Small Cap Report (29 May) - MBH, QPP, TRK, NBL, IDOX, DGB

29th May '13 by Paul Scott

22 comments 19119 reads

Pre 8 a.m. comments

Firstly, just on a house-keeping matter, I'd like to flag up a free Webinar that Stockopedia are holding today - i.e. an online tutorial in how to get the best out of Stockopedia. It's at 12:30 today! I've signed up for it, as there are so many great features buried in this website, that you might never find unless you are shown them. There are only a few places left, so if you're free at 12:30 then I encourage you to sign up here.

Michelmersh Brick Holdings (LON:MBH) announce the sale of a 15 acre site in Telford for £4.6m in cash, with £3m deferred for 1-2 years. That will put a bit of a dent in their £18.4m net debt. There looks to be a lot more property on the balance sheet too. I remember meeting the management some time ago, and thinking they had a pretty marginal business on the brick-making side of things, but who knows it might pick up if & when we finally start to build enough affordable houses in this country for the number of people who actually live here now!

So Michelmersh is really a special situation based more around its property assets than its operating business.

Quindell Portfolio (LON:QPP) have announced a 3-year deal with Honda. As usual, it's all couched in language which obscures what the deal actually is. But from what I can make out, it's based around the low margin business of supplying credit hire cars through Ai, which provides the bulk of Quindell's turnover, yet only £3.5m p.a. profit. The rest of Quindell's profit comes from mysterious software revenues that have apparently sprung from nowhere.

Accident Exchange and Helphire also provided similar deals (I recall ACE having one with Audi). Quindell claim that they manage a much broader range of services, and co-operate with insurers, as opposed to trying to fleece them with excessive charges, which was arguably the business model of other operators in this sector in the past.

Quindell also claim to have a, "continued focus on an ethical approach for the industry"! Well it's a pity they don't seem to have adopted an ethical approach towards their stock market announcements, since they blatantly misled the market over the true…

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cig

29th May '13

The DAX is a total return index (including dividends) so not including inflation directly, only looks closer than capital-only indices.

Funnymoney

Any views on the Idox statement?

Cheers

Edward Croft

Hey all - just thought I'd point out we've added some nice new features on the Compare page - http://bit.ly/ZdG2lS

bobdouglas

ref. Idox - growth slowing, maybe payment issues and backed up by large borrowings.

Marky

QPP:
"From what I can make out, it's based around the low margin business of supplying credit hire cars through Ai, which provides the bulk of Quindell's turnover, yet only £3.5m p.a. profit."

Just incredible - your figures have no factual basis whatsoever, Ai does not provide the bulk of Quindell's turnover, and the bulk of Quindell's business does not represent only £3.5m profit. This is so far from the truth you should be ashamed of yourself.

I encourage your readers to do their own research - they are most certainly not getting a balanced or rational view here, and as such should probably treat anything you say on the subject with a massive dose of scepticism.

Paul Scott

Marky,

What a lot of tosh!
Do you know where I got the figures from about Ai's turnover & profits???
From the Quindell website, on the video about Ai!!

Get your facts right before you start mud-slinging.

Paul.

Again, I urge your readers to do their own research if they are unsure on who to believe.

Fangorn

"Just incredible - your figures have no factual basis whatsoever, Ai does not provide the bulk of Quindell's turnover, and the bulk of Quindell's business does not represent only £3.5m profit. This is so far from the truth you should be ashamed of yourself. "

Please supply the figures you have that evidence this claim you make and thereby invalidate what paul Scott is saying then Marky.

Marky,

Again, I urge your readers to do their own research if they are unsure on who to believe.

Absolutely agreed! The whole ethos of this column is DYOR (do your own research).

But as another commenter added, seeing as you dispute my figures in Ai (which I got from Quindell's own website), then please state what you believe the correct figures to be for Ai's last reported turnover & profit.

I'm more than happy to retract & apologise for any factual errors, if you can provide the correct numbers?

Regards, Paul.

I was just thinking about such a feature this morning. How do you navigate there other than this link?

Ramridge

QPP continues to polarise views. Either this company is the next Microsoft story or it is all smoke and mirrors, the truth will out and it will end in tears. Which is it? Well we have to go with informed, fact-based arguments. And since the company's reports and accounts and subsequent statements leave a lot of unanswered questions, then in my view the 'smoke and mirror' argument wins for now. What puzzles me is why the die-hard believers are making such a noise. If I truly believed that this company is a future amazon then I would let the doubters carry on depressing the price and quietly stuff my boots and attic with as many shares as I can.
Regards, Ram

Refer to page 29

http://www.quindell.com/images/uploads/irdownloads2013/20130430_2012_results.pdf

Technology Enabled Outsourcing division (which includes Ai Claims, plus Medical and Legal, no breakdown given) revenues were £107.5m, which generated EBITDA of £32.2m (a margin of 29%)

Total revenue was £137.6m

So Tech Outsourcing accounts for the bulk of revenues, and generates a high profit margin.

You are misleading your readers with this.

marben100

Toolbox|Compare Stocks

I use the feature quite a lot. ;0)

Cheers,
Mark

steamy001

Very useful tool to compare two companies
try Quindell Portfolio (LON:QPP) vs Innovation (LON:TIG)
http://www.stockopedia.com/compare/?tickers=LON%3AQPP%2C+LON%3ATIG%2C

Marky,

I have not misled any of my readers at all, and I expect an apology for your making that false accusation.

Let me direct you to the facts that I quoted, and the source (Quindell itself!).

Watch this video from Quindell's website: http://www.quindell.com/index.php/business-process-services
At 1:44 in that video the graph for turnover clearly shows £130m turnover for Ai for 2011.
Since Ai was acquired by Quindell c. May-Jun 2012, then it stands to reason that QPP must have generated more than half its total group turnover of £137.6m in 2012 from Ai. Therefore my original assertion that QPP gets most of its turnover from Ai clearly stands.

At 1:48 in the same video it clearly shows that Ai only made £3.5m profit on £130m turnover in 2011, which is the original information I gave. That is clearly very low margin stuff, as I correctly stated in the original article.

This is precisely why I am querying where QPP's profits come from! Their main business hardly makes any money at all, and we are expected to believe that the rest of it comes from huge margins from selling software, despite the fact that QPP has not acquired any companies which made significant profits from selling software. Does that not strike you as rather odd?!

So everything I said is verifiably true, from the company's own corporate video.

Time for you to apologise for getting your facts wrong & throwing false accusations at me.

Paul.

I would also add that "Technology Enabled Outsourcing" simply means "outsourcing". The technology enabled bit means nothing whatsoever. I am a technology enabled writer, because I write on the internet. It's weasel wording, designed to mislead, which is what all QPP's statements and puff are about.

The bulk of their outsourcing division is nothing to do with technology, it's just bog standard credit hire vehicles, which is what Ai does.

Where does the enormous group profit come from then??? Nobody seems to know.

P.

Paul,

The company has moved away from same of the low-margin areas that Ai was previously involved in, in order to concentrate on the high-margin opps, hence the EBITDA margin of 29% for Tech Outsourcing, and a smaller element of revenues relating to Ai than you imagine.

But if you choose to believe that the bulk of the business is generating £3.5m profit, rather than the much larger figure that they state in their audited financials, then I will accept that we have to agree to disagree.

Readers, do your research and make it current.

Over and out.

Marky,

Since I clearly demonstrated the source of my figures (from Quindell itself!) and showed you the link to the facts which I quoted as being correct, then I am still expecting an apology from you.

I did NOT mislead my readers, and have proven where I got my figures from, and that they were correct. So kindly retract your previous false accusations against me.

If you want to believe that a huge profit has appeared out of thin air, without a credible explanation as to how it was generated, then that's entirely up to you!

Paul.

3rd Jun '13

Paul then comparing Quindell Portfolio (LON:QPP) with the competition they look very cheap

Quindell forecast figures here for ease
http://www.stockopedia.com/content/who-is-the-real-growth-company-in-this-sector-73668/?submitted=2#2

tonystafford

10th Jul '13

TRK interesting full year results, but compare H1 with H2, revenues decline £2M, cost of sales up by £0.8M, profit turns from £1.4M to a loss of $1.9M.... barely a mention in the financial reports.... was interested until now :(

Small Cap Report (29 May) - MBH, QPP, TRK, NBL, IDOX, DGB

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Paul Scott

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