Small Cap Value Report (12 June 2019) - TAP, PARK, RFX, CGS, NXR

Wednesday, Jun 12 2019 by

Good morning folks,

I only belatedly noticed this horrible RNS from Taptica International (LON:TAP). It says that Uber has filed a complainst against two Taptica companies, along with dozens of other companies, alleging "fraudulent concealment, negligence and unfair competition".

While there may be limits to any potential damage, given the US-centric nature of the complaint, this adds a risk that is difficult to quantify to a share which already lay outside my investable universe. 

I would remind readers that Taptica insiders sold 10.6% of the company at 140p, when the P/E multiple was 5x.

Taptica International (LON:TAP)

  • Share price: 99p (+19%)
  • No. of shares: 127.6 million
  • Market cap: £126 million

Update re Uber lawsuit and Proposed Share Buy Back

This sounds like it's in response to angry calls from shareholders, looking for more clarity. Why not provide this detail with the original RNS?

What it says: In 2014, Taptica was retained by another company, "Fetch", to run a campaign for Uber.

The revenue to Taptica from this campaign is not "a material portion of Taptica's revenue". So perhaps the associated liability is not too large? (I am not a laywer.)

Taptica then points out that Uber and Fetch have had a troubled relationship. See here for prior coverage of the $40 million lawsuit filed by Uber against Fetch. I think the implication is that the situation turned ugly for multiple parties and that Taptica might be an innocent scapegoat.

Buy-backs: Taptica is "actively considering" another buyback programme. With the shares trading at an EV/EBITDA multiple of 2x at last night's close (Stocko date), that is a relief.

My view: It is beyond my ability to analyse this company's investment merits, but I am fascinated to see how it works out. The ValueRank is 97. Good luck to all holders.

Other stories today (this list is final):


  • Share price: 68.1p (-0.6%)
  • No. of shares: 186 million
  • Market cap: £127 million

Final Results

(Please note that I have a long position in PARK.)

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


All my own views. I am not regulated by the FSA. No advice.

Do you like this Post?
63 thumbs up
1 thumb down
Share this post with friends

Taptica International Ltd offers data-focused marketing solutions that drive execution and brand insight in mobile, leveraging video, native, and display to reach the users for every application, service, and brand. The Company’s technology is based on artificial intelligence and machine learning at big data scale. The Company works with more than 450 advertisers, including Amazon, Disney, Facebook, Twitter, OpenTable, Expedia, and Zynga, and more than 50,000 supply and publishing partners worldwide. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Park Group plc is a multi-retailer gift voucher and prepaid gift card business, which is engaged in delivering rewards and prepaid products to the consumers and corporates in the United Kingdom. The Company focuses on consumer prepayments and corporate reward and incentive programs. The Company's segments include consumer and corporate. The consumer segment includes the Company's sales to consumers, utilizing its Christmas savings offering. The corporate includes the Company's sales to businesses, offering primarily sales of the Love2shop voucher, flexecash cards and other retailer vouchers to businesses for use as staff rewards/incentives, marketing aids and prizes and all online sales. Love2shop is the multi-retailer gift voucher and prepaid gift card, accepted at over 140 retailers with approximately 20,000 stores in the United Kingdom. It offers flexecash, which is its information technology infrastructure. Its Park Christmas Savings Club operates through a network of agents. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Ramsdens Holdings PLC (Ramsdens) is a financial services provider and retailer. The Company operates through four segments: Foreign Currency Exchange, Pawnbroking, Purchases of precious metals and Jewellery Retail. The Foreign Currency Exchange segment consists of primarily, the sale and purchase of foreign currency notes with prepaid travel cards and international bank to bank payments. The Pawnbroking segment is a form of asset backed lending where an item of value is given to the pawnbroker in exchange for a cash loan. Through its precious metals buying and selling service, Ramsdens offers to buy unwanted jewelry, gold and other precious metals from customers for cash. The Company is engaged in refurbishing items bought from customers and retailing them through its store network. The Company also provides ancillary services, including franchise fees, western union, sale and buy back of electronics, and credit broking. It has a portfolio of over 130 stores. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

  Is LON:TRMR fundamentally strong or weak? Find out More »

53 Comments on this Article show/hide all

LeoInvestorUK 12th Jun 34 of 53

Here is a hacked-together, shortened and edited version of three articles I have recently written about Norcros on my blog:


Norcros describes itself as a “market leading supplier of high quality and innovative bathroom and kitchen products”. UK / Irish brands include Triton showers, Merlyn shower enclosures / trays, Vado taps / showers, Croydex toilet seats / bathroom furnishings, Abode sinks and taps, Johnson Tiles and Norcros title adhesives. In South Africa they own some physical showrooms as well as supplying tiles and tile adhesives. The revenue and profit split is 2/3rds UK, 1/3rd South Africa.

Business has generally been going well the last few years with underlying profits growing and a series of acquisitions. Risks are exposure to consumer spending, the construction cycle, South Africa and volatile currencies, plus significant levels of debt and a large pension scheme that is in deficit.

Today's Results

Revenue is 10% ahead as guided in their recent trading statement. Underlying EPS of 31.7p compares to the 30.7p normalised EPS consensus shown on Stockopedia, although it is difficult to know if these are calculated on the same basis. Debt was £35.0m vs £36.0m guided, although of course this could be window dressed for the year end and is certainly seasonally lower than at the half-year point.

At first glance the Underlying Operating Profit figure stands out at 25.5% ahead of last year, however the small print confirms this reflects the effect of the recent large acquisition and so is utterly meaningless. Like-for-like profitability is not given, but like-for-like revenue is up 2.3% before currency effects.

Their underlying (excluding acquisition costs and pension), diluted (by share options and by shares issued for acquisitions) EPS is up 7.5%. The rise was mostly due to a the 12 month contribution vs 4 months last time of Merlyn, and seems a poor exchange for increase in debt that this entailed. Dividend is in line with EPS, up by 7.7%, giving a yield of 4.5%.

More positively, ROCE (which is important as it includes debt) is reported as slightly at 18.2%, however Stockopedia reports far lower figures.


The pension deficit has reduced to £31.6m, a little more than I expected. They cite increased scheme-specific mortality rates. UK life expectancy assumptions in general have been moderating of late.

Most importantly they are able to announce agreement with the pension fund trustees over the triennial valuation, and this unexpectedly shows a significantly reduced actuarial deficit at 1st April 2018 of £49.3m (from £73.5m three years ago), however significantly increased yearly contributions of £3.25m (from £2.6m last year) with a similar end date.

I have investigated this in detail and I believe the strong triennial valuation is caused by the higher-return asset mix in their pension fund compared to others. This allows them to discount future liabilities back to the present at a higher interest rate, thus reducing them. I believe this is a risk factor going forwards

Strategy / Attitude

Their strategy is explicitly more about growth than shareholder returns. It the past this has been partly to up-size the company in relation to its pension scheme size, but I am not sure this applies any longer. Their strategy is reflected in their KPIs (page numbered 12 in their last annual report.) and target to double revenue in 5 years. In the face of this it is hardly surprising that the underlying earnings growth looks so much better than EPS growth in today's results.


The pension deficit and debt reduction is good news. Most quality metrics are good. The PE is under 6 and the high dividend yield is attractive.

This is one of my largest holdings, but after spending a considerable time looking into them over the last few days I am much less happy than before, and am likely to reduce if the price strengthens.

Blog: LeoInvestorUK
| Link | Share
doublelutz 12th Jun 35 of 53

With reference to the results for Boohoo (LON:BOO) my concern is the action taken by the web designer. He says he was promised 10% of the company and was paid nothing for two years work. Now I don't suggest he is going to get his share but presumably he developed the web site unless it is a figment of his imagination. No one is going to do extensive work on an e-commerce website (many businesses have spent over a million pounds on such work) without the promise of some return. The director of Boohoo can easily prove that some payment was made if that were the case and perhaps he will do so. However, if the developer did the work and received no payment then it tells me everything I need to know about the director and I would not invest anything.

| Link | Share | 1 reply
Ben1 12th Jun 36 of 53

I would also appreciate your views on Norcros.

The pension deficit was always given as the reason for a low rating, but this does seem to be slowly but surely being brought under control

| Link | Share
jonno 12th Jun 37 of 53

Cheers Graham. Good review of Ramsdens Holdings (LON:RFX). Very balanced, helps mitigate my tendency to confirmation bias.

| Link | Share | 1 reply
Steves cups 12th Jun 38 of 53

Thanks for the Ramsdens Holdings (LON:RFX) write up. Look forward to Norcros (LON:NXR) if you have time

| Link | Share | 1 reply
Steves cups 12th Jun 39 of 53

Am I being paranoid or is the Mr Hill who writes enthusiastically about Elektron Technology (LON:EKT) the same Mr Hill who is the author of Equity Developments note on Elektron Technology (LON:EKT) issued today

| Link | Share | 1 reply
hayashi22 12th Jun 40 of 53

No doubt..certainly the one at Equity Development is paid to write glowing stuff about the company.

| Link | Share
sharw 12th Jun 41 of 53

In reply to post #483356

If so he is contradicting himself. Mr. Hill of ED predicts EPS of 2.7 (+30.4%) for Elektron Technology (LON:EKT) in the current year. Mr. Hill with his rose-coloured spectacles on this board predicts +100% to 4.2!

| Link | Share | 2 replies
davidjhill 12th Jun 42 of 53

In reply to post #483376

I am certainly not the same person !!

I don't understand the ED eps estimate. The company has already said Bulgin is up 20% to date and increasing margin although it expects that growth to moderate towards 10% as year goes on. So a 15% averaged annual increase appears reasonable? Thats £1.5m of operating profit

They bought Next for cash, no share issuance and the company has said it is running at £500k op profit for 4 months - so £1.5m.

The EPS is 2.1p this year and £3m of extra op profit takes it to 4p as there is no change in the number of shares. So even if we ignore the expected £1m growth from checkit, then a 2.7p eps from ED has to be wrong or I am missing a £2m loss somewhere else, but I can't find any reference to that.

| Link | Share
Gromley 12th Jun 43 of 53

In reply to post #483376

I would presume that DavidJ of these parts is not the same person as Paul from equity development.

Perhaps EKT just attracts people named after geographic features? (Old-timers might get the 'joke' there!)

| Link | Share
Graham Neary 12th Jun 44 of 53

In reply to post #483341

No worries Jonno! All the best. G

| Link | Share | 1 reply
Graham Neary 12th Jun 45 of 53

In reply to post #483346

Hi Steves, you're welcome. I am slowly getting there. Thanks. G

| Link | Share
purpleski 12th Jun 46 of 53

In reply to post #483231

Laughton I agree with you. Have held since 2015 without selling and 80% of my holding is profit. In 5 to 10 years from now Boohoo (LON:BOO) will be a much bigger company than it is now (demise of Arcadia etc can only help).

Can I ask what “very big” is? About 7.5% of folio for me and that is less than I should have got it too. I did not average up enough.

| Link | Share
purpleski 12th Jun 47 of 53

In reply to post #483331

Doublelutz Of course the bull case on this is that if Mr Womack had an enforceable contract then he would have presented this before suing etc etc. And 10% of a company for designing the web site seems a stretch.

Even if upheld in court no judge is going to award £118m.

Strikes me as one of those spurious claims against a company that has grown above all expectations but then I am a bull on the company!

| Link | Share
doublelutz 12th Jun 48 of 53

purpleski - I quite agree that he is not going to get 10% of the company. Assuming there was any agreement it would probably have been verbal. I have seen this situation where someone has contributed to the starting of a company with the promise of shares but foolishly had nothing in writing. My point was more concerning the attitude of the director. Did this man develop the web site? Did it take him a considerable period of time? Did he receive nothing for it? I have no way of knowing but if it is in any way true it comes back to what I said. It tells me something about the director and how he may regard shareholders and it would be a reason why I would not then invest.

| Link | Share
Paul Scott 13th Jun 49 of 53

In reply to post #483136

Hi Laughton,

I've only just read the update from Boohoo (LON:BOO) - it looks excellent to me.

BOO shares look quite decent value - rapidly rising earnings, and a forward PER that's not outrageous by any means.

I see it's bought another failed competitor, to apply the BOO treatment of better sourcing, better everything. There's plenty of upside here I think - from adding more brands, and international expansion.

Wish I'd held onto the 400k shares I bought at 25p LOL! Never mind.

Regards, Paul.

| Link | Share
mojomogoz 13th Jun 50 of 53

On the much hated Taptica International (LON:TAP)...and there's very good historic reason to give it some hate as a lot to digest in recent times that has not been good..

Today's AGM statement says $70m cash. I checked and that is net. Means since last available accounts of #TAP and acquired RhythmOne there's been $20m cash generation. Mkt priced as very broken but something is working.

Broker has revised down sales for the year as performance marketing is still struggling. However, company guides that they are still okay with profit expectations in market (which were revised down earlier in the year).

Its impossible to see anything very clearly due to the "transformative" acquisitions and the noise around CEO change. Company no doubt got themselves in a hole....and new CEO obvs had them over a barrel for a very handsome share package.

But we are left with a business valued at £125m with £55m cash and a PBT expected of just over £50m. Op margin somewhere north of 10% and perhaps into the teens with a business that now has a better waterfront position in ad tech space rather than old niche position with a transformed focus now on US (prior to Tremor and RhythmOne acquisitions this was non-US revenue business) with some top brand clients. Its risky but they are looking like a winning consolidator in the space. Taptica have a track record of acquiring and integrating well. They seem quite fierce on it some staff responses from old Tremor people and they felt a real shock when Taptica took over and shook up the place.

None of the above can be considered safe and quality but it does seem that there are high odds that the market is not weighing this situation correctly. Not for the feint hearted. Expect lots of unnerving volatility even if the outcome is good over the next 2 years as it will take time to set a positive narrative over the negative.

| Link | Share | 1 reply
mojomogoz 13th Jun 51 of 53

In reply to post #483536

PS obviously there is a big working capital element to Taptica International (LON:TAP) that comes with the ad tech business plus acquired Tremor seemed a bit lax in their financial management (significantly straightened up by time of last full year Taptica results it seems). My impression of mgt is that the CFO is diligent. He's now moved to the US to focus on RhythmOne integration. Historically, Taptica have been tight on managing working capital and cash flows so I'm assuming this is the case now. Note that they are only reporting with a couple of months of R1 under the belt so cleaning up their mgt processes and cash flow will not be very progressed....there will be non cash intangible write downs from this process but there could be cash generation upside based on past experience.

A lot makes me uncomfortable. I'd like clearer disclosure in the accounts. The management change is unnerving. But cash is the proof point against the anxieties. Hard to see through the smoke but my sense is a good probability that the business will be valued significantly higher in future. Even just a bit of scepticism on company and not much love and wariness on Uber legal case should see this 2-3x higher in price. Actual love and +5x. 

Bulletin boards and twitter talks up insider fraud and malignant stock manipulation. Well, this does happen and if it is happening here I'm toast. Too me it looks like a messy and fast moving entrepreneurial company iterating in a fast changing space (and so far doing it well).

Improved communications and disclosures would be welcome.

| Link | Share
Edward John Canham 23rd Jun 52 of 53

The Money Shop, which Ramsdens Holdings (LON:RFX) has recently bought shops and pledge books off, is to cease trading according to This Is Money.

For both H & T (LON:HAT) and Ramsdens Holdings (LON:RFX) I suspect this will be an opportunity to pick up further assets and might well be the best chance for affected employees.


| Link | Share
Edward John Canham 1st Jul 53 of 53

In reply to post #483396


We now know that 65 of The Money Shop locations are being purchased by H & T (LON:HAT) .

Given the review of Ramsdens Holdings (LON:RFX) I wonder what your view is now.


I hold both

| Link | Share

Please subscribe to submit a comment

 Are LON:TRMR's fundamentals sound as an investment? Find out More »

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Editor at Cube.Investments, small-cap writer at Stockopedia. Previously a fixed income analyst in the City and institutional fund manager. I'm a CFA charterholder and have the Investment Management Certificate and STA Diploma in Technical Analysis for good measure. When I'm not talking about finance, I enjoy recreational poker, chess and Mandarin Chinese. more »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis