Voyager RNS Log WC 18/02/2018 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. Monday 19/02/2018: Dart Group: DTG: Mkt Cap £964m: RNS Trading Update: Current Financial Year (FY18) Due to the continued success of our growing Leisure Travel business and a more normalised pricing environment after the heavy discounting in the market over the past year, the Board now expects Group underlying profit before taxation([1]) for the year ending 31 March 2018 to be materially ahead of current market expectations. The Group will publish its Preliminary Results for the year ending 31 March 2018 on 12 July 2018. Next Financial Year (FY19) The Group continues to develop and build its businesses. Looking ahead to the year ending 31 March 2019, forward bookings in our Leisure Travel business for summer 2018 are presently satisfactory. We also remain encouraged by the performance of our two new operating bases at London Stansted and Birmingham airports. Our Distribution & Logistics business, Fowler Welch, continues to focus on growing its revenue pipeline and developing existing and new business opportunities. It is still early in the leisure travel booking cycle and we remain cautious on pricing. However, given the satisfactory forward bookings and the execution of our growth strategy, the Board currently expects the Group's trading performance for the year ending 31 March 2019 to be broadly in line with the current financial year. My View: well nothing to dislike there and I would say that materially means in the order of maybe as much as 10% higher than market expectations. Some investors may be a touch phased by the comments looking into FY commencing April 2018 and whilst the forward booking process does offer some visibility, we have yet to enter Q1 of 2018/19 as yet. Therefore to my mind, the comments are absolutely fine and I am pleased to continue my association with DTG that goes back to about the 200p level a few years ago: I will continue to hold. Tuesday 20/02/2018: Bodycote: BOY: Mkt Cap £1.8b: RNS Re Long Term Safran Agreement BODYCOTE ENTERS INTO AGREEMENT WITH SAFRAN LONG-TERM CONTRACT FOR MANUFACTURING SERVICES Bodycote, the world's largest provider of heat treatment and specialist thermal processing services, today announced that the company has entered into a long-term agreement with Safran, an international high-technology group and tier-1 supplier of systems and equipment in the Aerospace market. Bodycote's global network will support the agreement, operating initially from strategically located facilities in France and Belgium. Under the agreement, Bodycote will provide manufacturing services which include thermal spray coatings, electron beam welding, hot isostatic pressing (HIP), heat treatment and others to Safran companies and their key strategic first-tier suppliers. Bodycote's processes and technologies are used to prolong the working life of critical components and provide in-service protection from factors such as abrasion, temperature and wear. The agreement ensures that manufacturing requirements will be met by a quality-focused supplier to support the growth in Safran's civil aerospace programs. These programs include but are not limited to CFM LEAP for Safran Aircraft Engines, helicopter engine programs for Safran Helicopter Engines and landing gear systems for Safran Landing Systems. Bodycote's international network of thermal processing and other specialist services offers security and mitigates risk in the supply chain. My View: whilst accepting that it’s not the sort of RNS that can offer any quantification in terms of revenues or profit, it’s nevertheless an encouraging announcement from BOY. I like Bodycote and have considered them to be a quality outfit for many years: decent returns of capital, decent FCF, no debt and a quality supplier. Very boring and steady but that’s nice in my opinion, who needs excitement! Happy to continue to hold. Wednesday 21/02/2018 No RNS Relevant to Portfolio Thursday 22/02/2018: Zytronic: ZYT: Mkt Cap £85m: RNS AGM Trading Update: Further to the outlook statement given in the preliminary results announcement, current revenues and profits over the first four months of this financial year remain broadly in line with the equivalent period last year. " The Outlook t the time of the interims on 12/12/2017 said: The current year has started with orders, revenues and trading along similar levels to that of the prior year, which, together with our strong balance sheet and cash generation, provides a sound base for further growth in dividends and shareholder value. The focus on growth this year will be from expansion in local sales representation in the USA and the Far East, and we shall keep shareholders updated on the progress, and any material developments, over the course of the year. My View: It was rather fond “thank you and goodbye for now” departure from ZYT at the opening bell as at best it looks like the progress in revenues and profits have plateaued for ZYT and the stock looks to be ex-growth. Note that ZYT was one of my major holdings up to October 2017 but the price seemed to really rise overly much in my view reflecting over expectation amongst investors. When I initially bought ZYT it could rightly be described as a high-quality growth business. Now whilst I still see ZYT as a quality business it is now appearing to have lost that growth label and whilst it had bags of cash on the balance sheet it’s valuation now looks a little toppy for a small cap dividend paying stock that maybe carries too much risk at the current time, especially as a very significant percentage of its revenues, come from four main customers. So, at the opening bell, I sold my last batch having done some heavy slicing in October 17. ZYT has done very well for me since my original purchase a few year ago and I was happy to both top up along the way and also continually reinvest my dividends but the statement “current revenues and profits over the first four months of this financial year remain broadly in line with the equivalent period last year” is in my opinion a mild profits warning. Lovely company and I may well return someday but for now, it’s protection of profits and capital. Coincidentally, taking the “at the opening bell” sale price and the XD to come matched the previous day’s close price; the benefits of early trading following a somewhat disappointing RNS! Note, take a look at the data below from the excellent SharePad and whilst there is still a lot to like, together with recent RNS announcements it suggests to me that growth may have stalled. Thursday 22/02/2018: D4t4: Mkt Cap £51m: RNS Regarding New Contract Wins D4t4 Solutions Plc (AIM: D4T4), the AIM-listed data solutions provider, is pleased to report a number of new contract wins in key vertical sectors for its Data Management and Data Collection business areas. Following the release of D4t4's half year results to 30 September 2017 and the Company's contract wins announcement on 27 December 2017, the Company has recently converted a number of further significant opportunities from its strong pipeline of potential business. My View: At the end of November 2017, I sold the majority, about 80%, of my D4t4. I just did not like the comment in the half year results with a real bias to H2 with H1 being disappointing. I felt there just seemed to be too much uncertainty in the company and maybe I had got this one wrong so for me it was best to take a manageable loss and preserve capital. However, I still retain a fairly small position with D4t4 and the news flow couple with director buying is enough to encourage me to continue to hold my remaining shares. Within this RNS there is no financial quantification of what the contracts mean to H2, remember H1 was poor with "better things to come in H2" and I find that somewhat disappointing. To my mind after a rather poor set of interims back in November 2017, they really should have taken the opportunity to update investors on H2 expectations. Friday 23/02/2018 No Significant RNS for Portfolio Shares. Glad I An Not There: sadly this weeks award goes to an absolute beacon of reliability from my days as a little lad in short trousers. At that time the AA was an absolute pillar of service & reliability, I used to dream of becoming an "AA motorcycle hero when I group up”. Well just like another fond childhood memory, Hornby trains, how things change. In June 2014 the AA was the subject of an IPO and had a very decent start on the markets with its share price appreciating by about 70% in the subsequent year. Despite good returns on capital, I could never be persuaded to invest simply to that enormous red flag of massive debt; to my sceptical mind, it was a flotation destined to make others rich but not the shareholders in the long run. The debt pile was always totally horrid whichever way you look at it: Net Debt to EBITDA over 7, debt to EV of over 75% which goes up to 85% when you take into account the large pension deficit. At the time of writing these notes and taking into account the reduced market cap following the profits warning, the debt to EV has gone to an astonishing 83%. On 21/02/2018 the AA released an RNS Strategy Review which was in effect a profits warning and a fairly massive reduction in the dividend. In itself the dividend cut is understandable but in terms of the overall debt, a mere drop in the ocean. I have no idea if the AA will survive without raising capital but overall, it’s not a place I would choose to be. Having said that, I should qualify my views on debt by saying that an easily manageable debt situation is fine but to my mind, the AA debt is simply crippling. Will AA service, will Hornby survive or will they follow the fate of that other iconic memory for my childhood, Jamboree Bags! I also not that the unfortunate Neil Woodford is a major shareholder in AA. Now, without doubt, Woodford is a decent investor but like all investors, continued success is simply not guaranteed and when one of his shares runs into problems it's simply difficult to impossible for him to discharge his holding in the way that the average private investor may do. Just one of the advantages us private investors have over the big boys. Incidentally, anybody who wants to do a follow up by looking in the rearview mirror with TalkTalk and my approach to getting out on less than good news may find the share price graph of TalkTalk interesting in reaction to poor news: “profits weighted towards H2”, “Cyber attack” etc offering plenty of opportunities to sell since mid 2015 and avoid the stepwise car crash of the share price. It was stock I held for quite a while and whilst selling a little early late in 2014, took some very decent profits. Had I been a holder in mid-2015, I would have long since fled. Why did I sell when I did? Well as a customer, when things went wrong I had really dreadfully frustrating service from the overseas “I must go through my checklist” customer service desk; as an investor the dropping down in returns on capital; overall losing conviction in the business. Protection of capital is paramount; if in doubt, get out “We can't control the winds - but we can adjust our sails”. Finally, for this week, you may find of interest the following link to an article in the Guardian about restaurants and the crowded marketplace: www.theguardian.com/lifeandstyle/2018/feb/22/casual-dining-crunch-jamies-italian-strada-byron-struggling Personally, I have totally withdrawn from investing in any food or pub chains several months ago. They have been decent enough to me in the past but we are at a time of rising basic wages for staff (a good thing for the low paid staff), incredibly tight margins and near saturation of the marketplace. Maybe one to return to another day but for now, they won't enter my portfolio. Whatever you are doing this weekend, try to stay warm as we have it appears a very cold front coming in from the East; oh how I look forward to sitting on my cold plastic seat at Kenilworth Road on Saturday. Happy investing.
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Voyager RNS Log WC 11/02/2018 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, the markets have certainly had their touch of volatility over this last couple of weeks as we have gone through what appears to be an expected correction. I often feel that the random movement of Mr Market is rather like a very drunk man trying to make his way home. He lurches from side to side, sometimes he even goes backwards or dangerously drifts into the road but despite all of these random lurches, he eventually goes in the right direction. Anyway, enough of this and onto this weeks review: Monday 12/02/2017: XP Power: XPP: Mkt Cap: £608m: RNS Regarding US Tax Changes: The recently enacted Tax Cuts and Jobs Act in the United States is expected (subject to audit) to result in a non-cash tax credit in 2017 relating to the revaluation of US deferred tax balances of circa GBP5.2m, based on the net deferred tax liability at the end of 2017. This credit is as a result of the reduction in the federal tax rate from 35% to 21% and will be excluded from adjusted earnings. The Company has also received notice that claims relating to the Development and Expansion Incentive (DEI) in Singapore have been accepted by the Inland Revenue Authority of Singapore resulting in a circa GBP1.3m refund of Corporation Tax paid in 2015 and 2016. This will also be excluded from adjusted earnings. We will continue to work through the full impact of these changes but expect the Company's future effective adjusted tax rate to be in the range 15-17% depending on regional mix of profits. My View: I have been a fan of XPP for quite some time and bought my first batch in early 2016 and have enjoyed a superb share price ride since that time. The shares got a touch of a boost from this tax gift on an RNS with the US & Singapore at a combined value of £6.5m. Now whilst the company is still evaluating the effects of this good fortune, they state that the Company's future effective adjusted tax rate to be in the range 15-17%, which to me can only be good news and may just lift some brokers forecasts a touch. As I say, nice company and I will continue to hold. Tuesday 13/02/2018: RWS Holdings: RWS: Mkt Cap £1.2b: RNS AGN & Trading Update: The current financial year has started well as we continue to build on this record performance, with our Patent Translation & Filing, newly formed Life Sciences, and Information divisions all contributing in line with our expectations. "In addition, RWS acquired Moravia on 3 November 2017 for a cash consideration of US$320 million. Moravia is one of the leading providers of technology enabled localisation services to some of the largest technology companies in the world. Its acquisition enhances RWS' global presence, adding operations in the Czech Republic, USA, Japan, China, Argentina, Hungary and Ireland; provides further geographic and currency diversification; and adds an additional profitable, cash generative division of scale to the Group. Current Trading and Outlook The Group has performed in line with the Board's expectations in the first quarter of the current financial year. Our focus now is upon the integration of Moravia together with the successful exploitation of the opportunities provided by our recent acquisitions. "Notwithstanding US exchange rate headwinds, the Board is confident of further substantial progress in 2018 as RWS consolidates its global leading positions in its chosen sectors. My View: well that’s a sound enough trading update for the first quarter of RWS’s financial year & let’s remember this is Q1 so a long way to go in the current FY. I guess some punters will be continually expecting to see “ahead of” trading update but in real life, this does not happen so expect there could be a minor sell by punters which may create another buying opportunity. Note I recently topped up at an attractive price on one of the dips early last week as the market had a little shakedown. In my opinion, a quality business that I am happy to continue to hold for a long time and top up when decent opportunities are presented. Wednesday 14/02/2018: Galliford Try: GFRD: Mkt Cap: £800m: RNS Half Year Report 14 FEBRUARY 2018 GALLIFORD TRY PLC - HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 INTERIM DIVIDEND The Group has brought forward plans to increase dividend cover to 2.0x pre-exceptional earnings. Reflecting this, and the Group's strong underlying performance during the half year to 31 December 2017, the directors have declared an interim dividend of 28.0p per share (H1 2017: 32.0p) which will be paid on 6 April 2018 to shareholders on the register at close of business on 16 March 2018. We then move on to the CLLN legacy: Financial position Galliford Try continues to operate well within its financial covenants. However, the compulsory liquidation of Carillion plc ("Carillion") has placed additional financial obligations on the Group arising principally from the joint venture with Carillion and Balfour Beatty plc on the Aberdeen Western Peripheral Route contract ("AWPR"). The over-run costs on AWPR, compounded by the compulsory liquidation of Carillion have increased the Group's total cash commitments on the project by in excess of £150m. The Group continues to make good progress in resolving both AWPR, the construction of which is expected to complete during summer 2018, and other legacy contracts. The Group no longer undertakes fixed price, all risk major projects of this nature, and has improved its tendering and project selection processes. The Group has sufficient financial resources to meet its obligations, including the estimated impact of Carillion's liquidation. However, this would involve diverting capital away from the Linden Homes and Partnerships & Regeneration businesses, thereby reducing their ability to capitalise on the material growth opportunities these businesses would otherwise be well positioned to exploit. Capital Raising Galliford Try therefore intends to raise £150m of new equity capital in the coming weeks to strengthen further the Group's balance sheet and ensure that the Group's businesses can continue to pursue their respective growth opportunities that were set out in the "Strategy to 2021" announced in February 2017 (the "2021 Strategy"). My View: Looking at the numbers you could argue that they look reasonable but then we come to the sting; the poisoned challis gifted by the CLLN joint venture which has necessitated a capital raising and inevitable dilution of about 15-20% for shareholders. We also have a dividend cut which is to my mind, not a particularly big issue compared to the CLLN legacy. At the time of writing these notes, the shares are some 50% down from their February to March price range. All of those who employed a trailing stop loss as an alarm call may well have got out as I did on the day of the CLLN news. I thought that was a sensible move selling at 1250p and it preserved my capital from a considerable further fall. However, I got my reentry into a fairly smallish position at 980 wrong last week as I incorrectly judged that the CLLN was built into the share price despite my reasoning of caution with my original sale (see Voyager RNS WC 21/1/18). Never mind, an unfortunately timed purchase but thankfully only a small position; it happens, don’t waste time justifying a wrong one, simply sell at the bell and move on. Had the RNSs been more positive, I would have considered adding more but simply too much risk for now in my opinion. I know some investors will think deeply and justify themselves for remaining faithful from that good 1550p share price 10-11 months ago and I accept that investment styles differ. However, as ever, capital preservation is paramount in my mind. Thursday 15/02/2018: NewRiver REIT: NRR: RNS Acquisition of two retail parks for GBP26.5 million representing a blended yield of 9% NewRiver is pleased to announce that it has completed the acquisition of two retail parks for a combined consideration of GBP26.5 million, representing an initial yield of 8.9% and a capital value of just GBP141 per sq ft. Both retail parks have good occupier demand and present NewRiver, as a specialist retail asset manager, with the opportunity to add value through a variety of identified active asset management initiatives. The Rishworth Centre and Railway Street Retail Park, Dewsbury The Valegate Retail Park, Cardiff Allan Lockhart, Property Director commented: "These acquisitions are in line with our strategy of acquiring fundamentally good quality assets with untapped enhancement opportunities which NewRiver is well placed to exploit as an active and specialist retail asset manager. We are confident of significantly improving the retailer profile and the sustainability and quality of underlying cash flows so that these assets will deliver attractive returns for our shareholders. Importantly we have retained our capital discipline on entry price, acquiring these assets at a blended yield of 9%." My View: this is one of the stocks I hold within my high yield portfolio and from what I can understand, it seems like another decent acquisition bt the competent management team at NRR. Just checking my records and I see that I first purchased NRR quite some time ago in fact back in mid-2013; I am happy to continue to hold and reinvest the generous dividends. Friday 16/02/2018: I am afraid I have an early start and will be away from home before the RNS flow so will catch up on anything significant in next weeks Voyager. Glad I Am Not There: well this week lets have a look at UP Global Sourcing Holdings plc, UPGS, an IPO at the start of March 2017 & it appears a top tip from a subscription service tipsheet or at least so I am told. Now I should say that I simply do not do IPOs: been there, done that, got the T-Shirt or correctly got out with what’s left of the T-Shirt. Absolutely years since I have done one as they are just not my style as I like proven track record companies that have been tested by the financial markets; each to their own and all that. Also, although the intention of these comments is not to knock the business concept, it’s not a business model that appeals to me. Anyway, UPGS issued a profits warning on Monday 12/02/2018 that say the shares fall by an astonishing 45% an absolute horror for investors. The horror story began to unfold last year with a first profits warning on 11/09/2017 just six months after coming to market; an absolutely horrid place for holders to be especially after such a short space of time on the market and really does question the business in total (model & management credibility). However, I digress as I just wanted to use this as a reference example to a couple of items a continually bang on about. Firstly, are experts really experts i.e. tipsters are like all of us in that they don’t get it right every time. Secondly, although you may not have got it right with your tip/purchase, the important thing for me is what action you take when bad news hits and believe me, sooner or later it will hit a stock within your portfolio. With rapid action in mind, look at the graph below and consider how investors on the day of the first profits warning back in September, may have escaped by selling at close to the opening bell maybe a 25% loss or worst case as much as a 50% loss with the share closing down at 104p having closed at 210p on the previous trading day. Well, that was bad but further procrastination over the next five months would see another 50% wiped off that already beaten up 104p. On the trading day before this Monday’s profits warning, the share price closed at 61p and on the day of the warning fell sharply to around 40p where if you were lucky, you may have been able to get. By the close, on the day of the second warning, the share price had hit 32p i.e. a 48% drop on the day. Will there be continual drift? Will investors see value in the business at these levels? I honestly don’t know the answer to either question but what I do know is that the smarter investor who exited on the day of the original profits warning on 11/09/2017 would despite the original pain, be so much better off than the investor who remained blindly loyal to their original investment decision. A lovely example of what I feel are combined capital destroyers: not acting on a profits warning and the application of wealth destroying procrastination. This weekend I have a Hatters free as our game at Coventry has to be rescheduled due to their continued progress in the FA Cup. I may well pop on a train and go to watch Cambridge United at home and that will at least give me a good excuse to call into that wonderful backstreet pub, The Cambridge Blue with its massive range of well kept real ales.
Whatever you are doing, have a good weekend and happy investing. Voyager RNS Log WC 04/02/2018 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, how I dislike February, such a dreadfully cold month; this year I just keep asking myself why have I not flown off to somewhere warmer? I have tried Oz on a couple occasions as a winter retreat but the trouble is down under that if you venture to the warmer parts such as Queensland then swimming is the sea is a definite no as something either wants to eat you or do irreparable harm to you. Yet if you head to Victoria or Southern Australia where the water is just too cold for box-jellyfish or crocodiles and certainly too cold for a southern softie like me. I shall have to have a think for winter 2019, maybe SE Asia, maybe Barbados or a bit closer to home, the Canaries. Mind you if Murder In Paradise is anything to go by, visitors drop like flies in the Carabian so who in their right mind would go there or even closer to home, be foolish enough to set foot in Midsomer. Just how would you get travel insurance for such places? Probably me just thinking a little too deeply. As I have written before on this site, I generally pay no attention to market noise and definitely don’t check price progress anything remotely like daily as I prefer to be RNS driven. However, with storm clouds forming in the USA and falling markets on Friday & Monday, I did a little trimming back on a small number of positions that had maybe become a little stretched, taking profits on FDEV and a few small company IT’s focused on Japan and the UK. Just risk mitigation on the fringes of the overall portfolio where things had become a little stretched. In this column in the past, I have mentioned that I took out all of my original costs for the purchase of KWS which due to its meteoric rise since my tranches purchased, maybe, I thought I might de-risk a little further and sell a few more? However, I then discovered that the considerable holding I have retained are all in my dealing account and not in the tax-free environment. What a wally I am, the CGT is already bulging for 2017/18 and any further sale would just add a horrible 20% gift to that gruesome chancellor bloke, yes the very one who scuppered our £5k tax-free income on share dividends. Looks like I will become a long-term supporter of KWS and eek them away over the next couple of years; long live Mecanno and the fat-finger, or maybe more correctly her, the blind eye syndrome. Oh well, all the KWS are running for free, so who knows! Following Tuesdays sell-off that was hitting the markets worldwide, I decided to do a little shopping and repurchased some GFRD for >20% lower than I had sold in mid-January and also added to my special situations holdings in RWS as they drifted south to what looked a rather bargain price for a quality company, and also topped up on Spectra Systems who issued a couple of ahead of expectations RNSs recently. Yes, there are risks with GFRD contract implications with Carillion but with a dividend of almost 10% which subject to change, is covered by FCF, it’s worth adding to the high yield portfolio. Interestingly on Twitter this week there have been a few views expressed on the use of stop losses; some folk use them whilst some folk don’t. I guess it’s whatever you feel more comfortable with and indeed to a large extent, the quality of the company in terms of its sound accounting practices, debt, realistic market prospects and momentum. Personally, as I have said many times before, taking steps to avoid the destruction of one's capital tied up with a falling share price is simply fundamental to the way I invest. With a stop loss, for a smaller cap company, which for me is £50m to £250m, I usually start with a 20% stop loss that then trails as the SP hopefully increases and as I reach good profits, then I reduce the trigger back to say 12%. If the trigger is hit, I don’t automatically sell but seriously reappraise the investment asking myself “if I did not already own this stock, would I purchase it today with the information currently at hand”? If the answer is yes, then I continue to hold and maybe even take the opportunity to top up; if it’s no, then of course I sell. I have friends and acquaintances who have steadfastly refused to listen to the alarm bells ringing. Is it because they would still buy the share today, maybe because they are terribly loyal or could it be can’t bring themselves to so crucially admit that they got that purchase wrong. Staying with a company that has hit you for a 40% loss requires a 66% gain for break even, a 50% loss requires a 100% gain and an 80% loss a five-fold appreciation in the share price to break even. For me, the answer is easy and you can always go back in such as in the case of GFRD mentioned a couple of paragraphs above, and repurchase again and often at a better price but as ever, each to their own. Looking at the end of last week and going through this week, are we heading for a crash or simply a market correction? Well, I don’t forecast these things and in truth, the “experts” don’t either. The experts are expert only and that’s one thing is looking in the rearview mirror and telling you where you have been but don't have the slightest clue about where we are headed. Where would they be without retrospect? Although in no way a prediction, I rather suspect that the current sell-off is just a correction as markets have really got a touch ahead of themselves and so slide back; it happens and is simply part of stock market investing. Recent examples of corrections are there to see: January 2014, August 2015, January 2016 and of course Brexit. Here we have in my view just got way overstretched in terms of the likes of the Dow Jones so maybe a fall back of as much of 12-15% could happen; yet as I say, predictions hold little value. When markets get maybe a little overvalued, I start to assess each RNS even closer and gradually, if it seems the prudent thing to do, cut reduce some positions i.e. my pre Christmas reductions in ZYT, BVXP, SMWH and KWS. I still hold these stocks but have just taken out some rather decent profits. The rest of the time I tend to ride the turbulence in a slightly more buoyant de-risked boat and hopefully pick up buying opportunities from the cash pile as I see fit. I should also say that after being a freebie, or is that tightfisted, member of ShareSoc, I took out a paying membership this week. Simply can't argue with what these guys do and I am very happy to support their efforts and who knows, I may well turn up at the odd meeting or two. Blimey, I am rabbiting on a bit this week. Let’s get down to discussing any RNSs that have an impact on the portfolio: Monday 05/02/2018: No RNS of interest to the portfolio Tuesday 06/02/2018: Amino Technologies: AMO: Mkt Cap: £140m: Final Results: Notes (1)Adjusted Gross Profit is a non-GAAP measure and is defined as gross profit before exceptional items (2)Adjusted EBITDA is a non-GAAP measure and is defined as earnings before interest, taxation, depreciation, amortisation, other operating income, exceptional items and share-based payment charges (3)Adjusted profit before tax, adjusted operating profit and adjusted earnings per share are non-GAAP measures and exclude amortisation of acquired intangibles, other operating income, exceptional items and share-based payment charges (4)Adjusted cash generated from operations excludes cash from exceptional items Keith Todd CBE, Non-Executive Chairman, said: "2017 was another year of progress for Amino with strong profit growth and cash generation. We have continued to innovate and steer through the changing customer landscape whilst building a broad product portfolio and customer proposition. Revenue for the year at GBP75.3m was broadly the same as the previous year (FY 2016: GBP75.2m). Profitability was in line with market expectations, with adjusted operating profit(1) of GBP11.1m representing a 9% increase over the prior year (FY 2016: GBP10.2m). Operating profit was 228% higher at GBP9.5m (FY 2016: GBP2.9m) as there were minimal acquisition related costs in the year. The Company's ability to generate cash remains strong with the year-end cash position ahead of market expectations at GBP13.0m (30 November 2016: GBP6.2m). We have large addressable markets and our recent investment in software, services and the emerging Android TV opportunity, coupled with a strong backlog and pipeline, supports our confidence in 2018 and beyond." Outlook Amino has made a promising start to 2018 and has a solid order book and sales pipeline visibility to the end of the year, with a return to our normal seasonality in terms of a stronger second half financial performance. With this positive momentum and clear portfolio and positioning, the Board expects the Company to deliver sustainable profitable growth in the coming year My View: the results look to be bang on target, being in line with market expectations, the dividend was raised by a nice 10% to give a handy yield of about 3.5%. Also, that dividend is amply covered by FCF. The brokers forecasts for 2018 suggest that the company should continue to grow albeit not at the stella rate that would attract the more adventurous investors. The outlook statement reads well enough to me and whilst accepting the risks associated with an AIM technology stock, I rather like the company and it has done quite well for me, I will continue to hold. Also nice to see the CFO, Mark Carlisle, dipping his hand into his pocket to buy an initial position of 5000 shares which is about time as he has been in post since August 2016. I always take notice of CFO/FD share purchases or sales. Tuesday 06/02/2018: Frontier Developments: FDEV: Mkt Cap £495m: Interims I will only cover this one very briefly as it exited the portfolio at the start of the week as I did a little derisking. FDEV was one of my special situations and did ok for me over the few months I have held the stock but with the USA having a wobble on Friday last and that continuing into the Monday, I decided that it was time to manage risk and sell as to my mind the valuation was looking very stretched with absolutely no room for disappointment. The results did not look that stunning to me with minimal increase in turnover and a gradually declining operating margin. Anybody who knows me will be aware of the disdain I have for the PE ratio but I have to admit that a projected PE of 55 is a touch stretched. Maybe I am getting overly cautious but as I am locked into Mecanno KWS for the foreseeable future for tax implications, there is only so much risk I want to carry and anyway, I can always come back at a later date. Wednesday 07/02/2018: No RNS of interest to the portfolio Thursday 08/02/2018: On The Beach: OTB: Mkt Cap £653m: RNS AGM Trading Update AGM Trading Update On the Beach Group plc (LSE: OTB.L), the UK's leading online retailer for beach holidays, today issues the following trading update for the four months to 31 January 2018, in advance of its Annual General Meeting to be held today. The international sites in Sweden and Norway have continued to show strong growth YOY and the Group will shortly launch its international proposition, http://www.ebeach, into its third market, Denmark. The Group continues to increase its investment in talent and technology while building its exclusive supply position and growing awareness across all brands. The Board believes the full benefits of these investments and the incremental marketing investment in the Sunshine.co.uk brand will continue to flow through in the remainder of this financial year. The Group will report Interim Results for the six months to 31 March 2018 on 10 May 2018. Simon Cooper, Chief Executive of On the Beach Group plc, commented: "The first four months of the new financial year has delivered another solid period of growth for the On the Beach, Sunshine and ebeach brands. Our strategy of investing in our brands, talent and technology to drive growth has delivered performance in line with the Board's expectations, with consumers attracted to our wide range of value for money beach holidays. Our third nationwide television advertising campaign started on Christmas Day and has helped drive this strong performance as our brand awareness continues to grow. The Board remains confident in the Group's outlook and will continue to evaluate opportunities to enhance its market share position." My View: I remain comfortable with OTB and appreciate the inline update which encouragingly demonstrates growth and also expansion into other countries to grab a slice of the online holiday market. A very good company in my opinion and I shall continue to hold Glad I Am Not There: well, it’s a place I was there at one time but sold out of Gattaca over 12 months ago once again to preserve capital and manage risk. Back in the late 90’s, a very experienced and well-read investor told me that if a company changes its name then that may well tell you something about the competence of the management of that company especially if that name is just plain stupid. Look at Compel back in the late 1999/2000, Norwich Union, Consignia in the mid-2000’s: now it’s not always the kiss of death and sometimes has no detrimental effect, simply a wise warning to keep a guarded eye open. So, enter Gattaca (GATC) previously known by the name of Matchtech and historically quite a decent business and one which I have pleasingly owned on a couple of occasions. Well, guys that totally ridiculous name change just did not work and as well as failing to give a reasonable account of the reasoning for that chosen name, you have managed to cock-up quite alarmingly and on Wednesday at 2:30 pm issued the following Trading Update/profits warming in an RNS: Taking a more prudent assessment of the economic outlook, we have tempered our expectations for growth in H2 and consequently, we are undertaking a review of our cost base, so as to identify savings, some of which will be achieved in H2. Notwithstanding these savings, profits before tax excluding non-recurring costs are now expected to be in the order of 15% below the Board's previous expectations. The management at Gattaca have steered the share price of the business from well over 600p in 2014 to today's price of just north of 200p; possibly Calamity may have been a better choice of name. Oh yes, the yield which could draw in the casual unsuspecting punter who fails to dig a little deeper, suggests it is now about 10% and will in my opinion, surely be severely cut as there is just not enough FCF to anywhere near cover the payment. Indeed the TU does make reference to the dividend in: In light of the revised full year expectations the Board has decided to reset the rate of dividend in order to restore a more sustainable dividend cover ratio, to enable the pay down of debt, and to reflect a more normalised yield. The Board intends to set the dividend cover at approximately 2x (2017 1x). My view is that the dividend will be reset with reference to the current valuation to be in the order of 4% which is quite a hit for current shareholders. Very glad I don’t hold any GATC and as a final thought, I really mistrust a company that chooses to issue such an announcement significantly later than 7:00 am; this one was released at 2:30 pm, simply poor in my opinion. I last purchased GATC at 322p in October 2016 and sold my holding on2/2/2017 on reading their TU that looked anything but inspiring; I simply asked my self “would I buy this share today knowing what I know now? The answer was a full and rapid NO and the stock was immediately sold, including the stock I had purchased a year or so earlier, for a total loss of around 15%. Not great but at least I was protecting my capital and this approach to capital protection is fundamental to me. Note, I applied the same logic with DTY when they issued what I perceived to be a warning bell; back in November I wrote: DTY a stock I sold at the bell on 13/11/2017 when they released a trading statement I just did not like; not a disastrous statement but nevertheless one that just did not make me feel in the slightest comfortable. I did have a medium sized position in the stock and thankfully escaped relatively unscathed: if in doubt, get out! Now I said relatively unscathed in my Voyager report back in November and checking the numbers, it was a manageable loss of 9%. The shares were, of course, hit by a rather horrible profits warning on 19/01/2018 and fell by a further 50%. Yet another point that I regularly bang on about is that if you are caught up in a profits warning, and believe me it happens to us all, my action is to immediately sell at the opening bell. Investors who failed to do this with DTY having been hit with that awful 50% drop already, would have seen their remaining capital hit by a further 25% in the following couple of weeks: I have written about my handling of profits warnings back in 2016 and since that time, Ed Crofts team have also written a very thorough mini-book on the subject which reaches the same conclusion: SELL on a PW as in the coming weeks and months the stock is most likely to continue to drift south. Finally, let,s add another green one that in my opinion is just so true:
Overconfidence can be a killer and I suspect after the sweet spot of 2017 that many PIs will feel they are very good investors. However, a strength for an investor is to remain very self-critical and examine the downside at least as much as you enthuse about the possible upside. This weekend I travel to the UK City Of Culture, Stevenage. Actually, I am quite thankful to the New Towns Act planners as they have actually created a town that manages to make my old hometown of Luton, look marginally attractive and that does take some doing believe me. The football ground itself is totally unappealing and the stewarding just about the most inhospitable and incompetent I have come across. The things I do in the cause of football! Whatever you are doing, I wish you a good weekend and definitely feel very envious of those investors residing in warmer climates. As ever, happy investing! Voyager RNS Log WC 28/01/2018
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. A fairly short report this week and to be quite honest, that’s rather nice in a way as it makes life so easy and hopefully one can let time and quality tick along together and work their slow magic provided Mr Market is not in a terribly bad mood for weeks or months. I have to say that I am not a great share price watcher and if a stock is not the subject of an RNS, then a week could easily drift by between me looking at prices. Having said that, I always have a sort of alarm for non-noise movement but the serious reactions are usually RNS driven hence my focus on what’s going on with a business rather than what mood the punters are in. Actually, for clarity in sharing my rambling thoughts, I am adding a key for the colouring of text: 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. So, let’s have a look at any RNS affecting shares within the portfolio: Well Monday, Tuesday and Wednesday came and went very quietly without any price action RNS for any of the portfolio shares. Thursday 01/02/2018: Keywords Studios (KWS): Mkt Cap £918m: RNS offering a trading update: Full year trading update Strong financial performance- strengthening our market leading position The Board is pleased to announce that it expects revenues to be not less than EUR150m (FY16: EUR96.6m) and adjusted PBT* of at least EUR22.5m (FY16: EUR14.9m), both of which are comfortably ahead of consensus market expectations. Strong organic growth remains a feature of the Group's performance and this has been supplemented by acquisitions as the Group continues to deliver on its strategy in order to become the "go to" supplier of technical services to the global video games industry. The Group is now comprised of seven globally managed service lines operating from 42 production studios in 20 countries, compared to four service lines operating from five production studios in five countries at the time of our IPO in July 2013. During the year, we welcomed eleven businesses into the Group across all its existing service lines as well as its newly established Engineering service line. 2017 saw two of the Group's largest acquisitions to date, VMC and Sperasoft, which have further strengthened our service offerings and client penetration and extended our geographic reach and access to talent. Sperasoft enabled our entry into Co-Development, in which multiple services including game programming and art creation are delivered holistically in the game development phase, whilst VMC has bolstered our Engineering capabilities. These significant acquisitions represent yet further steps in the pursuit of our strategy and we are pleased with how smoothly they are being integrated with the rest of the Group. The Group has invested net cash of EUR89.1m in the acquisitions described above, funded by the Group's strong cash generation, available debt facilities and a successful GBP75m equity placing in October 2017. The placing further demonstrated the support of our existing shareholders as well as enhancing our shareholder base through the addition of a number of new institutional investors. Following these acquisitions, the Group had EUR30.5m in cash at the year end and had utilised EUR18.3m of its EUR35m rolling credit facility, which leaves the Group well placed to complete further selective acquisitions in 2018. My View: I continue to rather like my favourite Meccano company as it continues to grow both organically and by acquisition. Certainly, I look forward to the final results both this year and next year to get a feel for the year on year appreciation of the financial performance. As mentioned in earlier RNS Voyager notes a few months back I sold some shares in KWS equivalent in value to my cumulative purchases I had made over the past couple of years. The shares having so markedly increased in value means that the holding I still have remains as one of my highest portfolio percentages by retained value of stock. I see no reason to reduce my holding but due to its high valuation in conventional terms, I will keep a close watch on this special situation as if and when the markets turn sour, it could potentially be hit rather hard. Thursday 01/02/2108: Spectra Systems (SPSY): Mkt Cap: £46m: RNS Trading Update Trading Update This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014. Spectra Systems Corporation, a leader in machine-readable high-speed banknote authentication and brand protection technologies, announces that it received confirmation yesterday from its licensee for covert materials supplied to 18 central banks that the royalty component of the licensee's payments will be higher than previously expected for 2017. As a result, Spectra estimates that its profits for the year ended 31 December 2017 will exceed market expectations. My View: well like KWS, one of my special situations and I gave the following thoughts on SPSY a couple of reports back in mid-January when they released the good news about Licencing Revenues and Revised expectations: “simply put, how beautiful as the work has been put in, the product delivered and it’s now almost as simple as counting the cash as it arrives from the customer. It’s not a big company and usually, I draw a line about having any more than one investment below a Market cap of £50m as such stocks can be very illiquid when you want to make an exit and sometimes only quote to very small normal market size. However, I really took a like to this one last October and nabbed a few for my special situations portfolio. Incidentally, for those who like the highly regarded Stock Ranks (SR) approach pioneered by Ed Croft’s Stockopedia team, SPCS has an excellent SR of a 95 and nicely gaining momentum. I am happy to continue to hold and should there be a little pull-back, which I expect there to be, add a few more”. This TU nicely gives both confirmation and faith to continue to hold for hopefully further gains. Friday 02/02/2018: No RNS for shares within portfolio. Time for a Glad I Am Not There: that unbelievable crowd at Utilitywise (UTW) still can’t agree with the auditors/advisors what constitutes revenue recognition and dealing in the shares has now been temporarily suspended on AIM until such time that the accounts for the FY ending 31st July 2017 may be agreed and published. If UTW can’t really publish with market confidence what their revenue was then, however, can an investor make a serious investment judgement on the stock? Certainly, this one has been flagged as a major risk for a couple of years now and was I believe, first highlighted by the excellent Paul Scott as a serious risk when the share price was far higher than it’s current suspension price of 40p. Investors have had a lot of time to assess their position in this business over the last couple of years and I really hope that the majority of private investors managed to get away some time ago. If ever I remotely suspect something dodgy in a companies accounting practice, then I simply get out. Staying on that theme, Purple Bricks (PURP) put out an odd RNS on Friday 02/02/2018 contesting the findings of the Jefferies research report in which Jefferies rather questioned the validity of some of the PURP figures. It’s not a share that has seriously tempted me as I really don’t feel I could ascribe any valuation to the share with its share price rather built of management projections and hope of things to come. PURP is to me a rather odd one and this mornings RNS attacking a research note simply increases my resolve to steer well clear of the business; maybe I am missing a wonderful opportunity but I just don’t fancy the risk. After last weeks away win for the Hatters at Grimsby, I penned an article titled “A Tale of Einstein & Chips By The Seaside”. It’s not only in football that suffers from what Einstein quoted “insanity is doing the same failing thing again and again and expecting a different result”; you see one of our perennial underperformers that the manager insists is “really good” failed yet again and actually got sent off after 30 minutes. As ever, have a good weekend and happy investing. Voyager RNS Log WC 21/01/2018
After the hectic last week of many RNSs from the portfolio, this week started quite sedately with nothing to report for either Monday or Tuesday; I honestly don’t mind a little quiet once in a while as it gives you time to both reflect and get on with other things in life. In terms of new investments, I have been wrestling with my conscience about not buying shares in Israeli companies. Am I unreasonably biased? Well after various historic dabbles with investments in Israeli companies I generally have not been left with a taste trust or confidence. So, I asked myself why was I considering breaking a rule and buying into Taptica? Well it would surely be on the grounds of what I term as a special situation i.e a business where something possibly game-changing is really happening, good RNS stories etc. with a nice “ahead of expectations trading update in early January: could I overcome my bias? Well the answer which was possibly influenced by the excellent McMafia on BBC was “don’t, at least not just yet”; just can't get that comfy feeling. No, I am afraid my “no-go” countries which include the bulk of Africa, Russia, Israel & China plus a few others, remain as they were. I know fellow investors will quote companies that have done well but equally from those countries I could quote Emblaze, Telit, Putin’s RusPetro, Stella Diamonds in Africa and various Chinese AIM rubbish; just why put your cash at risk? I have been adding a few bits & bobs to the portfolio in the last few days but these have been in the form of Investment Trusts, an area of investment I have been very keen on for many many years. I will have to get my bum into gear at some time in the next quarter and do an article dedicated to investment trusts and my approach to these terrifically underrated investment vehicles. Well, that’s enough rambling on, let’s have a look at this week’s RNSs that are relevant to companies within the Whittler universe. 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. Monday 22nd January 2018: No RNSs for whittler stocks Tuesday 23rd January 2018: No RNSs for whittler stocks Wednesday 24th January 2018: Bodycote: BOY: Mkt Cap £1880m: RNS BODYCOTE CONFIRMS EUROPEAN EXPANSION IN HOT ISOSTATIC PRESSING NEW MEGA-HIP VESSEL SCHEDULED FOR 2018 DELIVERY Bodycote is pleased to announce that its Sint Niklaas, Belgium, Hot Isostatic Pressing (HIP) location will take delivery of a new "Mega-HIP" unit which will be operational by the end of 2018. The new high pressure, high temperature Mega-HIP is Nadcap capable to meet the growing demand of the European aerospace market over the next five years and beyond. This investment will significantly increase Bodycote's Nadcap HIP capacity globally, in addition to the substantial increase in Nadcap capacity which Bodycote completed in 2017. These recent investments highlight Bodycote's commitment to expand its global HIP capacity to meet market requirements. In addition to aerospace, Bodycote HIP serves clients around the world in markets as diverse as medical, power generation, marine, nuclear, automotive and electronics with both HIP services and its Powdermet(R) technologies. The recently launched Powdermet(R) technologies incorporate new, patent-pending techniques that combine 3D printing with well-established net shape and near net shape (NNS) techniques. This new hybrid technology dramatically reduces the manufacturing time and production cost of a part compared to producing the same part using 3D printing alone. My View: well not exactly shooting from the HIP, the announcement looks positive for Bodycote and on another day may well have added a couple of pence to the share price but Mr Market was not in his best mood on Wednesday; no real issues in my opinion just uninteresting market noise taking the markets down a touch. I think that BOY is a lovely quality business and the share price itself had appreciated by about 18% since the middle of December. Until there is a recession, I am just going to sit on my hands with BOY and hopefully let the quality continue to play out. Wednesday 24th January 2018: WH Smith: SMWH: Market Cap £2340m: RNS Trading Update The Group delivered a good performance in the period with total sales flat year on year and like-for-like sales down 1% for the 20 weeks. Total sales in Travel were up 7% with like-for-like sales up 3%. We have continued to see good sales growth across all of our key channels and gross margin continues to grow in line with plan driven by category mix management. Our store opening programme in the UK is on track and we expect to open around 15 new units this year. Our new large airport stores in Gatwick and Stansted opened in the period and are performing well with good feedback from both landlords and customers. Our International business continues to grow and we now have 249 units open, including 2 of the 10 units we have won in Changi Airport, Singapore. We expect all 10 units there to be open this spring. In High Street, total sales were down 5% with like-for-like sales down 4%, in line with expectations. Gross margin was up year on year although slightly less than anticipated, in part reflecting the lower sales of high margin spoof humour books compared to the same period last year when humour books had a particularly strong performance. However, we continue with our cost efficiency programme and now expect full year cost savings to be in the region of GBP12m, slightly ahead of target. My View: well not exactly a trading update from my favourite boring business that will get the punters excited but the real interest in the business for me is the Travel which in 2016 weighed in with 66% of the groups PBT and rose to 69% of group PBT in 2017. According to the TU, travel is continuing to grow both by expansion and like-for-like in 2018. Overall, I am happy to continue to hold. Thursday 25th January 2018: No RNSs for whittler stocks. A nice chance to start a slow cooker large batch of Bolognese; if you take care with the selection of the ingredients, the quality really comes given time in the slow cooker; a bit like investing really! Friday 26th January 2018: No RNSs for whittler stocks Well, that’s a very short RNS log this week but it at least gives one a chance to draw breath after such a lot of scribbling last week. I am quite glad I ditched Galliford Try last week as the Carillion news broke; that swift action really protected my capital as since the sale the price has drifted down a further 12% as I write. I should say that I think GFRD is a very decent company and in all probability, I will return to invest in GFRD again but for now, I simply protect my capital. In my opinion, two fairly simple rules apply in this case:
On to next couple of weeks and we may well see a trading update from OTB, maybe JE., KWS and results pencilled in for FDEV & AMO. This weekend my incurable hattersitis take me to the delights of Cleethorpes where the Grimsby ground is situated with just about every old iron girder corroding nicely is the salty atmosphere. What a dog of a journey it is but needs must etc. Whilst I am not the greatest fan of fish & chips, even I have to say they are a bit special up there so I guess I will be digging into some. I hope you have a good weekend and should you find the time to read something really interesting, then over I slow cup of coffee, I would highly recommend a read of Terry Smith’s Annual Letter To Investors published a few days ago; a great read in my opinion. Happy investing. Voyager RNS Log WC 14/01/2018 This week has proved to be quiet a busy week after the lull over the festive season and things are picking up pace now including the arrival of those blasted new years resolvers in the pool at 6:30 am; are they a blasted nuisance or am I just getting grumpy towards them. Hang on, I have always been grumpy to such transient creatures but never mind a couple of really hard frosts by early February usually sees them retiring back to the comfort of the duvet for another 11 months. For me, the pattern stays the same every working day with a swift mile in the pool followed by initial interrogation on the iPhone of portfolio RNS’s; hopefully seeing no bad news then on with the day. I have always found that ploughing length after length in the pool gives me a great quiet time to think things through. When I was part of the rat race it used to be work issues, now it’s more about writing footy or investment stuff or another passion, good quality food. I absolutely hate the world of convenience food; whoops, did I mention I own shares in Just Eat; no moral fibre me! Anyway, enough of this Jeremy Clarkson stuff, what’s been going on in the markets relevant to shares within the portfolio? 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. Monday 15th January 2018: Spectra Systems (SPSY): Mkt Cap £39m: RNS: Licensing Agreement and Supply Agreement + Revised Expectations Licensing Agreement and Supply Agreement Spectra Systems Corporation, a leader in machine-readable high-speed banknote authentication and brand protection technologies, is delighted to announce that it executed on Friday an exclusive, worldwide, licensing agreement for one of its existing products which is in use by 18 central banks through an existing licensee, a major supplier of banknotes worldwide. The licensing agreement will extend the rights to the underlying technology, which has been in use since 2003, in perpetuity and generate $11.2 million in royalty payments over the next five years. The payments will be settled in eleven equally spaced payments. In addition, Spectra also executed a Material Supply Agreement with the same licensee to provide them with covert materials exclusively for a period of ten years at reduced rates relative to the current agreement. The Board anticipates that the supply of material, which does not incorporate minimum quantities, will generate a total revenue of approximately $1.5 million -$2.0 million over the next five years. It is estimated however that the combined licence and supplied material sales will generate a contribution per annum from this product through 2023 which is approximately 2.7 times that of the current agreement, based on the minimum purchase requirements in that agreement and experienced in certain recent years. Based on the execution of these agreements, Spectra is expecting that both its revenue and particularly its profit before taxes for the year ending 31 December 2018 will significantly exceed market expectations. My View: simply put, how beautiful as the work has been put in, the product delivered and it’s now almost as simple as counting the cash as it arrives from the customer. It’s not a big company and usually, I draw a line about having any more than one investment below a Market cap of £50m as such stocks can be very illiquid when you want to make an exit and sometimes only quote to very small normal market size. However, I really took a like to this one last October and nabbed a few for my special situations portfolio. Incidentally, for those who like the highly regarded Stock Ranks (SR) approach pioneered by Ed Croft’s Stockopedia team, SPCS has an excellent SR of a 95 and nicely gaining momentum. I am happy to continue to hold and should there be a little pull-back, which I expect there to be, add a few more. Monday 15th January 2018: Bodycote (BOY): Mkt Cap £1882m: RNS Us Tax Legislation & Trading Update US Tax Legislation Bodycote notes the enactment of the Tax Cuts and Jobs Act in the United States on 22 December 2017 reducing the statutory rate of US Federal corporate income tax to 21%. Whilst work is ongoing to review the full future impact of this new US tax legislation on the Group, it is expected to give rise to a significant non-cash tax credit for the Group in the year ended 31 December 2017 as a result of the revaluation of US net deferred tax liabilities. Subject to final audit and confirmation of final tax computations, the effect of this one-off revaluation of US net deferred tax liabilities is expected to add c. 5p to EPS for 2017. Trading Update Bodycote also announces that trading in the final quarter of 2017 was better than anticipated and the Board now expects full year 2017 headline operating profit to be towards the upper end of market expectations (company compiled analysts' estimates range: GBP117 million - GBP126 million). Bodycote intends to announce Full Year Results on Tuesday 6 March 2018. My View: well any regular readers of this RNS log will know that I rather rate this high-quality business. Maybe it’s not the most exciting beast on the market, even possibly a touch boring but we now know that profits will be towards the top end of expectations and when you look at the range quoted above, that looks rather good to me. Again what a nice SR of 88, can’t be bad and I am very happy to continue to hold. Monday 15th January 2018: Looking in another area we see the very sad news about Carillion a share that was valued at way over 300p for many years and now suspended at 14p and in what appears to be a terminal stare. The numbers have looked poor for a couple of years now yet I suspect some may have been sucked in by the generous and unsustainable dividend that has nowhere near been covered by FCF for the majority of recent years along with debts. This had a knock-on effect to a company within my portfolio: Galliford Try (GFRD) who mid-morning following the collapse of CLLN, put out the following RNS: Joint Venture with Carillion plc Galliford Try plc (the "Group") notes the announcement by Carillion plc this morning. The Group is in joint venture with Carillion and Balfour Beatty on the 550 million Aberdeen Western Peripheral Route contract. The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract. Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is 60-80 million, of which any shortfall will be funded equally between the joint venture members. The companies will discuss the position urgently with the Official Receiver of Carillion and Transport Scotland, to minimise any impact on the project. My View: firstly on CLLN where for investors caught up in the debacle one can only have limited sympathy as the signs were there for all if they cared to read the newsflow and look at the numbers. Yet the knock-on goes across many, many small businesses caught up in the web of subcontracting for the giant Carillion that CLLN lived within. Contractor business viability, jobs pensions all very sad stuff. Rather like being on a rowing boat being towed along by the Titanic; my sympathies to all innocent parties involved. Then we come to the knock-on effect for the likes of GFRD (Mkt Cap £970m) working with CLLN on major joint ventures. This casts a fair doubt on what hit there may be to GFRD’s bottom line this year and possibly also next year and it’s a doubt and risk I did not feel comfortable in carrying so an unemotional exit as soon as the GFRD RNS hit the market; funds intact and in fact exiting with a few % profit but, more importantly, reducing risk of further downside. Whilst on the subject of CLLN, just a thought: Very predictably, history does repeat itself and we can learn from the past if we choose to do so. Any readers remember the collapse of the once £1bn valued company Jarvis back in 2010? There are lessons there and again with CLLN; the tipsters being so terribly wrong and the toxicity of unsustainable debt. I remember in the days when I used to look at what the experts had to say, the absolute number of well-followed experts who recommended Jarvis as a super stock “super stock”, one to hold forever. Yes, right: such things inspired the article I published in July 2017 about the “share detectives” titled Watching The Detectives. Tuesday 16/01/2018: International Greetings: IGR: Mkt Cap £259m: RNS Trading Update Strong trading delivers earnings upgrade 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 an update for the third quarter, which covers the Group's Christmas trading period to 31 December 2017. The Group is pleased to report that following the positive performance reported over the first six months ending 30 September 2017, trading has continued to be strong up to and throughout the Christmas period. In line with the strategy to further diversify the business, the Group expects to deliver record revenues in FY18 with the continued expansion of its global footprint outside the UK which the Board expects will account for over 70% of sales by destination. All regions are on track to achieve year on year revenue and profit growth and we are therefore pleased to upgrade the Group's full year performance with diluted earnings per share(1) expected to be ahead of current market expectations and delivering strong year-on-year growth. We continue to see strong cash conversion across the Group and expect average leverage for FY18 to follow the progress made in recent years and be significantly below an average of two times. Latest initiatives highlighted in our Half Year Results Announcement remain on track to drive future revenues in FY19 and beyond. Additionally, as a result of the level of the Group's US earnings the Board expects earnings per share to benefit in FY19 and beyond from the recent US tax legislation changes. Furthermore, the US tax rate change is expected to translate into lower tax payments, thereby enhancing the cash generation of the Group. My View: simply what’s not to like? As I said last week in this log, my view on this quality business has not changed since I commented on the interim results at the end of November 2017 and in fact are even more positive taking into account the quality acquisitions and a touch of tax generosity from our mate Trump. I am happy to continue to hold the investment which has delivered a return of well over 100% for me in the last 18 months. Personally, I think this very sound well-managed business will gain further investor support after this RNS and in my opinion, continue to appreciate in value. Again a very decent SR but I won’t quote numbers as I don’t want to offend Ed as I have already quoted two CRs above. Wednesday 17/01/2018: RNS: Henderson Smaller Cos Investment Trust: HSL: Mkt Cap £672m: Half-year Report. I do like good quality investment trusts and HSL is, in my opinion, a high quality IT delivering year on year, in fact, the half-year report shows that for the 5 years to 30/11/17 the share price appreciated by 159% and by 304% in 10 years. Not exactly sluggish and by far outperforming the FT All Share TR and that’s why I use it as one of my benchmarks to judge my own performance. Below I have included a listing of the 60 largest holdings in the HSL investment trust and whilst there is the odd dud, it contains a lot of quality stocks: again a demonstration of the benefits of a basket of stocks: see an earlier blog I did about me being a basket case. Just click/tap on the listing to enlarge the view.
Thursday 18/01/2018: RNS: NewRiver REIT: NRR: Mkt Cap £977m:Third Quarter Company Update Convenience-led portfolio remains well positioned to deliver growing and sustainable cash returns Paul Roy, Chairman, commented: "NewRiver had a good third quarter, with our convenience-led, community-focused portfolio again performing well and significantly outperforming the wider UK retail market. Our occupancy has remained strong at a record level of 97%, supported by affordable average rents of GBP12.70 per square foot. Finally, our like-for-like footfall was up over the quarter by 0.5% and 1.9% during December, significantly outperforming the national benchmark. The strength of our key metrics underpin our growing dividend, which increased by 5% in the third quarter. Looking ahead, our conservatively geared balance sheet is strongly positioned to exploit accretive opportunities over the coming months and we remain confident in our ability to deliver growing and sustainable cash returns to our shareholders from our convenience-led, community-focused portfolio." My View: regular readers will know that I really like some boring businesses that do some of the unexciting work within my portfolios. In this case, NRR forms part of my high yield portfolio offering a 6.7% yield together with an attractive capital appreciation. It’s been trading at the bottom end of its trading range in the last couple of weeks and I am tempted not only to continue to hold but also bag a few more to the high yield portfolio: Edit: added more. Thursday 18/01/2018: Air Partner: AIR: Mkt Cap: £79m: RNS Trading Update TRADING STATEMENT - AIR PARTNER HAS GOOD SECOND HALF PERFORMANCE With two weeks to go before the end of the financial year, Air Partner is pleased to report that it has had a good second half. This has been driven by continued performance across all product lines within the Broking division, including strong results in the US and in Freight. In Consulting & Training, the forward pipeline remains encouraging. Underlying pre-tax profit for the financial year ending 31 January 2018 is expected to be not less than GBP6.4m, which compares to GBP5.1m reported in the same period last year and ahead of market consensus of GBP5.9m. The Group retains a strong net cash position. The acquisition of SafeSkys, a leading Environmental and Air Traffic Control services provider to UK & International airports, announced in September, is performing in line with expectations and we are excited about the long term prospects for this business under our ownership. SafeSkys operations relocated to our London Gatwick HQ in November 2017 and integration has now completed. Outlook Air Partner has had another encouraging year and the Board is confident about future prospects. My View: AIR is one of my top 10 holdings and it continues to perform very well after a sluggish period from July 2015 to July 2016 but sometimes apparent quality takes time to be proven and recognised by the markets. AIR like all shares does not move up in a straight line and in fact, suffers far more turbulence than most other stocks within the folio. I rate it as a very attractive business and one which has had a very good share price appreciation of over 50% in the last twelve months. Maybe even after such a decent trading update, it will again consolidate for a while before hopefully making further strides forward. I will continue to hold. Friday 19/01/2018: Bonmarche: BON: RNS Trading Update: Sales for the 13 weeks ended 30 December 2017 decreased by 5.5% against the corresponding period in FY17. Store LFL sales decreased by 9.7% and online sales increased by 28.5%. Sales for the 39 weeks ended 30 December 2017 increased by 0.9%; store LFL sales decreased by 2.8% and online sales increased by 35.5%. The clothing market became more challenging during the quarter There remains uncertainty as to how trading conditions will evolve as we enter our final quarter. We do not anticipate material changes in the underlying market conditions, and in this short term outlook, the weather represents the most significant uncertainty due to its effect on consumer shopping behaviour, with the risks equally weighted on the up and downsides. At the end of the third quarter, the Board's view of the likely outcome for the full year remains in line with previous expectations. We have a number of self help initiatives in progress or planned for FY19, which are expected to deliver profitable like for like sales growth in stores, and the continuation of strong sales growth online. My View: well not the best of trading updates I thought whilst sitting still wet in the changing room at the pool; best do my usual stuff and sell at the bell and hopefully escape with a handy total return. The store's sales were not at all pleasing, however, the online increase is quite encouraging. However, going back to the interims, the online sales only accounted for about 11% of the total turnover and therefore whilst the % increase look great, we are working from a fairly low base. Now this small holding (less than 0.5% of the folio) sits with IG and my attempts to sell at the screen prices of 117, 116, 112 all failed and within 10 minutes the stock was off by -30%. Time to sit on hands and wait until the panic is over and then exit hopefully still on the profit side. Sometimes Mr Market just will not let you sell easily as a stock is taking a tumble. I will update next week. It’s Glad I am Not There time CLLN, CAR, UTW, DTY : well we have already discussed CLLN above. So how about the once upon a time popular stock Carclo (CAR): Trading Update and Board Changes 15/01/2018 Carclo plc ("Carclo" or the "Group"), the global manufacturing group, announces a trading update for the year ending 31 March 2018. Trading update The stronger second half performance across the Group, anticipated at the time of the Interim Results in November last year, is not now expected to be achieved. Accordingly, the Board now expects the Group's performance for the current financial year to be significantly lower than previously planned. The Board expects the Group's profits for the year ending 31st March 2018 to be significantly lower than its previous expectations. In addition, as a consequence of some of these delayed projects and lower customer orders, the Board has now reduced its profit expectations for the 2018/19 financial year albeit these revised expectations will still represent healthy year on year growth. Board changes The Board announces today that, after 14 years as Group Finance Director, Robert Brooksbank is leaving the Group on 31 March 2018 to pursue other career and business opportunities. In addition, the Board announces that Michael Derbyshire will retire from the Board at the Group's Annual General Meeting in July 2018 after nearly six years as Chairman and over 12 years as a Non-Executive Director. My View: Thankfully not one I came anywhere near holding. Couple of things that I don’t like and rightly or wrongly, send alarm bells slightly ringing. Firstly I get a bit touchy when a CFO leaves at the time of bad news being released to the market; might he pure coincidence but who knows for sure. Also the term “ to pursue other career and business opportunities”, simply says to me that he has been given the push. Secondly, over the years I have become acutely aware that when companies say “things will improve in the second half of the year” or words to that effect, then unless it’s signed up contracts in the bag, the improvement stands a fair chance of not happening at all. Now I should say that I am not a Carclo in-depth follower as the numbers simply don’t attract me and even when they paid a dividend it was for the most part hardly ever covered by FCF. Just not one for me. Of course, we then have perennial disaster prone UTW announcing on Wednesday 17/011/2018 that announced a final results update. Well, hang on, no real numbers as such but rather an announcement that they have a further delay in respect of its full-year results for the year ended 31 July 2017 ("FY17"). Honestly, sounds like there was more cooking going on there than in Breaking Bad. Incidentally, I did look at this share a couple of years back but was rather put off by the smoke & mirrors feel of their approach to accounting. Surely if the business were really to be that attractive and revenues/profits were genuine, then the directors would have much more skin in the game would have been mopping up shares at the depressed values that have plagued the business, particularly over the last twelve months. Also having had some exposure to such companies when working with a utility business, I struggled to visualise the sustainability of the business model; enough said. Also on Friday 19/01/2018, we have a stinker of a trading update from Dignity: DTY a stock I sold at the bell on 13/11/2017 when they released a trading statement I just did not like; not a disastrous statement but nevertheless one that just did not make me feel in the slightest comfortable. I did have a medium sized position in the stock and thankfully escaped relatively unscathed: if in doubt, get out! Pre-close Trading Update and Market Positioning Dignity, the UK's only listed provider of funeral related services, confirms that its results for the period ended 29 December 2017 will be in line with market expectations. Its preliminary results will be published on 14 March 2018. While the pre-arranged and crematoria businesses are performing strongly with no change to the Board's expectations for these businesses, the Board is keen to address the continuing acceleration of price competition facing its funeral business. The Board is therefore taking decisive action on its funeral pricing strategy with a view to protecting market share and repositioning the Group for future growth. Consequently, the Board believes that the results for the period ending 28 December 2018 will be substantially below the market's current expectations My View: well it’s obvious that they are facing stiff competition, cough, cough, and thankfully my unemotional selling side save me from any horrible loss having sold on 13/11/2017 when the share price was £23 about 150% higher than at the time of writing these notes. A company that a few years ago had impressive numbers but things are subject to change. I will repeat of a few golden rules mentioned in earlier whittling on, apologies if it gets a bit boring:
Before closing, I should mention that I have made two new purchases this week and also a top-up of an existing holding NewRiver REIT. The new purchases are of stocks that I have previously owned and discussed on the whittler. Firstly Gear4music, G4M was repurchased after previously selling for a decent profit at the end of May last year. A few days ago they released a very upbeat trading update which was followed by rather bullish brokers note. One for the special situations pot. Secondly, I bought back into Portmeirion PMP a stock I had previously sold when they were experiencing sales challenges in Korea. Since that time my worries have been somewhat quelled and certainly, the Wax Lyrical acquisition appears to be bedding down nicely. It’s not a big initial position as I still have a few reservations about their Korean market but we will see. Have a good weekend and as ever, happy investing. Voyager RNS Log WC 7/01/2018
After the pre-Christmas lull and the end of year festivities, it’s time for the first RNS log of 2018. Quite a few IT changes in the Whittler household firstly with a Microsoft Surface Pro, what a lovely little machine that is, and a new i7processor with SSD desktop with both machines getting me on the net within 15 seconds of startup and of course able to run ShareScope which along with SharePad, gets used a lot by me. At the same time, I have moved to 200Mbps broadband and due to the thick walls on my very old property, have installed a mesh wifi with 3 three mini relayers. I now get absolutely crazily fast wifi that’s hard to believe in terms of speed and stability especially in the mountains of Cambridgeshire! What’s all this got to do with share dealing and investments? Well, over the years I like most of us have had occasional poor broadband performance or indeed outage of the service. My last outage was with TalkTalk a couple of years ago and it took two weeks for them to get BT in to replace the broken line: I just can't operate as I wish in such an environment. Anyway, enough of this IT waffling on, let’s get to some shares stuff starting with this weeks RNS’s that affect stocks within the Whittler universe: Monday 8th January 2018: No RNS announcements affecting shares within the portfolio. Tuesday 9th January 2018: RNS Persimmon: PSN: Trading Update: TRADING UPDATE Persimmon plc announces the following update ahead of its Final Results for the year ended 31 December 2017, which will be released on 27 February 2018. Revenues for 2017 of GBP3.42bn were 9% higher than the prior year (2016: GBP3.14bn) with legal completion volumes strongly ahead by 872 new homes (6% increase) to 16,043 (2016: 15,171). The Group's average selling price increased by 3% to c. GBP213,300 (2016: GBP206,765). Since the launch of our Group strategy in 2012 we have made a significant contribution to increasing UK housing supply by opening 1,189 new selling outlets and delivering 80,726 new homes to the market during which time we have increased our annual production by over 70%. We continued to experience healthy customer demand for new homes through the autumn sales season and the value of our forward sales at 31 December 2017 of c. GBP1,355m was 10% ahead of the prior year (2016: GBP1,234m). Second half legal completion volumes of 8,249 were 455 stronger than for the first half of the year (H1: 7,794), an increase of 6%. We anticipate our pre-tax profits for the year will be modestly ahead of market consensus. My View: Nothing to get overly anxious about this trading update in my opinion and for me, it has been a Brexit beauty which has given me a well over 90% return since that wonderful day after Brexit. In my mind, a totally stupid referendum in asking people to vote on something about which they have little understanding of the implications or the economics and emotions rule the day. If the referendum was about which sauce you should have on your sausage sandwich, red or brown, then the issues would be easy for everybody to understand but that’s a sandwich; this if life for decades to come. Anyway, rant over and I am simply grateful on a selfish front to have loaded up with bargains post Brexit. Oh yes, back to Persimmon, I am happy to continue to hold. Tuesday 9th January 2018: IG Design Group: IGR: Completion of Acquisition: Acquisition of a leading Australian greetings card business IG Design Group plc, one of the world's leading designers, innovators and manufacturers of celebration, gifting, stationery and creative play products, is pleased to announce that it has completed the acquisition of the trade and certain assets of Biscay Greetings Pty Limited ("Biscay"), a leading greetings card and paper products business based in Australia, as previously announced on 21(st) September 2017. The acquisition, made through Design Group's Australian Joint Venture Artwrap, was satisfied by a cash consideration of AUD8.9m using local debt facilities. The consideration represents 2.7x EBITDA for the year ended 30 June 2017 although an injection of working capital of up to AUD3m will also be required. In the year to 30 June 2017 Biscay generated sales of AUD13.4m with an operating profit before tax of AUD2.9m. Biscay provides greetings cards and related products to an extensive base of almost 2,000 customers through regional, wholesale distributors, and independent retail channels across Australia and New Zealand. With an established and strong reputation for design and excellence in product and customer service that complements the existing attributes of Design Group Australia, this acquisition provides opportunities for even greater engagement and cross-selling with all key National and Independent retailers throughout Australia and New Zealand. Commenting on the acquisition, Paul Fineman, Chief Executive, said: "Following our recent announcement of a robust half year performance and strong profit growth in Australia, we are delighted to complete this acquisition which complements Design Group's existing operations in the territory. "The acquisition almost doubles the Group's significant market share in the value channel of the Australian greetings card market, adds to our capabilities in this growing and higher margin category and further diversifies the Group geographically. At the same time, it provides cross-selling opportunities and thus an even more compelling proposition to existing and new customers " My View: well not exactly new news as the proposed acquisition was announced to the market on 21st September 2017 but nevertheless it’s worth commenting again that the acquisition appears to be attractive for the further expansion of IGR. My view on this quality business has not changed since I commented on the interim results at the end of November 2017: I am happy to continue to hold the investment which has delivered a return of well over 100% for me in the last 18 months. Wednesday 10th January 2018: RNS Taylor Wimpy: TW.: Trading Update: Outlook We will report FY 2017 results in line with our expectations, and we expect to achieve further growth and performance improvement in 2018. For FY 2017 the Group will deliver an improved operating profit* margin of c.21.2% (2016: 20.8%) and a return on net operating assets** of over 32% (2016: 30.7%). We will pay a total dividend in FY 2018 of c.GBP500 million, subject to shareholder approvals, and reiterate our intention to make further material capital returns in 2019 and beyond, with details to be provided at our Strategy Day scheduled for H1 2018. We start this year in a strong financial and operational position with significant embedded value in our short term landbank and strategic pipeline. Whilst we are aware of potential political and economic risks, we expect to demonstrate further progress in 2018 against our medium term financial targets, whilst also driving further operational improvements where we can add value, including customer service and product quality. My View: well looks solid if not explosive but as ever some investors may have been looking for something a touch more exciting. I rather expect TW., PSN and other housebuilders to fluctuate for a while but feel happy enough to hold for the moment and continue to take the very attractive dividends whilst at the same time, being mindful of the cyclical nature of the business. Wednesday 10th January 2018: RNS Amino Technologies AMO Contract Win: DELTA selects Amino for end-to-end multiscreen cable to IP service transformation Amino Technologies plc (LSE AIM: AMO), the Cambridge-based provider of digital entertainment solutions for IPTV, Internet TV and in-home multimedia distribution, today announces that DELTA, the Netherlands-based provider of internet, TV, telephony and energy, is deploying Amino's MOVE TV delivery platform to provide a full end-to-end solution to deliver multiscreen entertainment services. My View: Now technically the news makes interesting reading but it’s difficult to judge what impact the contract win will have in terms of profits. All we know is that AMO tell us “this contract will not have a significant incremental impact on the Company's revenues in the current financial year”. Maybe not the most helpful of RNSs just a little guidance would not have gone amiss. Wednesday 10th January 2018: Frontier Developments: FDEV: RNS Trading Update and Notice of Results For the six months to 30 November 2017, the Board expects to report a sustained level of performance compared to the record results achieved for financial year 2017 (the twelve months ended 31 May 2017), with revenue of approximately GBP19 million in the period compared to GBP18.1 million for the six months to 30 November 2016 and GBP19.3 million for the six months to 31 May 2017. Both Elite Dangerous and Planet Coaster continue to perform well. Frontier released Elite Dangerous on PlayStation 4 in June 2017. The launch was smooth and stable, which the Company believes illustrates the capabilities of its development and publishing teams, and the scalability of its infrastructure, such as the proprietary COBRA game engine. The successful launch boosted sales of Elite Dangerous, contributing to strong revenue generation during the period. The Company also released content updates for Planet Coaster and Elite Dangerous, and hosted a well-attended first Frontier Expo event in October 2017. Trading through the holiday period (Thanksgiving and Christmas) was in line with the Board's expectations, with both Elite Dangerous and Planet Coaster performing well in price promotion events. Taking the above factors together, the Board anticipates that Elite Dangerous revenue will normalise down from the first half to the second half of the financial year as PlayStation 4 sales settle to a post-launch run-rate, but that underlying run-rate sales (including downloadable content) will sustain at healthy levels. As a consequence, the Board remains confident about achieving its expectations for the current financial year ending 31 May 2018. My View: FDEV is a highly rated share in terms of price and maybe the impatient trading types were looking for “above market expectations”. FDEV can be somewhat of a volatile stock and initially the traders probably sold a few but the stock ended up the day 4.4% down. I don’t have a massive holding of FDEV in my special situations portfolio and whilst it has done fairly well, I feel it is a tad too risky/elevated to add any more at the moment. Thursday 10th January 2108: RNS boohoo.com: BOO: Trading Update: Guidance Group revenue growth for this financial year is now expected to be around 90%, ahead of our previous guidance of around 80%, which was raised from 60% at our interim results in late September. We now expect group adjusted EBITDA margins to be between 9.25% and 9.75%, narrowing the range from the 9% to 10% as guided at our interim results. Mahmud Kamani and Carol Kane, joint CEOs, commented: "We are delighted to report another set of strong financial and operational results, with record sales in the four months to December across all our brands. The Black Friday period was our most successful ever and we traded well throughout the period under review. boohoo has continued to perform well, delivering strong revenue growth on increasingly challenging comparatives last year. PrettyLittleThing has continued to deliver exceptional results and Nasty Gal is making excellent progress in its first year. Our focus remains on the customer proposition: offering the best range of the latest fashion at affordable prices, coupled with great customer service." Note: I will not attempt to go into the full details of the TU here but rather refer readers to the notes of the excellent Paul Scott who is an expert commentator in the sector and has a substantial holding in the business: LINK: www.stockopedia.com/content/small-cap-value-report-thu-11-jan-2018-tsco-mks-john-lewis-boo-gmd-card-ao-gmd-lrm-296228/ My View: I repurchased back into BOO a couple of weeks before Christmas. I had made decent profits on BOO earlier but jumped off the ride way too early and had been toying with the idea of reinvesting; hence the purchase after a drop of over 30% since the September 27th interims, mentioned above in bold. Whilst at the time of December repurchase, I did not see the stock as a totally compelling purchase, it nevertheless warranted inclusion in my special situations portfolio: so let’s see what happens from here. Undoubtedly BOO has been demonstrating exceptional growth in terms of revenue and profits the valuation has continued to be dramatically high. If the company continues to grow, then the valuation will be justified but as is the case with many stocks on mammoth valuations they have to continue to deliver to justify the share price. Friday 11th January 2018: RNS XP Power: XPP: Trading Update: Trading The Company had a good finish to the year, in line with the Board's expectations, as the strong order intake reported in the third quarter drove robust revenue growth in the final quarter. Encouragingly, the momentum in order intake continued into the fourth quarter and geographically, both order intake and revenue growth has been strong across all regions. Order intake in the fourth quarter of 2017 was GBP46.8 million, 24% ahead of Q4 2016 on a reported basis or 32% ahead in constant currency. This resulted in order intake for the twelve months ended 31 December 2017 being GBP184.3 million, an increase of 38% over 2016 on a reported basis, or 31% in constant currency. Revenue in the fourth quarter of 2017 was GBP43.2 million, 16% ahead of Q4 2016 on a reported basis, or 23% in constant currency. Revenue for the twelve months ended 31 December 2017 was GBP167.0 million, an increase of 29% over 2016, or 22% in constant currency. Outlook: We are encouraged by the continued strong order intake experienced across the business during the second half of 2017 and the overall book to bill level for the year. We enter 2018 with positive momentum and therefore expect to grow orders and revenue in 2018 above that in 2017. My View: Note the company also goes on to say that the acquisition Comdel, is performing in line with management expectations. I like XPP and originally wrote about the company back in April 2016 marking out what really attracted me to the business. Since that original purchase, the price has appreciated by well over 100% and I continue to feel comfortable in holding the share that continues to demonstrate good returns of capital invested and good free cash flow. Friday 11th January 2018: RNS: Somero: SOM: Trading Update Overview The Board is pleased to report that the Company delivered strong, profitable growth and healthy cash generation in the six months since 30 June 2017 exiting 2017 with its strongest trading month of the year. As a result of the strong H2 performance, the Board now expects 2017 revenues will be slightly ahead of market expectations of $84.7m, EBITDA will be comfortably ahead of market expectations of $26.0m driven by the volume increase and effective operating cost management, while net cash at 31 December 2017 is expected to be not less than $18.5m, well ahead of market expectations of $16.5m. Outlook Following record results in 2017, the Board is confident in the Company's ability to deliver another year of profitable growth in 2018 as the underlying market conditions in our core markets remain positive and as the Board continues to see significant growth opportunities in our other territories. The Board's confidence is further supported by recently enacted pro-growth US corporate tax law changes which are expected to stimulate increased economic activity in the Company's largest market. In addition, considering the Company's continued, healthy cash generation and strong year-end financial position, the Board plans to review the Company's cash position alongside cash requirements for 2018 as part of its review of the final dividend for 2017. While no decision has been made with regard to future dividends, including any special dividends, the Board has concluded the growth and increased complexity of the business necessitates an increase to the level of net cash to be maintained by the Company to a minimum of $15m at 31 December each year going forward. A decision on the use of excess cash above the increased net cash reserve will be announced as part of the 2017 earnings announcement scheduled to occur on 14 March 2018. My View: what a dull boring business SOM, you just can’t get less exciting that pouring flat concrete surely. Yet it’s the numbers that drew me to SOM back in 2015 with again good returns on capital, decent cash free flow and a well-covered dividend; at that time the price was around 100p. I suspect there is also a special dividend to be announced by SOM within the next few months. The business looks to be well on track to deliver again in 2018; a good company that I am happy to continue to hold. That’s all for this week and moving into the weekend, I am off to Chesterfield to see the Hatters; a few years since I have been to Chesterfield and they have a new stadium since my last visit. I wish a good weekend to all readers and as ever, happy investing. Voyager RNS Log WC 10/12/2017 After the motherboard failure, I had on my last self-build PC, can’t complain as it was 9 years old and starting to groan just a little, I am now a happy IT man again having purchased a really splendid Microsoft Surface Tablet/Notebook as a backup to my new desktop PC. I just love having SSD HDs as you can be on the net within about 15 seconds of starting up. Yes, I know apple/android systems (I also have both) can be almost instant but with Apple, they are absolute control freaks you constantly feel they are just letting you use their devices out of sheer goodwill. Whilst Android has those little battery eating androids gobbling up battery power when you are not looking. Anyway, ShareScope is such a vital part of my armoury, I have to have a .exe environment to operate it hence Windows 10. I must admit these days I find myself continuously using SharePad/ShareScope and tend to neglect my Stockopedia, another excellent tool; just happens that way for me. Anyway, enough IT type whittling, let’s have a look at recent RNS activity within the Portfolio. This week I am including a short update for last week which thankfully was rather quiet and gave me much needed breathing space to complete the membership transfer on the Ltfcfool, a new discussion forum for Hatters fans; yes, I know you have to be a long-suffering fool to be a Hatters fan: an incurable affliction that renders the sufferer way beyond help. Tuesday 5th December 2017: Amino Technologies: AMO: Mkt Cap £134m: Trading Update Trading Update and Notice of Results Profit and margins in line with market expectations Amino Technologies plc (LSE AIM: AMO), the Cambridge-based provider of digital entertainment solutions for IPTV, Internet TV and in-home multimedia distribution, today provides the following trading update for the year ended 30 November 2017. The Group expects to report a full year performance that demonstrates continued customer traction for its IP / cloud video software solutions and devices, despite industry-wide memory cost headwinds. Gross profit and adjusted profit before tax are expected to be in line with market expectations, whilst revenue is expected to be similar to the previous financial year due to product mix. The Company's cash position at 30 November 2017 was GBP13.0m (30 November 2016: GBP6.2m) as a result of good operating cash conversion. Commenting on today's announcement, Keith Todd CBE, Non-Executive Chairman said: "I am encouraged by Amino's strong operational performance with good profit margins and excellent cash generation. As we continue to deliver momentum and scale, we are seeing growing traction for our software solutions and new product lines. We enter 2018 with a solid backlog and an excellent pipeline which provide us with confidence for the year ahead and beyond." The Company will announce its full year results on 6 February 2018. My View: I am comfortable enough with this in-line trading update; no nasty shocks and on track to deliver market expectations. The shares are not on a demanding valuation with a PE 13.9 which falls by about 10% when you take into account the good cash position. Brokers forecast an eps growth of around 25% and the shares offer an attractive yield of 3.6%. Stockopedia stock ranks system also indicates AMO as attractive with an SR of 91. Looking my preferred selection criteria of return on capital (ROCE & CROCI) & FCF; all of which look attractive, I am happy to continue to hold this interesting technology company. Wednesday 6th December 2017: RWS Holdings: RWS: Market Cap £1.2b: Final Results: Outlook: The Group has made a strong start in the first two months of the new financial year, in line with our expectations that we will continue to build upon the record levels established in 2017 RWS now possesses an outstanding global platform, which will enable it to develop sales opportunities in multiple geographies, with a complete range of language management services and technology offerings. My View: Good progress with the promise of more to come including the transformational acquisition of Moravia. I think a lot of investors see RWS as an expensive stock on a PE of 23 but I prefer to focus on the very attractive returns of capital (ROCE & CROCI), ability to generate FCF and its impressive eps forecast growth rate of 46%. Data from SharePad shown below:
Tuesday 12th December 2017: Zytronic: ZYT: Market Cap: £82m: Final Results: Preliminary Results for the year ended 30 September 2017 (audited) Zytronic plc, a leading specialist manufacturer of touch sensors, announces its preliminary results for the year ended 30 September 2017. Overview Significant improvement in Group trading profits to 5.4m (2016: 4.3m) Strong cash generation from operating activities of 4.7m (2016: 5.6m) Final dividend increased by 39% to 15.2p (2016: 10.96p), bringing total dividends for the year to 19.0p (2016: 14.41p), up 32% year-on-year and the fourth successive year of double-digit dividend growth Touch sensor units sold increased to 138,000 units (2016: 130,000 units) with large sensors > 30" increasing to 18,000 units (2016: 14,000) Basic earnings per share increased to 29.0p (2016: 26.6p) Commenting on the outlook, Chairman, Tudor Davies said: "The current year has started with orders, revenues and trading along similar levels to that of the prior year which together with our strong balance sheet and cash generation provides a sound base for further growth in dividends and shareholder value." My View: Zytronic is another of my smaller companies that I have held for a reasonable length of time, about three years and whilst containing the risks that many small companies are exposed to including a reliance of a fairly small group of clients, they are in my view a quality outfit. However, having said that, they are not one that may appeal to the investor in a rush as witnessed by the short-termism that drove the share price up to well over 600p ahead of the October trading update. At that time I decided that nice as ZYT is, that it had become a tad overheated and top sliced about 30% of my holding to watch the shares gradually drop back to around 500p. I just do not understand the impatience of some “fast buck” investors; that approach just does not do it for my watchful but more patient temperament. So how do the results look? Well, eps marginally beat brokers forecasts at 29p and the dividend has significantly increased, up by 39%. Additionally, ZYT seems to be awash with cash. Chuck in the forecast yield of 4.5%, my favoured ROCE/CROCI and ZYT’s ability to generate free cash flow and that leaves me as a happy yet patient holder. As for growth, that’s a little conservative in terms of the outlook from the company but in fairness, they have tended to be anything but boastful in the past. Wednesday 13th December 2017: Keyword Studios: KWS: Market Cap £912m: Acquisition of Sperasoft Services Extended into Co-Development, expanding Engineering Service Line Entry into Eastern Europe Keywords Studios, the international technical services provider to the global video games industry, today announces that it has acquired Sperasoft Inc and Sperasoft Studio LLC (together, "Sperasoft"), for a total consideration of $27 million from the founders Igor Efremov, Alexei Kudriashov and Mark Rizzo (the "Sellers"). Headquartered in Santa Clara, California, Sperasoft provides game development, art creation and software engineering services to video game developers and publishers around the world from its production studios in St Petersburg and Volgograd, Russia and Krakow, Poland. Over the years, Sperasoft has delivered consistent high quality work for its clients including Electronic Arts, Ubisoft, Warner Bros and Riot Games. For instance, the company is proud of the recent work of its St Petersburg studio, which worked alongside five of Ubisoft's internal studios to develop Assassin's Creed: Origins, which launched to critical acclaim on 27th October 2017. The acquisition of Sperasoft is in line with Keywords Studios' strategy to grow organically and by acquisition as it selectively consolidates the highly fragmented market for video game services. Sperasoft adds considerable expertise and scale to Keywords new and growing Engineering Services business and adds additional scale to the Art creation business. In joining the Group, Sperasoft also provides Keywords with production centres and supporting management in Russia and Poland which are important locations for video game services talent across all of Keywords service lines. Sperasoft has grown steadily over the years increasing revenues from $10.4m in 2015 to $16m in 2016. It is anticipated to grow to approximately $20m for the year ending 31 December 2017. The underlying adjusted EBITDA for 2017 is expected to be approximately $2m. Under the terms of the acquisition, which is expected to be earnings enhancing in the first year, Keywords is paying a total consideration of $27m. This is being satisfied by $22m in cash, $1.0m of which is deferred until the first anniversary of the acquisition, funded from the Group's existing resources. The remainder is being satisfied by the issue of 260,049 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. Friday 15th December 2017: Keyword Solution and another acquisition: LOLA Keywords Studios, the international technical services provider to the global video games industry, today announces that it has acquired the assets and business of Localizadora Latam SC ("LOLA") for a total consideration of up to US$1.03m from its founders, Alejandro González and Luis Daniel Ramírez. Based in Mexico City, LOLA provides Latin American Spanish dubbing, localisation and sound design services for the video game, film and television markets, with clients including Warner Bros and Ubisoft. Founded in 2013, LOLA has built a reputation for quality and Keywords Studios currently uses the services of LOLA to complement those of its wholly owned local voice recording studio, Kite Team Mexico. Following the acquisition, Keywords' existing Kite Team operations in Mexico City will be integrated with those of LOLA to create the market leading provider of services for Latin American Spanish localised video games. LOLA had revenues of US$1.2m in 2016. In the year to 31 December 2017 the company is expected to maintain this performance, with an estimated normalised PBT of US$250,000. Approximately 40% of its revenues relate to work subcontracted from Keywords Studios. Under the terms of the acquisition Keywords is paying a consideration comprised of US$480,000 in cash and the issue of 10,106 new ordinary shares in Keywords, which will be subject to a one-year lock in period. Keywords will pay a further amount of up to $350,000 in cash over the next 2 years dependent on LOLA achieving certain performance targets. My View: Sperasoft this is the second largest acquisition made by my favourite Mecanno company KWS and involves the inclusion of 400 technical types onto the companies books. KWS is really becoming a sizable business and has considerably grown since I first purchased the stock. The second acquisition of the week seems a logical low risk bolt on of LOLA a company that KWS know very well as they subcontract work to them. I doubt Lola will cause the sort of surprises that Ray Davies of the excellent Links sang about back in 1970. Yes, by conventional measures the shares do look expensive hovering at around the 1500p mark but then again I thought that by conventional measures they looked expensive when I first bought at just over 300p. As mentioned before in this series of Voyager notes, I did top slice these on the first of September 17 taking out in terms of capital, my entire original spend. That still leaves me with a significant investment in KWS that essentially I run for free. Looking at the conventional PE we have a dizzy value of around 50 for PE but equally an exceptional forecast eps growth rate of over 40% plus my usual comfort blanket of very attractive returns on capital. I remain a happy holder but nevertheless one that is very aware that one of the spinning plates, in terms of managing the acquisition could easily crash to the floor. Investors may find the article form the Evening Standard of interest: https://www.standard.co.uk/business/stateside-swoop-for-keywords-in-27m-raid-on-assassin-s-creed-firm-a3718511.html Glad I Am Not There (GINT): well, it’s a fairly big one in terms of market capitalisation in Saga and in fact a company I bought shares in at the IPO at about 185p and sold a couple of years later for a total return of about 10%. No moans from me there as 10% is I agree not impressive but within an overall basket of shares it does no harm the bottom line. I should say that I do like the Saga way of doing business; they appear very professional to me and I certainly use their platinum credit card rather than cash abroad. Yet Saga has been hit by the collapse of Monarch Airlines and have allowed for a one-off hit of £2m to cover the financial fallout. In my view, although it qualifies for a GINT, I think the overall business is good and expect it to make a recovery from the current depressed share price that sits around the 125p mark. This weekend I travel to the football ground owned by the new age traveller Dale Vince a man famous for his green energy credentials and I have to say well done to him; admirable stuff. The Forest Green FC ground is up the top a great big hill in Nailsworth. It’s not only the location that makes the place interesting, the locally brewed beer is good and the club has a strict vegetarian policy in the very welcoming pub, The Green Man, that forms part of the stadium. Not your usual terrible football food offering at this ground where quite palatable veggie burgers are the order of the day. Whatever you are doing this weekend, have a good one and don’t spend too much time looking for the mythical Santa Rally of the markets; I never really bought totally into that one. Voyager RNS Log WC 26/11/2017 Oh dear, the perils of train travel. My weekend trip to Crewe for the Hatters game had to be abandoned at Birmingham New Street station as the train arrived over two hours late due to a broken rail north of Leicester. So instead of football, I retrieved what I could from the day by visiting the Birmingham Frankfurt Xmas market; beer & bratwurst. The beer was nice but the sadly the bratwurst had all of the culinary delights you would expect from an emulsified pig. Still, such is life: now how about the RNSs that affect stocks within the portfolio over this week? Monday 27th November 2017: No RNSs for shares held within the portfolio. Tuesday 28th November 2017: D4t4: Mkt Cap £51m Interim Results "As experienced in some previous years a higher proportion of our business is expected to close and be delivered in H2 2017. Despite a lower first half due primarily to a change in the timing of contract awards by comparison to the same period last year, the Board remains confident of achieving management expectations for the full year based on recent business wins and the depth and quality of the prospects pipeline." The first half loss is primarily due to the timing of client contracts during 2017. The balance of business intake during the period has been similar to that experienced by us previously in FY2014-15, in that a large proportion of our business is expected to close and be delivered in H2 2017. Ø Many of the contracts currently in negotiation (>80% by value) are with existing clients, who wish to increase either the footprint of our software or extend the use of our managed private cloud environments. Ø Data and analytics recurring income has continued to grow and, we are currently in contractual negotiations with 14+ companies across the software licence sales, private cloud and analytical platform modernisation project areas of our business Ø With the existing customer contracts forecast to close before the year end, recent new business wins and the depth and quality of prospects identified for both projects and software licence sales, the Board remain confident that the business will achieve a solid finish to the financial year which will be in line with management's expectations My View: the loss in the first half of the year is a touch disappointing but of more of concern to me is the lack of a real feeling of confidence with the visibility of sales. Phrases such as “business (completion of orders) is expected to close and be delivered in H2 2017 “and “we are currently in contractual negotiations with 14+ companies” just don’t give me enough of a good feel or reassurance to continue to hold all of my position in D4t4 and I therefore, have carried out a very unemotional sale of 70% of my holding for a manageable 12% loss. Despite fairly significant director buying post interims, I feel there is just too much uncertainty for my comfort and have now greatly reduced my position. Tuesday 28th November 2017: IG Design (IGR): Mkt Cap £260m formerly known as International Greetings. Interim Results: Outlook Whilst cost headwinds are undoubtedly stronger than ever, our businesses are well positioned to combat these. A full order book and a strong performance in the first half of the year provides confidence that the Group is fully on track to meet full year market expectations for profit and other key underlying metrics. My View: Punters got overly excited about IGR and unsustainably drove the price up by almost 10% just a couple of days before the interims. On the day of the interims, the shares dropped back due to probably a bit of profit taking and the gamblers waking up to a very good but steadily growing company that will not make them rich overnight: get rich quick is definitely not my style if investing; it only happens in Hollywood movies and the lottery. The results are in my opinion very good with increasing sales, increasing profit and organic growth supplemented by additional growth from the acquisition of the business Lang. Decent returns on capital and good cash flow/free cash flow; my kind of business and one that has given me handsome return since re-entering the stock at less than 180p in early April 2016. The closing price on 30/11/17 was 414p. A Happy investor who will continue to hold. Wednesday 29/11/2017: Telford Homes: TEF: Market Cap: £314m: Interim Results. Outlook We are firmly on track to deliver profit before tax in excess of £40 million for the year to 31 March 2018, in line with market expectations, having secured over 95 per cent of anticipated gross profit. We have also already secured over 65 per cent of the gross profit required to exceed £50 million of profit before tax in the year to 31 March 2019. My View: Usually a phrase such as 2nd half weighted/H2 weighted rather concern me but not in the case of Telford a very well managed business that continues to deliver and to my mind is the most attractive of the builders based upon current valuations and it’s good prospects. I will continue to hold. Thursday 30/11/2017: On The Beach: OTB: Mkt Cap: £580m: Preliminary Results: Current trading and outlook
The first quarter of our financial year (calendar Q4) is historically the quietest trading period for the Group. The low cost carrier summer 2018 seat release came earlier than last year and in part helped to offset the disruption caused by the Monarch Airlines Limited failure and repeated flight cancellations borne out of air traffic control and pilot strikes. On many of the routes from regional departure points where Monarch had a higher proportion of the flight capacity we are already seeing replacement capacity being positioned. In calendar Q4 last year sales for summer 2017 were impacted by the tour operator currency hedge and the Western Mediterranean hotel price inflation. Neither of these headwinds have been prevalent in the start to FY18. In addition to this, consumer appetite for and capacity travelling to destinations in the Eastern Mediterranean are strongly up year on year and against this backdrop the Board is pleased to report that current performance is in line with expectations and believes the business is well positioned for the key trading period that commences in late December and continues into Q1 2018. My View: A sound set of results for OTB having good returns on capital and usually very decent cash flow, reinvesting in the business and continuing to grow at a good rate: Revenue up 17.2%, PBT up 25% & basic eps up by 25%. I do rate OTB and they have done well for me and I rather expect they will continue to deliver. My only real criticism is one directed at myself as unfortunately, I dithered little too long back in the Autumn of 2016 before buying into OTB after having a good look at both the numbers and the quality of the product on offer on their website. I like the business and will continue to hold. Glad I Am Not There (GINT): well so as not to be overly modest, how about a place where I was, D4t4; can’t get them all right but what I can do is mitigate risk and sell a large percentage of my holding. I am afraid one of the inherent risks of investing in small cap companies is often the visibility of earnings. Note, I am not condemning D4t4 but simply limiting my potential risk exposure. No football travel for me this weekend as the dreaded BBC have switched the Hatters game away to Gateshead in the FA Cup to a Sunday 2 pm kick-off and logistics just prohibit that one for me. In truth, I am a southern softie these days despite my folks hailing from Wallsend in the frozen north. Whatever you are doing, have a great weekend. Voyager RNS Log Catch Up @ 24/11/2017
Hello, nice to be back posting after what has been a rather testing break due to a whole host of non-stock market issues that have held my time captive. I feel all the IT issues are just about sorted and heavens if only people issues were easier to resolve; such is life! Anyway back to sanity and a look at the main RNSs that impact stocks from within the Whittler portfolio. As this is a catch-up session and time is limited, I am also spending hours on a disaster recovery for the Luton262 football fans forum that crashed and expired, means a new site, I will just do brief headline notes for this week. Next week I will return to my usual fag-packet waffling on ways! Oh, if anybody is interested I had my last cigarette over 25 years ago but I just love the fag-packet calculation expression. So here we go: with a look at the more significant RNS’s for my universe shares over the last three or so weeks: 31/10/2017: Just Eat plc Trading Update Q3 2017 Update Strong Q3 performance; increased full year revenue guidance Highlights: -- Reported revenues were up 47% to GBP138.6 million in the Third Quarter (Q3 2016: GBP94.5 million) driven by strong order growth and the inclusion of SkipTheDishes. -- On a currency neutral basis, revenues grew by 44%. -- Total orders were up 29% to 43.1 million in the Third Quarter (Q3 2016: 33.3 million). -- UK orders were 26.2 million (Q3 2016: 21.4 million), up 22% against a comparative period that was impacted by unseasonal weather conditions. -- International orders were up 43% to 16.9 million (Q3 2016: 11.8 million), driven by triple digit pro-forma order growth from SkipTheDishes. -- Proposed acquisition of Hungryhouse received provisional clearance from the Competition and Markets Authority. Guidance: Given the continued strength of SkipTheDishes, driven by commensurate investment, we are pleased to raise our previous revenue guidance for full year 2017 of GBP500-515 million to between GBP515-530 million and retain that of underlying EBITDA of between GBP157-163 million. Peter Plumb, CEO commented: "The Just Eat team has once again delivered another period of strong growth. As I get to know the company, it is great to see the UK business in good health and positive momentum across our international markets, particularly in Canada where SkipTheDishes' delivery expertise and relentless focus on customer service are driving excellent results. We will continue to invest for growth in technology, marketing and great people." My View: well it all looks rather good to me with the very reassuring statement increased full-year revenue guidance; remember it’s only a few weeks ago that the market took a little fright on 27/7/17 when they informed the markets about further capital investment proposals. Well, that proved to be a beautiful buying opportunity to add further stock if one felt the need and the price has motored up by over 30% since that little wobble. Yes, expensive for those who like PE valuations but sometimes you have to pay for quality and growth. 02/11/2017: Norcros NXR: Proposed Acquisition of Merlyn Industries Limited Norcros (LSE: NXR), has agreed to acquire Merlyn Industries Limited ("Merlyn"), a market leading, innovative designer and distributor of mid to high end branded shower enclosures (the "Acquisition"), for total consideration of GBP60.0 million on a debt free, cash free basis (subject to certain adjustments). The Company also announces its intention to conduct a firm placing and placing and open offer to raise gross proceeds of GBP31.4 million (before expenses) (the "Capital Raising") to part-fund the Acquisition through the issue of 18,254,161 new ordinary shares in Norcros (the "Placing Shares") at a price of 172 pence per share (the "Placing Price"). Acquisition Highlights - Strategically and financially compelling transaction for Norcros - Acquisition of Merlyn, a growing, profitable, market leading business for total consideration of GBP60.0 million on a debt free, cash free basis (subject to certain adjustments) - In the year ended 31 March 2017, Merlyn reported revenues of GBP30.7 million and operating profit of GBP6.4 million - Acquisition consistent with Norcros' strategy to enhance its bathroom product portfolio - Addition of a number of well-established and market leading brands to the Group's existing portfolio - Merlyn enjoys established multiple sales channels which provide end market diversification and significant future growth opportunities - Merlyn is at the forefront of shower enclosure design and innovation - Experienced management team to be retained - led by Charlie Soden - Acquisition expected to be earnings enhancing in the first full year of ownership, and return on investment expected to exceed Norcros' cost of capital(1) The Firm Placing and Placing and Open Offer - Firm Placing and Placing and Open Offer to raise up to GBP31.4 million (before expenses) at the Placing Price of 172 pence - The Placing Price represents a discount of 5.9 per cent. to the Closing Price as at 1 November 2017 - Proposal to raise GBP10.6 million through the issue of 6,165,312 Placing Shares pursuant to the Firm Placing and GBP20.8 million through the issue of 12,088,849 Placing Shares pursuant to the Placing and Open Offer - Numis Securities Limited ("Numis") is acting as sole sponsor, financial adviser and sole bookrunner in respect of the Placing - The Capital Raising will be used to part-fund the Acquisition, with the balance of the Acquisition consideration (plus associated transaction costs) to be funded from the Group's new GBP120 million debt facility - Directors of the Company have indicated their intention to subscribe for Placing Shares in the Open Offer My View: well the acquisition certainly has a number of attractions including an overall dilution of the “elephant in the room” pension issue. This share resides in my income portfolio and it’s about as unexciting as a business can be yet it pays me far more in dividends than what a bank could offer and looks at least to my eye, ridiculously cheap. As I have said before in these notes, I don’t think that the incredibly mature pension obligation is anywhere of a serious issue especially with an average age of member just about to hit 80. However, as I have a good number of NXR in my high yield folio, I declined to take up the offer as the discount was simply not attractive enough. I will hold what I have for now and watch the paint dry. I should also add that the interim results issued on 16/11/22017 were also very decent in my opinion. Overall a decent dividend paying business that may on day substantially increase in price should the investor not die of boredom. 08/11/2017: Persimmon: PSN: third quarter trading update: as sort of steady update with nothing to particularly excite the market and the shares have since fallen back a few %points. Personally, I am not unduly worried and this company has performed phenomenally well in terms of total return since those wonderful post Brexit referendum days when Joe Public was asked to cast a vote on something of which he had just about zero comprehension. My View: I will continue to hold and reinvest the dividends but at the same time be mindful of the cyclical nature of the housing market. 15/11/2017: AB Dynamics: ABDP: Final Results and to me they read very well but I know a good number of investors were concerned about Adjusted to exclude share option costs of £1.5m (2016: £0.3m). My View: Personally whilst I have freebies for companies not really doing the desired work for their investors, I am happy enough that the business is growing and incentives being offered to retain key and expert staff; probably not in a dissimilar way to BVXP in the wish to retain highly skilled staff within the business. The shares are nicely up since the initial fret over the announcement. I will continue to hold. 16/11/2017: Dart Group: DTG: Interim Results: Since the half-year end, we have seen a further strengthening of customer demand, particularly for our flight-only product. This has resulted in future Leisure Travel bookings for this financial year performing ahead of expectations. As a result, the Board is optimistic that market expectations of Group profit before foreign exchange revaluation and tax for the year ending 31 March 2018 will be materially exceeded. My View: I do like this company and remember well when I thought I had missed the boat when I initially bought in at around 200p. The market seems to like the results and the shares have soared up to around 720p including about 10% since the results were issued. I see no reason to sell: happy holder. Bonmarche Holdings: BON: Interim results. These make pretty good reading from a retailer that is probably considered to be a boring as it gets: Total revenue up 5.0% to GBP97.8m (FY17 H1: GBP93.1m) Combined LFL sales growth 4.3%; store-only LFL sales up 1.6%, online sales up 38.6% Product gross margin remained level with the same period last year In line with Board expectations, profit before tax of GBP4.2m (FY17 H1: GBP2.0m) Basic EPS was 6.8p (FY17 H1: 3.1p) Inventory levels at GBP23.5m compared to GBP24.8m at the end of FY17 H1 Net cash of GBP14.9m at the half year end (FY17 H1: GBP9.8m) Interim dividend of 2.5 pence per share (FY17 H1: 2.5 pence) My View: well I originally bought these a few months ago at the 90p mark viewing them as a special situation with the added attraction of an apparently safe exceedingly generous dividend which as in the order of 7%. The real drive behind this special situation was the super growth albeit from a low base of the online retail side of the business. The shares performed very well for me in a relatively short space of time and I personally think there is more to come but fashion is fashion even at Bonmarche. I will continue to hold. Well, that’s it from me in terms of a brief update. Oh, hang on what about glad I am not here? Well, to be honest, I have had plenty of that myself in non-stock market terms with a dead MBO/IT issues and jumping in to rescue a Hatter's football site: so in non-stocks terms, I have been where I would rather not be but a challenge is a challenge. Have a great weekend, I will be travelling up to Crewe for the football and calling at a very unusual real ale brewhouse that is not normally open on a Saturday lunchtime but has kindly opened for Hatters supporters by special request. lick here to edit. |
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