"In the short run........."

To quote Ben Graham:-

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

R4e is a company that I've mentioned before, and this morning they released their full year results.

In recent weeks, the share price has shot up with persistent buying from Gate Ventures plc, who now hold just over 18% of the company. Good luck to them I say. To be frank I can't see what the appeal is?

Let's take a look at today's finals.

Firstly, they report in the headline figures a profit before tax of £4.5m. Ignore this totally. This profit comes from writing off a significant debt.

The headline figure is this:- "Underlying profitability for r4e (Adjusted EBITDA*) reduced by 31 per cent to £1.8 million (2014: £2.6 million)". Note that even this is adjusted EBITDA i.e. excluding impairment of goodwill and exceptional items. The true figure is actually a huge £4.3m operating loss.

I cannot see anything appealing about this company at all.

Even though they have recently undertaken a massively dilutive placing at 1p, the balance sheet looks awful. Cash is just £1.16m, net current assets of minus £6m, and tnav of minus £7.1m. Debt whilst more manageable is still a hefty £6.7m.

In summary, it's a company with a horrible looking balance sheet making losses and burning through cash (it burnt through £855,000 last year) with just £1.16m in cash remaining. Gross margins are around 24%. Hardly mouth watering.

The company claims to be the leader in it's field. Well good luck with that.

Can investors seek solace in 2016:-

"The platform for 2016 has been established"

"2015 marks a significant milestone for the Group.  Cleared of the prohibitive debt facility from AIB, the business now has the ability to organically grow as well as invest and expand where the opportunities present themselves, particularly in exploring new geographies and pursing data-based marketing and other digital initiatives.  The management team is confident that the Group will be able to pursue these growth opportunities while maintaining and building upon its position as a theatre and entertainment market leader in the London and New York. "

Reading between the lines it looks like they are going to require a considerable amount of additional capital, and they're not going to fund expansion through their own cash generation.

The voting machine may be in full flow at the moment, but the company's a flyweight and I've got a feeling that it'll all end in tears again.

A speculative buy begininng to pay off........

Angle plc is a company I've held in my portfolio since the back-end of 2012 where I was picking up shares at around 27p a pop. This was a speculative investment which I mentioned in the blog below:-

http://michae1mouse.blogspot.co.uk/2012/12/a-new-angle.html

I have written several times about my investment since the original blog, and I have so far been mightily impressed with their progress.

The big money for Angle will come from demonstrating the utility of it's liquid biopsy system Parsortix for clinical use in ovarian, breast and prostate cancer.

However, as mentioned back in December 2012, funding is always required for these types of companies as they progress towards meaningful cash generation and profitability.

Today the company announced a placing to raise just over £10m to further fund progress. This doesn't come as a surprise given the excellent results that they are achieving with Parsortix, and it was pleasing that the placing price of 64.5p per share wasn't discounted.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/AGL/12828416.html

Further news released this morning came in the announcement of a contract with Cancer Research UK.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/AGL/12828426.html

"ANGLE plc (AIM:AGL OTCQX:ANPCY), the specialist medtech company, is delighted to announce that it has signed a contract with The University of Manchester, acting in this instance, through the Cancer Research UK Manchester Institute which will allow incorporation of ANGLE's Parsortix system in the Clinical and Experimental Pharmacology group for routine use in clinical trials and for research purposes."

It appears that Angle's patient and sensible approach working alongside their key opinion leaders is now paying dividends, and all the evidence suggests that the Parsortix device will prove invaluable in the fight against cancer. For shareholders, I believe that patience will soon be realised as the focus of the company begins to slowly but surely shift towards revenue generation.

From today's announcement's:-

"Since 1 November 2015, the Company has continued to trade in line with Directors' expectations with revenues expected to be within the range of analysts' forecasts for the 12 months to 30 April 2016.  Together with the net proceeds of the Placing, the Company's cash resources on Admission will be approximately £13.1 million."

The speculative nature of my investment here continues to diminish with each RNS issued, and I am becoming quietly confident that the company will ultimately deliver on it's early promise. I remain a strong holder of my shares.

A football chant comes to mind

A trading statement from Ten Alps (TAL) brought a football chant to my mind yesterday. I'm not a holder of shares in TAL, never have been and never will be, but all I could think of was "Are you DCD Media in disguise, are you DCD Media in disguise etc."

Doesn't really roll off the tongue very easily perhaps, but regular readers will understand why I'd avoid Ten Alps like the plague following my experiences with DCD Media.

Both companies operate in virtually the same highly precarious sector. Neither company appears capable of making a profit. Both have undergone a name change, DCD Media was formerly Digital Classics and Ten Alps is soon to be Zinc Media. Their respective balance sheets are stuffed full of worthless goodwill and intangibles and they're both full of hot air and bluster when it comes to future predictions. You can rely on both companies to disappoint investors on a regular basis.

Let me illustrate. From the March interims, TAL's outlook statement was short, sharp and straight to the point:-

"The Company remains on track to generate a full year profit for the first time in a number of years and to continue momentum into the medium term."

Wow!!  Fill your boots boys and girls. A micro-cap company about to become profitable with momentum behind it. Sounds exciting and also suggests good visibility.

Two months later we have:-

"Whilst the Company does not yet have total visibility on its full year results, the Directors believe that the Company will fall materially behind market expectations for the year ending June 2016."

and

"These continued losses are likely to result in the Group not being profitable for the year as a whole, albeit the Directors do expect some improvement on the losses recorded in FY15."

I do like the phrase "not being profitable" though, so much more palatable than "making losses".

Anyway, enough said. "Are you DCD Media in disguise......."