Disappointing results from Belgravium....Bull and Bear points for consideration

Belgravium Technologies released their interim results this morning. They are very disappointing.

More than anything I was unhappy that the dividend has been scrapped with no mention of the potential acquisition. As a reminder, in their final report they hinted that if the acquisition did not go ahead then a dividend would be reconsidered. As it happens neither has occurred, and no reasons are given.

I first mentioned Belgravium Technologies back in 2013 where I said that I had been accumulating at prices below 3p. I gave my reasons for my purchases in the blog below:-

http://michae1mouse.blogspot.co.uk/2013/08/13-rise-for-belgravium-technologies.html

The share price did achieve a high of around 5.5p, and my initial optimism appeared to be justified with improving results. Sadly, the recovery appears to have run out of steam, at least in the short term anyway.

I sold my entire holding this morning for a small profit. Whilst I am a long term holder by nature, I constantly re-examine the reasons for my original purchases and will continue to hold or add if the story remains in-tact and sell when it changes. From my original blog (link above) you will see that my original reasons for an investment are no longer valid.

Whilst revenues at the interim stage are not drastically down many of the other measures are certainly less attractive.

The company is going to be loss making for the full year after restructuring costs. Cash on the balance sheet has fallen to £414,000 and the net tangible asset value is around £1.8m.

As the new chairman states, "the Company has a strong cash generative ability and maintains a conservative balance sheet."

He also says:-

"Our plan is to reduce the cost base by approximately £500,000 on an annualized basis and make the business more effective."

He goes on:-

"This year will therefore be a year of transformation. As we move into next year we will be moving out of this current period of consolidation and restructuring. Next year and subsequent years will benefit from a much lower cost base, coherent structure and a new energy."

Ian Martin may well be just the man for the job, he certainly did well with Avesco and I do like this statement:-

 "To conclude, although financial results in the short term may be disappointing, the changes that are now being made are essential to the future prosperity of the business. In a turnaround situation it is always difficult to predict the actual point when the benefits will become visible, but change is happening. We are investing in our future and have not been afraid to sacrifice some of the present to do so."

Plenty of bull points remain and there is always the possibility of a takeover. However, this was not one of my larger holdings, and since there are always opportunities elsewhere, I have decided to take my small profit here, run my winners and invest in new opportunities.

Belgravium was a pick of mine to double this year at 4.25p, sadly it doesn't look like the best choice after today's news. Never mind you can't win them all, and when you're choosing micro-caps you should expect some disappointments.

It's worth remembering that it's your portfolio performance that counts not individual shares. Simple maths tells you that if you choose let's say ten micro-cap stocks and eight break even with just two 5-bagging then your portfolio has grown 80%. In fact, two 5-bagging and eight going bust still leaves you at break-even. Of course these should be worst case scenarios and in reality with research, judicious stock picking, a bit of luck and patience you are likely to do extremely well.