Following on from a blog post I penned back in April, Stilo International will de-list from the AIM market tomorrow (Tuesday 8th October) :-
This is April's blog post giving my thoughts at that time:-
http://michae1mouse.blogspot.com/2019/04/a-de-listing-bring-it-on.html
There's not a huge amount to add other than I've retained my entire holding in Stilo International and remain cautiously optimistic for the future.
The interims were released with a notice of their intention to de-list, and as anticipated the outlook for this year is lacklustre at best. There was a tender offer of 1p to purchase shares from private shareholders, but it appears that almost all private shareholders (like myself) have passed on the tender offer and are happy to hold their shares in the private company. Indeed it was pretty much a no-brainer since if you'd wished to sell out some or all of your holding since the de-listing announcement it's been possible to sell shares significantly above 1p. It should be noted that the company did buyback over 15,000,000 shares from Giltspur and Brewin nominees at 1p to reduce the share capital to around 98,000,000. It also worth mentioning that C.Lee has been acquiring shares and now owns over 10% of the company.
I am very happy that the company has de-listed since it doesn't need to raise funds from the market with a very solid debt free balance sheet and a cash balance (last reported) of over a £1m. This is against a market cap. that had fallen to around the company's cash level. The saving over £120,000 per annum on listing costs will be very significant for the company. In fact £120,000 represents around a 0.12p possible dividend. If you were lucky enough to get shares for around 1p then that's a 12% return. I expect dividend payments to return very soon following their de-listing.
From the General Meeting circular issued in August
(http://www.stilo.com/wp-content/uploads/2019/08/General-Meeting-Circular-23-August-2019.pdf), we also had this included in their reasons to de-list:-
"the Directors believe that the Company’s AIM-quoted status – in which the Company has a tangible share price and hence a perceived “value” - has presented a significant barrier, in practice, in advancing M&A discussions with potential acquisition candidates. Additionally, the Board’s experience is that many privately owned companies are not attracted by the prospect of acquiring, or becoming part of, a publicly traded company. The Directors believe that if the Company was off the market, it might be possible to command a much higher company valuation than that which is currently reflected in our share price."
My guess is that the company will return to profits and cash generation in the not too distant future and then sell the company at a hefty premium to its listed market cap.
Anyway, I'll keep you posted, and it'll be interesting for me since it's the first time I'll have held shares in a private limited company.
Monday 7 October 2019
Friday 19 July 2019
Dividends can keep you happy whilst you patiently wait for capital returns
It's a little while since I last produced a blog post so I thought I'd write a short article about Aeorema Communications (AEO). I've mentioned them several times in the past. It's basically a great value micro-cap that's returned to encouraging growth. The market is currently overlooking this little gem, although it does appear that micro-caps are, in general, currently out of fashion with Mr. Market. It'll all change in time. It always does.
From 2014-2018 revenues at AEO fluctuated in the £4m-£5m range, although pre-tax profits were declining. It's worth noting that the company did remain profitable during this period and continued paying dividends.
However, AEO's current management appear to have now got the company back on a growth trajectory. After reporting a half-year loss, chiefly due to the lag between making two senior appointments to their team and the inherent recruitment costs and time to make an impact, and the usual second half weighting they've now rapidly turned the half year loss into a full year profit which has beaten market expectations at over £350,000. Revenue took a big leap forward to £6.7m which is a quantum leap from the 2014-2018 figures. It appears that the new appointments are already beginning to prove their worth.
Their cash position is strong and it's their intention to continue with dividend payments. In 2018 the dividend was 0.75p so I'd expect a further increase this year. The current p/e ratio is around 7, and I'd guess the cash on the balance sheet is at least half the current market cap. of £2.4m.
Bizarrely, after the ahead statement yesterday and an initial 20% rise in the share price, the shares have now fallen back to where they started on Thursday.
From a personal perspective whilst it can be frustrating waiting for the market to recognise AEO's true worth, and in my view the company is stupidly cheap, I've received around 25% of my money back in dividends already with more to come following the release of their full year results.
Finally, a Mr Jonathan Hicking appears a regular and keen buyer and has today upped his stake further to 13%.
From 2014-2018 revenues at AEO fluctuated in the £4m-£5m range, although pre-tax profits were declining. It's worth noting that the company did remain profitable during this period and continued paying dividends.
However, AEO's current management appear to have now got the company back on a growth trajectory. After reporting a half-year loss, chiefly due to the lag between making two senior appointments to their team and the inherent recruitment costs and time to make an impact, and the usual second half weighting they've now rapidly turned the half year loss into a full year profit which has beaten market expectations at over £350,000. Revenue took a big leap forward to £6.7m which is a quantum leap from the 2014-2018 figures. It appears that the new appointments are already beginning to prove their worth.
Their cash position is strong and it's their intention to continue with dividend payments. In 2018 the dividend was 0.75p so I'd expect a further increase this year. The current p/e ratio is around 7, and I'd guess the cash on the balance sheet is at least half the current market cap. of £2.4m.
Bizarrely, after the ahead statement yesterday and an initial 20% rise in the share price, the shares have now fallen back to where they started on Thursday.
From a personal perspective whilst it can be frustrating waiting for the market to recognise AEO's true worth, and in my view the company is stupidly cheap, I've received around 25% of my money back in dividends already with more to come following the release of their full year results.
Finally, a Mr Jonathan Hicking appears a regular and keen buyer and has today upped his stake further to 13%.
Tuesday 30 April 2019
A de-listing? Bring it on!
I've written about Stilo International several times in the past. It's a tiny company with a market cap. around £2.3m. The share price has bounced up and down for years, and currently sits near its all time lows. It's disappointing since I had high hopes for Stilo, and have written very positively about them in the past.
There are two key reasons that the share price is currently languishing at 2p. Firstly, growth suddenly stalled in 2018 after looking like the company might be reaching an inflection point. Through 2015, 2016 and 2017 revenues had been steadily growing and although EPS had remained flat due to increased development costs, the company boasts 99% gross margins and it doesn't take too much imagination to see how quickly operational gearing would have kicked in and increased sales would have dropped to the bottom line. Alas in 2018 revenues suddenly dipped, and although the company was still profitable, growth had stalled. Unfortunately, sentiment was not helped by the following comment in their preliminary report, "2019 is going to be a challenging year for the Company, with potential demand, as always, difficult to predict at the current time."
The uncertainty regarding trading in 2019 coupled with the following hint that management may favour a de-listing i.e."Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000.", "spooked" investors and decimated the share price.
If you don't like the possibilty of holding shares in a de-listed company then I'd suggest you stop reading now. However, if you're more adventurous then read on.
My feeling from the tone of the 2018 prelims is that management would be happy to de-list. Indeed why wouldn't they be? Currently the shares yield a 6% dividend, a dividend that has incidentally doubled in the past four years. In fact, it rose 20% this year (a dip year) which indicates huge confidence in the long term future and an extremely robust balance sheet. In essence, de-listing would save them a further £150,000 per annum which is enough to double the current dividend immediately i.e. a potential 12% yield. That's mouth watering! It should be noted that the Directors hold around 25% of the shares and consequently a (potential) double digit dividend would be highly appealing. It should be noted though that they would need the support of all their major shareholders to secure the 75%+ votes to enable a de-listing to happen.
For such a tiny company, the balance sheet is absolutely superb. Cash stands at £1.3m and there is zero debt. The NAV is £3.8m (TNAV is £1.3m) against a current market cap of £2.3m, although if you do your research I believe the true value of Stilo is very significantly higher.
From the prelims, it suggests that their trading statement in May will be lacklustre and it's possible that they might even try and persuade investors to back a de-listing. I'm comfortable holding or even adding whatever happens.
Stilo has excellent financials and the potential to restart their growth trajectory again. Whilst growth may not resume this year, I very much suspect that the medium to long term looks far more rosy.
The shares are already highly illiquid, so any potential de-listing won't improve that situation but by way of compensation you just might get a double digit dividend yield!!
As a final note, I'd add that I've never held a micro-cap company before that was profitable, pays a generous and improving dividend that has doubled over four years and has a rock solid balance sheet.
I hope that they can regain their growth trajectory in the medium to long term because that would truly be very exciting whether they're listed or not!!
De-listing? Bring it on!!
There are two key reasons that the share price is currently languishing at 2p. Firstly, growth suddenly stalled in 2018 after looking like the company might be reaching an inflection point. Through 2015, 2016 and 2017 revenues had been steadily growing and although EPS had remained flat due to increased development costs, the company boasts 99% gross margins and it doesn't take too much imagination to see how quickly operational gearing would have kicked in and increased sales would have dropped to the bottom line. Alas in 2018 revenues suddenly dipped, and although the company was still profitable, growth had stalled. Unfortunately, sentiment was not helped by the following comment in their preliminary report, "2019 is going to be a challenging year for the Company, with potential demand, as always, difficult to predict at the current time."
The uncertainty regarding trading in 2019 coupled with the following hint that management may favour a de-listing i.e."Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000.", "spooked" investors and decimated the share price.
If you don't like the possibilty of holding shares in a de-listed company then I'd suggest you stop reading now. However, if you're more adventurous then read on.
My feeling from the tone of the 2018 prelims is that management would be happy to de-list. Indeed why wouldn't they be? Currently the shares yield a 6% dividend, a dividend that has incidentally doubled in the past four years. In fact, it rose 20% this year (a dip year) which indicates huge confidence in the long term future and an extremely robust balance sheet. In essence, de-listing would save them a further £150,000 per annum which is enough to double the current dividend immediately i.e. a potential 12% yield. That's mouth watering! It should be noted that the Directors hold around 25% of the shares and consequently a (potential) double digit dividend would be highly appealing. It should be noted though that they would need the support of all their major shareholders to secure the 75%+ votes to enable a de-listing to happen.
For such a tiny company, the balance sheet is absolutely superb. Cash stands at £1.3m and there is zero debt. The NAV is £3.8m (TNAV is £1.3m) against a current market cap of £2.3m, although if you do your research I believe the true value of Stilo is very significantly higher.
From the prelims, it suggests that their trading statement in May will be lacklustre and it's possible that they might even try and persuade investors to back a de-listing. I'm comfortable holding or even adding whatever happens.
Stilo has excellent financials and the potential to restart their growth trajectory again. Whilst growth may not resume this year, I very much suspect that the medium to long term looks far more rosy.
The shares are already highly illiquid, so any potential de-listing won't improve that situation but by way of compensation you just might get a double digit dividend yield!!
As a final note, I'd add that I've never held a micro-cap company before that was profitable, pays a generous and improving dividend that has doubled over four years and has a rock solid balance sheet.
I hope that they can regain their growth trajectory in the medium to long term because that would truly be very exciting whether they're listed or not!!
De-listing? Bring it on!!
Tuesday 9 April 2019
It's not all bad thank goodness!
Hot on the heels of the 7digital debacle, I'm reporting a successful share sale in a company (to make myself feel better) which is the antithesis of 7digital. The company in question is Scientific Digital Imaging where I've banked a 3-bagger (203% profit to be more precise). I bought shares in SDI in December 2016, and have watched a wonderful success story where the management have done a great job in growing the company both organically and by acquisition. The company is profitable, cash generative and has a strong balance sheet. It's gross margins are very healthy at around 66%. As I said, the opposite of 7digital's fundamentals.
I love this company and believe it has far further to run, but I wanted to release some funds because I believe that there are bargains to be had and others that will materialise in the coming weeks or months. It's always a difficult decision to sell a company if it's performed well and I do believe in running winners, but the reality is that occasionally you need to raise cash for other perceived opportunities and you need to make choices. With SDI the compounding return for me after just 2.25 years was 64% per annum. If only all of my choices could do as well.
In further good news, One Media IP (OMIP) reported very encouraging interims today alongside the acquisition of a music catalogue:-
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033376.html
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033329.html
I don't envisage selling any shares in OMIP in the near future. Again it's a great little company with good growth prospects and excellent fundamentals.
As ever DYOR, and listen to nothing I say.
I love this company and believe it has far further to run, but I wanted to release some funds because I believe that there are bargains to be had and others that will materialise in the coming weeks or months. It's always a difficult decision to sell a company if it's performed well and I do believe in running winners, but the reality is that occasionally you need to raise cash for other perceived opportunities and you need to make choices. With SDI the compounding return for me after just 2.25 years was 64% per annum. If only all of my choices could do as well.
In further good news, One Media IP (OMIP) reported very encouraging interims today alongside the acquisition of a music catalogue:-
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033376.html
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033329.html
I don't envisage selling any shares in OMIP in the near future. Again it's a great little company with good growth prospects and excellent fundamentals.
As ever DYOR, and listen to nothing I say.
Liars, incompetence, and foolhardy choices
FFS I never saw that coming! Maybe I should have? I'll try not to be to harsh with myself, but I must show more discipline in future.
This morning's shock came in the form of a "Business Update" from 7digital. The previous CEO Simon Cole has just left the company after saying the following on 25th March, "I leave 7digital in good shape". It's now become obvious that he was referring to himself rather than the company, and has clearly been spending too much time at the gym since today's business update from the new incumbent says the following, "the Board's current view is that the business will require material further equity and/or debt funding in the next quarter without which the Company would be unable to continue as a going concern. The Board will assess financing options for the Company however, it is likely that this would entail significant dilution for shareholders."
I'm glad Simon's in good shape, and enjoyed his journey since it provides me with great comfort having today sold my entire holding for a whopping 94% loss overall. The only saving grace for me is that I wasn't suckered in by these rats when the previous share price collapse happened back in January. I have massive sympathy for those who were. In my previous two blog posts I had this to say:-
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
"7digital (7DIG) - current sp 2.3p, market cap. £9.2m. Big promises but disappointing so far. Has had a habit of pulling defeat from the jaws of victory. Up until now it's been a big cash guzzler and diluted shareholders. Major acquisition should now be fully integrated? Cost savings will be £5m per annum? Gross margins should be 70%+ , and profitability just around the corner in a potentially exciting space. Market doesn't currently believe the promises, but if 7digital proves them wrong then expect a multi-bagger in double quick time."
Followed by:-
http://michae1mouse.blogspot.com/2019/03/the-micro-cap-update-3-months-later.html
"7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team."
Given the newsflow, shareholders had every right to believe that, despite the January issues, the company was recovering and with a 4m Euro settlement received had enough cash for the foreseeable future at least. I can't even express how angry this makes me. At best it was financial incompetence, I'll let you surmise what it was at worst.
I don't care what happens to this company or it's share price from now on since I've been 100% wrong up until this point. However, given it's history then who in their right mind is going to stump up extra cash and/or lend them money when they've pissed so many millions up the wall already. Good riddance.
In terms of lessons learnt then I'm not going to be too harsh with myself, but I'm not best pleased either since this now ranks as my worst investment since DCD Media and there were some worrying parallels e.g. crap balance sheet stuffed with intangibles, ill advised acquisitions, management promises never fulfilled etc.
Firstly, in my defence I'd say that the company was beginning to generate very healthy revenues, gross margins were around 70% (very appealing for operational gearing), they were last man standing in Europe and profitability and cash generation was promised and appeared highly likely in 2018.
It's all "jam tomorrow" bollocks though really. At the 2018 interims, despite a healthy increase in revenues, losses were over £2.5m, net current assets were nearly minus £2m and they were still burning cash like it was going out of fashion. The fundamentals will always out in the end! I know this and must do better next time.
I've been in this game for a long time now, and the successes are invariably those companies which have most of the following qualities:- Profits, good cash generation, a solid balance sheet, high gross margins, good management, dividend payments and Directors with "plenty of skin in the game". Small companies don't need to have all of them to pique my interest, but 7digital only boasted growing revenues and high gross margins. It's not enough.
What still amazes me after all this time is investors (including myself in this instance) chasing companies with none of the above and sometimes barely any revenues. 99% of the time it ends in disaster for such companies. 7digital being one of them. What on earth was I thinking?
Remember ignore all I say and do, but (just for myself) don't listen to bullshit by CEO's, sharetipsters, multi-handled bulletin board idiots, tweeters or any one else. It's always the fundamentals stupid with some potential for growth and a bit of luck thrown in! They might not always be multi-baggers, but some will be and the ones that aren't are unlikely to lose you 95% of your capital.
GLA, and commiserations if you own(ed) 7digital or indeed any other company that has lost significant value.
This morning's shock came in the form of a "Business Update" from 7digital. The previous CEO Simon Cole has just left the company after saying the following on 25th March, "I leave 7digital in good shape". It's now become obvious that he was referring to himself rather than the company, and has clearly been spending too much time at the gym since today's business update from the new incumbent says the following, "the Board's current view is that the business will require material further equity and/or debt funding in the next quarter without which the Company would be unable to continue as a going concern. The Board will assess financing options for the Company however, it is likely that this would entail significant dilution for shareholders."
I'm glad Simon's in good shape, and enjoyed his journey since it provides me with great comfort having today sold my entire holding for a whopping 94% loss overall. The only saving grace for me is that I wasn't suckered in by these rats when the previous share price collapse happened back in January. I have massive sympathy for those who were. In my previous two blog posts I had this to say:-
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
"7digital (7DIG) - current sp 2.3p, market cap. £9.2m. Big promises but disappointing so far. Has had a habit of pulling defeat from the jaws of victory. Up until now it's been a big cash guzzler and diluted shareholders. Major acquisition should now be fully integrated? Cost savings will be £5m per annum? Gross margins should be 70%+ , and profitability just around the corner in a potentially exciting space. Market doesn't currently believe the promises, but if 7digital proves them wrong then expect a multi-bagger in double quick time."
Followed by:-
http://michae1mouse.blogspot.com/2019/03/the-micro-cap-update-3-months-later.html
"7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team."
Given the newsflow, shareholders had every right to believe that, despite the January issues, the company was recovering and with a 4m Euro settlement received had enough cash for the foreseeable future at least. I can't even express how angry this makes me. At best it was financial incompetence, I'll let you surmise what it was at worst.
I don't care what happens to this company or it's share price from now on since I've been 100% wrong up until this point. However, given it's history then who in their right mind is going to stump up extra cash and/or lend them money when they've pissed so many millions up the wall already. Good riddance.
In terms of lessons learnt then I'm not going to be too harsh with myself, but I'm not best pleased either since this now ranks as my worst investment since DCD Media and there were some worrying parallels e.g. crap balance sheet stuffed with intangibles, ill advised acquisitions, management promises never fulfilled etc.
Firstly, in my defence I'd say that the company was beginning to generate very healthy revenues, gross margins were around 70% (very appealing for operational gearing), they were last man standing in Europe and profitability and cash generation was promised and appeared highly likely in 2018.
It's all "jam tomorrow" bollocks though really. At the 2018 interims, despite a healthy increase in revenues, losses were over £2.5m, net current assets were nearly minus £2m and they were still burning cash like it was going out of fashion. The fundamentals will always out in the end! I know this and must do better next time.
I've been in this game for a long time now, and the successes are invariably those companies which have most of the following qualities:- Profits, good cash generation, a solid balance sheet, high gross margins, good management, dividend payments and Directors with "plenty of skin in the game". Small companies don't need to have all of them to pique my interest, but 7digital only boasted growing revenues and high gross margins. It's not enough.
What still amazes me after all this time is investors (including myself in this instance) chasing companies with none of the above and sometimes barely any revenues. 99% of the time it ends in disaster for such companies. 7digital being one of them. What on earth was I thinking?
Remember ignore all I say and do, but (just for myself) don't listen to bullshit by CEO's, sharetipsters, multi-handled bulletin board idiots, tweeters or any one else. It's always the fundamentals stupid with some potential for growth and a bit of luck thrown in! They might not always be multi-baggers, but some will be and the ones that aren't are unlikely to lose you 95% of your capital.
GLA, and commiserations if you own(ed) 7digital or indeed any other company that has lost significant value.
Saturday 30 March 2019
The micro-cap update - 3 months later!
Back in early December I wrote the following blog post:-
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
Just for clarity, I may or may not have added or sold (partially or fully) any or all of the following company shares or simply done nothing since writing the above article. Indeed, I may or may not have acquired or be acquiring shares in other companies since December that don't appear in the list above. I am not recommending buying or selling any of the companies mentioned, but merely reporting on progress at regular intervals (probably every 3 months).
As I outlined in the article in December, I'm looking at a 5+ years horizon so after just 3 months we are very early on in making any judgements. It's also worth pointing out that the majority of the company shares mentioned are highly illiquid and can move very quickly in either direction so it goes without saying they're not for widows or orphans or the faint hearted.
Anyway, a quick progress check.
First up Mediazest (MDZ). The current share price at 0.09p is up 20%. Since I last reported, Mediazest now has a new Nominated Advisor, it raised £110,000 at 0.10p for working capital and to strengthen the balance sheet, and recently issued a trading statement. The full year performance will be below market expectations, but will show an improvement on the prior year. A company called "In Ur Face Media Limited" has taken a 8.5% interest in the company.
Aeorema Communications (AEO) has released one significant news item (this week) which was it's interim report. The shares stand at 26p (20% down). Despite an in-line statement and robust cash position most of the share price fall occurred this week. They intend to continue dividend payments.
Stilo International (STL) released full year results on 14 March. There were no surprises from earlier trading statements. Despite a fall in revenues they still recorded a £177,000 profit and upped the dividend again by 20%. The balance sheet is still strong with plenty of cash. The share price is 2.35p (down 15%) with the dividend yield now standing at 5%. Incidently, Stilo's progressive dividend policy has meant that the payout has doubled in 4 years.
Immedia (IME) has produced no significant news but the shares have risen to 29p (up 9.5%).
Space and People (SAL) produced a profit warning in January causing the shares to plunge, and have since released their final results. Renewals and new contracts provide for optimism in 2019, as does the payment of a dividend this year at a yield of 3.8% at the current share price. We shall see if they can recover in 2019 of course. The share price is currently 13p (fallen 38%).
Trakm8 (TRAK) released a trading statement that was a bit of a mixed bag in February although they expect to be profitable in the second half of 2018, and promise a much improved performance in 2019. They've sold their property in Dorset for £506,000. The shares are flat at 21p.
One Media IP Group (OMIP) have announced a new contract and the acquisition of a new catalogue. Finals will be on the 09/04/19. The share price stands at 5.05p (down 8%).
7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team.
Crimson Tide (TIDE) released a very positive trading statement which bodes well for their short, medium and long term future. The shares are currently 2.65p (up 20%).
Biome Technologies (BIOM) had an excellent 2018 where it recorded the first profit in it's history, largely due to a stellar performance in it's RF division. Revenues were up 44% at £8.9m with EBITDA at £600,000 and a maiden operating profit of £100,000. The shares have fallen since I last reported chiefly because the RF division won't record the same revenues in 2019, but will outperform results in 2017 which were still very good. Investors appear to be overlooking the progress in the Bioplastics division which will be the real growth driver going forward. The Finals which were released this week read very positively and "the Board is confident in the group's outlook for 2019". The share price is currently 365p (down 33%).
Scientific Digital Imaging (SDI) is the star performer so far at 47p (up 25%). SDI released their interims results with all of the key metrics showing excellent progress, in particular cash generation was up 103% at £1.5m. The group's outlook remains positive. They have since made a further two acquisitions which should further enhance earnings alongside organic growth.
Last but not least is PCF Group (PCF). They've raised capital in the markets to accelerate their impressive growth, and a trading statement which was very encouraging in the short, medium and long term. The share price at 33p is down 8%.
It's very early stages at the moment, but if you'd invested £1000 in each company mentioned then currently you'd be sitting on a loss of 8% at the moment (average share prices), although paper losses would be greater if you include bid/offer spreads and buying fees. Not great, but in the current climate for micro-caps not a disaster either. Current political and economic uncertainty is certainly adversely affecting the performance of very small companies.
It should be noted that 6 companies in the list are now valued at less than £5m namely STL, IME, AEO, 7DIG, SAL, and MDZ with STL, AEO, IME and SAL having excellent balance sheets and plentiful cash (STL, AEO and SAL pay a dividend). Four more of the companies are capitalised below £13m i.e. TRAK, TIDE, OMIP and BIOM with the remaining two less than £100m (SDI and PCF).
As mentioned previously, the gains or losses mentioned above do not relate to my own losses or gains and I may or may not still hold all or some of the above. I may or may not have acquired shares in companies not mentioned in the list. From time to time, I will update my blog with details of my own purchases or sales of companies and report losses or gains. As a very long term holder though, these occasions are relatively rare.
Good luck with your stock picking, and enjoy. As ever no advice is given or implied!!
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
Just for clarity, I may or may not have added or sold (partially or fully) any or all of the following company shares or simply done nothing since writing the above article. Indeed, I may or may not have acquired or be acquiring shares in other companies since December that don't appear in the list above. I am not recommending buying or selling any of the companies mentioned, but merely reporting on progress at regular intervals (probably every 3 months).
As I outlined in the article in December, I'm looking at a 5+ years horizon so after just 3 months we are very early on in making any judgements. It's also worth pointing out that the majority of the company shares mentioned are highly illiquid and can move very quickly in either direction so it goes without saying they're not for widows or orphans or the faint hearted.
Anyway, a quick progress check.
First up Mediazest (MDZ). The current share price at 0.09p is up 20%. Since I last reported, Mediazest now has a new Nominated Advisor, it raised £110,000 at 0.10p for working capital and to strengthen the balance sheet, and recently issued a trading statement. The full year performance will be below market expectations, but will show an improvement on the prior year. A company called "In Ur Face Media Limited" has taken a 8.5% interest in the company.
Aeorema Communications (AEO) has released one significant news item (this week) which was it's interim report. The shares stand at 26p (20% down). Despite an in-line statement and robust cash position most of the share price fall occurred this week. They intend to continue dividend payments.
Stilo International (STL) released full year results on 14 March. There were no surprises from earlier trading statements. Despite a fall in revenues they still recorded a £177,000 profit and upped the dividend again by 20%. The balance sheet is still strong with plenty of cash. The share price is 2.35p (down 15%) with the dividend yield now standing at 5%. Incidently, Stilo's progressive dividend policy has meant that the payout has doubled in 4 years.
Immedia (IME) has produced no significant news but the shares have risen to 29p (up 9.5%).
Space and People (SAL) produced a profit warning in January causing the shares to plunge, and have since released their final results. Renewals and new contracts provide for optimism in 2019, as does the payment of a dividend this year at a yield of 3.8% at the current share price. We shall see if they can recover in 2019 of course. The share price is currently 13p (fallen 38%).
Trakm8 (TRAK) released a trading statement that was a bit of a mixed bag in February although they expect to be profitable in the second half of 2018, and promise a much improved performance in 2019. They've sold their property in Dorset for £506,000. The shares are flat at 21p.
One Media IP Group (OMIP) have announced a new contract and the acquisition of a new catalogue. Finals will be on the 09/04/19. The share price stands at 5.05p (down 8%).
7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team.
Crimson Tide (TIDE) released a very positive trading statement which bodes well for their short, medium and long term future. The shares are currently 2.65p (up 20%).
Biome Technologies (BIOM) had an excellent 2018 where it recorded the first profit in it's history, largely due to a stellar performance in it's RF division. Revenues were up 44% at £8.9m with EBITDA at £600,000 and a maiden operating profit of £100,000. The shares have fallen since I last reported chiefly because the RF division won't record the same revenues in 2019, but will outperform results in 2017 which were still very good. Investors appear to be overlooking the progress in the Bioplastics division which will be the real growth driver going forward. The Finals which were released this week read very positively and "the Board is confident in the group's outlook for 2019". The share price is currently 365p (down 33%).
Scientific Digital Imaging (SDI) is the star performer so far at 47p (up 25%). SDI released their interims results with all of the key metrics showing excellent progress, in particular cash generation was up 103% at £1.5m. The group's outlook remains positive. They have since made a further two acquisitions which should further enhance earnings alongside organic growth.
Last but not least is PCF Group (PCF). They've raised capital in the markets to accelerate their impressive growth, and a trading statement which was very encouraging in the short, medium and long term. The share price at 33p is down 8%.
It's very early stages at the moment, but if you'd invested £1000 in each company mentioned then currently you'd be sitting on a loss of 8% at the moment (average share prices), although paper losses would be greater if you include bid/offer spreads and buying fees. Not great, but in the current climate for micro-caps not a disaster either. Current political and economic uncertainty is certainly adversely affecting the performance of very small companies.
It should be noted that 6 companies in the list are now valued at less than £5m namely STL, IME, AEO, 7DIG, SAL, and MDZ with STL, AEO, IME and SAL having excellent balance sheets and plentiful cash (STL, AEO and SAL pay a dividend). Four more of the companies are capitalised below £13m i.e. TRAK, TIDE, OMIP and BIOM with the remaining two less than £100m (SDI and PCF).
As mentioned previously, the gains or losses mentioned above do not relate to my own losses or gains and I may or may not still hold all or some of the above. I may or may not have acquired shares in companies not mentioned in the list. From time to time, I will update my blog with details of my own purchases or sales of companies and report losses or gains. As a very long term holder though, these occasions are relatively rare.
Good luck with your stock picking, and enjoy. As ever no advice is given or implied!!
Thursday 14 March 2019
Stilo results and important matters re:AIM listing
Following the release of today's results from Stilo International, I have written a short blog post about the figures, the narrative and their AIM listing:-
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/STL/14001536.html
Firstly, let's address this line where some have hinted it suggests that Stilo will seek a de-listing,
"Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000."
Whilst a de-listing is not out the question, it should be noted that Stilo's Directors hold less than 25% of the company's shares which makes it impossible at this juncture to secure a de-listing without significant support from it's other shareholders. If the company wanted to de-list they would need to make an offer for the entire share capital in my opinion i.e. a Management buyout. As a shareholder I would expect a far higher offer than the current lowly market cap.
As for today's results, I'm pleased that they still managed to make a profit after warnings earlier in the year, and I'm extremely pleased with a 20% hike in the proposed dividend (2018:0.12p, 2017:0.10p). Incidently, this is the 5th consecutive year of rising dividends. In short, they continue profitably with plenty of cash and a strong un-geared balance sheet.
As for the outlook, they appear non-committal at this stage. In fact, mixed messages possibly? We have:-
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/STL/14001536.html
Firstly, let's address this line where some have hinted it suggests that Stilo will seek a de-listing,
"Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000."
Whilst a de-listing is not out the question, it should be noted that Stilo's Directors hold less than 25% of the company's shares which makes it impossible at this juncture to secure a de-listing without significant support from it's other shareholders. If the company wanted to de-list they would need to make an offer for the entire share capital in my opinion i.e. a Management buyout. As a shareholder I would expect a far higher offer than the current lowly market cap.
As for today's results, I'm pleased that they still managed to make a profit after warnings earlier in the year, and I'm extremely pleased with a 20% hike in the proposed dividend (2018:0.12p, 2017:0.10p). Incidently, this is the 5th consecutive year of rising dividends. In short, they continue profitably with plenty of cash and a strong un-geared balance sheet.
As for the outlook, they appear non-committal at this stage. In fact, mixed messages possibly? We have:-
"The Company continues to invest in the development of leading technologies for the structured content market and in so doing build long-term value for shareholders. As we look forward to growing future sales, supported by healthy cash reserves and a strong balance sheet, I am pleased to announce the payment of an increased final dividend of 0.06 pence per share, providing a total dividend for the year of 0.12 pence".
then
"In the short term, growth will be primarily driven by sales of Migrate and OptimizeR solutions to new customers and we will be stepping up our sales, marketing and development efforts accordingly. 2019 is going to be a challenging year for the Company, with potential demand, as always, difficult to predict at the current time. "
Here's my blog from September 2018.
Not much has changed for me following these results. Stilo is undervalued and I continue to hold and await developments.
Thursday 10 January 2019
Some very mice news from Angle!
Well investors in Angle should be smiling this evening following the release of this RNS and a near 80% jump in the share price:-
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/AGL/13930951.html
Fabulous stuff. Not least because Angle's Parsortix diagnostic kit has the potential to help in saving thousands of lives. Whether you're a shareholder or not you should be extremely pleased that companies like Angle are assisting in the search for effective ways of personalising cancer treatment.
I'd be a very happy shareholder, except I'd already sold my shareholding. It's a familiar story, and one that sometimes comes back to haunt me from time to time. I bought my shares in December 2012 at around 27p:-
http://michae1mouse.blogspot.com/2012/12/a-new-angle.html
I recognised they were speculative, but could see potential. The share price raced ahead in the early days around the levels seen towards the end of today, but quickly retreated again. After what I deemed slow(ish) progress and several fund raisings, I eventually took profits selling my shares for around 50p.
As a long term buy and hold investor, I must remind myself just to tough it out most of the time. Many companies take many years to make the required progress, but when they do the rewards can be spectacular. I hope Angle eventually rewards it's patient and loyal following.
I note that today's RNS says it's "ground breaking" work, but fairly early stage since the tests were on mice. However, it's another potentially significant use of the parsortix system. I wish the company and long term investors good luck.
I must remind myself that I must not get frustrated and remain patient. Whilst some investments will fail to perform, my personal experience is that if you have a reasonable flair for spotting long term potential, the winners eventually render the laggards insignificant.
As such, Angle's news today has provided a timely reminder to just hang on in there with my current holdings and patiently wait until latent potential has been fully realised or the company becomes a total non-starter. For those that missed it, here are a few ideas of micro-caps with the possibility of a big future yet to be fulfilled:-
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
Wishing you all a belated, but healthy and happy new year.
https://londonstockexchange.com/exchange/news/market-news/market-news-detail/AGL/13930951.html
Fabulous stuff. Not least because Angle's Parsortix diagnostic kit has the potential to help in saving thousands of lives. Whether you're a shareholder or not you should be extremely pleased that companies like Angle are assisting in the search for effective ways of personalising cancer treatment.
I'd be a very happy shareholder, except I'd already sold my shareholding. It's a familiar story, and one that sometimes comes back to haunt me from time to time. I bought my shares in December 2012 at around 27p:-
http://michae1mouse.blogspot.com/2012/12/a-new-angle.html
I recognised they were speculative, but could see potential. The share price raced ahead in the early days around the levels seen towards the end of today, but quickly retreated again. After what I deemed slow(ish) progress and several fund raisings, I eventually took profits selling my shares for around 50p.
As a long term buy and hold investor, I must remind myself just to tough it out most of the time. Many companies take many years to make the required progress, but when they do the rewards can be spectacular. I hope Angle eventually rewards it's patient and loyal following.
I note that today's RNS says it's "ground breaking" work, but fairly early stage since the tests were on mice. However, it's another potentially significant use of the parsortix system. I wish the company and long term investors good luck.
I must remind myself that I must not get frustrated and remain patient. Whilst some investments will fail to perform, my personal experience is that if you have a reasonable flair for spotting long term potential, the winners eventually render the laggards insignificant.
As such, Angle's news today has provided a timely reminder to just hang on in there with my current holdings and patiently wait until latent potential has been fully realised or the company becomes a total non-starter. For those that missed it, here are a few ideas of micro-caps with the possibility of a big future yet to be fulfilled:-
http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html
Wishing you all a belated, but healthy and happy new year.
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