Small Cap Value Report (26 Jul 2016) - CLL, SDY, VLX, VCP

Tuesday, Jul 26 2016 by

Good morning!

I hope you didn't miss me too much yesterday.

Cello (LON:CLL)

Share price: 97.6p (up 0.1% today)
No. shares: 86.6m
Market cap: £84.5m

Pre-close trading statement - this covers the 6 months to 30 Jun 2016.

This statement is ideally laid out - a brief description of the business first. Then a clear, and simple paragraph giving a summary. Then more detail below, for those who have the time & wish to read it. When we have lots of RNSs to read in just an hour, between 7-8 am, it's very useful when companies issue concise, and clear updates like this.

The Group has had a good first half, with robust performances from the core of Cello Health and from Cello Signal. Accordingly, the Board remains confident that the Group will deliver a strong full year result in line with current expectations.

More detail is given, concerning one division (consumer consulting) which is not performing very well, but this has been absorbed by better performances elsewhere within the group. Cost-cutting has been done, resulting in a £0.6m one-off charge.

Outlook - sounds fairly upbeat to me, and note the robust Brexit-related comment below;

The Group has delivered a good underlying first half, and the Board expects this to continue in the second half.

Whilst profits in the first half will be flat on the prior year as a result of the decline of the consumer consulting unit of Cello Health, overall revenue growth has nevertheless been good.

There has been no noticeable impact on client spending behaviour as a result of the EU referendum vote and income pipelines remain robust.

The Group will also continue to benefit from a stronger dollar in the second half if the dollar / sterling rate remains at current levels. The Board remains confident that the Group will deliver a strong full year result in line with current expectations.

My opinion - the big quandary at the moment is whether or not the UK economy is likely to go into recession? We've had very poor recent PMI data, which correlates closely with GDP. However, most companies that I've looked at are saying that it's broadly business as usual.

Also, a key question to ask with every company now, is what the geographic split of business is. A heavy UK weighting could be risky. Whereas a heavy overseas weighting…

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Cello Health plc, formerly Cello Group plc, is a United Kingdom-based healthcare and consumer strategic marketing company. The Company is engaged in providing market research, consulting and direct marketing services. The Company operates through two segments: Cello Health and Cello Signal. The Cello Health Division provides market research, consulting and communications services principally to the Company's pharmaceutical and healthcare clients. The Cello Signal Division provides market research and direct communications services principally to the Company's consumer facing clients. The Company delivers its services from office networks in the United Kingdom, the United States and Singapore. more »

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Speedy Hire Plc is a tools, equipment and plant hire services company. The Company's segments include UK & Ireland Asset Services and International Asset Services. UK & Ireland Asset Services delivers asset management and focuses on relationship management. International Asset Services delivers overseas projects and facilities management contracts by providing a managed site support service. Its geographical segments include UK, Ireland and Other countries. It operates across the construction, infrastructure and industrial markets. Its hire fleet comprises a range of small tools, specialist equipment, and large plant vehicles and machinery. It also retails a range of tools and equipment, as well as safety personal protective equipment (PPE) and site supplies. It also offers various services, such as on-site operative training, test and repair, fuel supply and management, industrial shutdown project management, on-site depots and hire desks. It also offers partnered services. more »

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Volex plc is a supplier of power cords and cable assembly solutions servicing a range of markets, including consumer electronics, telecommunications, data centers, medical equipment and the automotive industry. The Company's segments include Power Cords, Cable Assemblies and Central. The Power Cords segment is engaged in the sale and manufacture of electrical power products to manufacturers of electrical/electronic devices and appliances. These include laptop/desktop computers, printers, televisions, power tools and floor cleaning equipment. The Cable Assemblies segment is engaged in the sale and manufacture of cables permitting the transfer of electronic, radio frequency and optical data. These cables range from universal serial bus (USB) cables to high-speed cable assemblies, and are used in a range of devices, including medical equipment, data centers, telecoms networks and the automotive industry. It is also engaged in contract manufacturing service and product development. more »

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

28 Comments on this Article show/hide all

davidtalbo 26th Jul '16 9 of 28

Details of GW's apparent past modus operandi at VCP are contained in the following Lucien Miers article

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Sniggolb 26th Jul '16 10 of 28

good for Paul in spotting Victoria

Excellent comments about Brexit, the idea that the UK can't make a success of independence has always been ludicrous. Being is the EU was like being shackled to a corpse, thank goodness we will be free at last.

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Aislabie 26th Jul '16 11 of 28

In the 15 April SCVR you noted that you did not see anything particularly exciting in Acal (ACL) and today their results continue their "unexciting" progress, with positive notes about the rest of the year and a statement that 80% of their revenues come from outside the UK.
I must admit that this is the kind of "boring" that I rather like in stocks, particularly in these rather too exciting times.
Acquisitions have pushed up debt (and intangibles)to as high a level as I would think acceptable but they can point to a significant push in profits as justification.
Do you have any further thoughts on Acal?

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Trident 26th Jul '16 12 of 28

I think the reference to luvvies in the Brexit commentary is a bit like pandering to stereotypes, and he seems to have taken a large draft of Farage ale.

I am allergic to playing to the crowd, but I guess it makes a change from anodyne corporate speak.

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herbie47 26th Jul '16 13 of 28

In reply to post #144270

Were they blind drunk at the time?

Did anyone see Dragon's Den the other night, they had a company that is a gin club, £40 per month, I thought that may be of interest to Paul. They send you a box with a bottle of craft gin and few other bits every month, inc. Fevertree tonic.

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Fangorn 26th Jul '16 14 of 28

In reply to post #144291

Is that Sipsmith Gin Herbie or something more extravagant?

Disclosure: - Didn't watch "Dragon's Den"

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lightningtiger 26th Jul '16 15 of 28

Hi Ramridge & Paul, you beat me to it with VCP. Just compiling some notes together to do a write up and it's already been done thanks. I particularly like the Chairman's statement , "A good plan exicuted today is better than a perfect plan next week ".There is also an extra 5 minutes auction at close today..
What struck me most was that Profit before tax up +743% and Net Debt + 71%, so when the business is doing well it pays to borrow a bit more.

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herbie47 26th Jul '16 16 of 28

In reply to post #144294

I believe one of them was but I'm not a gin drinker so was not paying that much attention. Herno is the current gin of the month.

My local brewer won the best gin award in 2013, Adnams Copper House Distillery at the International Wine and Spirits competition. They also won best Vodka in 2014. Their shares are very difficult to buy though.

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dgold 26th Jul '16 17 of 28

On Victoria (LON:VCP), ou quote a forecast eps of 113.3p and say this is a p/e of 9.1 Actually, at 1218p, it is a pe of 10.8.

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Fangorn 26th Jul '16 18 of 28

In reply to post #144300

Not heard of Herno - have tried Sipsmith - it's not bad at all.

They usually have a stall at some of the Wine tastings. They're a bit pricer than many run of the mill labels(even Tanqueray/Bombay) and the bottle is noticeably smaller!

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herbie47 26th Jul '16 19 of 28

In reply to post #144309

Have a look at their website its

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Paul Scott 26th Jul '16 20 of 28

In reply to post #144303

Hi dgold,

On Victoria (LON:VCP), ou quote a forecast eps of 113.3p and say this is a p/e of 9.1 Actually, at 1218p, it is a pe of 10.8.

Thank you very much for pointing this out. I've corrected the article accordingly.

Profuse apologies.

Regards, Paul.

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Fangorn 26th Jul '16 21 of 28

In reply to post #144270


"Mind you, I've blind tested several people with FEVR, and none of them has been able to detect the slightest difference in taste to normal Schweppes tonic water. So personally I think it's a triumph of marketing over substance!"

Absolutely agree. Tried test myself, as a regular G&T drinker, and cant distinguish - Either my palate is shot or perhaps certain Gins "mask" said alternate taste. Certainly notice the diference Gin wise with Cadbury schweppes and say Bombay Sapphire or Gordon's however.

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simoan 26th Jul '16 22 of 28


Well, I can certainly tell the difference, but then I can drink a glass of wine and tell you pretty much what grapes are in it with reasonable accuracy. I went through a phase of trying all the various gins and at the end of the day it comes down to which combination of botanicals you like most and the tonic water definitely makes a difference to a G&T. I'm deeply wary of anything that uses the word "craft" these days; it seems a simple but effective marketing term that gives perceived provenance that the end product rarely deserves in my experience. The beer industry has been going through this and most of the "craft beer" made by a couple of blokes in a shed is absolute muck.

The same applies to gin. It is another fad and Fevertree has tapped into that really well but then again the whole alcoholic drink market is totally driven by fads and heavy marketing spend which doesn't work on old gits like me. I only drink The Botanist gin with Fever Tree tonic nowadays on the basis that life is too short to drink crap gin with crap tonic.

All the best, Si

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JohnEustace 26th Jul '16 23 of 28

In reply to post #144321

I'm with you in finding the difference obvious. I wonder how many of those who don't are smokers?

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simoan 26th Jul '16 24 of 28

In reply to post #144333


Everyone is different when it comes to tasting, there is no wrong or right, so I expect some people are genuinely not able to tell the difference. I work with a supertaster who can detect very small traces of substances - if I even stir his tea with the spoon I used to stir my coffee, he can detect the coffee in his tea! The downside is that he cannot stand wine as the taste is just too intense.

All the best, Si

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EDWARD FORT 27th Jul '16 25 of 28

"The ludicrous over-reaction to the outcome of the EU referendum complete with hyper-ventilating commentators and hysterical luvvie wittering has become more balanced recently."

Yeah. Nothing to worry about. Currency through the floor, Scotland out the window, recession coming up fast. Nothing to worry about at all.

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kenobi 27th Jul '16 26 of 28

In reply to post #144438

yes I think we need a bit of balance, to some like vcp , their exports are cheaper and their competiitors imports have become more expensive. And we're still in the single market.

What's going to happen when the EU refuses us access to the single market, and car companies in the midlands who set up here chiefly for access to the single market, are facing a 9% tarrif, plus admin ? And then the EU systematically offers them incentives to move to eastern europe ?

Some good some bad I would say, hopefully on balance we'll be better off, but I must say that I'm skeptical that we'll ever actually leave, perhaps some kind of fudge will be done ?


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staverly 28th Jul '16 27 of 28

Bearing in mind mcap was around 17m on Geoff Wilding's arrival, compared to today's 225m, the ex. chairman has done a stellar job but taking into account the addition of 78m debt since his tenure and even allowing for the sizeable dividends, the corresponding increase in book value (38 to 71), IMO, suggests the stock must be fully valued. DYOR

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Paul Scott 29th Jul '16 28 of 28

In reply to post #144498


The UK is a massive net importer of goods from the EU.

Germans have already said that there's no question of trade barriers. We buy 20% of their entire car production. Relax, it's gonna be fine in the long run. Short term, a few bumps in the road, so we need to position ourselves accordingly.

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


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