Small Cap Value Report (16 Jul) - SID, VNET, GTC, VDN, IDEA

Tuesday, Jul 16 2013 by
17

Good morning! The big small cap news this morning is an update from Silverdell (LON:SID). The shares were completely unexpectedly suspended on 2 July, pending clarification of the group's financial position - which is nearly always code that the company is bust.

It just didn't stack up in this case, and indeed on 3 Jul, after doing my research, I commented here as follows:

 

... It appears that there has been some sort of disastrous sequence of events concerning a Winding-Up Petition for a fairly trivial amount of money, which appears to have triggered much bigger problems with the Bank and/or the Court in some way, and has resulted in a subsidiary of Silverdell, Kitson's being put into Administration.

We don't know what will happen next, but it sounds to me as if there's some chance that the situation could be salvageable. We'll have to wait & see what their next announcement says.

 

Whilst almost all other (bulletin board) commentators had written the company's obituary, and mulled over why investors had been foolish to buy the shares, It now looks as if my reading of things was correct! The situation does appear to have been salvaged, as the company has belatedly issued a statement this morning indicating that:

 

The Board is pleased to confirm that discussions with the Group's bankers, HSBC, have reached a satisfactory outcome.  HSBC has confirmed that it remains supportive of the business and will be providing additional short term facilities to the Group. 

The Board also confirms that Kitsons is the only Group company which is in administration, and that all other Group companies continue to trade as normal.

 

So the most likely next steps are that there will be a more detailed explanation, and the shares should be restored to trading, and in all likelihood will open substantially lower. I suspect there will need to be an equity fund-raising fairly soon too, because Silverdell had a stretched Balance Sheet to start with, and after all these shenanigans it is vital that they strengthen their finances to help restore confidence.

We also need to know what the hell went wrong, who is going to take the blame for it, and what they have done to ensure nothing like this ever happens again.

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Vianet Group plc is a provider of real time monitoring systems, data management services, and actionable insights for the leisure and vending sectors. The Company's segments include Leisure Services, which includes design, product development, sale and rental of fluid monitoring equipment, data management and related services; Vending, which includes design product development, sale and rental of machine monitoring equipment, data management and related services; Technology, which includes the provision of data management and technology related services, and Fuel Solutions, which includes wet stock analysis and related services. Its Leisure division consists of the core beer monitoring business (including the United States), and gaming machine monitoring. Its subsidiaries include Brulines Trustee Company Limited, Vianet Americas Inc and Vianet Limited. more »

LSE Price
114p
Change
-0.4%
Mkt Cap (£m)
32.4
P/E (fwd)
12.6
Yield (fwd)
5.0

Getech Group Plc is a United Kingdom-based company, which provides geological services, reports and data to the petroleum and mining industries to assist in their exploration activities. The Company's segments include Multiclient products and services, Consultancy projects and All other segments. Its Multiclient products and services segment includes Globe, which is its live Geographic Information Systems (GIS) Earth platform; Gravity and magnetics, which offers global databases; Multiclient regional reports, which include reports on various exploration areas, and Multi-Satellite Altimeter Gravity Programme, which is a three-year study covering gravity data for the continental margins of the world. Its Consultancy projects include Consultancy and licensing rounds, under which the Company provides technical support and advice to the Mozambique government, and GIS software and services, under which, the Company, through Exprodat Consulting Limited, offers Exploration Analyst Online. more »

LSE Price
38p
Change
4.1%
Mkt Cap (£m)
13.7
P/E (fwd)
n/a
Yield (fwd)
n/a



  Is LON:SID^J17 fundamentally strong or weak? Find out More »


6 Comments on this Article show/hide all

SevenPillars 16th Jul '13 1 of 6
2

Silverdell's statement does have one glaring omission.

"The Board is extremely grateful to the Group's employees, customers and suppliers for their patience and forbearance."

No mention of the company shareholders then? Perhaps they don't feel the need to thank the owners for their patience as well? If they were a private company that might be understandable as the owners would probably know what was going on, but as a public company Silverdell probably has many small shareholders who have been in the dark for a couple of weeks. Their investment could now well be diluted significantly once trading begins again.

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Ramridge 16th Jul '13 2 of 6
1

Hi Paul
Getech up 13% on positive trading update.
Well done.
Regards, Ram

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thekingsgambit 16th Jul '13 3 of 6
2

Hi Paul,

If you strip out the £5.5 million cash for Getech (LON:GTC) the P/E ratio drops to about 10 (after todays rise). My only concern is the sustainability of earnings after the Globe project finishes within the next 3 years. Do they start Globe II ? It would be interesting to see what happens. They would also really benefit from putting a presentation on their website. Certainly be interesting to see what they can do next year.

All the best

Stuart

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PhilH 16th Jul '13 4 of 6
1

Hi
If you like Getech (LON:GTC) you might also like Spectrum ASA (OSL:SPU), a norwegian company operating in a similar space. It's high quality,very good value and has good growth potential.

You can compare them here ...

http://www.stockopedia.com/compare/?tickers=LON%3AGTC%2C+OSL%3ASPU%2C+

Hope that helps
Phil (long on £spu)

Professional Services: Sunflower Counselling
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tads 16th Jul '13 5 of 6
4

Hi Paul

just back from the VNET AGM. Apparently the first private investor to turn up at an AGM.

The treatment I received was very good...was given a conducted tour of the operations and I am quite impressed.

They seem very confident they will be able to fight off the threatened government regulation.

Another notable is that vending machine telematics has moved into profit.

Happy to hold.

Mike

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Paul Scott 16th Jul '13 6 of 6
1

In reply to post #75220

Hi tads,

Thanks very much indeed for posting that. Always great to get feedback from people who've taken the trouble to go to the AGM.

I'm pretty comfortable that we'll get our money back on Vianet (LON:VNET) with a 6 month view, and then hopefully more in the longer term.

Cheers, Paul.

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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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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