As a brief follow-up to my recent commentary on Avanti's interims, from today's FT - Small-cap week:-
"Avanti Communications rallied 7.6% after the satellite operator, which has regularly been a target for short sellers, announced a three-year agreement to supply bandwidth to Vodafone.
Analysts at Natixis said the deal hinted at "enormous potential" demand from mobile operators as well as "substantially" boosting Avanti's sales, which it forecast to rise from $20m in the first half of 2014 to $45m in the second half."
The Vodafone contract has come hot on the heels of encouraging interims where revenues had increased by 81%, and it would appear that sales momentum is truly gathering pace.
In fact on Friday this appeared on the official website:-
http://avantiplc.com/news-media/pressreleases
"Multi-million dollar partnership will extend broadband coverage to thousands in Burundi"
It will be interesting to see if Avanti announce further lucrative contracts in the near future.
Saturday 22 February 2014
Quarto Group, Tandem and Walker Crips - 'Value Portfolio'
The final three companies that appear in my value portfolio include Quarto Group, Tandem Group and Walker Crips.
Quarto Group describes itself as 'the world's leading international illustrated non-fiction book publisher and distribution group'. A brief look at the financials suggests that the shares at 163p represent good value. The market cap. is £32m and they pay a dividend of 5%. The historic p/e ratio is 6.3.
Revenue at the half-year was a tad down, but the interim dividend has been maintained and a recent trading statement suggests that the group is on track to meet market expectations for the full year.
The business is highly cash generative, and boasts a NAV of 260p per share, although if you strip out the goodwill and intangibles this falls to -265p and the group carries significant debt.
Whilst I like the cash generative nature of the business, the high levels of debt may be a deterrent for me. However, it should be noted that the business has implemented a progressive dividend policy since 1998, and the debt clearly hasn't caused any issues to date. In the interims they also state their intention to bring down their levels of debt, "importantly we are clearly bringing down our debt levels and shall continue to do so.", and recent asset sales would provide further confirmation that they are making steady progress in this area.
On the face of it Quarto looks like a pretty secure income play. We shall see.
Next up is Tandem, a company that I have looked at several times, but have never invested in. Rightly or wrongly I associate this company with middle aged men trying to regain their youth and vitality by donning ludicrous lycra outfits and buying expensive biking gear, and then cluttering up country roads on Sunday mornings and generally getting in the way (Just joking - I don't want to alienate half my audience!!).
Anyway back to the statistics. Tandem is valued at just over £3.5m, and currently boasts a yield of about 4%. It has a single digit p/e ratio of 5.4 and, the shares at 79p, are just above net tangible asset value.
The recent trading statement was a bit of a mixed bag. Revenues were slightly behind last year's, but operating profit for the full year has improved and they are confident that operating profit can be improved again in 2014 whilst they reduce debt levels. Against this are competitive pressures that are squeezing margins.
It doesn't necessarily appeal to me, but then again it could prove to be good value in the longer term.
Finally, Walker Crips, the investment and wealth management services group. At first sight this appears to have made the value portfolio based on the disposal of Walker Crips Asset Managers Ltd ("WCAM") fund management
subsidiary in April 2012 which realised a one-off gain of in excess of GBP11.7m and which helped the group deliver record pre-tax profits of GBP9.1 and pay a special dividend of 7.5p.
In fact they actually made an operating loss of £2.3m without the exceptional gain and the dividend payment was 1.37p. Based on a current share price of 44p, the dividend yield is actually around 3%.
At this year's half-year the company have made a small operating profit of £263,000. There was also a further exceptional gain from the disposal mentioned above. The interim dividend has been increased by 8.5% and the recent interim management statement is encouraging. It indicates further improvements in trading with like for like revenues increasing by 16.3%. The Group remains in a strong financial position with more than GBP10 million of net cash on its balance sheet.
They sound cautiously optimistic about the medium term.
Anyway, that concludes my summary of all of the shares included in the value portfolio and I'll review it's performance against the FTSE-all share index every six months or so.
Quarto Group describes itself as 'the world's leading international illustrated non-fiction book publisher and distribution group'. A brief look at the financials suggests that the shares at 163p represent good value. The market cap. is £32m and they pay a dividend of 5%. The historic p/e ratio is 6.3.
Revenue at the half-year was a tad down, but the interim dividend has been maintained and a recent trading statement suggests that the group is on track to meet market expectations for the full year.
The business is highly cash generative, and boasts a NAV of 260p per share, although if you strip out the goodwill and intangibles this falls to -265p and the group carries significant debt.
Whilst I like the cash generative nature of the business, the high levels of debt may be a deterrent for me. However, it should be noted that the business has implemented a progressive dividend policy since 1998, and the debt clearly hasn't caused any issues to date. In the interims they also state their intention to bring down their levels of debt, "importantly we are clearly bringing down our debt levels and shall continue to do so.", and recent asset sales would provide further confirmation that they are making steady progress in this area.
On the face of it Quarto looks like a pretty secure income play. We shall see.
Next up is Tandem, a company that I have looked at several times, but have never invested in. Rightly or wrongly I associate this company with middle aged men trying to regain their youth and vitality by donning ludicrous lycra outfits and buying expensive biking gear, and then cluttering up country roads on Sunday mornings and generally getting in the way (Just joking - I don't want to alienate half my audience!!).
Anyway back to the statistics. Tandem is valued at just over £3.5m, and currently boasts a yield of about 4%. It has a single digit p/e ratio of 5.4 and, the shares at 79p, are just above net tangible asset value.
The recent trading statement was a bit of a mixed bag. Revenues were slightly behind last year's, but operating profit for the full year has improved and they are confident that operating profit can be improved again in 2014 whilst they reduce debt levels. Against this are competitive pressures that are squeezing margins.
It doesn't necessarily appeal to me, but then again it could prove to be good value in the longer term.
Finally, Walker Crips, the investment and wealth management services group. At first sight this appears to have made the value portfolio based on the disposal of Walker Crips Asset Managers Ltd ("WCAM") fund management
subsidiary in April 2012 which realised a one-off gain of in excess of GBP11.7m and which helped the group deliver record pre-tax profits of GBP9.1 and pay a special dividend of 7.5p.In fact they actually made an operating loss of £2.3m without the exceptional gain and the dividend payment was 1.37p. Based on a current share price of 44p, the dividend yield is actually around 3%.
At this year's half-year the company have made a small operating profit of £263,000. There was also a further exceptional gain from the disposal mentioned above. The interim dividend has been increased by 8.5% and the recent interim management statement is encouraging. It indicates further improvements in trading with like for like revenues increasing by 16.3%. The Group remains in a strong financial position with more than GBP10 million of net cash on its balance sheet.
They sound cautiously optimistic about the medium term.
Anyway, that concludes my summary of all of the shares included in the value portfolio and I'll review it's performance against the FTSE-all share index every six months or so.
Thursday 20 February 2014
Avesco update
I see today's biggest riser, following a trading update, was Snoozebox (zzz) which supplies portable hotel accommodation to events and festivals. I notice the trading statement contained the following:-
"In addition to the events calendar, the Company is seeing demand from the wider corporate market. In the last six months Snoozebox has hosted a range of events on behalf of blue chip retailers, banking clients, car manufacturers, travel companies and event agencies."
This may just be company specific, and of course, the business is different to Avesco's. However, given the recent statistics regarding economic recovery, I wouldn't be surprised if the corporate market (certainly in the UK) is springing back into life with a vengeance which will greatly benefit Avesco.
It's easily forgotten that Avesco has thrived despite the turmoil over recent years. This is an excellent showing given the cyclical nature of the business.
The even year effect (Winter Olympics, World Cup, Commonwealth Games), higher corporate spending, a significantly reduced share capital and an increasing dividend policy could bode well for shareholders.
Richard Murray recently purchased another £108,370 worth of shares if that's any guide.
As ever no advice intended.
"In addition to the events calendar, the Company is seeing demand from the wider corporate market. In the last six months Snoozebox has hosted a range of events on behalf of blue chip retailers, banking clients, car manufacturers, travel companies and event agencies."
This may just be company specific, and of course, the business is different to Avesco's. However, given the recent statistics regarding economic recovery, I wouldn't be surprised if the corporate market (certainly in the UK) is springing back into life with a vengeance which will greatly benefit Avesco.
It's easily forgotten that Avesco has thrived despite the turmoil over recent years. This is an excellent showing given the cyclical nature of the business.
The even year effect (Winter Olympics, World Cup, Commonwealth Games), higher corporate spending, a significantly reduced share capital and an increasing dividend policy could bode well for shareholders.
Richard Murray recently purchased another £108,370 worth of shares if that's any guide.
As ever no advice intended.
Sunday 16 February 2014
Avanti Communications interims
It's been some time since I've commented on my holding in Avanti Communications, the satellite operator, which has been somewhat of a volatile performer in my portfolio to date. Given that this is a speculative holding in a company that is still to make a profit, the share price performance holds no surprises, and I'm happy to sit tight.
The interims look encouraging to me, and whilst I have no illusions about the risks involved with these type of investments, if they are eventually successful then the nature of the business suggests that the market cap. will substantially increase from current levels, and Avanti should become a handsome dividend payer.
Revenues for the year were up an impressive 81%, and they attained 40 new contracts in the period with sales momentum continuing with high quality global telco and media customers.
The outlook statement is very encouraging:-
"The second half started positively with the award of a large African government contract. We won several million dollars of broadband business in Western Europe from competitors based on quality of service advantages. Our cellular backhaul product gained new pilot projects in Africa last month, and our SNG product is currently used in high profile events like Sochi. We continue to sell to new large and expert customers and backlog is growing. Our business growth will remain difficult to forecast, but the growth in the size and quality of the customer base and a satisfying repeat order rate gives us firm belief that we are building a profitable and enduring business."
Cash flow, as would be expected, is rapidly improving and cash on the balance sheet is $78.3m. In September the company entered the debt capital markets with their first $370m bond
issue placed on competitive terms to re-finance and extend maturities which David Williams, Chief Executive Officer, said:
"diversifies and increases the sources of funding available to the Company. The greater flexibility which the Notes provide will allow us to utilise our balance sheet more effectively and to respond to new opportunities. The Notes have no financial ratio covenant tests and greatly enhance our cashflow."
Bizarrely, it appears that the usual suspects are still trying to short Avanti's shares. Albeit with little success for the time being.
I say bizarrely for the following reasons.
Whilst nobody should pretend that this is anything but a highly speculative investment, it does appear that sales momentum is beginning to gather considerable pace. They are winning business from competitors based on the quality of their service, and they are picking up high quality global Telco and media customers. With the acquisition of the Artemis satellite they now have valuable Ka band (and some Ku and S band) spectrum filings in the ITU Master Register at 33.5degW, 21.5deg East and 31.0deg East.
It's no mean feat to build and launch two satellites successfully with full operational capability, and whilst risk still remains, my guess is that at worst the company will be an acquisition target.
Anyway, time will tell, and as ever no advice is intended or given.
The interims look encouraging to me, and whilst I have no illusions about the risks involved with these type of investments, if they are eventually successful then the nature of the business suggests that the market cap. will substantially increase from current levels, and Avanti should become a handsome dividend payer.
Revenues for the year were up an impressive 81%, and they attained 40 new contracts in the period with sales momentum continuing with high quality global telco and media customers.
The outlook statement is very encouraging:-
"The second half started positively with the award of a large African government contract. We won several million dollars of broadband business in Western Europe from competitors based on quality of service advantages. Our cellular backhaul product gained new pilot projects in Africa last month, and our SNG product is currently used in high profile events like Sochi. We continue to sell to new large and expert customers and backlog is growing. Our business growth will remain difficult to forecast, but the growth in the size and quality of the customer base and a satisfying repeat order rate gives us firm belief that we are building a profitable and enduring business."
Cash flow, as would be expected, is rapidly improving and cash on the balance sheet is $78.3m. In September the company entered the debt capital markets with their first $370m bond
issue placed on competitive terms to re-finance and extend maturities which David Williams, Chief Executive Officer, said:"diversifies and increases the sources of funding available to the Company. The greater flexibility which the Notes provide will allow us to utilise our balance sheet more effectively and to respond to new opportunities. The Notes have no financial ratio covenant tests and greatly enhance our cashflow."
Bizarrely, it appears that the usual suspects are still trying to short Avanti's shares. Albeit with little success for the time being.
I say bizarrely for the following reasons.
Whilst nobody should pretend that this is anything but a highly speculative investment, it does appear that sales momentum is beginning to gather considerable pace. They are winning business from competitors based on the quality of their service, and they are picking up high quality global Telco and media customers. With the acquisition of the Artemis satellite they now have valuable Ka band (and some Ku and S band) spectrum filings in the ITU Master Register at 33.5degW, 21.5deg East and 31.0deg East.
It's no mean feat to build and launch two satellites successfully with full operational capability, and whilst risk still remains, my guess is that at worst the company will be an acquisition target.
Anyway, time will tell, and as ever no advice is intended or given.
Sunday 2 February 2014
Updates on Belgravium Technologies, Angle and Trakm8
Belgravium Technologies, a company I have mentioned before (see below),
http://michae1mouse.blogspot.co.uk/2013/08/13-rise-for-belgravium-technologies.html
released their trading statement for the full year on Friday, and stated the following:-
"The board of Belgravium Technologies plc is pleased to announce that as anticipated it's trading performance for the second half of the year ended 31 December 2013 has been stronger than the first half and that as a consequence the Directors expect the result for the year, before exceptional costs, to be broadly in line with expectations. Exceptional costs have been incurred principally in relation to the acquisition costs of Feedback Data earlier in the year and in respect of further restructuring undertaken within Feedback and other parts of the group, which the board is confident will bring benefits in 2014.
The results for the year ended 31 December 2013 are expected to be announced on 5 March 2013."
As a long term holder, I'm quite happy with the progress they are making. Certainly the statement held no nasty surprises, and since this is a company committed to paying dividends and which is looking forward to further progress in 2014, I shall continue to hold.
The full year results and outlook statement in early March will make for interesting reading, but with broker forecasts of £9m revenues, 0.35p EPS and 0.1p dividend for this year and just over £10m in revenues next year, 0.6p EPS and a 0.2p dividend, the shares still look cheap. The 2013 P/E ratio will be around 14 dropping to 8.5 in 2014, whilst the dividend yield is predicted to be around 2% this year, jumping to 4% in 2014.
Angle Plc also released their interim results last week. These also held few surprises, but as commented previously they do appear to be making excellent progress with a diagnostic device that could make a major contribution in the fight against various types of cancer, although this is not the only area in which the device has potential applications. From an investment point of view the target market is worth billions, and if Angle are successful then the rewards could be very substantial indeed.
However, this is undoubtedly still a very speculative investment since there is much work to be done before they see meaningful revenues.
The task they face shouldn't be underestimated either. This paragraph from the interims:-
"ANGLE is working to establish the use of Parsortix in clinical practice through identifying key clinical applications with medical utility, securing clinical data that demonstrates the medical utility of those applications in patient trials and obtaining key opinion leader support for the adoption of Parsortix in the routine medical care of cancer patients",
tells us that getting the product to market is quite some task because this not just a case of selling an excellent product into established markets, they've pretty much got to create the market in the first instance.
In the interims it also states that:- "As we establish each clinical application supported by proven clinical data and key opinion leaders, we would expect sustained revenue growth for that application. We intend to amplify this growth by developing key relationships with major medtech companies and pharmaceutical companies over the same timeframe. We intend to amplify this growth by developing key relationships with major medtech companies and pharmaceutical companies over the same timeframe."
My suspicion is that if this device is as successful as it appears to be then a major medtech company will probably be far more interested in buying Angle lock, stock and barrel rather than some sort of partnership. We shall see. Overall, I am very encouraged by progress here and I would look to buy more shares on any share price weakness.
Finally, Trakm8 released what at first glance looked like a fairly innocuous RNS headed "Grant of Options and sale of treasury shares". It was the sale of treasury shares that caught the eye. Basically, an employee has bought 220,000 shares out of treasury at 46.25p per share i.e. £101,750 worth. Not a bad vote of confidence. Mind you if you bear in mind that Trakm8 is achieving very good growth in an attractive and expanding market, having scaled up with the acquisition of BOX telematics, the current £15m market capitalisation looks very cheap when compared against any number of similar small cap. listed companies.
As ever no advice intended or given, and I am a shareholder in each of the companies mentioned above. Please do your own research.
http://michae1mouse.blogspot.co.uk/2013/08/13-rise-for-belgravium-technologies.html
released their trading statement for the full year on Friday, and stated the following:-
"The board of Belgravium Technologies plc is pleased to announce that as anticipated it's trading
performance for the second half of the year ended 31 December 2013 has been stronger than the first half and that as a consequence the Directors expect the result for the year, before exceptional costs, to be broadly in line with expectations. Exceptional costs have been incurred principally in relation to the acquisition costs of Feedback Data earlier in the year and in respect of further restructuring undertaken within Feedback and other parts of the group, which the board is confident will bring benefits in 2014. The results for the year ended 31 December 2013 are expected to be announced on 5 March 2013."
As a long term holder, I'm quite happy with the progress they are making. Certainly the statement held no nasty surprises, and since this is a company committed to paying dividends and which is looking forward to further progress in 2014, I shall continue to hold.
The full year results and outlook statement in early March will make for interesting reading, but with broker forecasts of £9m revenues, 0.35p EPS and 0.1p dividend for this year and just over £10m in revenues next year, 0.6p EPS and a 0.2p dividend, the shares still look cheap. The 2013 P/E ratio will be around 14 dropping to 8.5 in 2014, whilst the dividend yield is predicted to be around 2% this year, jumping to 4% in 2014.
Angle Plc also released their interim results last week. These also held few surprises, but as commented previously they do appear to be making excellent progress with a diagnostic device that could make a major contribution in the fight against various types of cancer, although this is not the only area in which the device has potential applications. From an investment point of view the target market is worth billions, and if Angle are successful then the rewards could be very substantial indeed.
However, this is undoubtedly still a very speculative investment since there is much work to be done before they see meaningful revenues.
The task they face shouldn't be underestimated either. This paragraph from the interims:-
"ANGLE is working to establish the use of Parsortix in clinical practice through identifying key clinical applications with medical utility, securing clinical data that demonstrates the medical utility of those applications in patient trials and obtaining key opinion leader support for the adoption of Parsortix in the routine medical care of cancer patients",
tells us that getting the product to market is quite some task because this not just a case of selling an excellent product into established markets, they've pretty much got to create the market in the first instance.
In the interims it also states that:- "As we establish each clinical application supported by proven clinical data and key opinion leaders, we would expect sustained revenue growth for that application. We intend to amplify this growth by developing key relationships with major medtech companies and pharmaceutical companies over the same timeframe. We intend to amplify this growth by developing key relationships with major medtech companies and pharmaceutical companies over the same timeframe."
My suspicion is that if this device is as successful as it appears to be then a major medtech company will probably be far more interested in buying Angle lock, stock and barrel rather than some sort of partnership. We shall see. Overall, I am very encouraged by progress here and I would look to buy more shares on any share price weakness.
Finally, Trakm8 released what at first glance looked like a fairly innocuous RNS headed "Grant of Options and sale of treasury shares". It was the sale of treasury shares that caught the eye. Basically, an employee has bought 220,000 shares out of treasury at 46.25p per share i.e. £101,750 worth. Not a bad vote of confidence. Mind you if you bear in mind that Trakm8 is achieving very good growth in an attractive and expanding market, having scaled up with the acquisition of BOX telematics, the current £15m market capitalisation looks very cheap when compared against any number of similar small cap. listed companies.
As ever no advice intended or given, and I am a shareholder in each of the companies mentioned above. Please do your own research.
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