Small Cap Value Report (10 Mar 2015) -MNZS, SNX, ITQ, BEG, GOAL, SIV

10th Mar '15 by Paul Scott

10 comments 20309 reads

APOLOGIES - I'VE MESSED UP THE FORMATTING.

It took ages to get it back, so I daren't tinker with it any more & lose everything again.

Good
morning! Apologies for my outage yesterday - I wrote up a report
yesterday evening, so here
is the link for
that, where I reported on news
from: Tungsten (LON:TUNG), Maintel
Holdings (LON:MAI), Transense
Technologies (LON:TRT), Escher
Group (LON:ESCH), Clarkson (LON:CKN)

Lots
of results today, so this report will probably take me most of today,
therefore please refresh the page every now & then.

John
Menzies (LON:MNZS)

Share
price: 388p
No. shares: 61.3m
Market
Cap: £237.8m

Final
results -
for calendar 2014 are out today. They're not very good, although that
was expected since the company issued a profit warning on 5 Nov 2014,
which I
reported on here,
when problems arose at its aviation division.

Then
on 16 Jan 2015 the company put out an in line with (reduced)
expectations trading statement.

Here
are the financial highlights for the 2014 results;

Points
to note;

It's
a high turnover, low margin business (operating margin only 2.6%),
so should be cheap.
Underlying
EPS of 49.2p is a whisker below forecast of 49.9p, so that's OK.
Dividend
cut - as I predicted in my last two reports, the dividends looked
unsustainable, and have (sensibly) been cut by 39% to 16.2p for the
year - a yield of 4.2% now.

Balance
Sheet -
there are a number of issues, and overall I describe the balance
sheet as weak. The company claims to have a strong financial
position, which just isn't true, so it's really annoying to see them
repeating that claim today. If the financial position was strong,
they wouldn't have cut the dividend, would they?!

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FREng

10th Mar '15

Any views on the half-year report from ST Ives (LON:SIV) ?

OsullivanB

Paul, if you do have time to report on SIV, I would appreciate your views on the fact that net debt is reported as at 2nd August 2014 and not at the half-year end. The ballooning pension liability probably rules it out anyway for me, and the amount of net debt compared with profit/earnings doesn't encourge me either - yet they go on paying an increasing and above-average dividend.

oldnotbold

Lots to dislike in SIV's restatements, non-recurring items, pension debts, but I did just check their net debt as at the last reporting date and it was £42.7mn, so no naughtiness there. Their pension scheme has liabilities and assets of around £300mn, and has been closed to new members since 2002 (note 29 of last year's annual report). The continuing 'exceptional' payments and non-cash revaluation into it are frustrating, but not the real problem with St Ives, I think. What I really have been shocked with is the amount of non-underlying costs excluded from their presentation of their results, including redundancies, empty building costs, amortisation of acquired intangibles, impairment of goodwill, contingent consideration required to be treated as remuneration, etc. You get the picture. Let's book all the good stuff as revenues, and anything we got wrong let's stuff into non-underlying. What is frustrating is that 'underlying' all of this there may be an interesting company trying to get out, as it reduces its old book printing business to 20% of sales, and focuses on higher growth areas of digital marketing.

illiswilgig

Hello Paul,

I hope you make it through to Airea (AIEA) H1 results. The format is straightforward and the results are quite promising. I guess that the pension deficit and the microcap size cause the current sp to be so far below TNAV. cheers, Mark ( disclosure I am long and looking on iii appear to be the only to buy any shares this morning which is something of a novelty for me!)

As I read the half-year results the net debt at 31st January 2014 was £42.7m and the net debt at 2nd August 2014 was £43m. My concern is why the net debt is not stated on a comparable basis i.e. at 31st January 2015. There may or may not be naughtiness, but it seems very odd.

imranawan

11th Mar '15

Hi Paul

Did you cover the ST Ives (LON:SIV) interims? The header contains the ticker but I can't see this covered in the actual report (I may have missed it due to the formatting issues). The only mention of SIV I can see is from fellow Stocko subscribers.

Best wishes,
Imran.

cycle

Hi Paul,

Just wondered if you had time to review the Stadium (LON:SDM) results? I know there's a pension deficit but this looks to be a company that is following the likes of Tracsys and Judges Scientific and making sensible add-on acquisitions which add value and increase margins.

maillotàpoisrouges

Think you have posted yesterdays write up instead of todays Paul.

mrwhits

re SIV, think Paul would have probably given it a miss due to its weak balance sheet as follows,

current ratio = 0.64, test failed for current ratio, negative ntav of £41M, coupled with a small rise in net debt would prob mean Paul not wanting to commit to it as an investment.

As a side, hope you are OK Paul, and that your breakfast Demon hasn't returned, if it has get well soon!

regards

mrwhits.

no position in SIV.

Paul Scott

13th Mar '15

Hi, sorry I had absolutely massive technical issues, when adding a section on ST Ives (LON:SIV) - it disappeared 3 times, then totally screwed up the whole report. I couldn't retrieve it, so just fixed things as best I could.

St Ives - yes it was the balance sheet that put me off, from memory.

Regards, Paul.

Small Cap Value Report (10 Mar 2015) -MNZS, SNX, ITQ, BEG, GOAL, SIV

John
Menzies (LON:MNZS)

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Paul Scott

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Small Cap Value Report (10 Mar 2015) -MNZS, SNX, ITQ, BEG, GOAL, SIV

John Menzies (LON:MNZS)

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Paul Scott

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John
Menzies (LON:MNZS)