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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