Angle - prelims

Angle released their preliminary results this morning, and apart from confirming the excellent progress that they have already made this year, there were no big surprises.

Just reading through the report does fill me with cautious optimism for the future of this company and the success of its Parsortix PR1 system.

The outlook statement summarises as follows:-

Garth Selvey, Chairman, commented:

 

"In a highly successful year, ANGLE not only completed the key development phase for its Parsortix system for capturing circulating tumour cells (CTCs) but also developed a new capability to harvest intact CTCs from patient blood for DNA analysis.  The Parsortix system has already been well received by our research partners and is now being evaluated by key opinion leaders in the fields of cancer diagnosis and treatment.  ANGLE is now focused on securing regulatory authorisations to allow it to address the multi-billion pound clinical market for the treatment of cancer patients."  

 

Indications suggest that revenues should start to flow and be meaningful towards the later part of 2013 and into 2014 and beyond.

 

At the moment Angle still has £1.8m cash on the balance sheet (at year end at least), and there was no cash call to accompany the preliminary statement this morning. I think it's fair to say that they will need more cash in the not too distant future, but I am hopeful that this will now be possible to raise through the sale of Geometrics or from a fund raising at a substantial premium to the current share price.

 

I notice that Geometrics appears to be prospering  "Enlighten has now become recognised by leading customers as the best lighting solution for the next generation platforms and sales are significantly up on the prior year. " From what I can ascertain, Angle's 31% holding in Geometrics has a book value around £4m? Although I am happy to be corrected on this.

 

I continue to hold, and no advice is intended or given. For any potential investors they are producing a webcast today which may be of interest:-

 

See below:-

 

 

"A meeting for analysts will be held at 11.30am today at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN.  For a webcast of the analyst meeting, please log on to the following web address about 5 minutes before 11.30am:

 

http://mediaserve.buchanan.uk.com/2013/angle310713/registration.asp.

 

A recording of the webcast and presentation will be made available on ANGLE's and Buchanan's websites, www.ANGLEplc.com and www.buchanan.uk.com, following the analyst meeting."

 

 

 

 

Reach4entertainment - an apt name for an entertaining investment?

On the face of it, shares in Reach4entertainment, an Aim listed company look very cheap with a current market cap. of around £3m. The company which recently released an in-line trading statement has turnover around the £70m mark and a p/e ratio of less than 4.

Shares this morning have jumped by around 7% on a renegotiation of it's debt repayment:-

"Heads of Terms Agreement
r4e, the transatlantic media and entertainment company, today announces that it has entered into a Heads of Terms agreement with Allied Irish Bank to restructure the existing loan facility which is due to expire in May 2015.
This agreement, subject to contract, establishes a six year term from date of contract and a new interest rate of 3 per cent over LIBOR."

r4e, describes itself as a transatlantic media and entertainment company, and in recent times looks to have entered a period of uncertainty regarding it's future viability as a going concern. Hence the lowly share price.

The company has substantial debt and for investors with little appetite for high risk, this is certainly one to avoid since there is no margin of safety whatsoever. In fact if trading were to stall or worse suddenly deteriorate, then there is a chance that the company will go bust. The balance sheet shows that r4e has negative net assets despite £18m of goodwill on the balance sheet.

However, on the other side of the coin this is one of those companies that could multi-bag if they can keep costs under control and maintain trading momentum. Gross margins are reasonable (25%) and have improved 2% from last year.

Thomas cook are a good example in recent times of what can happen when heavily indebted companies begin to improve trading and are able to sort out their balance sheet. At one point TCG was trading at around 14p per share.

These "recovery play" situations are extremely risky but can be very rewarding indeed, and I'm certainly not averse to taking a punt from time to time. Ashtead was a really good example some years ago. I did buy Ashtead shares for about 15p if I remember rightly, but sold far too early. Currently the share price is 702p. Unbelievably at one point you could have bought the shares for 1.5p when it looked odds on that the company would go bust.

Will I buy r4e? It's certainly a dilemma! It would certainly be an entertaining if not nail-biting ride.

Indigovision disappoints again

Those of you who regularly read my blog will know that I have been a holder of Indigovision shares on two separate occasions. The first time I held shares I was lucky enough to crystallise profits of 750%. Relatively recently I took a more modest 50%. I've kept the company on my monitor, but haven't felt inclined to buy back in. I gave my reasons for selling the shares back in November, and after today's trading update I feel justified in having sold when I did. You can read my reasoning below:-

Trading statements and cashing in a 50% profit.

http://michae1mouse.blogspot.co.uk/2012/11/trading-statements-and-cashing-in-50.html

The shares slid back 12% today following the trading statement, and I have to say that I won't be buying back in unless the price falls substantially from here.

Back in 2004 when I first bought shares in Indigovision (for about 62p) and they went on to multi-bag, it looked very possible that the company would be a very long term hold for me. However, circumstances changed and it appeared to me that the company had lost their competitive advantage.

This statement today from Marcus Kneen, Chief Executive is very telling :- "We have made progress towards our goal of repositioning IndigoVision to achieve market rates of sales growth..."

There was a time when Indigovision aspired to and briefly did achieve more than the market rates of growth with what appeared to be a market leading position. The company now gives the impression of a being a "me also" company in its sector. Although that may be a little harsh.

The positives for shareholders are that Indigovision is profitable and boasts a strong balance sheet with no debt. It also pays dividends. It's highly unlikely that you're going to lose your shirt with a holding in Indigovision, and I certainly wouldn't dismiss a future bid for the company given the above.

However, it now looks like a company struggling to find momentum for growth, and I don't consider the company is cheap enough to have multi-bagger potential at these levels and so I'll sit on the sidelines for now.

Of course circumstances do change and I'll remain vigilant.

As ever, no advice intended or given. All opinions expressed are my own personal musings.