0m (2016: €14.9m) Adjusted basic earnings per share* up by 52% to 31.18c (2016: 20.59c) Adjusted operating cash generation** increase of 48% to €21.9m (2016: €14.8m) Net cash*** of €11.1m (2016: €8.7m) Final dividend of 0.98p (2016: 0.89p); 10% increase in total dividend to 1.46p per share (2016: 1.33p) My View: the numbers themselves are right at the top end of the revised market expectations; the revisions being made when KWS provided a strong trading statement back in early February this year. There are of course lots of adjustments but this is inevitable with a company growing at the rate that KWS and continually making bolt-on acquisitions but nevertheless the numbers are highly impressive. The market, which is incidentally highly fragmented, for the work that KWS offer is simply huge and the CEO Andrew Day, estimates this to be $5 Billion; that’s some market and KWSX is now becoming recognised as a “go to” provider for many of the requirements of this huge market. Incidentally, it’s well worth a look at the results presentation that KWS did on Pi World this Monday, Link: www.piworld.co.uk/2018/04/09/keywords-studios-kws-fy-results-presentation-9th-april-2018/ Regular readers will know that I first bought into KWS back in mid-2016 when the shares were just over £3 and did make several top-ups as the “beating expectations” RNSs kept flowing. I eventually reached a point where the percentage of KWS in my portfolio was becoming a touch sill and that together with my ongoing thoughts about the risks associated with managing so many acquisitions, lead me to sell some shares in kws to the value of my original investment: just simple risk mitigation. However, due to the continual upward trajectory, despite my top-slicing, KWS remains as one of my most significant stocks by percentage value shares within the Voyager. At the moment, I am happy to continue to hold and hopefully sleep well. Tuesday 10/04/2018: D4t4: D4t4: Mkt Cap £50m: RNS Trading Update & Contract Wins: The Company is in the process of its year-end close and intends to provide a more detailed update on financial performance on 23 April 2018, in advance of this, the Directors are confident that the revenue and adjusted* profit before tax will be ahead of the comparatives for the year ended 31 March 2017. Details of the recently converted opportunities are as follows: Data Management: · A major multi-year contract with a global US headquartered financial institution for our Private Cloud Data Analytics solution. Data Collection: · A new contract for our Celebrus data collection software with a Taiwanese bank. · An extension of a global contract in the financial services sector with the addition of a new data collection channel using our Celebrus data collection software. · A capacity extension contract for our Celebrus data collection software with a major online retailer in the UK. · A capacity and functionality extension contract for our Celebrus data collection software with a major online retailer in the UK. · A capacity extension contract for our Celebrus data collection software with a major European retailer. · A new contract for our Celebrus data collection software with a major Japanese car manufacturer who will be utilising our GDPR compliance functionality. *Adjusted for amortisation of acquired intangibles, share based payment charges and foreign exchange losses. My View: I did write a few months back that when D4t4 released that ”results will be weighted to the second half of the year” RNS, that I greatly reduced by holding again simply as risk mitigation. Well, although I am fairly ruthless in jettisoning a risk to the portfolio, once I feel confident about better news then I am happy to either but back in or consider increasing my holding. I thought that this RNS was both reassuring about this year’s prospects and the new contract wins certainly add more confidence in going forward. The one thing I did not like about the RNS was the vague wording “profit before tax will be ahead of the comparatives for the year ended 31 March 2017”. Just why not say we will meet market expectations and save the poor investor some legwork in terms of chasing back through historis reports? All in all, I am happy as I bought back my previously sold stock at a lower price than I had sold them for and the share price looks to be appreciating nicely: happy enough with that one. Wednesday 11/04/2018: Norcros: NXR: Mkt Cap £150m: RNS Trading Update: Group underlying operating profit for the year is expected to be in line with the Board's expectations. Group revenue for the year is expected to be in the region of £300m (2017: £271.2m), 10.7% higher than the prior year on a reported basis, 8.7% higher on a constant currency basis, and 4.4% higher on a constant currency like for like basis2. UK revenue for the year was 10.0% higher than the prior year reflecting in part the first time contribution from Merlyn which was acquired on 23 November 2017. Merlyn has been seamlessly integrated into the Group and performed in line with the Board's expectations. On a like for like basis2, UK revenue was 3.6% higher than the prior year. Second half UK LFL revenue declined by 0.8% compared to the 8.5% growth seen in the first half. This was largely due to lower retail revenues at Johnson Tiles and a tough comparative period last year. Johnson Tiles apart, H2 UK LFL revenue was 8.4% higher (H1 +11.4%). Our South African business again delivered strong revenue growth despite a challenging market environment, 6.0% higher than the prior year on a constant currency basis and 12.0% higher on a reported basis, continuing the sustained progress of recent years. Reorganisation - Johnson Tiles UK In 2017 we implemented a restructuring at Johnson Tiles UK designed to improve its operating performance and increase manufacturing flexibility. Notwithstanding the benefits of this restructuring the business remains loss making as market conditions experienced in the second half proved more challenging than expected. As a result, the Board has implemented a further restructuring programme which will involve the loss of up to 50 jobs. This will result in a charge of around £2.1m, to be treated as an exceptional item and recognised in the financial year ended 31 March 2018 with the subsequent cash outflow occurring in the first half of 2018/19. Annualised savings are expected to be at least £2m. Financial position Closing year end net debt is expected to be around £48m (2017: £23.2m), in line with the Board's expectations. Pro forma Net Debt to EBITDA is expected to be circa 1.3x, in line with the guidance at the time of the Merlyn acquisition. My View: I greatly reduced my position in NXR which formed part of an Income portfolio, towards the end of February (see earlier blog notes). I still like the company and it had indeed delivered all one could ask for in a high yield portfolio but I felt as the market continued to be blinded by the pension issues that it was time to take a 50% or thereabouts top slice. Incidentally, those pension issues as I write so often, are simply not a serious issue as the pension fund is closed to new entrants and the average age of members in now in the early 80’s. I am happy to hold my remaining share and trust the issues that have held the company back at Johnson Tiles will be sorted shortly. I always feel for employees that are to be made redundant, I have done enough of that “breaking the bad news” in my career but a quick fag packet look at the numbers suggests that the staff will be treated reasonably well. Without doubt whilst the accountants who run NXR may be described as a safe pair of hands, their RNSs and presentations are as dull as dishwater completely lacking in inspiration but I will nevertheless hold my reduced holding for now. Wednesday 11/04/2018: Air Partner: AIR: Mkt Cap £47m: RNS FURTHER UPDATE ON ACCOUNTING REVIEW: Our review has made good progress, and is ongoing. At this stage, we believe that the total cumulative impact arising between the financial years ended 31 July 2011 and 31 January 2018 will not exceed £4m. The final amount will be confirmed to the market after completion of the review. In accordance with accounting practice, amounts relating to prior periods will be recorded as restatements of comparative financial information. Any amount attributable to any period will be treated as a non-cash item. On the advice of its advisers, considering the work required to restate appropriate historic accounts and complete the full year audit, the Company believes it prudent to reschedule the announcement of its full year results for year ended 31 January 2018 from 26th April 2018 to 31 May 2018. The RNS then goes on to reassure by After appropriate restatements, the Board expects that the Company will have sufficient distributable reserves to pay dividends. The Board intends to recommend that the final dividend payable for the year ended 31st January 2018 will be 3.8 pence per share. The Board further wishes to take this opportunity to reaffirm its ongoing commitment to its dividend policy, which targets cover of between 1.5 and 2.0 times underlying earnings per share. On 6th February 2018, the company announced, "underlying pre-tax profit for the financial year ended 31 January 2018 is expected to be not less than £6.4m". Prior to adjustment for any expense attributable to the period arising from this matter, this statement remains valid. The Group currently maintains a strong balance sheet with over £8.6m of its own cash at the end of March 2018. Any one off costs and fees associated with the review will be expensed in the financial year ended 31st January 2019 and clearly identified as such. Whilst our review is ongoing, we will not comment on rumour or speculation, and shareholders should expect official statements to be issued to recognised Regulatory Information Service providers as appropriate, ensuring full compliance with regulatory obligations. My View: well that’s quite a reassuring update from AIR and to a large extent dispels some of the market fears that AIR could become another CVR. In my view AIR was nothing like the CVR situation; with AIR somebody in the accounts department has been let’s say irresponsible with bad practice remaining undetected and whilst this is a worry, this RNS does clear the air ( I like that, clear the air). Last week I wrote in this journal that I sold all of my AIR at the opening and took my profits as the stock carried too much risk and could easily drop appreciably further and of course, it certainly did and indeed so much further than I expected and more than probably justified. Early on the day of this latest reassuring RNS, I bought back into AIR at a price very significantly cheaper than I had sold them at last week. I now see AIR as a special situation with, given time, an attractive upside but with a touch more risk that most of the other stocks within my portfolio. My view is that whilst even at the best of times the share price is prone to turbulence, this stock has potential given time for a maybe 25-40% upside. Note: although I do sell with a rather ruthless unemotional streak, and this is done in order to protect capital, I am very open to returning to that stock once the risk has diminished: recent in 2018 include PMP, D4t4 & AIR. For me, it’s all a question about acknowledging the risk, mitigating that risk and NEVER being too proud to either sell or repurchase once the situation has changed and the stock risk altered. Thursday 12/04/2018: WH Smith: SMWH: Mkt Cap £2180m: RNS Interim Results: The figures tend to show in my opinion that SMWH is possibly treading water a little this last six months: My View: well after a very good association with SMWH which had delivered my a splendid return from one of my favourite “most boring” companies, it’s time to bid the stock farewell and bank the profits. It’s a lovely company and the travel section is still progressing well but the attractions in terms of ROCE/CROIC remain, I see limited upside and indeed by trailing stop loss has been pinging little messages to me since mid-February. For me, it’s time for now to bank the profits. Friday13/04/2018: XP Power: XPP: Mkt Cap £677m: RNS Trading Update: The Company has made a good start to the new financial year as the strong order intake reported in 2017 continued into 2018. Order intake in the first quarter of 2018 was £51.2 million (2017: £47.0 million), 9% ahead of Q1 2017 on a reported basis or 19% ahead in constant currency. On a “like for like” basis, removing currency effects and the impact of the Comdel acquisition, orders increased by 12%. Group revenue for the three months to 31 March 2018 was £46.6 million (2017: £39.6 million), 18% ahead of Q1 2017 on a reported basis, or 28% ahead in constant currency. On a “like for like” basis revenue increased by 17%. The Book to Bill ratio, which tracks the relationship between orders received and completed sales and is an indicator of future revenue growth, was 1.10 for the first quarter. Financial Position Net debt was £6.8 million at 31 March 2018 compared with £9.0 million at 31 December 2017. Dividend The Board has declared a dividend for the first quarter of 16 pence per share, a 7% increase over the prior year, which will be paid on 11 July 2018 to shareholders on the register at 15 June 2018 (2017: 15 pence per share). Outlook The momentum seen in 2017 has continued into the first quarter of 2018 and we are encouraged by the continued strong order intake experienced across the business and the book to bill level gives us confidence for the future. The Board’s expectations for the Company’s full-year performance remain unchanged. My View: A solid trading update from XPP and let’s remember this is for the first quarter of 2018 so you are quite unlikely to get “ahead of expectations” predictions for the full year at this stage. I have held XPP for a couple of years now and it has been a fine performer in the portfolio. I really do like the company as they offer so many of the attributes that I seek in a solid business: of course, like most stocks it is not without risk but with good management at the helm, you get a comfortable feel. For information the brokers forecasts are shown below; I see Stockopedia also allocates an attractive stock rank of 87 to XPP. Friday13/04/2018: Air Partner: AIR: RNS Directorate Change: Following the announcement of Air Partner's intention to restate certain historic results, the Company today announces that the Chief Financial Officer, Neil Morris, has offered his resignation to the Board of Air Partner. This has been accepted, with effect from today. Neil will remain available to the Company to contribute to the ongoing review, in respect of which, there is no further update from the RNS released on Wednesday. The Company is reviewing candidates for the position of Interim Chief Financial Officer that are available immediately. Air Partner will be engaging an external recruitment consultancy to assist in the search process for a permanent Chief Financial Officer. My View: Well, no an unexpected announcement but nevertheless a touch cold as we don’t even have a “we would like to thank Neil….” In the statement and it makes it fairly clear that no internal candidates will be considered. I would think there will be a whole lot of changes in the finance department at AIR. Whats On the horizon next week: Let’s start with Sunday when I hope to do blog on the Voyager performance in FY 2017/18; it will be a fairly high-level overview in terms did the Voyager bear the benchmarks applied. I can’t see any results pencilled in for next week but would have thought that we could possibly see some Trading Updates from RWS, TEF, IGR & BON shortly. This weekend the stumbling Hatters have the opportunity to lurch a little closer to promotion when we take on Crewe at Kenilworth Road. I had better mention next week's game now as although I have a train ticket booked that gets me into Carlisle at mid-morning well ahead of the 3pm kickoff, I might just waste the ticket and take a couple of days around Grasmere before heading off to Carlisle; I will take a late decision on that one. If it is a few days walking in the Lakes then I may have to sacrifice next weeks voyager. Happy investing; catch you all next week Voyager RNS Log WC 01/04/2018 As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. This week a different introduction by saying that I am a mistrusting individual when it comes to the business culture of certain countries of the world; can’t see me ever changing that mistrust but should I just occasionally break my rule? I have a geographic deep mistrust with companies domiciled in certain countries and whilst I have absolutely nothing against the good folk of China, Israel, Russia or the wonderful African continent, I just don’t need to take the risk in terms of investing in such companies. I have to have faith in the accounting practices and honest news release of companies and unfortunately, countries as described in the areas above, simply do not give me that faith. Yes, I will miss out of some investments but simply put, I just don’t have the appetite for that kind of risk; I have to feel that I can trust the integrity of the directors of a company. In an investment club many years ago, we got our fingers burned with GEO Interactive Media/Emblaze; I personally had a fortuitously profitable but I consider lucky escape with Telit Communication when my some & mirrors digging raised some real concerns. I would suggest that any investor might find it worthwhile putting together some form of defence to guard against the “smoke & mirrors” merchants of the investment universe. Enough ranting about my mistrust of management, yet to be fair, if you don’t have that basic trust of the management practices on any business and that includes wherever they are domiciled, however can you either invest or remain invested? Anyway, on to this week's Voyager RNS. Tuesday 03/04/2018: Air Partner: AIR: Mkt Cap £60m: RNS is about accounting issues: YEAR END UPDATE The Board of Air Partner has identified, during the course of its year-end review process, an issue predominantly relating to its accounting for receivables and deferred income. Following preliminary investigations, the issue principally relates to the collection of receivables from customers and accounting for uncollected amounts since financial year 2010/11. Certain uncollected receivables were inappropriately offset against deferred income rather than being expensed to the income statement in the appropriate financial year. This is a non-cash item and has no bearing on the Company's cash balances. Whilst the investigation continues, the Board presently understands that the cumulative amount between financial year ended 31 July 2011 and the financial year ended 31 January 2018 is approximately £3.3 million and a significant proportion of this relates back to 2011. At no point was a customer, operator or supplier impacted or disadvantaged. Further, the Group continues to maintain a strong net cash position. My View: As ever when such news breaks, I carry out a very rapid risk evaluation and 95% of the time sell as soon to the opening bell as I can. In this case, I asked myself a few fundamental questions about management of AIR particularly as the RNS seems to have been rushed out without the management at AIR really knowing the full extent of the problem “Whilst the investigation continues”: Do I still have sufficient trust in the management of the business to have my capital invested? The answer was of course no; simply how can I with them having not just once but systematically made such an accounting error. Indeed will senior managers & directors bonuses that may have been paid in relation to such “profits”, be repaid? Will the ongoing investigations reveal more unfortunate errors? The answer is I don’t know but what I do know is that a risk that further unfortunate errors could be identified which could lead to considerable further downside and that risk does not sit easily with me. In such circumstances, I ask myself the very simple question: “If I did not hold this stock already, would I buy today given what the situation is now”? Again for me, the answer is NO. I originally bought AIR at just over 70p and have enjoyed decent dividends and a steady if sometimes choppy appreciation in share price but at the moment the stock simply carries too much risk to be comfortably retained within the portfolio and has been jettisoned and a very decent profit banked. As it turns out I got a very much better price by selling early than if I had waited until later in the day or indeed the next day or two when the shares fell another 20%. I did not sell at the top or anywhere close to it but that’s fine with me as it's been a capital benefit to the portfolio. I know that some investors are a little loath to sell on such news and worry about sunk dealing charges and whilst that may have been a worry with the silly dealing charges of 20 years ago, many brokers only charge a tiny £5 commission on a trade. I shall not bore folk with my whittling on about procrastination… Wednesday 04/04/2018: No RNS relevant to the Voyager portfolio but as retail appears to be under so much pressure, I decided to cash in my holding in Newriver Reit. Overall, it’s done ok for me but with the gradual demise of retail and the shopping experience moving so much to either the internet or tightening household purse strings, I just saw upside as not favourably balancing the potential downside. So it was a fond goodbye to an old friend from 2013 and time to move on. I have to say that in the past four months I have done considerable top-slicing of some positions that had just got a little too frothy; in hindsight, that was most definitely the right thing to do but the cash pile is now becoming a touch heavy. As ever, patience will be exercised in selection, execution and selling. However, it is becoming increasingly more difficult to identify good FCF/Returns on Capital stocks at attractive prices but I had to bite the bullet in late March and make a very late entry into Games Workshop as it dipped to the £22 mark. Do you know how many times over the last couple of years I have identified GAW as having so many characteristics that I look for in a stock yet my prejudice in terms of identifying with the business, prevented me from buying in early 2017. Never mind, maybe better late than never! Thursday 05/04/2018: No RNS relevant to the Voyager portfolio but I do keep running the rule over BOO; a share I sold for some decent profits and just keep questioning myself if it is still overvalued or getting into “buy back in” territory? I see a broker this week has placed a price target for what it’s worth, of 125p as they still feel the stock is overvalued at the mid 140’s: time will tell. I will simply keep on the watch list for now. I also set some time aside on Thursday evening to simply review over the last seven years records my “when there is a doubt get out” culture and quite honestly the picture is overwhelmingly positive. I would say that stock selection by whatever your chosen method may say on average give you a 50% or 60% win rate. Without a doubt in my view the crucial factor that differentiates the good performance from the average performance is how you actually manage those stocks that don’t perform: I could write a book about it! What saddens me is when private investors continually go into denial with an attitude of “it will come good, I am sure”. A massive character strength in investing is to acknowledge a not so bright prospect and move on. Friday 06/04/2018: No RNS relevant to the Voyager portfolio; lovely as I have some project work to get on with outdoors in the garden. Whats On the horizon next week: Two portfolio companies have reporting dates next week; one an exciting company and the other one an incredibly boring company; there is nothing with boring companies, I love them! 09/04/2018: Keywords Studios: Finals 12/04/2018: WH Smith: Half Year Finally, with the financial year closing, it’s time to calculate an allocation of profits to my two selected charities and pleasingly this FY has proved to be a very good investment return for me and therefore for my charities, Shelter & Prostate Cancer UK. Have a good weekend & catch you next week. Happy investing. Voyager RNS Log WC 25/03/2018 & A Catch-Up As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock. The key for the colouring of text within these notes: Text in normal black: just my thoughts. Text in blue italics: direct lifts or copy & paste from the RNS issues by the business. Text in green: loosely, the investment principles that I feel comfortable with. Red is a disclaimer in that what I write is NOT investment advice. Back on the keys this week and what a nice feeling it is after a few weeks diversion of my attention to matters of more immediate importance than investing. I have kept abreast of RNS releases as I honestly believe these are your insight into the market. Any regular readers will know I have almost zero time for market noise and that includes the opinions of the so-called experts, tipsters etc. For me, it's about the information coming from the company, particularly RNS flow and an evaluation of the numbers provided. Oh yes, and not to forget hacking your way through the various adjustments that sometimes used to massage the numbers. Whilst I have been away from the keys, I have made a few portfolio changes. The following few jottings bring you up to date with these changes: XP Power: XPP: made another top up in late February: nice business with a lot of the financial ration/numbers that I look for. It’s a company I have held and added to for a couple of years now. Norcros: NXR: sold approximately 60% of my patient holding of NXR, it was a fairly large holding; in truth quite a nice return steady total return of around 30% but the patience of a saint etc. I still retain a holding in NXR with a feeling that someday the market will re-rate the business.
Somero: SOM: I thought the results as ever looked very encouraging including a significant increase in dividend: overall the company and tidy accounts, give me long-term confidence. I added to my current holding on the morning of the results, 14/03/2018. Note: I have held SOM shares for a few years now originally buying at a touch over 100p. I have since top sliced a couple of times but if you still believe the news flow is good, there is nothing wrong with going back in even after selling/top slicing and topping up again and again. Spectra Systems Corp: SPSY: Final results on 19/03/2018 failed to inspire the punters who were no doubt looking for more positive stuff from the business but I guess that’s trading rather than investing. I am happy to continue to hold but suspect that some investors whilst content with the revenue stream including those from royalties, were looking for more positives. De La Rue: DLAR: sold at the bell following a trading update that said that profits would be at the lower end of expectations 20/03/2018. Honestly what an underhand way to inform the market hiding the “lower end of expectations” within a headline RNS of a Directorate change De La Rue plc today announces that Jitesh Sodha, Chief Financial Officer, has informed the Board of his intention to step down to pursue his career outside of the Company. Jitesh resigns as a Director with immediate effect but will remain in the business until the end of September 2018 in order to ensure an orderly transition while a suitable successor is identified. Comment from me: So, is it immediate effect for the FD or not quite immediate? Separately, the Board expects to update the market on the outturn for the year in the third week of April, and is currently expecting the result to be around the lower end of the current consensus range. How strange that the two days later, or let’s call it a day later if you watch the BBC news in the evening, DLAR announce that they have lost out on their tender to continue to provide passport services for the UK. Remembering that I try to practice what I preach, I saw the 20/03/2018 RNS as a minor profits warning, that’s one red flag and the FD resigning with immediate effect, a second red flag, I sold at an 18% loss; never nice but not a major holding. The point is, had I held on for a couple of days my loss would have been over 30%. Here I go again: procrastination is a major destroyer of an investors wealth. IQE: I sold my holding on 20/03/2108 early on the day of the release of their final results. In a nutshell, I bought IQE as a positive momentum stock and over eight months it has given me a greater than 40% return. The reason for the sale? Well, to be honest, I am not massively influenced by the bear cases or other market noise; it’s more my lack of conviction together with just possibly some creative use of numbers to paint a picture for the final results; there is a lot in note 4 of the accounts that accompanied the final results. Maybe I will return when it stops drifting but it’s become a bit of a trading stock. This week’s RNS Log as I get back on track with the Voyager Log: Monday 26/03/2018: Bioventix: BVXP: Mkt Cap £129m: RNS Half Year Results: The chairman & chief executive statement reads: We are delighted to be able to report such positive news for the current half-year. We are pleased with the continued success of our vitamin D antibody and the remainder of the core antibody business. We remain optimistic about our troponin project and the success of Siemens as their product launches around the world and we look forward to further progress in the second half of the year. My View: The numbers themselves were very encouraging from one of my favourite companies; they always seem to underpromise yet over-deliver, a trait I absolutely love and one to cherish with a small company. I immediately added to my current holding. Note: I have held BVXP since the shares were valued at £7 back in 2014. I did heavily top slice when the share price simply got ahead of itself back in October 2017 and am delighted to have topped up at a significantly lower price than my October top slice. Wednesday 28/03/2018: AB Dynamics: ABDP: Mkt Cap: £169m: RNS Trading Update and Notice of Interim Results AB Dynamics plc (AIM: ABDP) the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, is pleased to provide a trading update in advance of announcing its Interim Results for the six months ended 28 February 2018. Revenues and operating profits (adjusted to add back share option charges) for the six months to 28 February 2018 are expected to be significantly ahead of the same period last year and in line with management expectations. The Group has seen a further increase in demand for its track testing products. A strong forward order book has secured a sales pipeline for the remainder of this financial year and into the next financial year. Looking ahead, the Group continues to invest and develop new products and technologies which will secure the Group's future. Tony Best, Chairman, commented: "I am delighted to report that we are once again in a position to deliver another year of successful growth and have a good pipeline of orders to take us into the next financial year. Our new HQ has enabled us to improve our production capability and will also facilitate further growth." My View: rather nice positive words from the Chairman in terms of delivery of future growth. Can we read anything into the significantly ahead part? The optimist would say yes but the realist (me) would say “fine, in line with market expectations”. Overall, I do like this company in which I bought my first tranche of shares a couple of years back and have added to a couple of times since. I see ABDP as a well-run AIM company that I am happy to continue to hold for the long term in my portfolio and will be seeking the opportunity to add on any share price weakness. I should really do a catch up Glad I Am Not ( GINT) There, so here we go: I should say these are not “clever dick” notes just simply an attempt to help investors learn from their mistakes and let's face it, we all make mistakes: the crucial point is what we learn from those mistakes. I have in the past held two of the companies that appear in this weeks GINT; TCM and SPRP, but jettisoned them from my portfolio as doubts arose in my mind either from the accounts or from the RNS flow: both were jettisoned from the Voyager a couple of years ago. Those actions saved me a considerable amount of capital as the individual stories unfolded over the following months. Incidentally, I do feel that when investors comment about a share, even say in a Tweet, they should indicate if they have an interest in that share. I also strongly believe that if a market commentator unmasks a particular share as let’s say a fraudulent one, then they should return to the story sometime later and close off the story even if necessary admitting that their “outing” was wrong. To admit you are wrong certainly is not a sign of weakness but more one of strength. Telit Communications: TCM: Oh dear here go the smoke and mirrors mob again. I always ask myself “do I have confidence in the management”? if the answer is no; then it’s off to the exit; simply why take the risk with your hard-earned? The Financial Conduct Authority (the "FCA") has notified Telit Communications PLC ("Telit", AIM: TCM), a global enabler of the Internet of Things (IoT), that it has commenced an investigation into Telit with regard to the timeliness of announcing certain matters included in the interim results published on 7 August 2017. Telit has cooperated fully with the FCA in its enquiries to date and will continue to do so. Will more buried bodies be identified? I did write about TCM a couple of years ago listing some of my reasons for mistrust; now after a few more horror stories the price dwindles further south; simply uninvestable in my view. I don’t hold a position in TCM either long or short. Sprue Aegis: SPRP: This like TCM is another company I sold about two years ago again at the opening bell, or as close as I could get to it, following a profits warning. Fortunately, by selling early at the opening, the loss was not a significant one but by close of trading the share price had declined by a mighty 54%. Why do some investors hang on and justify their position? Now whilst SPRP appearances on my smoke and mirrors (I think there is a joke in there) screens from time to time, I am sure they are a far more worthy than TCM but for me, SPRP just seems to be so heavily accident prone as demonstrated by various RNSs over recent years. What does that tell me? It tells me I can not place huge confidence in the management of the company, they just don’t seem to have their finger on the pulse; hence not one for me. The most recent RNS issued on 23/03/2018 makes worrying reading regarding potential hits to the bottom line caused by a fall out with BRK. Again, not one for me; simply why expose yourself to the risk. I don’t hold a position in SPRP either long or short. Utilitywise UTW: A company that I have written about a few times and one that has very real difficulties in deciding what’s a sale and what’s not a sale to be included within their numbers. They came back to the market on 23/03/2108; one for the gambler as how can you, at least for the next couple of years have faith in the integrity of the published numbers. I should add that the excellent Paul Scott has been warning investors about the dodgy accounting practices at UTW for years. Maybe one for the punters but not for me. I don’t hold a position in UTW either long or short. Conviviality: CVR: issued a profits warning on 08/03/2018 “adjusted EBITDA for the current year will be approximately 20% below current market expectations”. Now I know I bore folk to death about emotionless closure of positions that issue profits warnings. If you had sold at the bell you would probably have missed some but only some of the 60% fall in share price that occurred that day. However, as sometimes happens, worse was to follow: somewhere in the accounts department of CVR a Revenue & Customs obligation note asking for £30.0 million was discovered; just how do you overlook that? Again no confidence in the credibility of the management of the company. The shares are currently suspended and another massive % fall can be expected if they return from suspension or even worse a 100% fall should they move into administration. I don’t hold a position in CVR either long or short. I have to say I have researched the company in the past and liked some of the growth story but three things prevented me from investing. Firstly the vulnerability of very low profit margin, secondly the high level of debt and thirdly, simply as much as I like a beer or a glass of red or two, these days I struggle ethically to invest in such companies that offer bargain booze or exploit the the less well off in society in any way at all e.g pawnbrokers/loan shark companies. I suppose it's investing with a social conscience. Leaving my conscience to one side, apart from the low profit margin and the level of debt, there was an attractive growth company in there that just became overstretched and the demise came rapidly. I don't think any investors that seriously lost money on CVR should beat themselves up; rather make a note to be wary of rising debt and tight profit margins in the future. Late yesterday after the market had closed CVR issues what in effect is a “were finished” RNS as the required funds could not be raised. The late RNS went on to say “The Company is in discussions with its lending banks and advisors regarding other possible options and is in receipt of a number of inbound enquiries regarding a potential sale of all or parts the business. The Board believe that shareholders in the Company will receive little-to-nil value”. Friday 29/03 an RNS confirming the end as Administrators are to be appointed. Comisserations to holders. . Before I close off this week, l will just leave a thought with readers; if you are a middle-aged male or the partner of a middle-aged male, then seriously consider going along to the GP and commence regular PSA blood testing; don’t be fobbed off by the rottweiler on reception. Under the NHS men over the age of 50 are entitled to a PSA test, it’s simple, very important and could just save your life! Do have a think about it. Have a good Easter and let's look forward to the onset of Spring! Happy investing; catch you all next week |
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