Avesco released their half year results in early June. What's not to like about this company? I've said it all before about why I believe Avesco offers terrific value, and I continue to hold all of my shares.
If you were a buyer when the shares were languishing between 20p-30p in 2009 then you'd already have had your money back 4 to 5 times over with the special dividend alone (£1.10). Add in the capital growth and regular dividend payments and you'll gather why I'm a fan.
Even now though with the share price at £1.10 the company is undervalued. From the interim results TNAV is around £1.65 and I'd guess the prospective dividend yield is around 6%-7% given the 50% hike at the interim stage (from 1p to 1.5p) and the reduction in share capital from around 26m to 19m shares following the buyback from Taya.
Results at the half year exceeded management expectations and they expect to do the same for the full year given that results will include the World Cup, Ryder Cup, Commonwealth Games etc.
The restructuring that has been taking place throughout the group appears to have gone smoothly, and tellingly management expects this to produce more stable and less volatile trading results, not only in even years where they have the benefit of major sporting events, but also in the odd years which have traditionally been more challenging for the Group.
Avesco is a terrific little company that is cash generative and believes in rewarding its shareholders with generous payouts. It's still dirt cheap. What more is there to say!!
Talking of dividends I'd recommend reading this article from last week's Sunday Telegraph:-
http://www.telegraph.co.uk/finance/markets/10948379/Dividend-yield-is-better-guide-than-the-FTSE-100-at-7000.html
Saturday, 12 July 2014
Trakm8 - Finals
Trakm8 released a great set of results on Monday. I believe that there is massive potential here, and below I have detailed some of the highlights for me:-
Firstly, this is a company achieving rapid growth organically and through acquisition in a area where a clear tipping point has been reached as companies clamour for Big Data. Revenues were up 94% at £9.19m (5 months contribution from Box Telematics) with recurring revenues up 111% at £4.5m. Like for like orders were up 46%.
This is profitable growth with good cash generation, and their recent acquisition was immediately earnings enhancing. Operating cash flow was £1.32m and adjusted EPS rose from 0.79p to 3.48p.
A major contract has been secured with Direct Line Insurance which is significant and potentially transformational for the company, and the outlook statement states that in the year to date revenues are well ahead of last year and trading is in line with expectations.
The narrative in the report is very positive with revenues from recently announced contracts to start really flowing through in the current financial year and beyond, providing a solid stream of recurring revenues now and in the future. Interestingly, they launched a sales and applications engineering team out of their office in Prague this year. This operation has secured several customers and they expect it to be self-funding by the end of the next financial year, following initial start-up costs.
I am still very excited by Trakm8's development where they are achieving profitable growth, generating strong cash flows, excellent gross margins, and strongly increasing recurring revenues which make up more than 50% of total revenues.
Their financial model is very strong, and it will be interesting to see if they can identify any further value enhancing acquisitions in the near future. One intriguing snippet from their final report says:- "The market remains largely fragmented although consolidation is occurring, particularly driven by interest in the space from VCs."
Trakm8 may be a predator at the moment, but I wouldn't discount the possibility of them becoming the prey either, although given the opportunity that lies ahead I'd prefer to see the company transform itself into a multi-million pound cap. by itself. Certainly, the management appear to be doing a great job at the moment.
Firstly, this is a company achieving rapid growth organically and through acquisition in a area where a clear tipping point has been reached as companies clamour for Big Data. Revenues were up 94% at £9.19m (5 months contribution from Box Telematics) with recurring revenues up 111% at £4.5m. Like for like orders were up 46%.
This is profitable growth with good cash generation, and their recent acquisition was immediately earnings enhancing. Operating cash flow was £1.32m and adjusted EPS rose from 0.79p to 3.48p.
A major contract has been secured with Direct Line Insurance which is significant and potentially transformational for the company, and the outlook statement states that in the year to date revenues are well ahead of last year and trading is in line with expectations.
The narrative in the report is very positive with revenues from recently announced contracts to start really flowing through in the current financial year and beyond, providing a solid stream of recurring revenues now and in the future. Interestingly, they launched a sales and applications engineering team out of their office in Prague this year. This operation has secured several customers and they expect it to be self-funding by the end of the next financial year, following initial start-up costs.
I am still very excited by Trakm8's development where they are achieving profitable growth, generating strong cash flows, excellent gross margins, and strongly increasing recurring revenues which make up more than 50% of total revenues.
Their financial model is very strong, and it will be interesting to see if they can identify any further value enhancing acquisitions in the near future. One intriguing snippet from their final report says:- "The market remains largely fragmented although consolidation is occurring, particularly driven by interest in the space from VCs."
Trakm8 may be a predator at the moment, but I wouldn't discount the possibility of them becoming the prey either, although given the opportunity that lies ahead I'd prefer to see the company transform itself into a multi-million pound cap. by itself. Certainly, the management appear to be doing a great job at the moment.
Trakm8 no longer interested in Belgravium Technologies
It would appear that Trakm8's potential bid approach for Belgravium Technologies is now dead in the water. Should investors in either company be disappointed (I hold both incidentally)? Not in my opinion. Although I have no knowledge of the initial negotiations, I strongly suspect that given talks have been terminated in less than five days, it's a case of there having being little common ground on price. Clearly, the two proposed valuations were poles apart.
Trakm8 recently acquired Box Telematics for £4.25m where Box produced revenues of £8.4 million and profit before tax of £850,000, given that Belgravium produced almost identical revenues to Box with a profit before tax of £125,000, it seems unlikely that they would wish to pay much more than that for Belgravium. At yesterday's close Belgravium was valued at about £4.9m.
As a shareholder in both companies, I am comforted that Trakm8 like acquiring good businesses at bargain basement prices, and Belgravium believe that their company is considerably undervalued.
In both cases one or more Directors have a substantial shareholding in their respective companies which ensures that their interests are aligned with the interests of their shareholder base.
Both companies continue to be a long term hold for me.
Trakm8 recently acquired Box Telematics for £4.25m where Box produced revenues of £8.4 million and profit before tax of £850,000, given that Belgravium produced almost identical revenues to Box with a profit before tax of £125,000, it seems unlikely that they would wish to pay much more than that for Belgravium. At yesterday's close Belgravium was valued at about £4.9m.
As a shareholder in both companies, I am comforted that Trakm8 like acquiring good businesses at bargain basement prices, and Belgravium believe that their company is considerably undervalued.
In both cases one or more Directors have a substantial shareholding in their respective companies which ensures that their interests are aligned with the interests of their shareholder base.
Both companies continue to be a long term hold for me.
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