A reasonably quiet week with the main piece of exciting news within the portfolio being that from KWS shown below. What a chunky addition that is for KWS and thankfully the market seems to love it. KWS is now up by a factor of 4x since my original purchases about 18 months ago. This will never do, I like boring, boring stocks and maybe KWS is just too exciting: oh well, such is life. Returning to the truly boring stuff, quite a few chunky ex-dividends dates have kicked in this week and pleasingly the portfolio has held up very well prior to the eventual arrival of the dividend payments and subsequent reinvestment. Note: historically I always reinvest dividends usually, but not exclusively, in the parent company and if not in the parent company then something showing positive momentum within the portfolio. Over time the contribution of reinvested dividends is simply incredibly significant in terms of total stock market returns.
Maybe this relatively quiet week and the drawing to the end of civilised temperatures as we reach the end of October has brought my hibernation tendencies out: I was probably a grizzly bear in a previous life! Anyway, that seems a reasonable excuse for me sleeping in this morning; I did not wake until 06:35 and by that time I would normally be ploughing through the water. Looks like I will be a grumpy bear with a sore head today. Enough of this and on to this week’s RNS stories for shares within the portfolio: Monday 23/10/2017: No RNSs directly relevant to stocks within the portfolio. Tuesday 24/10/2017: Keyword Studios: KWS: Market Cap: £798m: Two RNSs, firstly one relating to the proposed acquisition of VMC & secondly one relating to a placing to fund that proposed acquisition: The Acquisition: A major acquisition in North America; significantly earnings enhancing Keywords Studios plc, the international technical services provider to the global video games industry, is pleased to announce that it has entered into a conditional agreement to acquire the entire issued share capital of VMC Consulting Corporation and Volt Canada Inc. (collectively, "VMC"), a leading provider of video game Functional Testing and Customer Support in North America (the "Acquisition"), from Volt Information Sciences, Inc. ("Volt") for a cash consideration of approximately USD $66.4 million, subject to certain working capital adjustments. The Consideration and working capital adjustments and related transaction costs are intended to be funded by a fully underwritten cash placing of approximately £75 million (before expenses) of new ordinary shares in the capital of the Company (the "Placing"), details of which have been announced by the Company separately today. The Board believes that the Acquisition has a compelling strategic and financial rationale as it:
The Placing: Keywords Studios plc, the international technical services provider to the global video games industry, announces its intention to undertake an equity placing of up to 5,750,000 new ordinary shares of 1 pence each in the capital of the Company (the "Placing Shares"), equivalent to approximately 10 per cent. of the Company's existing issued share capital (the "Placing"). The Placing, which is underwritten, is intended to raise gross proceeds of approximately £75m (before expenses) (the "Placing"). Rationale for the Placing and use of proceeds The Placing is being undertaken to fund the Company's proposed acquisition of the entire issued share capital of VMC Consulting Corporation ("VMC"), a leading provider of Functional Testing and Customer Support in North America (the "Acquisition"), and certain of its affiliates, from Volt Information Sciences, Inc. ("Volt") for a cash consideration of approximately US $66.4m (the "Consideration"), subject to certain working capital adjustments, as separately announced by the Company today. Transaction costs and working capital expenses are estimated to be a further US $5.0m. The additional proceeds raised will be used to finance the Group's strong acquisition pipeline. The Placing will allow the Group to maintain its conservative gearing policy. Certain Directors of the Company have indicated their intention to subscribe for Placing Shares. Further details of the Placing and any participation by such Directors will be set out in the announcement to be made on the closing of the Placing, which is expected to be made later today. The Acquisition is expected to be completed on or around 30 October 2017, conditional upon, amongst other things, completion of the Placing. Hold on, RNS No 3 of the day telling us that the placing has been fully taken up at 1400p which is a slight premium to yesterday’s close price and that some of the directors have also stumped up a few shillings to take part. My View: well, where does it all end for the “King of Meccano” with yet another bolt-on acquisition and this one is certainly the largest one to date. I have gone through the numbers in the rationale for the acquisition & to my eye, I can see some claimed advantages. The target company, VMC, do have recently declining YOY revenue but that's due to exiting low margin areas of business & I am sure KWS have done their due diligence stuff and are therefore happy with this high reputation bolt-on. My slight concern with KWS is the management coping with and integrating all of these bolt on businesses. I rather visualise a KWS board meeting to have a centre table with a whole series of plates spinning on sticks and directors running around to make sure none start to stutter and stall. Not to worry, with all investments I probably spend as much time asking myself What could go wrong” as I do thinking about what may go right. Anyway, Mr Market seems to like it and I guess those presented to must have been impressed, in fact, the shares motored up almost 20% by close of trading on the Thursday. Also, yes, yes, yes, I know it’s a placing, costs are saved etc but once again the good old faithful PI once valued in the embryo years of the now significant business is not as much as mentioned; not even as much as a “Mrs Brown feck-off”. I do confess to becoming a touch itchy with my KWS holding and that’s even after taking out my entire original invested capital a few weeks ago ; I simply bought them at such a low price, I still have a very substantial investment in them “riding for free” and even after top slicing they are still in the top five of my % of portfolio value. Maybe I am just feeling Octoberish, who knows but for now I will hold and see what happens. Wednesday 25/10/2017: No RNSs directly relevant to stocks within the portfolio. Thursday 26/10/2017: Bodycote: BOY: Market Cap £1.77bn: Trading update for third quarter on the year: Trading Update Bodycote, the world's leading provider of heat treatment and specialist thermal processing services, is issuing a trading update covering the three month period from 1 July to 30 September 2017 ("the period"). Current trading Group revenue for the three months ended 30 September 2017 was GBP169.0m, 16.6% higher than the same period last year and 12.9% higher at constant currency. Organic growth(1) was 9.1% at constant currency, reflecting 9.6% growth in our Aerospace, Defence and Energy business and 8.7% growth in the Automotive & General Industrial business. The year to date organic constant currency growth was 6.2%. The following review of the Group's markets quotes all movements on the basis of organic growth against the same period in 2016 at constant currency: Civil aerospace revenues grew 3.0% and continued to be driven by growth in Western Europe. The recovery in the North American onshore oil & gas market began during the second quarter and continued during the period. The overall growth of our energy revenues was 24.5%. Defence revenues continued to decline in the period. We saw continued growth of 8.3% in the car and light truck market, with strong growth in Western Europe and our emerging markets, while North American revenues were down. General industrial revenues were 11.0% higher against a weak comparable. General Industrial growth was achieved in all geographies, and was strongest in Western Europe. Financial position Net cash as at 30 September 2017 was GBP23.8m compared to net cash of GBP17.7m at 30 June. The interim dividend of 5.3p per share will be paid on 3 November 2017, at a cost of GBP10.1m. Summary and outlook Bodycote's performance in the period has been in line with the Board's expectations and, accordingly, the Group's outlook for the year as a whole remains unchanged. My View: I really like Bodycote and it has been kind to me, increasing in value by some 70% since I bought into it just over 18 months ago. I have also made further top us purchases of BOY along the journey; something I tend to do with the more compelling positions whilst the story unfolds. Today’s TU did not disappoint and I suspect that BOY will meet their year end numbers, we are in the 3rd quarter, with relative ease. Happy holder and I will continue to hold. Thursday 26/10/2017: BBC News item about a single traveller on a Jet2 flight from Glasgow to Crete. Just an observation but what a great bit of publicity for Jet2. The way I look at it, they probably had to go to Crete anyway to collect passengers returning to the UK from Crete so no money lost in real terms. Instead, they get a well-covered BBC news report showing the splendid care given to this single passenger. As I say, great almost free PR that hits budget competition such as Ryanair & its charming Michael O’Leary right out of the park: nice one for fellow Dart (DTG) holders in my view. Friday 25/10/2017: No RNSs directly relevant to stocks within the portfolio. Glad I’m Not There (GINT): well a nomination for this weeks GINT presented itself at 7:00 on a Monday morning with a weasel worded Trading Update from Dialight (DIA) blandly informing the markets that “due to short-term production challenges, we now expect EBIT for the year ending 31 December 2017 to be in the range of GBP13.5m to GBP15.5m”. Now in anybodys book thats a pretty hefty profits warning when you consider that the consensus was for GBP18.2m; if we take the mid-point of DIAs wide “we don’t have a clue” new range that’s a 20% shortfall on market expectations. Now these things do happen indeed they happen occasionally to my holdings that’s the nature of investing but unless you had the consensus figure at hand, the first impression a reader may be given is “ok, they have some production challenges but they do give us an indication of what EBIT will come in at”. Nowhere in the RNS do DIA say that they will have a very serious shortfall in profits: I would have expected at least a “materially below market expectations” comment from DIA to be worded in the RNS. Sorry, DIA, simply not good enough. Thursday also saw a rather unpleasant RNS from Lombard Risk Management (LRM), the only reason I came across this company is because it came up as a “high avoid” on the smoke & mirrors. Not one I would wish to ever own and I see on Twitter that it had been recommended by a journal tipster. That in truth is one of my major criticisms of investment journals; they are compelled to write up numerous weekly buy recommendations and I would think that over a two year period they would have suggested getting on the 50% of the shares listed on the LSE as buys. Finally, I did tweet about a planned purchase of an AIM company that was going to be added to my Hi Yield portfolio: well the order price I set was not reached so no purchase made but that’s the way it goes! On Thursday I cancelled the limit order as there was something that I originally missed in the figures that watered down my enthusiasm; as ever, it’s all about managing risk and protecting one's capital. I truth I rarely purchase any AIM stocks just for their yield and although I am of the opinion that there are some terrific stocks on AIM if one takes the time to research them, my AIMs are much more biased to growth than safe income. Next week: well it looks fairly quiet but maybe we will get the odd trading update maybe KWS will announce another acquisition; maybe they will go for ITV, who knows. Can you imagine the products of such a marriage? Coupled with my utter dislike for gaming, the possibility of Simon Cowell look alikes and the cast of Corrie being zapped by the press of a button on the latest KWS-ITV streamed game: maybe not a bad thought after all! This weekend the Hatters take on the mighty Coventry City at home so it’s a relatively easy 150 mile round trip to the theatre self-deception. Whatever your plans, have a good weekend and the markets will still be there come Monday.
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Well what a touch of good fortune this week as I received a letter from The International Postcode Online Lottery informing me that I had won £725,000. Now that is doubly fortunate as having never bought a ticket in the first place to actually win is simply amazing. I must call the telephone number on the letter and arrange to pay the few £000’s in order for my win to be released. Honestly, I sincerely hope that nobody falls for such a scam. Anyway, back to my whittling; a little bit of activity for the portfolio this week as I added a new holding, RWS Holdings; see notes below for Wednesday 18/10/2017. I also did a hefty top slice of Bioventix as well as some Zytronic. Both of these companies, BVXP & ZYT, are included in this log. Some of the proceeds of these sales were used to add further to my ITV holding which I have been continuing to add to since mid-September. I should say that I am now getting a touch concerned about the general Midas feel that investors have; should I feel that concern? Well, I have written before about the need to exercise some caution and remember that in a bull market valuations and indeed cult stocks can become terribly stretched like a stressed piece of elastic as the price of these Klondike microclimate stocks detaches from reality. Examples can be seen all over the place including a couple I write about in this note; e.g. although Tristel is a great business does it comfortably warrant such a high rating based on “things to come”? I am also evaluating the return of BOO to the portfolio, a stock I previously took profits in albeit a touch early, but yet again, the great business that it obviously is, does it really warrant such a sky-high valuation. Sorry, I simply don't have the answers but that does not preclude me from viewing the Klondike with caution. Monday 16/10/2017: Bioventix: BVXP: Final results for the year ending 30/06/2017: Pleasingly a 40p special dividend has also been declared which added to the collective routine dividends of 51p for this year gives 91p which amazingly is equivalent to 13% of my purchase price of BVXP. As ever, the CEO, Peter Harrison, is very balanced with his comments: The revenues resulting from the success of the Siemens troponin project will be important in replacing approximately £1 million of NT proBNP sales that will be lost from the 2017/18 accounts due to the termination of a specific technology license. Conclusion We are delighted to be able to report such positive news for the current year. For the financial year 2017/18, our challenge will be to make up for the approximately £1 million of lost sales mentioned above with revenues from the newly launched Siemens troponin project and modest growth from additional vitamin D antibody sales and royalties. Beyond that, growth in the period 2018/2020 will be linked to our troponin project and the success of Siemens in their product launches around the world. We continue our research activities as we look to seed additional projects that will germinate in the period 2020/2030 creating additional shareholder value. My View: BVXP have performed exceptionally well in the three years that I have held them and Peter Harrison always modestly and conservatively looks at the future usually under promising yet overperforming. They have had an exceptional last three months with a 50% rise in the share price and as may be expected, this has drifted back a touch since the finals. Just to balance the risk of the touch of uncertainty over take up of new diagnostics, I have top sliced the shares up to 175% of my original investment. That leaves me still with a decent sized chunk "riding for free" and as an investor, I am very happy to continue to hold this reduced amount for the long term. Some of the proceeds have been used to purchase further ITV shares to add to my current holding. Monday/Tuesday/Wednesday: The daily news from RBG regarding their proposed takeover by Stonegate plus the “leaving with immediate effect” RNS about the CEO. Now before I go any further, I should declare that I no longer have financial interest in RBG having evaluated the “Stonegate Ultimatum”, I sold last Friday at 200p and booked a very tidy profit. Stonegate, I believe really backed themselves into a corner with their “Final Offer” and in effect scuppered any chance of solely increasing their offer above 203p as they have to abide by the Takeover Panel rules. The proxy votes and investors votes were not sufficient to get above the 75% YES threshold and so the deal was off. Now after selling I kept an eye on the RNS flow and saw that sadly some investors either don’t understand takeover panel rules or simply can’t add up even after the proxy results were reported on the Monday before the Tuesday shareholders vote, it was blindingly obvious that the 75% threshold just mathematically could not be reached in favour of Stonegate. Finally, as a non-invested bystander, I did smirk a touch when the news was announced on Wednesday 18/10/2017 that the CEO was leaving with immediate effect and the post to be temporarily covered by the chairman. They seem to have this type of misfortune at Revolving Door Group, sorry RBG as they lose CFO’s and a CEO. Anyway, due to the tight profit margins and type of business it is (I detest Vodka), I simply thank RBG for the short ride and wish them and all current shareholders all the best and to be honest, I reckon they will eventually do ok. Wednesday 18/10/2017: RWS Holding: RWS: Market Cap £1263m. Three RNSs this morning. Firstly the proposed acquisition of Moravia: RWS Holdings plc, a world leading provider of intellectual property support services (patent translations, international patent filing solutions and searches), commercial translations and linguistic validation, today announces that it has entered into an agreement (the "Acquisition Agreement") to acquire the entire issued share capital of Moravia US Holding Company, Inc. and Moravia Lux Holding Company S.à r.l. (together "Moravia"), a leading provider of technology-enabled localisation services, from Moravia Holdings II, LLC (the "Acquisition") for a cash consideration of US$320m (the "Consideration") plus working capital and certain other adjustments and transaction costs. The Consideration, adjustments and transaction costs are intended to be funded by a c.£185m (before expenses) cash placing of new ordinary shares in the capital of the Company (the "Placing"), details of which have been announced by the Company separately today, and a new US$160m term loan which will refinance the Group's existing facility (the "New Facility"). The Board believes that the Acquisition has a compelling strategic and financial rationale as it: Brings to the Group a highly successful business with a strong track record of profitable and cash generative growth: Long term relationships with some of the largest publicly traded technology companies in the world Has increased revenues by a CAGR of 26.0% from US$100.3m in 2014 to US$159.2m in 2016 and adjusted EBITDA by a CAGR of 52.6% from US$11.6m in 2014 to US$27.1m in 2016 Creates a third RWS division of scale with significant growth prospects: Growth opportunities include increasing share of wallet with its long-standing clients, winning new clients, introducing complementary solutions and growing new verticals and geographies Will operate as an autonomous division, replicating the successful creation of a Life Sciences division through the Group's acquisitions of CTi and LUZ, giving the Group three divisions of scale in attractive global markets, all with strong track records of profitable, cash generative growth Further diversifies RWS, as it is expected to represent approximately one third of the enlarged group's profits, and strengthens its global operational base Provides significant additional market opportunities for both companies due to their complementary business activities, geographies and client base, including the potential cross-selling of patent translation services to Moravia's intellectual property-rich clients Brings a strong, well established management team to the Group Is at an attractive valuation for one of the few major localisation providers focussed on the high growth technology sector in a highly fragmented market Is expected to be highly and immediately earnings enhancing for RWS shareholders Secondly, we have an RNS telling the market about a placing of 45,000,000 shares with institutions in order to fund the acquisition. Finally, later in the morning an RNS informing the markets of the success of the placing at 425p: sadly PIs have been overlooked from consideration, it seems the larger a company gets the less it treasures its PIs. My View: quite an interesting one for me this as I dithered on a purchase following their excellent trading update of 03/10/2017 “adjusted profit before tax (before amortisation of intangibles, share option costs and exceptional acquisition costs) is also expected to have performed strongly and ahead of market expectations”. Luckily the acquisition and placing announcements of 18/10/2017 gave me a second opportunity to climb on board at a reasonable price. My “fag packet” calculations very much agree with the RWS statement that this deal should be very & immediately earnings enhancing for shareholders but that’s not all, a quick scan around the Moravia web site reveals a tantalising list of customers: Is RWS expensive? Well, readers will know that I am just not at all impressed by the ubiquitous “Arfer Daley” PE, I much prefer to base my comfort on ROCE, CROCI and free cash flow and RWS scores highly in these areas. So, on board now and look forward to the ride which I hope will be a long one. Thursday 19/10/2017: On The Beach: OTB: Market Cap: £587m: 2017 Full Year Trading Update “Strong H2 revenue growth across all markets” The Group has traded well in the year with adjusted PBT performance expected to be in line with Board expectations. UK revenue growth for the year was 17% on the back of a strong H2 performance with growth of 26%. Excluding the acquisition of Sunshine.co.uk Limited, UK revenue growth was 14%, with H2 revenue up 21%, with continued progression in UK EBITDA margin compared to 2016. The Group experienced significant growth for the majority of the key summer trading period, despite some softness in the weeks that followed the Barcelona terrorist attack in August and we have exited the financial year with strong forward momentum. My View: looks fine to me and although reference is made to the Monarch failure, I can’t visualise that this will be more than a small blip on the one year figures. Overall I am happy to continue to hold. Thursday 19/10/2017: Tristel: TSTL: Market Cap: £126m: Final results for year ending 30/06/2017 and I have screenshot the headline numbers below: Well, the year ended 30/06/2017 look very good with the company heading in the right direction so no complaints there. However, I really would encourage Tristel to clearly include an outlook statement rather than leave the investor to glean what may be going on from the residual text published: sorry TSTL not good enough. Maybe the lack of an outlook is down to the delay/uncertainty with the North American venture? Well ok, be open and simply include a note in the phantom outlook statement.
My View: well I have had my reporting rant so what do I really feel about this business that I first took a fairly sizable stake some years ago when the price was 69p and that holding was then sold for 124p when a RNS gave me concerns about greedy share based payments and slowing down sales in the UK. Indeed at the time, the market was not overly impressed and the shares drifted over the next five months from a high of 145p to 90p. In the rising 90’s I re-entered the stock and then top sliced at 200p; wise or not, it was simply becoming too dominant a position within the portfolio and for risk management, I cut it back a touch. Overall, historically the company has been one of my favourites but what about the future? Firstly the stock does have great expectations built into the price which itself has appreciated by 90% since the turn of the start of the year and some 40% since July. Balancing that we have to consider that if regulatory approval is gained for North America then despite what appears to be a high rating, the stock should nicely continue to increase in value. On the other hand, I note some investors consider the stock to be expensive and should there be further USA delay or even a refusal, then the share price could easily be under severe pressure. On balance, I will continue to hold my remaining shares although I have to say that I appreciate the comfort of having banked very good profits on this one. Finally, if I did not already hold some TSTL, would I see TSTL as a compelling buy? I have to be brutally honest with myself and say no. Thursday 19/10/2017: Zytronic: ZYT: Market Cap: £96m: Trading Statement: The Board of Zytronic is pleased to provide the following pre-close statement ahead of announcement of the Group's results for the year ended 30 September 2017, which is expected to take place in December 2017. Revenues have continued to show good progress over the prior period, and results are expected to be in line with market expectations. My View: simply looks fine to me and despite my top slice this week, I am very happy to continue to hold a decent slice of ZYT which has handsomely delivered for me since my initial purchase in early 2015. I did have a scan round the quotes from other PIs and saw some remarks such as “an uninspiring trading update” but there you go, ZYT can't be expected to be “ahead of expectations” all of the time. I have seen an argument run to say that the valuation on a PE of 20 is historically on the expensive side but you know what, I think that the placing of an over reliance on the PE alone is simply misleading. For starters, if you strip out the cash that ZYT holds this PE comes down quite nicely. Now to my preferred measures: ROCE, CROCI, free cash flow & FCF conversion and I see a real quality business and it’s up to the individual investor to decide if the current share price offers reasonable value. The risk; well with reliance on a limited numbers of customers there is a risk of hitting a bump in the road. Personally, I decided that for a relatively small company ZYT had due to its success, really pulled it's weight & some more since the start of 2017 and that a top slice would be a prudent measure (Note: I am beginning to sound like Gordon Brown in saying prudent, HELP!) The remaining chunk, I am happy with and will continue to hold. Thursday 19/10/2017: Keyword Studios: KWS: Market Cap: £780m: Well, I was beginning to worry having not read of an acquisition by KWS for a few weeks but those needless worries have been set aside by the announcement of the acquisition of d3t ( you know this all gets a bit confusing as I already hold D4t4 but what’s in a name?); anyway the RNS for KWS: Keywords Studios, the international technical services provider to the global video games industry, today announces that it has acquired d3t ltd ("d3t"), for a total consideration of £3 million from the founders Jamie Campbell and Stephen Powell and others (the "Sellers"). Based in the North West of England, between Liverpool and Manchester, d3t delivers premium quality outsourced software development services for video game developers and publishers internationally. The acquisition of d3t 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. d3t brings additional skills, client relationships and geographic reach to Keywords, extending the strength and scale of its recently established Engineering service line. Founded in 2011 and now employing 44 staff, d3t is an award-winning software development company with capabilities including HD re-mastering, porting, optimisation, rendering and game systems development. Over the course of the last six years they have delivered consistent high quality across dozens of projects for clients such as SEGA, Codemasters, Sony XDev and the BBC. Jamie Campbell and Stephen Powell, along with the rest of d3t team, will remain with the business. In the year ended 31st of July 2017, d3t achieved revenues of £2.8 million and an underlying adjusted pre-tax profit of £0.4 million. Under the terms of the acquisition Keywords is paying a consideration comprised of £2.4m in cash and the issue of 42,368 new ordinary shares in Keywords, which will be subject to a two-year lock in period. Giacomo Duranti, Chief Operating Officer, commented: "The acquisition of d3t complements our recent acquisition GameSim's capabilities to extend the services, scale and geographical presence of our Engineering offering. With increasing demand in the video games industry for reliable, high-quality outsourced software engineering services, we are building a strong offering to support our clients globally. My View: As I wrote a couple of weeks back, I still have a very significant holding in KWS that I am essentially running for free having taken out the value of my original investment in the business; it still remains one of my major holdings. The share dilution and cost of the acquisition are fairly insignificant so it’s really a question of bedding the new business in and continued delivery; something that KWS appears to be rather good at. I try to imagine how this gaming Mecano company that bolts on so many acquisitions manages the growing empire and that’s my only concern with the stock. Personally, I absolutely detest all gaming, it just does not relax me but that could possibly be because I am totally crap at it; give me the full TV series of Breaking Bad any-day! However, investment is not about one’s personal preference, it’s about attractive and hopefully sound companies and KWS continues to meet my selection criteria. To be honest, I think I may be holding this company for many years to come. Friday 20/10/2017: IQE: IQE: Market Cap: £940m: RNS regarding the under-payment of US Tax due to an unfortunate third party accountancy firms regrettable ignorance: Settlement of Prior Years Taxes: The Group recently engaged the services of an international tax firm to assist with a routine US tax filing for the year ended 2016. Unexpectedly, this exercise has identified taxes due in the US relating to the profits of an overseas subsidiary for the years ending 2013, 2014, 2015 and 2016, which follow the acquisition of the epitaxy business of Kopin in January 2013. This firm has estimated the tax due as approx. £4.2m, and is in the process of calculating the actual amount, which may take up to 4 weeks. IQE immediately initiated the payment of the estimated amount to the relevant tax authority, and will adjust any over/under payment in due course. On the advice of this firm, IQE has also accrued interest due of up to £0.4m. As a result of a Group re-organisation initiated in September 2016, but unrelated directly to this previously advised tax treatment, it is believed that no similar tax liability arises in 2017. The wildly optimistic line which I think is total fantasy is that IQE feels that they can claim full recompense from a local tax advisory service for the issue. In my opinion, that's daft. Whilst they may be able to gain some claw back on fees, the US taxes are clearly owed by IQE and not down to the activity of the third party accountancy firm. IQE is clearly extremely disappointed with the previous professional advice received and will be pursuing full recompense as a matter of priority with the previous advisors. I guess the reassuring part is a hint on current trading: The Group has enjoyed a strong Q3 with continuing growth driven largely by the ongoing strong VCSEL ramp in support of a highly significant mass market consumer application, and the new Foundry expansion remains on course to open in H1 2018. As a result, the Board remains confident the Group is on track to deliver full year expectations, including that of net debt. My View: lots of the figures may well be brushed away as exceptional items and at least the company has been responsible in highlighting the issue and also giving a flavour of current trading. Glad I am not there: well on a few occasions as I pen these notes I have and will continue to declare that I hold or held a “Glad I am not here” as they occur. Let’s face it, I am most definitely not clever enough to invest only in companies that never have issued bad news or profit warnings. This week the flavour is slightly different with RWS which did not treat it’s PIs that well with the placing and that hit current shareholders, particularly as they were not included in the offer. However, I bought straight into RWS on the day of the acquisition & placing announcements but at the same time feel for those PIs treated a tad shoddily by the lack of consideration by RWS. I suppose those PIs were important to RWS at one stage but just like stepping stones on a stream, they become less significant when the company has grown and crossed that once challenging stream: sad but a fact of investment life. This weekend my football travels continue to watch the table topping Hatters (yes that's right, table topping) at Crawley. I will make the fairly easy journey by train and have a couple of pints of decent ale in the Brewery Shades Inn before the game. Whatever you are doing, I hope you have a great weekend & as ever, happy investing. Voyager RNS Log WC 08/10/2017 Note: as ever nothing I write here is in any way a recommendation; well apart from the superb meze. Just view this as me meandering through my thought process concerning various regulatory announcements and sharing my views. It has been quite a busy week but in terms of the portfolio, the composition apart from reinvested dividends has remained constant without any transactions taking place. My thoughts on the various RNSs relevant to companies that I hold are: Monday 09/10/2017: XP Power: XPP: Market Cap £596m Trading Update: I did comment on XPPs acquisition of Condel last week and in a pleasant start to this week we have an excellent “ahead of its previous expectations” Trading Update. Trading Trading in the third quarter has been robust. Revenues for the nine months ended 30 September 2017 increased by 34% over the prior year to £123.9 million (2016: £92.6 million). In constant currency the increase in revenues was 21%. Order intake for the nine months ended 30 September 2017 was strong at £137.5 million (2016: £95.8 million) which was 44% higher than the prior year. In constant currency this was an increase of 30%. Our third quarter order intake was £44.1 million (2016: £34.2 million). The momentum in our order intake is encouraging, particularly the continued growth we are experiencing in our North American markets. Outlook We are encouraged by another quarter of strong order intake with our end markets remaining buoyant. The Group believes it is continuing to take market share as its portfolio of industry-leading power technology products is increasingly designed-in to new equipment by our target customers. These design wins will translate into orders as our customers’ projects move to production phase over the coming years. The Board now anticipates the Group’s performance for the full year will be ahead of its previous expectations outlined at the time of the Group’s interim results on 31 July 2017. My View: well, how can I be anything but happy with that RNS: I am happy to continue holding. Tuesday 10/10/2017: Revolution Bars: RBG: Market Cap £100m: a string of put up the money, no we will not, swipes between RBG and Deltec that culminated with Deltec declaring that they would not be making a cash offer for RBG; hardly a surprise in my opinion as Deltec was debt ridden and did not have the cash. So it’s back to the 203p which I won’t grumble about as it gives me a fortunate 70% profit on stock I repurchased as a special situation recovery stock; I was simply lucky: right place at the right time etc. Note: on Thursday, Stonegate in an RNS, indicated that their bid price for RBG would remain at 203p. Wednesday 11/10/2017: Telford Homes: TEF: Market Cap £308m: Trading Update: reads well enough to me: The Group's reported profits in any given period are driven by the number of open market completions achieved and there were far fewer of these in the first half of the year than the number expected in the second half. This is purely down to development timings which are all on track and in accordance with the original programmes but do not fall equally across the year. Completions of individual properties are proceeding exactly as planned with no unexpected delays. As a result of the imbalance of completions across the year pre-tax profit for H1 2018 will be significantly lower than H2 2018 and also lower than the corresponding period last year but will be entirely in line with expectations. The interim dividend is proposed to increase in accordance with the anticipated full year profit growth. The Group is on track to deliver full year profit before tax in excess of £40 million in accordance with market expectations and the Board's longer term positive outlook is unchanged. My View: I feel that Telford are an impressive company that without fuss simply gets on with the or business plan and monotonously delivers: just the sort of company I lIke to own. The table below reproduced from SharePad, compares five housebuilders that I either own or have owned over the last 18 months. As you can see from the table, Telford has many attractions and in my view is the housebuilder I would choose to own if I were limited to holding just one stock in this particular sector. Thursday 12/10/2017: Norcros: NXR: Market Cap: £103m: Trading Update: Oh how nice to read an NXR release update where even the dull accountants take a positive note. The thrust of the TU is overall good progress and in-line. Group revenue and underlying operating profit(1) in the first half is expected to be in line with the Board's expectations. Group revenue for the first half is expected to be approximately GBP144.9m (2016: GBP128.8m), 12.5% higher than the prior year and 7.1% higher on a constant currency basis. The growth reflects a robust performance in our UK business and continued growth in our South African business. My View: I still think this is an astonishingly undervalued business whose share price has been held back by the perception the market has over its pension deficit. NXR have also done very well in reducing debt from £27.5m in 2016 to £21m in 2017. I did a write up on NXR at the time of the AGM at the end of July when I commented that in my view Mr Market is being far too pessimistic about that pension deficit which is well managed and has a very high average age per member. Thursday 12/10/2017: WH Smith: SMWH: Market Cap £228m: Preliminary Results: Stephen Clarke, Group Chief Executive, commented:
"We have delivered a good performance across the Group. "The Travel business continues to perform well with strong revenue growth, up 9% in the year. For the first time, revenue in Travel has overtaken High Street and Travel is now the largest part of the Group in both revenue and profit. Profit in Travel is up 10% to GBP96m, now over 60% of Group trading profit. "During our 225(th) anniversary year, we were delighted to open our 225(th) international store and now have 233 stores open. We have won 273 stores across 25 countries, including new stores in Singapore and Rome. "The High Street business performed well - matching the particularly strong profit performance from last year. Our investment in new product design continues to drive stationery revenue and we have been pleased with the success of the recently launched Tom Fletcher Kids Book Club. "The Board has proposed a 10% increase in the final dividend and we have today announced a further share buyback of up to GBP50m reflecting the Group's cash generation and our confidence in the future prospects of the Group. "This performance is only possible through the hard work and commitment of our 14,000 colleagues across the business and I am grateful for their continued support. "Looking ahead, we will focus on profitable growth, cash generation and new opportunities to profitably invest in the future. While the economic environment remains uncertain, we are well positioned for the current year and beyond." (1) Group profit from trading operations and High Street and Travel trading profit are stated after directly attributable share-based payment and pension service charges and before unallocated costs, finance costs and taxation. See Note 3 to the financial statements and Glossary on page 31 for an explanation of the definition and purpose of the Group's alternative performance measures. (2) Like-for-like sales are calculated on stores with a similar selling space that have been open for more than a year (constant currency basis) My View: well anybody who follows my writings will know that SMWH is truly one of my favourite investments; incredibly boring and they just deliver. It’s interesting to see that the continued growth of the travel offering which has been a huge success: when was the last time I did not have to queue at a Smiths at either a motorway service station or airport? Maybe market research at it's best! Despite the 35% rise in SP since the start of 2017, I am happy to continue to hold. Thursday 12/10/2017: Just Eat: JE. Market Cap: £477m RNS regarding Hungryhouse merger:- CMA provisionally clears Just Eat / Hungryhouse merger Just Eat plc (LSE: JE) welcomes today's announcement from the CMA that it has provisionally cleared the company's acquisition of Hungryhouse. We are pleased that the CMA has provisionally concluded that this transaction does not lessen competition. We look forward to continuing to deploy our technology and expertise to help more independent restaurants develop and grow their businesses, while offering an even better service to consumers. My View: The market seems to like the news and the shares kicked on over 6%. Admittedly not my usual style of purchase being on such a stretched valuation but I will console myself by calling it a “special situation”. Friday 13/10/2017: no RNSs of mote involving shares within my portfolios Glad I Am Not Here: well I of course always like to think that things will turn out well for shareholders and particularly so with the case of AIM stocks where generically the universe is a tougher place if one does not take care. This week we had the rather astonishing announcement from Mytrah Energy informing the market that the chairman had taken an “unauthorised loan” from the company to purchase a property; just how did that escape corporate governance from a business that is loss making and with terrible cash flow? Now I do honestly believe that on AIM there are some really excellent well managed companies that are very worthy of an investment, in fact over a third of my portfolio is invested in AIM companies but they are ones where I have trust in the management of the company. Just a case of being diligent and doing research plus the all important risk assessment. Having said that, remember that the next profits warning is maybe just around the corner; simply the nature of investment particularly in small companies. Another qualifier for the Glad I Am Not Here weekly award is Character Group: CCT. Now this is a share I have owned a couple of times over the years and and on Wednesday they were firstly a little naughty with a late RNS offering the markets a trading update at 08:00 a touch late in the day for my liking and really just unacceptable; I mean did the accountant break the news to the CEO over the morning bowl of corn flakes? Actually, that’s a reasonable scenario as they are a serial profits warner; sorry, I will get my coat! The RNS tells us that “At this early stage of the Group's new financial year the Board consider that, based on the latest sales and market data available to them, the Group's performance for the year ending 31 August 2018 is now expected to be significantly below current market estimates. Nevertheless, the Directors believe this to be a temporary downturn and that the Group anticipates returning to its previous growth pattern during the second half of the 2018 calendar year, and this ultimately is expected to be reflected in the financial performance for the year ending 31 August 2019”. Now for my part, I began to lose confidence in management, again, with some trading updates and also a video presentation the company did; the whole thing just started to appear to be a risk in my opinion and I sold in January 2017 for a smidgen on an overall gain. As I always say, once you doubt something about a company it’s simply time to go; I may not always be right but it’s a question of comfort and managing perceived risk. It’s just a question for the individual investor and what you feel comfortable with. For example, some discomfort sales over the last four years in addition to CCT have been SAL, SHOE, SPRP, PMP, TCM & TRAK. With it’s strong balance sheet, I suspect CCT will go on and do what it usually does i.e. a mix of good progress sprinkled with the occasional profits warning. Next Week: I expect to see trading updates from ZYT & AMO early next week and in fact the market has been racing ahead a touch with ZYT so obviously, some investors feel there is good news to come but for my part, I am much more cautious with small-cap companies. Sometimes the order book can be lumpy and disappoint so let’s wait and see. We also have the finals from BVXP which has enjoyed an incredible increase in share price of over 100% in 2017. Have a great weekend and as ever, happy investing Voyager RNS Log WC 01/10/2017 Well, quite a lot to talk about this week on the portfolio front with a number of announcements that made interesting reading after ploughing a steady mile in the pool. Strange how we all have some “addictive” pursuit; just could not imagine the early mornings without a nice calming pool in front of me. Just as a general comment and maybe a take care reminder; the markets we currently trade in are probably at one of their easier moods than I have generally experienced over the last 30 years of investing and I fear that there are many investors out there who have never experience a bear market or serious correction. It seems that the world and his brother are making 20%, 30% etc at present and that does genuinely please me but do remember that the music will not keep playing forever: just a reminder that “everybody is a winner in bull markets” and they simply don’t continue forever and careful stock selection of quality businesses is to my mind essential. A couple of Whittler Rules:
Anyway the universe/folio RNSs: Monday 02/10/2017: XP Power: XPP: Mkt Cap. £546m: RNS Regarding their acquisition of Condel Inc.: The RNS reads: XP Power, a world-leading developer and manufacturer of critical power control solutions for the electronics industry, announces that it has acquired the business and assets of Comdel Inc. ("Comdel"), a designer and manufacturer of radio frequency ("RF") power supplies (the "Acquisition"). Total consideration of US$23.0 million (GBP17.0 million) was paid in cash on completion. The Acquisition is on a debt and cash free basis and was funded with a new revolving credit facility of US$40.0 million with a US$20.0 million additional accordion option. The new facility is in place to assist the company's inorganic growth strategy. Comdel is based in Massachusetts, USA, and supplies the industrial and technology sectors with a range of standard, modified and custom high power RF power conversion products. Comdel typically supplies RF power supplies to the semiconductor, thin film, photovoltaics, and induction heating industries. In the fiscal year ended 31 December 2016, Comdel recorded sales of US$16.5 million (GBP13.0 million), profit before tax of $1.8 million (GBP1.4 million) and had gross assets at the year end of $10.9 million (GBP8.5 million). The Acquisition is expected to be enhancing to the Company's earnings per share in 2018*. My View: Looks a decent acquisition to me and will hopefully boost XPP growth prospect over the coming years. Is XPP expensive? Well even on the ubiquitous and often manipulated PE ratio, not terribly expensive for a company experiencing attractive growth in my opinion. As ever, I look to the returns on capital which are very attractive and confirm my view that I am very happy to continue to hold. In fact, I am a little niggled with myself as although I have made various top-ups over the last 18 months, I really should have been more committed to my “fag-packet calculations” that kept shouting to me to make a further significant purchase. I reckon we all have the gift of wisdom after the event! Click on chart to enlarge: Monday 02/10/2017: On The Beach: OTB: Mkt Cap: £526m: an RNS statement regarding Monarch Airlines: On the Beach Group plc, (LSE: OTB), the UK's leading online retailer for beach holidays, notes the recent announcements by the Monarch group and the Civil Aviation Authority that Monarch Airlines Ltd and other companies in the Monarch group have entered administration. On the Beach is contacting customers that are currently in resort to assist with their return travel and also those customers booked to fly with Monarch Airlines in the coming weeks and months. The Group has Scheduled Airline Failure Insurance in place which covers the failure of Monarch Airlines Ltd including monies paid to Monarch Airlines Ltd and also the costs to repatriate customers currently in resort. The Board anticipates that there will be a one-off exceptional cash cost associated with helping customers to organise alternative travel arrangements or providing refunds and will update shareholders in due course. The Group has no exposure to Monarch Holidays Ltd bookings as it only offered Monarch Airlines Ltd seat-only flight options on its website. My View: this sort of thing happens in the travel industry and with the pressure on airfares it will undoubtedly happen again maybe not to OTB but certainly elsewhere. I take a fairly relaxed view to this event and will continue to hold my current position. Tuesday 03/10/2017: Revolution Bars Group: RBG: Mkt Cap: £105m: Results For Year Ended 31/07/2017. The results in truth mean very little as RBG is the subject of an agreed takeover by Stonegate at a price of 203p; that price may of course rattle up a little if Deltic who are ponderously carrying out due diligence on RBG, come in with a higher offer before 5pm on 10/10/2017 the deadline set by The Takeover Panel. Of course, there is always the possibility that a third potential bidder may enter the contest and for that reason, I am happy to stay invested with the comfort that the Stonegate 203p is near as money in the bank. Readers may recall that earlier in the year following the announcement that the second FD was to depart RGB having only been in post a handful of months, I took this as a major red flag warning banner and immediately sold my holding. An extract from my RNS Log of 04/08/2017 reads I originally bought into RBG in January this year but following an announcement that the second CFO in a few months had declared he was leaving the business I sold my entire holding; 2 x CFO’s leaving in a short space of time just did not sit well with me. A few months later, May 2017, RBG duly issued a profits warning and the shares were absolutely caned eventually bottoming at about 50% of the pre-profits warning price in early July: hardly surprising as management credibility had declined and with it the trust of many investors. On Tuesday last week, RBG issued a very reassuring trading statement and it appeared the new CFO had brought a bit of sanity and reassurance to the business. I pondered for a couple of days and then bought back in on Friday afternoon. Back to the RBG Results: The results do reveal an accounting mess at RBG before the time of the current FD: Our results Our reported results show good progress against the prior period, with sales growth of +9.2% and even stronger growth in adjusted EBITDA*** at +16.0% against the restated figure for the prior period. We consider adjusted EBITDA*** to be the key measure that best represents the business' underlying performance as it excludes exceptional items and bar opening costs that are a function of the timing of the new venue development programme rather than the underlying trade. Last year's adjusted EBITDA*** has been restated from GBP15.6m to GBP13.0m. Operating profit was GBP3.7m (2016 Restated*: GBP5.3m) but this was after charging exceptional items of GBP4.4m (2016 Restated*: GBP1.4m). During the year, there was significant change within our finance team. This included the Chief Financial Officer, Sean Curran, and the Group Financial Controller, who had both been with the business for over ten years, both leaving the Group. Chris Chambers replaced Sean in the autumn of 2016 but resigned shortly thereafter in February 2017. Mike Foster joined the business in March 2017, initially as interim Finance Director, before being appointed to the Board and as the Group's Chief Financial Officer in early June 2017. Our Finance and IT teams play a critical role in providing the systems and reporting to facilitate running an efficient business. Significant IT developments have been undertaken in the year to support the Sales, Operations and People Development teams. Our Finance team has had much to contend with in the last year and it is now very clear that our accounting systems and processes were in need of upgrading. Improvements have been made, and will continue to be made, in this area to provide a more robust financial infrastructure and in so doing bring additional benefits. My View: All in all a bit of a financial reporting muddle at RBG and it’s just as well in my opinion that another company looks like taking them over albeit at a probable bargain price just north of 200p. Reference Note: Note: now just to reiterate, I do NOT OFFER ADVICE on specific shares but merely share my rationale and methodology of investing, However, I have over the years built up a series of Whittler Rules that sit on my office wall. In the case of RBG at the time of my initial exit as two FDs sought other opportunities, the rules that applied, again as on my office wall, were:
Tuesday 03/10/2017: AB Dynamics: ABDP: Mkt Cap £114m: Pre-Close Trading Update: The Group has performed well in 2017 and the Board expects revenue and profit before tax (excluding share option charges and latest IFRS 15 adjustments) to be slightly ahead of analysts' forecasts. The Board has chosen early adoption of IFRS 15, from 1 March 2017, and this is expected to lead to a reduction in the level of reported revenue for the year to 31 August 2017, but with no consequential impact on profit before tax. Despite the adoption of IFRS 15, it is anticipated that reported revenue will nevertheless remain in-line with current market expectations. My View: I like ABDP and it’s rewarded me nicely since my couple of batches purchased in June & July of 2016 following a fall back in the previous high flight path of the stock. Within the update are the pleasingly reassuring words that the PBT will be slightly ahead of analysts expectations: much nicer wording than management expectations as after all, what are management expectations! Is the share expensive? Well, I personally think not given its niche state of its business and forecast profits growth over the next couple of years. Also the returns on capital, ROCE & CROCI have been historically high and look like staying that way. Probably one I will hold for quite some time to come. Wednesday 04/10/2017: No RNS relating to a share within my universe or portfolio. Thursday 05/10/2017: Only one RNS of serious note for the portfolio in that Deltec came out with a very wordy RNS essentially suggesting a non-cash takeover/merger of Deltec & RBG. I guess this one may drag on for a while and hopefully may either flush out an improved bif from Stonegate or suck in another bidder who may see the RBG offering being undervalued at a touch over 200p. I think I will just sit on my hands and not get overly excited until the end game is a touch closer. Friday 06/10/2017: No RNS relating to a share within my universe or portfolio. Glad I Am Not Here: well, its a fairly sad one this week for holders of Accrol Group: ACRL with an apparently disastrous announcement that the shares are to be suspended with the likelihood that much of the forecast profits for this year will be flushed down the pan along with the companies tissues that they manufacture. You could go on with the puns but in truth it’s simply not a happy position for investors who bought into ACRL when It was listed on AIM not that many months ago. I have to say that I very rarely invest in IPOs and take the view that I would rather have a decent look at the minimum of a few months listed trading and numbers to anywhere near give me an acceptable degree of comfort. An added deterrent for the ACRL float was the enticement of a fat yield in order to get investors on-board. Were there any warning signs? Well, I would say there was one that would not sit well with me and that is the RNS dated 07/09/2017: giving a TU and the announcement of the appointment of a new CEO: the RNS reads: Accrol Group Holdings plc (the "Company" or "Accrol"), the AIM-listed leading independent tissue converter, announces that Gareth Jenkins has been appointed as Chief Executive Officer with effect from 11 September 2017. Gareth joins the Company having spent 24 years at DS Smith plc, one of Europe's leading packaging companies manufacturing corrugated solutions for the retail, FMCG and industrial markets. He spent the last four years as Managing Director of the UK & Ireland packaging division and has extensive strategy, commercial, M&A and operational experience, gained in both the UK and in Europe. Gareth will replace Steve Crossley, who is leaving the Company and stepping down from the Board with immediate effect to pursue other interests. My view: That sort of statement does set the warning bells ringing very loudly especially as there was absolutely no hint of Steve Crossley's "unplanned" departure in the year end results RNS published just 8 weeks earlier. Had I have been an investor I would have very rapidly sought significant reassurance that all was well or otherwise: see my notes in red above "rules on the wall". I should also add that I steer away from companies that promised large dividends that are nowhere bear covered by FCF & also carry debt. Next Week: we have preliminary results for my favourite boring company WH Smith and I hope there is zero excitement and my boredom may continue. SMWH are up over 25% so far this year and I have to say have done me proud over the years. I also suspect we may see a trading update from Amino: AMO next week. Have a good weekend and as ever, happy investing. The Voyager RNS Log: Week Commencing 24/09/2017 Note: as ever nothing I write here is in any way a recommendation; well apart from the superb meze. Just view this as me meandering through my thought process concerning various regulatory announcements and sharing my views. Well having returned from my routine September visit to my favourite restaurants in Kyrenia; I just love authentic meze. However, it’s nice to get back behind the keyboard; and so refreshing not to even look at share prices over the last couple of weeks but just kept an eye on RNSs via a distinctly awful wifi and costly 3G. I have to say that Erdogan’s antics are likely to prevent me from flying via Istanbul again; can you believe four baggage x-rays, a compulsory change of plane and a body search with swab tests on my IT kit just to get back home; Erdogan seems a total paranoid madman. Anyway, a couple of RNSs to catch up on before I touch on this week’s events. Firstly: Tuesday 19/09/2017: Keyword Studios: KWS: Half Year Report and once again another very solid picture of growth emerges with adjusted profits up some 60% and adjusted eps up 55%. Note: the nature of the adjustment is integration expenses of EUR0.5m (H1 2016: EUR0.7m), share option charges of EUR0.4m (H1 2016: EUR0.3m), amortisation of intangibles of EUR1.2m (H1 2016: EUR0.6m) and foreign currency loss of EUR1.96m (H1 2016: EUR1.77m). Now adjustments are without doubt a pain in the bum for us private investors so what does the profits growth look like when stripping back these adjustments? Well, to my “fag packet calculation” it looks pretty blooming good. Has the share price got a touch ahead of itself? Well, that’s the perennial question with all growth stocks that prove popular with investors and see their share price appreciation in such a dynamic way. In my case KWS has appreciated about 4 to 5 fold since my original batches purchased and to mitigate a touch, especially as KWS was becoming a touch heavy in the portfolio, I sold some shares that covered my entire initial investments value thus leaving a very significant amount of stock riding “for free” within the folio. Hang on, “riding for free”, what a silly concept/quote that I remember seeing in share tip sheets in the late 90’s. Whatever does it mean? Whoopee, a profits warning but that won’t hurt me as they are riding for free! My View: I am very happy to continue to hold what seems to be an ever-increasing weighting in my portfolio even after the recent sale of my original investment in £. Incidentally, surprisingly I managed to sell that part holding at the top of the market; now that does not happen often! Is the share currently expensive? Well, difficult one to answer after such a great run but the measures I like, ROCE, CROCI, Free Cash Flow Conversion look so attractive as does the forecast growth rate in eps. Another aspect that attracts me is the huge addressable market where gaming companies outsource such services as those offered by KWS. Also, KWS appears to have a good reputation with its customers, an impressive client list and confidence in the continual expansion of the business. I personally see this one as a 3-5 year hold in which you have to acknowledge the risks associated with such an acquisitive company but worth “sensibly” tucking away in my opinion. Thursday 21/09/2017: Revolution Bars: RBG: RNS ruling from takeover Panel ruling that Ranimul, the parent company of Deltic the other bidder competing with Stonegate for the acquisition of RBG, must announce by 5 pm on 10/10/2017 if they intend to make an offer for RBG. Interesting times and I feel a rather happy investor. Thursday 21/09/2017: IG Design Group: IGR: RNS Re: Acquisition of a leading Australian greetings card business: In the year to 30 June 2017 the business generated sales of AUD13.4m with an operating profit before tax of AUD2.9m. The total transaction and restructuring costs are estimated to be AUD0.6m (GBP0.4m) which will be treated as exceptional costs. While of negligible impact to underlying earnings in 2017/18 due to the timing of completion, the acquisition will be earnings accretive from the next financial year underpinned by synergies in sourcing, design and logistics net of amortization of intangible assets. My View: anybody who reads my various notes about IGR will no doubt already be aware that I consider this to be a well-managed business that has delivered in recent years. Is it expensive or not? Well, you may well know that I just don’t have much faith in easily manipulated PE values preferring to consider returns on capital invested whilst looking for an attractive entry point. In this case we have a decent CROCI and IGR nicely converts profits into cash. Overall I am happy to happily hold IGR which has doubled my original investment over the last 18 months. Dashboard from the excellent SharePad: Monday 25/09/2017 to Wednesday 27/09/2017: only a few routing RNSs for stocks within the Whittler universe/portfolio. Thursday 28/09/2017: Air Partner AIR: Interim Results and to my eye a very good set of interims with the headlines shown below: So with the numbers, all looks to be very encouraging as is the outlook statement: Outlook: The new financial year has started well and we are making good headway against our strategic objectives. Trading since the period end has remained solid. We enter the second half with continued confidence that our expectations for the remainder of the year will be met, whilst the final quarter of the financial year can be the most challenging. We have built a strong platform from which to continue to grow the business. Our long-term objective to create a more equal balance between our two divisions, Broking and Consulting & Training, will deliver higher quality and increasingly visible earnings to our shareholders and will further align us to the needs of our global customer base, enabling us to continue to provide exceptional service and value. One part to keep an eye on in the next update/results will be the progress with Clockwork research which has had a challenging first half since it’s recent acquisition by AIR: At the end of 2016, we acquired fatigue management consultancy, Clockwork Research. First half trading has been challenging, but with a good pipeline of projects we are confident in the longer-term prospects for the business. We have undertaken work to further strengthen this pipeline and leverage the Baines Simmons offering. An encouraging example of the cross selling opportunities that have arisen following acquisition, is that Clockwork Research is now carrying out work within the rotary sector with a Baines Simmons client. On the same day as the interims, AIR announced that it had paid £3m to acquire SafeSkys Limited: On 27 September 2017 Air Partner plc acquired the entire share capital of SafeSkys Limited for a total net of consideration of £3.0m, obtaining control of the company on that date. SafeSkys Limited is a leading environmental and air traffic control services provider to UK and international airports. The acquisition has been funded from the Group's cash resources. Due to the proximity of the transaction to the reporting date, the purchase price allocation accounting has not been finalised. Details of the acquisition accounting will be provided in the annual report for the year ending 31 January 2018. The acquisition of SafeSkyes was itself the subject of a separate RNS on 28/09/2017: Air Partner plc ("Air Partner"), the global aviation services group, is pleased to announce the acquisition of SafeSkys Limited ("SafeSkys"), a leading Environmental and Air Traffic Control services provider to UK & International airports. The acquisition has been funded from Air Partner's existing cash resources, aligns to Air Partner's long-term strategy and objectives, and is expected to be earnings enhancing in its first full year of ownership. SafeSkys reported revenue of c. £1.8m for the year ended 31 July 2016. SafeSkys was founded in 1993 by Richard Barber, and over the past 24 years of his ownership, has grown to be recognised as a leading provider of Environmental and Air Traffic Control services working across 16 civilian and military airports in the UK, employing over 80 trained staff working every day onsite at the customer airport. Hopefully we will have some more details provided about this acquisition at the time of the finals and certainly AIR must be confident having paid £3m for a company with a current turnover of £1.8m; digging around at companies house I also gleaned some information from the latest accounts for 2016, SafeSkys have net assets of £637k which included £223k of cash. From what I can deduce from the SafeSkys site, they seem to operate almost as an agency style of operation so extrapolating the 80 staff to the £1.8m turnover can give a duff figure of salary estimate per employee. Friday 29/09/2017: no RNS significant to stocks within the Whittler universe/portfolio.
My View: a very decent set of interims accompanied by the interesting acquisition of SafeSkys all make the company look very attractive to my eye and I will continue to hold plus may be tempted to make further additions on the inevitable turbulence that AIR encounters on its flight path to hopeful continued success (hell, that was a cheesy line Whittler). I have been invested in Air Partner since mid-2015 and have made a series of top ups since that time. Happy to say that the investment, which also provides a healthy >4% dividend, is working rather well for me. Not quite in the Glad I am not here category but nevertheless, a share a keep a dubious eye on having once held and sold after becoming a touch concerned about the management of the business (issues with tied in suppliers & market understanding), is Sprue Aegis: SPRP who posted their half year report on Monday 25/09/2017. Strange in a way because I suspect that SPRP is overall a decent enough business. However, I still feel concerned about the allocation of revenue to capex which just seems to increase all the time and is running at 6 to 7 times the D&A. The allocation of costs to capex is just a touch worrying when compared to both the D&A & EBIT: maybe it’s fine but if I were a shareholder I would dig a lot deeper just to make sure I was comfortable. However, as I am no longer a shareholder, I will leave that one there and dig around elsewhere: whoops, I mean studiously investigate elsewhere. Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). Congratulations to multi-award winner Telit Communications whose shareholders either need nerves of steel or a bottle of gin! On Thursday 28/09/2017 an RNS suggested that the smoke generator may have run out of fuel and the mirrors developing cracks. The announcement advises of some downward revisions of forecasts and also an advance waiver for any potential breach of a covenant; thankfully I don’t hold TCM neither do I like gin! Finally, what a nice bunch of people private investors can be; well that’s certainly my view of the large number I have come across over the many years I have been investing. I remember that for years I just did not like the Twitter style of social media and indeed only ever used Twitter at the time to see how depressing the Hatters team news would be: I should explain that Twitter carries football team lineup news at around an hour before kick off when I am enjoying a pre-match pint. Strange but how wrong I turned out to be because about three years ago I started using the little tweeting birdie to exchange a few thoughts on shares. Amazingly this opened a whole new world of Twitter buddies, blogs etc; all in all really enjoyable. Last weekend, although I did not attend as away on holiday, one of those dubious ringleaders, Wheeliedealer; a top bloke incidentally, organised a summer bash which was attended by many from quite considerable distances even the frozen north of Scotland and a few outside of the UK. What a superb community or indeed set of communities there are available out there for us private private investors with the likes of sensible types on Twitter, ShareSoc & events such as those organised by David Stredder, Of course we also have such excellent writers such as Phil Oakley on SharePad/Sharescope and of course the unique style of Stockopedia’s Paul Scott plus the great Conkers Corner. There is plenty of good stuff out there for the open-minded PI to learn from if they so choose. Next week: we have preliminary results from Revolution Bars Group, there may be a trading update from Amino Technologies but I suspect that will be the week after; the same applies to Zytronic where I expect to see a trading update within the next 2-3 weeks. Have a great weekend and as ever, happy investing. Week 9 of The Voyager RNS Log: Week Commencing 03/09/2017 Firstly a bit of sampling the product from Cake at the Lincoln Patisserie Valerie: I dropped in ahead of the Hatters game with Lincoln City and as I detest cakes as such we decided to go for Eggs Royale & Eggs Benedict: the food was good & also the coffee was good but the establishment looked a little tired to be honest and maybe a tad on the expensive side. The city of Lincoln around the Cathedral was buzzing with tourists but sadly not this branch of Patisserie Valerie; lots of unoccupied tables. It did concern me a touch when I also noticed that a queue was forming from people actually trying to get into a local patisserie/coffee shop. Then pre-match I met up with some friends and their partners for a couple of pre-match beers and the discussion got around to my visit to Patisserie Valerie. The conclusion based on their visits in other towns was that the offerings were priced a touch high for acceptable quality. After a few days consideration, on Wednesday morning I jettisoned my holding in CAKE for a total return of around 20%: live market research at its best! Note: see my notes on Fulham Shore. Monday 04/09/2017: Bioventix: BVXP: Market Cap £130m: RNS Trading Update: and what a splendidly boring update it was: Trading Update Bioventix plc (BVXP), a UK company specialising in the development and commercial supply of high-affinity monoclonal antibodies for application in clinical diagnostics, announces a trading update. The Board is pleased to report that revenues for the financial year ended 30 June 2017 are expected to be marginally in excess of £7M (2015/16: £5.5M). Since the cost-base of the Company continues to follow a similar shallow trajectory as in previous years, both revenues and profits before tax are expected to be ahead of market expectations for the year ended 30 June 2017. Now I say boring as the seductive words “ahead of market expectations” appear so often in BVXP trading updates. I have quite a long relationship with BVXP going back to 2014 and have added on a few occasions since my 700p purchase three years ago: in fact, looking at my records, the last top up was at around 1900p at the end of July. BVXP is now one of my top 5 holdings in terms of portfolio value. Really what a lovely solid business this is with a relatively low-cost base and totally superb ROCE & CROCI. My View: This is a total gem of a company, in fact, it’s the type of company that you so rarely come across: I intend to continue to hold and will consider further top ups in the future. Tuesday 05/09/2017: IQE: Market Cap £240m: Interim results: A lot of punters and indeed some investors had great hopes that these results would maybe contain the Apple word; hardly a sound reason for investing; best stick to the transformational nature of the business in my opinion. Possibly the numbers quoted in the interims are not as key as the rather wordy commentary which is where I pitch my attention: Dr Drew Nelson, IQE Chief Executive, said: "The compound semiconductor industry is moving through an inflection point. Many of the key innovations that are taking place in the technology world would not be possible without the advanced properties of compound semiconductor materials. Indeed, compound semiconductors are the fundamental enabler of innovations such as 3D sensing, biometric sensors, electric and autonomous vehicles, high speed wireless and optical communications, and advanced manufacturing. "IQE has developed an unparalleled breath (SW, I think they meant breadth) of materials IP, which position it to prosper from the inflection that is taking place in our industry. Our broad portfolio of IP is a powerful competitive advantage which is enabling us to differentiate ourselves in the marketplace. The strength of our IP has enabled us to broaden our direct engagement with OEMs from single points of engagement a few years ago, to multiple programmes enabling a number of next generation mass market technologies. "IQE's outlook has never looked better. The broad range of customer engagements across multiple technologies and multiple end markets, provide a clear path to increase revenue diversity and accelerate growth over the coming months and years ahead. The breadth and depth of customer engagement underpins the Board's confidence in approving the capacity expansion plan, which provides a flexible and cost effective route to significantly scaling up in our business over the next few years" My View: I don’t see IQE as a punt and maybe that’s because after such a great few months the shares will stop their rise and consolidate particularly as the punters get bored. With many shares, investment is a long haul game and I see this with IQE. I would suggest that it will go on over the 1-3 years to be a fairly exciting growth business and maybe fall to a predator as others have done in the area of the market. Initially, after these results, the shares lurched down into the low 120’s as those with great expectations and little patience bailed out but then bounced. I will be patient and happily, as I am well into profit, continue to hold: maybe the punters have temporarily left and the investors remain? Wednesday 06/09/2017: Somero: SOM: Market Cap £160m: Interim Results: My View: although I have had a great relationship, but not love, with this stock since the early days of 2014 and greatly respect the SOM management, three things continue to make me feel that the superb share price rise over the last three years is just slowing down a touch: The stock is simply due to its sector, cyclical in nature. Although undoubtedly a high quality business it’s moat is really built on excellent customer service; the technology is not patented and an abundance of copies are available in China. The hoped for market penetration in China has not materialised. As mentioned in an earlier RNS log, I still retain a reasonable holding in SOM but had previously decided to take some money off the table at just over 300p. A lovely company but in my opinion during the summer it was, time for me to bank some substantial profits and reduce my holding. I still maintain a holding in the quality business. Wednesday 06/09/2017: Fulham Shore: FUL: AGM & Trading Update The Update Reads: We are currently building two more Franco Manca pizzeria, in London and in Bristol, which are due to open later this autumn. The Group continues to anticipate opening 15 new restaurants in the current financial year, in line with expectations (10 have been opened so far, the latest two being Franca Manca Oxford and The Real Greek Dulwich Village). However, given an increased availability of sites for sale due to the well-publicised pressures on other restaurant operators, we have decided to review our opening pipeline and to seek to improve terms with landlords of new sites we had already identified. This may delay some of our openings to later in this financial year. In March 2017, the Company announced that it was reviewing the progress of its third business, a single franchise of the Bukowski Grill. In order to simplify operations and focus on the Group's core brands, Fulham Shore has taken the decision to sell its Bukowski franchise and site in D'Arblay Street, Soho. A further update will be announced in due course. Current trading Despite hitting our Group targets for the first quarter of this financial year, during the holiday season in July and August the Group has seen a slowdown in trade, primarily from our restaurants in London suburbs. We believe this is a sector-wide trading pattern and not unique to our brands. In addition to this slowdown in revenue growth, as previously indicated, the Group is experiencing a higher fixed cost element to support its increased level of operations, especially in The Real Greek. As a result of these two factors, the Board expects that, while Headline EBITDA (as defined in the Company's accounts) for FY18 will be significantly higher than that achieved in FY17, it is likely to be less than current market expectations. My View: lovely business in terms of product, tried it myself, but it’s in a very crowded market place and despite its differential, it has not been able to withstand the overall pressures felt by the restaurant sector in recent months. In common with my usual approach to a profits warning this stock was sold by 08:10. The original tiny purchase (much less than 0.5% of folio) I made in FUL was always going to be a touch of a risk and really demanded continued roll out and increasing returns. As the company has hit a bit of a bump in the road, as shown by the curtailed expansion programme and profits warning, the action for me was to sell at the opening bell. I appreciate that after this RNS some directors bought what on the face of it seems like substantial numbers of shares. However, they held such a vast number of shares already; it was like taking a £5 note from a cash machine to top up your wallet already containing £2000 in notes if you get my drift. Wednesday 06/09/2017: Severfield: SFR: Market Cap £204m: AGM Trading Update Current trading and outlook The Group's trading performance and financial position remains in line with management expectations and the outlook for the year ending 31 March 2018 remains unchanged. As a result of the current phasing of contract works, the results for the full year are expected to be more first half weighted than in the prior year. My View: The wording of the trading update heavily suggests to me that the contract income & profits are now slowing down after that very rosy place SFR enjoyed over the past 12 months. On 25/11/2016 SFR in an RNS declared that the company’s order book was trading ahead of expectations. On Wednesday 06/09/2017 the TU tells us that the results are to be more weighted to H1 than H2. The implication is that in previous years H2 was greater than H1 so do I smell a “things are slowing down guys” message. So, it’s straight out with the fag packet calculation: I have not smoked for over 30 years but affectionately hold on to that fag packet term as most of my bookies odds on the gee-gees were calculated in that way. The H1 & H2 over the last couple of years looks like: Rev PBT Ratio (H2-H1)/H1 H1 2005 97.4 3.0 H2 2015 201.5 8.3 1.77 H1 2016 117.1 4.8 H2 2016 239.4 13.2 1.75 H1 2017 118.2 8.1 H2 2017 262.2 19.8 1.44 For 2018 > 1.O?? As suggested by latest RNS: H1 weighted more than H2 My early conclusion was that revenue and PBT have now peaked and are indeed slowing down: just my take on the numbers but that’s what investment is about, opinions. I sold very close to 08:10 hrs this morning: still a good company but the original attraction has now diminished. Wednesday 06/09/2017: ULS Technology: ULS Market Cap£77m: New Conveyancing Service: ULS Technology plc (AIM:ULS), the provider of online B2B platforms for the UK conveyancing and financial intermediary markets, announces the launch of a new conveyancing service developed for the mortgage lender Magellan Homeloans ("Magellan"). My View: I purchased ULS back in April 2017 after an encouraging trading update and to be honest it was never more than a momentum play and although it has served me well over this 6 month period I was happy to take my 15% profit and move on. As often is the case with these small cap AIM stocks, the sale had to be done in a couple of chunks in order to get a “non-blind” price that I felt comfortable with. Thursday 07/09/2017: Dart Group: DTG: Market Cap £765m AGM Trading Update: Annual General Meeting Statement At the Company's Annual General Meeting later today, Philip Meeson, Executive Chairman, will make the following statement: "The satisfactory start to the financial year as reported in our Preliminary Results Statement of 13 July 2017 has continued, with Leisure Travel bookings growing in line with our 41% summer 2017 seat capacity increase. Demand for our higher margin package holiday products remains strong and holiday customer numbers as a proportion of total departing customers have increased slightly. It is particularly encouraging to report that our new London Stansted and Birmingham Airport operating bases are already proving popular, with over 1.3m passengers booked to fly with Jet2.com this summer, of which close to 50% have chosen a package holiday with Jet2holidays. Continued progress is being made at Fowler Welch, our Distribution & Logistics business. Despite our airline ticket yields being lower than those achieved in summer 2016, overall the Board expects the Group to meet current market expectations of underlying profit before taxation for the year ending 31 March 2018 and will provide a further trading update on publication of its interim results on 16 November 2017." My View: this is an old favourite and one that I have written about on a number of occasions and a fine example of “maybe you have not missed the boat”; well plane in this case! I honestly thought that this one had got away from me a few years ago when the price hit 200p but it has prospered for me very nicely as the company has grown. Today’s “meet expectations” update looks fine to me although when I read the RNS on the iPhone whilst sitting in a humid pool changing room, I did wonder if the market would go negative on the lower ticket yield line. I will continue to hold. Thursday 07/09/2017: Frontier Dev: FDEV:Market Cap £420m: Final Results This was a new purchase for me this week and comes into my special situations category: I have already benefited in this area with KWS and so felt quite comfortable in buying into FDEV. Anyway, the RNS reads very well and below I have included the rather meteoric financial numbers: What a lovely set of results they are but why include the * note to explain EBITDA? The outlook, I have included the full text as it’s rather exciting and worth a read, goes on to say: Current Trading and Outlook The Board have been encouraged by trading since the year end (31 May 2017). The number of players of Frontier's games continues to grow. In August 2017, Planet Coaster, which launched in November 2016, passed 1 million cumulative franchise units, and Elite Dangerous, which launched in December 2014, exceeded 2.75 million franchise units. We have further expanded the addressable audience for Elite Dangerous by launching on PlayStation 4 in June 2017. During the summer Planet Coaster and Elite Dangerous participated in successful price promotions on our major distribution channels with the Steam & Xbox Summer Sale events. These events were in turn supported by major updates for each game as we followed our strategy of continuing to further enhance the experiences the delivery. We launched our first in-game Paid Downloadable Content (PDLC) for Planet Coaster in July 2017, and announced that Elite Dangerous 2.4 'The Return' will be released in September 2017 which supports the on-going story arc related to Thargoids, the franchise's first alien species. In August 2017 we announced that our third franchise, Jurassic World Evolution, will launch in summer 2018 on PC, PlayStation 4 and Xbox One simultaneously. In 2015, Universal Pictures' Jurassic World became one of the biggest blockbusters in cinema history, grossing more than $1.67 billion at the global box office on its way to becoming the third-highest-grossing film of all time. Jurassic World Evolution will launch in the year that Universal Pictures' celebrates the 25th anniversary of the original Jurassic Park film, and the next chapter of the franchise Jurassic World: Fallen Kingdom will be in theatres June 2018. We anticipate that the next step-up in our financial performance will be delivered by the launch of Jurassic World Evolution in summer 2018. The Board currently expect that the majority of initial revenues from this new franchise will fall into the financial year ending 31 May 2019, as the Jurassic World: Fallen Kingdom movie is released in June 2018. The Board therefore anticipates that trading in the current financial year, the twelve months ending 31 May 2018, will principally be based on sales from the Elite Dangerous and Planet Coaster franchises. The Board is excited about the growth opportunities ahead in the coming years, as existing franchises continue to be strengthened and new franchises are developed and launched. Frontier is developing, evolving and investing in our people, organisational structure and facilities to effectively create, develop, market and sell even more distinct franchises aimed at different audience segments to achieve the Company's ambition to create a self-publishing multi-franchise success story. My View: personally I simply can’t stand video games or anything similar: stick cricket is about my limit! However, you don’t have to like the products to invest in something: I have no real need for laser flat concrete (SOM) but the company is attractive. This is what I classify in my in my terms as a special situation with the potential for exciting growth over the next few years: yes, it has its associated risks of fashion and competition but for now its an interesting addition to the portfolio. Friday 08/09/2017: No RNSs for companies within Portfolio However, I do note another profits warning from SafeStyle: SFE. I have never held the shares but did write a cautionary note about them being a householder discretionary purchase in the RNS Log of 21/072017 when they first warned on profits. Probably a decent company but you do need that element of housholder/consumer confidence and spare dosh so in my view, not one for now. RNSs for a couple of shares I held relatively recently and took profits. Firstly G4M which had become rather overheated for my taste and I sold at 800p in early June to take a very, very healthy almost silly profit. Anyway, they issued a trading update on 05/09/2017. Myself, I just felt the share price had got somewhat ahead of itself but nevertheless have kept an eye on the shares since as I am keen to see how sales are developing in Europe & the rest of the world as the UK stuff seemed to be slowing down a tad. Today’s update shows that the UK has a sales increase of 31% (is that bad?) compared to the same period in 2106 and that Europe & Rest of the World (ROW) has shot up by some 70%. I would suggest that in a year’s time that Europe and ROW will be in line or ahead of UK sales. So my feelings are that I will keep a close eye on this one and definitely be looking to buy back in on a pull back. Secondly, my old friend Cambria Automobiles: CAMB issued a trading update on Tuesday 05/09/2017 which was a touch cautious with sales of new cars under some pressure due to consumer confidence and the weak pound affecting imported cars. Now I should say that in my view Camb are a well managed class act albeit in a very low margin business. The nature of their business is cyclical and linked very much to consumer confidence and that confidence has been in something of a decline since the shares hit around 90p some 18 months ago. CAMB have been very kind to me having sold the stock back in January 2016 and like any quality business I owned stock in, I keep a watchful eye on their performance. I am sure I will buy back in sometime but I don’t feel that time is here just yet. Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). Well one I was there this week although an overall decent company with good management is Fulham Shore; see RNS notes above. As I say just about every week in this Voyager RNS Log, your next profits warning may be just around the corner; simply part of the life of a private investor no matter how clever or careful you try to be. You can mitigate the risk of profits warning by going for what I perceive as quality but even then, you will get bitten by a PW now and again. The trick is to act according to your plan, whatever that may be, and don’t beat yourself up; accept that PWs happen! Take a look at the Telegraph article on Neil Woodford’s apology to investors after his “fortnight from hell”: http://www.telegraph.co.uk/business/2017/09/06/neil-woodford-right-criticised-sorry/?WT.mc_id=tmg_share_tw Maybe the nomination for the Glad I’m Not There award this week should be Interquest Q: ITQ, who have been right royally shafted their faithful and long suffering shareholders. On Wednesday they announced that they will effectively be suspended from AIM on 09/09/2017 following their dismissal of their nominated adviser and broker Panmure Gordon. When will they return? So, the long suffering shareholders saw the stock fall by 22% on the day of the RNS. In fact the shares have fallen 67% in the last 15 months. On the fact of it you may get the impression that this is simply terrible and incompetent management of the business: indeed it is but sadly it’s far worse that that. It appears that the owner & some fellow directors, who failed in an attempt to buyout the company some time ago, have rather engineered this situation that will lead to the companies expulsion from AIM; I wonder who will be the beneficiary of that expulsion, certainly not the shareholders. It is the sort of behaviour that gets AIM an often unjustified bad reputation. Yes, there are some dodgy businesses listed on AIM & I have written about some of them recently. However, let’s not lose sight of the fact that AIM contains some very wonderful well managed companies and a significant percentage of my capital is invested in them. I did actually write a blog article “Surviving On The Hostile Planet AIM” back in back in August 2016: http://stockwhittler.weebly.com/blog/archives/08-2016 Over the next couple of weeks the RNS log may possibly take a bit of a breather as I am taking what I feel is a well earned break for a few days in Kyrenia; I always manage a break around this time of year. I will try to get a Voyager RNS Log out next Thursday and then maybe some awfully brief ramblings the following week with a return to normality at the end of the month. Next week: the only planned RNS I can see scheduled within the folio is GFRD finals on 13/09/2017. However, there may be further news on RGB takeover and who knows what trading updates may arrive: as ever, always remember that the next profits warning may just be around the corner. Have a good weekend and as ever, happy investing. Week 8 of The Voyager RNS Log: Week Commencing 27/08/2017 Monday 28/08/2017: London Markets closed for Bank Holiday but children playing with fireworks in Korea proved a market distraction. Tuesday 29/08/2017: IG Design: IGR: Market Cap £242m: RNS Trading Update for 1st Qtr of financial year.
Trading Update IG Design Group plc, one of the world's leading designers, innovators and manufacturers of celebration, gifting, stationery and creative play products, is pleased to provide an update on the first quarter's trading period ending 30 June 2017. Highlights -- First quarter trading is in line with management expectations with a strong pipeline built in all regions -- Tangible benefits from recent initiatives include: -- the unification of the Group's three UK businesses under a single leadership team; -- the synergies resulting from our acquisition of Lang in the USA; and -- the National all store "roll out" of our single greeting card range with Australia's largest discounter Group sales during the first quarter, combined with overall customer order levels already received for the balance of the year, give the Directors confidence in the outcome for the full financial year. Americas Sales volume growth together with product mix is continuing to enhance margins across our broadening customer base. The region has achieved noteworthy momentum in the Creative Play categories. The investment in state-of-the-art gift wrap converting facilities continues to deliver production efficiencies. The region is also benefiting from further significant synergies from the Lang acquisition, in line with management's plans. UK As previously announced, having unified our three UK based businesses under one leadership team we have enhanced our ability to deliver a coordinated offering of product and service solutions to our broad base of customers, whilst retaining product and commercial expertise. Following the reorganisation, the region is trading in line with expectations with synergy benefits flowing though. Our investment in the manufacturing of not-for-sale-consumables is fully on schedule and on budget. Our order book for these new products is building strongly and our initial shipments are scheduled to take place in the second half of the year. Continental Europe The region is on course to achieve record sales and production levels across the Group's core gift packaging product categories. The Group's second efficient and environmentally friendly printing press is on schedule and on budget to be installed in time for our main production in FY19. Additionally, sales of both stationery and gift products are encouraging especially to our existing base of Europe's strongest and growing multiple retail customers. Australia The region has seen particularly strong growth in the higher margin independent store sector. Having won a major new contract for the supply of every day greetings cards with Australia's largest discounter, we are benefitting from the economies of scale that this opportunity presents, particularly leveraging our logistical capability and scale. Paul Fineman, Group CEO, commented: "We are pleased with the progress made in the first quarter, particularly with regard to the various incremental growth initiatives highlighted at the Group's results. Alongside this, our order book is yet again at record levels with strong momentum fueled by excellent product innovation and ever closer relationships across our broad customer base. Organic growth opportunities exist in all regions, and our strong balance sheet is also providing the flexibility to continue to evaluate M&A opportunities." As mentioned in an earlier blog article, I had previously done fairly well in IGR holding over the 2004/05 period and thankfully dodged the bullet that was to come along in 2007/08 when IGR or International Greetings as it was once called, got badly beaten-up during the financial crisis as their share price collapsed by over 95%. However, these days the company seems to be in safe hands with Mr Fineman in the driving seat. I have to admit that after the previous massive declining in the share price of IGR, I was a touch slow in buying the shares again having been very tempted in April 2015 after a great TU when the share price was 112p but I finally bought at 180p some months later after another fine TU; sometimes you do kick yourself don’t you! Since that time I have made further top ups as the good news “ahead of current market expectations” continued to flow. Learning Point From My Experience That I Am Happy To Share A learning point that has served me well over the years: If you find a share that looks very attractive, the numbers appear solid and the RNS good news continues to back your initial interest, don’t think you have missed the boat just because the SP has gone up by x% whilst you dithered. Provided the price is not silly, you often get other chances to buy but remember that sometimes you simply have to stump up the cash for quality! My View: I really do like IGR and it’s what I consider to be a very well managed AIM company. I rather trust the CEO, Paul Fineman who was appointed as Group MD in January 2008 and a year later became the company's CEO. Today's trading update reads well and suggests the company is both continuing to grow and is in fine form. Wednesday 30/08/2017: WH Smith: SMWH: Market Cap: £2045m RNS Pre Close Trading Update: PRE CLOSE TRADING UPDATE Prior to entering its close period ahead of reporting its preliminary results for the twelve months ending 31 August 2017 on 12 October 2017, WH Smith PLC announces the following pre-close update. Our Travel business continues to deliver a strong performance with good sales across all of our channels and our new store opening programme both in the UK and internationally is in line with our plan. We have now opened our first three stores in Italy - in Rome's Fiumicino and Ciampino airports, and one in Turin airport. We continue to see further opportunities in the international news, books and convenience travel market. Our High Street business continues to perform in line with expectations. Cost savings and margin improvements have been delivered in line with our profit focused strategy. WH Smith PLC expects the outcome for the year to 31 August 2017 to be in line with expectations. It’s actually quite beneficial for me writing these notes as it pushes me to be a touch more analytical with my trading history. In the case of beautiful boring WH Smith, I bought the 1st tranche of the current holding in October 2014 and made a more significant purchase a few months after the Brexit vote when the shares had been a touch overly clobbered. What I like about SMWH in addition to the published numbers, is the way they have grown their travel side of the business. I always drop in at an airport or service station and happily observe the footfall; nice! My View: I love them, they are a big market cap company and one that has continued to deliver over recent years. In addition, they offer a modest but handy dividend that is in common with my investment approach, I reinvest in the stock hopefully compounding my return. It's good to have a number of truly boring stocks in the portfolio and you don't really get much more boring than WH Smith. Thursday 31/08/2017 & Friday 01/09/2017 no significant RNS for portfolio shares Fourth Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own).The Real Good Food company has been at its tricks again this week (I did comment on this company a couple of weeks back). On 29/08/2017 they issued their 2nd profits warning within four weeks. Now the optimists among us may claim that we should be thankful for a few weeks of stability but to my mind, they remain totally uninvestable due to lack of management credibility; thankfully I never got near to them. Maybe for the punter, this will be the time to buy as I assume they have done a kitchen sink job and all the bad news is out there; so who knows they may improve from here. However, I don’t personally care much for punting. On 30/08/2017 we had an awful RNS from HSS stating that a profit of £2.2m in H1 last year would compare to a massive loss this year at H1 of £14.2m. Now if that is not bad enough let's throw in the absolutely massive debt that the company has been saddled with since IPO. The net debt stands at over £200m and totally dwarfs any claimed profit: simply an almost uninvestable situation even before Wednesday's profits warning. Like other investors who write a diary or form of Internet blog, I do not offer advice but in the case of IPO’s I often suggest that people take great care when a company is floated or refloated and laden with debt by the charitable sharks who previously owned the entire business. I am afraid that HSS was simply an accident waiting to happen and now the share price is about 20% of it’s flotation price. If things go well for a business stacked up with IPO legacy debt then ok, you just might get by in the good times but simply why take the risk as massive debt may simply prove to be unsustainable for the survival of the business. Turning to next week, the portfolio has results from IQE on Tuesday 05/09/2017, SOM on Wednesday 06/09/2017 & SFR holds their AGM on Wednesday 06/09/2017 and it is their usual practice to give the market a trading update at their AGM. Tomorrow it’s off to the fair city of Lincoln for the Hatters next confrontation within football basement planet of giants; oh why does the LTFC manager buy a lorry load of dwarfs for the midfield; just can’t work that one out; this is L2, the world of giants for heaven's sake! Anyway the plan is to arrive early, breakfast in Patisserie Valerie, well why not as I hold the shares, followed by the sights of Lincoln and finally a pre-match beer. Oh yes, and the game, how could I possibly forget that? Have a great weekend & as ever, happy investing. Week No 7 of The Voyager RNS Log: Week commencing 20/08/2017 Monday 21/08/2017: No RNS of interest to the portfolio or Whittler universe. Tuesday 22/98/2017: RNS Persimmon:PSN: Half Year Results As has been the case with the majority of housebuilders over the last few years, a very decent strong set of results backed up by a lengthy and confident outlook statement: Persimmon is a share that I have held on three occasions over the last 15 years. I consider PSN to be a quality business but due to its product, housing, being closely linked to the mood of the economy, house builders prosperity is cyclical in nature. On the other hand, when the mood of the economy is positive, it offers excellent returns on capital, great free cash flow and makes handsome returns to investors in the form of dividends and return of capital/special dividends. I have to say that about 20 months ago I had really become obesely overweight housebuilders in the ISA portfolio. The attractions were simply just too good to ignore and they had done marvellously well for me but in January 2016 I rather trimmed the sector thinking that would be enough of a ride for the time-being. However, Brexit presented such wonderful opportunities and I took the plunge once again including a fairly medium folio % in Persimmon at slightly over £14: what could possibly go wrong? Well thankfully nothing did go wrong and the shares prospered well including some very generous returns of cash & dividends all of which have been reinvested in further purchases of PSN. That medium sized holding has now developed into a reasonably significant holding.
My View: PSN is a quality business, yes it’s cyclical in nature but provided you keep a close eye on momentum & the housing market in general, I don’t consider it overly as a risk. I will continue to hold. Wednesday 23/08/2017: No RNS of interest to the portfolio or Whittler universe. Thursday 24/08/2017: Revolution Bars Group:RBG: What an interesting morning with a couple of RNSs one from Stonegate confirming, as I suspected, that they will be going ahead with an agreed takeover of RBG but at a modestly increased price of 203p; the indicative price in the earlier RNS a couple of weeks back was 200p. Then our friends Deltic determinedly release their RNS acknowledging the 203p from Stonegate but at the same time declare their intention to evaluate a cash offer for RBG and very interestingly go on to say that RBG has given them access to the accounts: Wow, do I detect a bidding war? Who knows? We will just have to wait and see. My View: My investment strategy is roughly based on about 75% of stocks qualifying via return on capital ROCE/CROCI & free cash flow matrices but the remaining roughly 25% is on what I classify as special situations: probably similar to a whole number of other private investors. In terms of special situations, they could be what I consider to be value plays or possibly a company where something “game changing” is happening. Over the years I have done quite well with these special situations and a couple of recent examples are Lavendon and Waterman. Now just to be clear, with these special situations I only go for what I consider to be good quality yet undervalued businesses and most definitely not value traps or dividend seduction whores where the dividend is paid out of anything but free cash flow. To that recent list, I can now add RBG as I consider the 203p from Stonegate as money in the bank and I can’t see the price falling below that level now. So my intention is to simply hold on and await developments from Deltic to see if a better offer is made for RBG and then if Stonegate really want their bid on the cheap to continue, see what they can come up with; I am in no rush. Friday 25/08/2017: Air Partner: AIR: A very solid trading update:- PRE-CLOSE TRADING STATEMENT Air Partner has made a strong start to the year with underlying pre-tax profit for the first half of the financial year expected to be not less than GBP4.0m, which compares to GBP3.0m reported in the same period last year. The Group retains a strong net cash position. Our Broking division, comprising Aircraft Charter and Remarketing, has performed well across all product lines during the first half, while the Consulting & Training division is delivering solid results with an encouraging pipeline of opportunities to be secured in the second half of the financial year. In line with our growth strategy, the Board continues to assess investment opportunities, both organic and acquisition, to enhance or extend the services and capabilities we offer our customers around the world, and to strengthen and advance our market position. We are on a journey of transformation, with the clear objective to become a more balanced business, with two market leading divisions - Broking and Consulting & Training - providing exceptional service and value to our customers globally and delivering high quality and increasingly visible earnings to our shareholders. Outlook The Board is pleased with the strong start to the year and remains comfortable with its expectations for the full year. As we always state, in the world of aviation, and most especially in the global charter industry, it is prudent to be ever cautious and vigilant. The global charter business has always been, and will continue to be, a volatile industry, and against this backdrop we will manage the business for the long term, with a very clear strategy of alignment to the needs of our global customer base. My View: I am very happy to hold my present position in AIR which is now up by around 70% since my original purchase. In addition I have made a series of top up purchases during 2017 including some positive rebalancing with AIR in the Tinker folio. I am a very happy holder whilst at the same time appreciating the potential volatility within this market as outlined honestly in the trading statement. Sad one of the week has to be Dixons Carphone PLC in which I have not held a position for over 18 months. I have such fond memories of Dixons/Dixons Carphone having bought them for what was a ridiculously low price back in 2013 as they were starting to once again get their act together; finally selling them in January 2016 following some RNS releases that indicated that the superb growth in profits was tailing off. It’s quite comforting in a way reading the 24/08/2017 RNS and finding out that I am not alone in being slow to trade my smartphone up to the next super smart model that can do all sorts of things that are unlikely to really interest me. As it stands my iPhone 6s needs a recharge every day; it does not seem so long ago that my Nokia could last a week on a single charge but there again, that was what it said on the side, a phone. I really like a lot of the things a smartphone can do; excellent camera & the super 4G but this RNS maybe suggests that the customer’s appetite is almost satisfied. Fourth Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). This weeks star prize has to go to a high market cap company, Provident Financial (PFG) a FTSE 100 business: note I have never held either a long or short position in PFG. Oh morally how worthy they are of copping a nasty one. Sorry to go off on a rant but I absolutely deplore such businesses that make their money by exploiting those in desperate need of a loan when such facilities are unavailable because of credit rating etc via banks. These unfortunate often poor customers of PFG need help and not financial exploitation in a similar but possibly less dramatic way to pay day loan companies. On Wednesday PFG issued an RNS and put it this way, “if Carlsberg did profits warnings….”. It was simply a dreadful profits warning and had all the dreadful elements of profits collapsing along with the new strategy for the business, the CEO departing and the dividend being scrapped. Honestly, it could not happen to a more deserving bunch of bums. For me, such a business involving what is politely called “sub-prime lender” is totally uninvestable on ethical grounds and there is absolutely no chance I would ever want to own the shares; I like to make money but not by supporting the exploitation of the poor. I probably come across as a raving socialist but to be truthful I am much more of a capitalist with a conscience. In terms of profit warnings, investors would have had an opportunity to seek the exit door on 20/06/2017 when a slightly veiled profits warning was issued and the share price fell by 18%. Investors would then have had a few more days to sell at around the £24/£25 mark before the usual post-PW gradual decline set in. On PW day, 23/08/2017, the share price fell astonishingly by over 60%. Will it recover? Well, quite honestly I don’t care as it would always sit way up on my bargepole list. Incidentally, I found it rather sad that Woodford wrote a note on the day of the profits warning almost excusing himself from the hurt that it would cause investors in his underperforming fund; a little humility would perhaps have been a touch more appropriate. Finally, something I learned many years ago; Procrastination is, in my opinion, the worst enemy for a private investor following a profits warning and remember no matter how good an investor you are, you WILL suffer the occasional profits warning; that’s a simple stocks investing truth. Do have a great weekend and as ever, happy investing. Week No 6 of The Voyager RNS Log: Week commencing 13/08/2017
Monday 14th August 2017: Firstly one in which I don't hold a position at all; neither long or short. RNS from Telit: TCM: Mkt Cap: £168m but sadly for holders subject to violent gravitational pull. The RNS informs the market that the crook of a CEO has departed the company and that allegations made about the company's accounts are incorrect and that all is well. Well, that’s ok then but hang on, how come that in just 48 hours since the market closed Telit suddenly find out that their CEO is a fraudster? Also, the interim CEO is the CFO i.e. the chap who was responsible for signing off the accounts so he is hardly likely to say that he produced a set of smoke and mirror accounts to fool the market, is he? Now somewhat surprisingly the share price did not tank in fact, it went up a few points by the end of the day and thereby offering investors rather than gamblers the chance to jump ship. My View: When I have the slightest suspicion that I doubt the trustworthiness of management or something is potentially wrong with the management of a company, I honestly don’t waste time in heading for the exit. That’s what I did back in June 2016 when I stumbled on the likelihood that TCM had been creating alleged profits by diverting essentially opex costs to capex. Just turning back to last weeks profits warning, those who acted fast on the day of the profits warning would have been able to exit at around 190p-200p rather than the close price of 150p: a strategy I employ is to sell on a profits warning as early as I can and I usually have business done by about 08:10 unless I am swanning around somewhere far-away enjoying myself. As soon as there is any doubt in my belief in the management or a PW, then I sell immediately: I just can’t see the sense in not preserving one's capital. I feel it always pays to remember that bad directors don’t readily become good directors and poor company culture is so difficult and slow to change. In the case of TCM with the various announcements from the company and investigative work from a couple of highly respected researchers, I take the view that to hold the shares is really simply a gamble something akin to running through a gunpowder factory in the dark carrying a candle: you may reach the other side and be declared as brave yet other outcomes are certainly less favourable. I honestly don’t mean to offend investors who decide to remain faithful to TCM; simply a case of me writing about my approach to such situations. Incidentally, I do not hold either a long or short position in TCM: shorting seems a touch alien to my mindset. Tuesday 15/08/2017: Revolution Bars Group: RBG: two RNSs today involving RBF. Firstly at 07:00 one from Deltec Group informing the market that they had approached RBG about a possible takeover of RBG but the RBG board did not wish to pursue further. Secondly, one from RBG giving their view on the Deltec approach and their reasoning for not feeling the approach would be in the best interest of shareholders. Also at the same time, RBG confirmed that they are still working with Stonegate as they discuss a possible bid at 200p. My View: It seems to me that RBG is now firmly in play and will either be taken out by Stonegate or another predator and I would not be at all surprised if it were to be at a higher price than 200p. I will sit tight on my fortuitous purchase of RBG and await developments. Wednesday 16/08/2017: No RNS of interest to the portfolio or Whittler universe. Thursday 17/08/2017: No RNS of interest to the portfolio or Whittler universe. Friday: No RNS of interest to the portfolio or Whittler universe. Third Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). This week’s major Glad I’m Not Here award goes for the second consecutive week to Telit Communications: TCM if only for the comment about the shamed CEO that they published on Monday: “It is a source of considerable anger to the Board that the historical indictment against Oozi Cats was never disclosed to them or previous members of the Board and that they have only been made aware of its existence through third parties”. I have to say that statement did amuse me a touch, just what did they expect a fraudster to do? Another worthy contender for the award is Ashley (Laura): ALY: a serial disappointer and another profits warning this week. The generous looking “unreal” dividend that has not been covered by FCF for years and in recent months there have been boardroom changes plus senior management resignations. This weeks RNS contains the award winning paragraph “The results will show an exceptional GBP2.8m impairment charge due to the revaluation of a freehold property owned by the Group. In addition, and as previously disclosed, trading conditions have continued to be demanding. The Board of the Company therefore expect net pre-tax profits for the year ended 30 June 2017 will now be materially below market expectations”. Just what are demanding trading conditions? Does it mean difficult, overpriced or simply customers not living in a time warp? Next week: The only scheduled RNS I have in the diary is for one of those beautiful Brexit bargains Persimmon: PSN with full year results on 22/08/2017 although I suspect we will get a trading update from the superb Bioventix in the next few days. Fingers crossed for nothing nasty from elsewhere but if it happens, it happens! As I always say part of the deal we sign up to as investors is that even with best due diligence sobriety reminds us that the next profits warning is probably just around the corner. Have a good weekend; catch you next week. Week No 5 of The Voyager RNS Log: Week commencing 06/08/2017
Note: straight lifts from each RNS are in italics and my scribbling in normal text. Monday 07/08/2016: No RNS for stocks held within the Portfolio Tuesday 08/08/2017: No RNS for stocks held within the Portfolio Wednesday 09/08/2017: Legal & General: LGEN: Half Year Results The results make decent if boring reading with the headlines of: financial highlights: OPERATING PROFIT up 27% to £988M (H1 2016: £777m) Profit after tax UP 43% to £952m (H1 2016: £667m) Earnings per share up 41% to 15.94P (H1 2016: 11.27p) Interim dividend3 of 4.30p per share (H1 2016: 4.00p) Net release From operations for Retained business4 up 6% to £724m (H1 2016: £681m) return on equity5 of 26.7% (H1 2016: 20.6%) SOLVENCY II SURPLUS6 INCREASED BY £1.0BN TO £6.7BN (FY 2016: £5.7BN) SOLVENCY II COVERAGE RATIO6 OF 186% (FY 2016: 171%) H1 2017 Results include base mortality release7 of £126m My View: well what can I say about one of my Brexit bargains that has given me a return of 55% since. Includes a nice safe yield of over 5% & intend to hold until I need the capital for something more attractive. Why did I not fill the wheelbarrow at the time! Wednesday 09/08/2017: AB Dynamics: ABDP: RNS informing the markets of directorate changes with CEO Tim Rogers announcing that it was his intention to step down at the end of 2017 plus some strengthening of the board with a couple of new appointments. The following link to an interview with Tim Rogers detailing the changes is worth a listen to: http://www.directorstalk.net/interview-ab-dynamics-ceo-stepping-largest-order-ever/ Thursday 10/08/2017: AB Dynamics once again: ABDP: another RNS from ABDP and one worth taking note of as the culture of the board is not to bombard the market with insignificant minor announcements: Significant Contract for Driving Robots AB Dynamics plc (AIM: ABDP) the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, is pleased to announce that it has received its largest ever order for driving robots. The order has been received from the China Automotive Technology and Research Center (CATARC), a leading Chinese research organisation based in Tianjin. AB Dynamics is a longstanding supplier to CATARC, which has previously bought a number of driving robots, a Guided Soft Target and a Suspension Parameter Measurement Machine from the UK-based automotive testing specialist. The new order allows CATARC to expand its track-based testing capabilities to include the latest China-NCAP test protocols and to perform a wide range of other international standard tests as required by its clients. CATARC is the leading organisation in China for the testing of Intelligent and Connected Vehicles and has already invested nearly 100 million yuan in its track-based testing and simulation capabilities. Tim Rogers, CEO of AB Dynamics, commented: "We were delighted to receive this strategically-important order from one of our key Chinese customers. CATARC is a benchmark in the Chinese car industry and we appreciate the confidence that it has placed in AB Dynamics and its products. With the new suite of driving robots and the Guided Soft Target which will be delivered later in 2017, CATARC has positioned itself as a major player in global vehicle safety testing business. "AB Dynamics has focused on offering a comprehensive suite of test equipment covering lab-based and test track which works together in synergy. Customers appreciate the fact that our products have been designed from the outset to work together seamlessly." My View: I don't think the board changes are anything to worry about and seem to be well planned and nothing knee jerk about them so seems fine with me. As for the significant contract for driving robotics it can only be good news for the company but no indication is given in monetary terms as to its positive impact on ABDP. Myself, I am happy to hold my initial post Brexit shock wave purchase and the couple of follow up top ups I have made having enjoyed a super return over the last 12 months. Friday 11/08/2017: no announcements relevant to the shares within the portfolio or universe of interest. Second Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own). This week’s major Glad I’m Not Here award is oh so worthy of the award: Telit Communications: TCM. Oh, what a calamitous week the Israeli IT company has had. Firstly on Monday, they published their half year results. In a nutshell the smoke & mirrors Profit Before Tax came in at a loss of $6.7m compared to a “profit” of $4.2m in H1 last year. The company tried to offer some reassuring words which did not thrill the market sufficiently to stop the share price falling by 41%. Two days later an RNS announced that the CEO was taking extended leave following fraud allegations relating to his past pre-TCM days and the share price took another dip on the day; this time by another 33%. The CEO had the great slice of luck to have sold a few million shares at close to the top of the market at around the 350p mark; yes, that was indeed a stroke of good fortune as some 10 weeks later the shares trade at around a third of that sale price. So after trousering a handsome return, the CEO takes an extended leave of absence from the company whilst an investigation takes place. Of course, I am not suggesting anything was improper; just simply commenting that the CEO had excellent timing in executing that sale. Now I should say that I have been incredibly mistrusting of TCM for a long time now and even blogged about them in the first half of 2016. My concern being that I really suspected they were capitalising routine “running the business” costs and therefore greatly inflating profits; indeed, I questioned if they had ever really made a real profit had the accounts been of a less aggressive nature. Who knows, this may even be a turning point for the company once they have reviewed their accounting policy but it’s not one where I wish to risk my hard earned dosh on. I did write about my concerns here, on BB’s and also Twitter but these days I am much guarded with my comments after the abuse I received on certain BB’s when I wrote a few years ago about the unsustainability of the Tesco model, poor and declining ROCE, insufficient FCF to cover dividend payments etc. It received a similar response concerning a similar fragility with the Morrison Supermarket chain. To be honest I changed my BB name and these days hardly post on such sites at all; who needs the abuse of fools when all you are doing is trying to very gently point out a potentially serious financial situation with a business; such is life! As for TCM, the excellent Paul Scott has tried to point out his concerns surround in the accounts over the last year or two and now the “sheriff of AIM” Tom Winnifrith has given his damning views of the business. I do hope that PIs managed to look after themselves; personally I only held the shares for 9 days back in the first half of 2016 when further checking of the numbers revealed that I had been a tad lazy on my due diligence and because of the capitalisation of costs issue I sold at once miraculously making a small %: simply a slice of luck in my case when I really deserved a kick in the arse for not taking sufficient care with my research on that one. I have been running a Smoke & Mirrors screen (SMS) for about 18 months now and it’s quite a dynamic screen that I refine on a regular basis. The screen flags up companies that I need to take real in depth look at should they somehow enter my investment universe. Even today, the SMS flags up shares that are extremely popular with PIs that I talk to. However, apart from throwing in the odd direct question, I learnt my lesson on the BBs as I don’t want to offend fold or create any bitterness. Maybe all PIs should have their own SMC or a system of flagging “take extra care”. Incidentally, Israeli companies are just about to join avoid list along current residents Africa, China & Russia. Ok, I know that many PIs may have done well in companies based in these continents or countries but to my way of thinking the risk of corruption is simply too high and these geographic locations are best avoided. Next Week looks like being a fairly quiet week for the portfolio with no announcements scheduled. Heck, that’s bound to tease out a profits warning; after all, I always say a profits warning is just around the corner; let’s wait and see. Well, that’s it for this weeks RNS log: it's off to the Barnet game tomorrow following the Hatters. The ground is set in a nice open spacious park but unfortunately does not have a decent pub within miles. Happy Investing & have a good weekend. |
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