Avesco - interims

A quick mention re: Avesco's interims this morning.

A little bit of a mixed bag with one or two negatives from the six months ending 31 March 2016, namely gross margins have reduced slightly (2%) due to pricing pressures and overall the trading profit is down from last year to £4.6m (from £5.5m in 2015). Mclcreate has had a disappointing half-year.

However, any negatives should be taken in the context of a group that has still produced an excellent trading profit with the main contribution coming from their CTUS operations. Revenues have increased by 11% to £77m (£66m in 2015) and the group remains highly cash generative.

Net assets now stand at 230p per share, and the sale of Fountain Studios has reduced net debt to just £3.5m. With the current share price at 217p this represents a 6% discount to net assets.

Importantly, as a show of confidence in the full year outcome, the interim dividend has once again been increased by 25% to 2.5p.

The sale of Fountain Studios means that reported profit is £10.3m or 54p per share. The underlying profit is flat on last year at 13p per share.

Avesco's current market cap. is £41m and cash on the balance sheet stood at £23m.

As a permanent Bull on this company, Avesco still looks ridiculously cheap to me.

The outlook statement for the full year looks good with Richard Murray stating:-

"With net debt now at historically low levels and the Rio 2016 Olympic Games to come over the summer, the outlook for the Group remains very positive."

I shall look forward to my interim dividend and the full year results.

The margin of safety remains high here, and as mentioned before, the group is always vulnerable to a opportunistic bid.

The one that didn't get away........

Here's a rule to follow. Always be prepared to break your own investing rules, although not too often perhaps. Some time ago I wrote a blog about why I tend to avoid investing in companies that have recently listed on the stock market. However, a fellow investor whose track record and investment reasoning I have found to be well worth listening to, brought my attention to a fairly new issue - Fishing Republic. With a healthy degree of scepticism, I carried out some research on the company, and liked what I saw.

Subsequently, I bought shares in the company for 17p in October 2015. As ever, I wasn't expecting fireworks in the first few months, particularly since the company is a fishing tackle retailer. Not very sexy really. What attracted me to the company was a solid balance sheet, a modest valuation and a low market cap.

In less than eight months, the shares have rocketed forward and at the end of today, they stood at 41.5p. If you'd have asked me at the time of buying into Fishing Republic which of my holdings is likely to more than double in the next year then this one wouldn't have been listed in my top five. In all the time that I've been investing, I've learnt to accept that this can often be the case though.

I'm certainly not complaining.

You'll notice that the FISH bulletin board is nice and quiet with one or two lone positive voices and probably a few more negative voices. No surprise there either.

Thanks to the poster Norbert Colon for bringing Fishing Republic to my attention.

LWRF - poor interims

I've been very sceptical about a company called Lightwave RF (LWRF) and expressed concerns on the ADVFN bulletin boards several times.

The company released dreadful interim results this morning I'm afraid. Revenues have fallen a whopping 47% to just £804,455 and an order book of just £750,000 is pretty poor when they're burning through cash like it's going out of fashion. They used more than £500,000 of recently raised funds in just six months, and the balance sheet is looking pretty ropey. Cash remaining on the balance sheet is just £119,000. Losses amounted to almost £400,000.

They've attributed a net book value of £600,000 to the group in a rather laughable attempt to suggest that the group is increasing in value when tangible assets have increasingly got worse. In fact if you strip out intangibles then the group is worthless with tnav of minus £316,719.

With losses likely to be heavy for the full year alongside significant cash burn then even at this lowly market cap. you'd need a huge leap of faith to invest in my opinion.

Clearly the IoT hasn't quite arrived for this company yet. Now where did I put my mobile phone?