Small Cap Report (12 Feb) - LOQ, NARS, DSN, PRES,

Tuesday, Feb 12 2013 by

Lo-Q (LON:LOQ) issues solid results for a "52 week and 6 day" financial period ended 4 Nov 2012 (unusual!).

Revenue rose 19% to £29.1m, and profit before tax was up 17% to £3.2m. This translates into basic EPS up 26% to 14.6p (EPS is flattered by a Corporation Tax charge which has fallen from 28.2% last year to 20.0% this year).

The year-end net cash pile of £8.9m has since been spent on the acquisition of an American company in a similar space, virtual queuing systems, called Accesso. That used up £4m of the cash, and incurred £4.0m in debt (which has been refinanced with Lloyds today, as planned), plus an additional payment made in 1.8m new shares. So they are effectively now more-or-less cash neutral.

LOQ has clearly been a success story, as the historic data table below shows;


Interesting to note however that EPS has actually been flat from 2008-2011 at 11-12p. (please note that TTM is "Trailing Twelve Months")

That has jumped to 14.6p for 2012, and is forecast to grow again to 16p in the current year (ending 31 Oct 2013), fuelled by the acquisition of Accesso. There is no dividend.

I like the company, but remain sceptical about the elevated valuation. The market cap is now around £90m, or 3 times sales, at around 450p a share. I cannot see how this represents value at 31 times EPS just reported, and 28 times forecast EPS for the current year. But we are in a bull market, and valuations for growth companies are becoming pretty racy again, so who knows maybe the momentum will keep going here? To my mind a sensible price would be around 300p, or just under 20 times current year forecast EPS.

However, I also know how enthusiastic shareholders are about LOQ, and if you think they are likely to beat forecasts, then the numbers might stack up on a long term view at the current share price?

(Edit: new Edison research note on LOQ just published, click here to view it)


Nationwide Accident Repair Services (LON:NARS) issues a trading update today. They operate a chain of car crash repair workshops across the UK. Results for calendar 2012 are expected…

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accesso Technology Group plc is a United Kingdom-based company engaged in the development and application of ticketing, mobile and e-commerce technologies, and virtual queuing solutions for the attractions and leisure industry. The Company's solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. accesso LoQueue is a queuing solution that includes Qsmart, Qbot and Qband. The accesso Passport ticketing suite is built where its customers shop. accesso Siriusware provides clients with ticketing and admission solutions, and includes various modules, such as OnSite Ticketing, OnLine eCommerce, Point-of-Sale and Guest Management. accesso ShoWare offers a range of ticketing software solutions for theaters, fairs, arenas and tours. The Company's products and services support attractions in the world, including a range of paid admission operations ranging from theme parks, water parks and zoos to cultural attractions and sporting events. more »

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Nationwide Accident Repair Services Ltd. is a United Kingdom-based company, which provides automotive crash repair and accident administration services to the automotive insurance industry. The Company also provides its services to fleet operators. Its group of companies include Nationwide Crash Repair Centres Ltd, which operates a network of repair centers across England, Scotland and Wales; Nationwide Network Services Ltd, which provides accident management administration services to insurance companies and fleet operators; Nationwide Mobile Repair, which consists of a fleet of vans, fitted with repair equipment and manned by trained staff that provides services to repair centers nationally, and Nationwide Motorglass, which consists of a fleet of vans, fitted with glass repair and replacement equipment and manned by trained staff, which provides services to vehicle drivers through insurance companies, throughout the United Kingdom. The Company operates in Witney, Oxfordshire. more »

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Densitron Technologies plc is engaged in the design, development and delivery of electronic displays and related electronics and software. The Company’s products include Organic Light-Emitting Diode (OLED), Thin-Film Transistor (TFT), Liquid Crystal Display (LCD) Module and LCD Glass, Touchscreen Displays and E-Paper or E-Ink Displays. The Company is also a designer and manufacturer of display technology. It operates in 35 countries worldwide and has local presence in the United Kingdom, the United States, Japan, Taiwan, France, Finland and Germany along with branch offices in India and the Netherlands. The Company’s geographical segments include Europe (the United Kingdom, France, Nordic and Germany), the United States and Asia (Japan and Taiwan). The Company’s subsidiaries include Densitron Europe Limited, Densitron Corporation of Japan, Densitron Corporation, Densitron France, Densitron Nordic Oy, Densitron Deutschland GmbH, Densitron Display Taiwan Limited and Densitron Land Ltd. more »

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  Is accesso Technology fundamentally strong or weak? Find out More »

6 Comments on this Article show/hide all

Asagi 12th Feb '13 1 of 6

Hi paulypilot.

In the last year, the price of gold has fallen 5%. In the last two years, the price is up just 20%. I say 'just' because a 20% rise in two years cannot be considered boom conditions.

Albemarle & Bond Holdings (LON:ABM) did very well indeed out of the gold boom. This was not profiting from people's misery but giving them a nice bunce for scraps that they had tucked away.

Albemarle & Bond Holdings (LON:ABM) used the gold boom to expand its operations and increase its dividend payments.

Before the credit crunch and gold boom, the company was making 11p per annum (using 2007 figures - not perfect as the credit crunch began in August 2007). Investors will be concerned that earnings could go back to that pre gold-boom level. Even worse, the company could incur significant costs if its store expansion programme has to be put into reverse.

So, it appears that Albemarle & Bond Holdings (LON:ABM) has made hay while the sun has been shining. Nothing wrong with that but anyone analysing the shares will have to wonder how much further earnings could fall.

Asagi (no position)

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Beginner 12th Feb '13 2 of 6

Hi Paul
Regarding Densitron, the court case involves up to £600,000 in unpaid rent, and about £60,000 in unpaid rates. From what I can see the landlord has a relatively strong case, and having refused to enter arbitration, at the very least this will rumble on for a long time. This being the case, it may be best to let this one pass (despite many other positive indicators).

[Just posted above on your blog, but have now sussed Stockopedia registration! D'Oh!!]

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Paul Scott 12th Feb '13 3 of 6

In reply to Beginner, post #2

Hi "Beginner",

I saw you post this on my Blog, and was hoping you'd also post it here, as useful info.
My worry with any legal action is the costs, which can often spiral into huge amounts.
So as you say, might be best to avoid Densitron unless/until the outcome & total costs are known.
They own some land in BlackHeath too, I believe, wonder what that's worth, and if anything is happening with it?

Cheers, Paul.

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Ramridge 12th Feb '13 4 of 6

Hi Paul.
Re. NARS. The pension issue is a big one. I have been looking at NARS's FY 31/12/2011 accounts and their accounting treatment of the pension liability is disgraceful. Buried in Note 15, you find that the unfunded liability stands at £26m. Then by a magic sleight of hand (Paul Daniel would have been proud) they apply something called "unrecognised actuarial losses" = £37m and turn it into an asset of £37m - £26m = £11m. So now we have an asset shown in the balance sheet of £11m. All other pension related bad news is off balance sheet buried in obscure tables. A figure of £37m which is bigger than NARS's market value is put in their footnotes under an obscure heading without any explanation. Talk about the elephant in the room.
I understand that the IAS 19 rules taking effect from jan 2013 will make pension scheme funding deficits more transparent, but also hear that it will have a negative impact on reported earnings for those running large deficits. The sooner NARS management comes clean the better.
Regards, Ram

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Paul Scott 12th Feb '13 5 of 6

In reply to Ramridge, post #4

I know, I wrote a report giving chapter & verse on NARS misleading accounts (linked to in today's report), but here is the link again. It's an outrage! The accounts should never have been published, as they fail the "true & fair" test. Also I don't trust management that would approve such accounts. Common sense should have made them stop and say, "this is wrong". That doesn't happen enough generally in business these days I'm afraid.
cheers, Paul.

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Ramridge 12th Feb '13 6 of 6

In reply to paulypilot, post #5

Paul. Should have followed your link first time. You were there lot earlier than me.
Regards, Ram

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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