Small Cap Value Report (30 Oct 2015) - SHOE, SEE, SOLI, CAMK

Friday, Oct 30 2015 by

Good afternoon!

Hardly any company news of interest to me today, so I had a lie-in after skimming the RNS first thing in bed, on my iPad! What I'll do this afternoon is circle back to a few companies whose results or trading updates that were overlooked earlier this week.

So if you're reading this on the 1pm email, please refresh this page later, as the report will gradually build as I post more sections throughout the afternoon.

Shoe Zone (LON:SHOE)

Share price: 202p (down 2.2% today)
No. shares: 50.0m
Market cap: £101.0m

Director selling - the CEO & COO, founders of the company, have sold 2.5m shares. That's undoubtedly a negative, however they still retain a very high shareholding, of 25.0m shares, about half of the company.

I'm in two minds about this - Directors should have plenty of skin in the game, but 50% of the company is probably still too high, as they can do whatever they want with the company at that level. There again, Directors selling is a signal that they'd rather use the money for other things, and it sells a signal that they think the shares are fully valued.

In a separate announcement, the wife of the CFO has bought £30k of stock, but that looks like a fig leaf to me.

Seeing Machines (LON:SEE)

Employee Benefit Plan - I see that there was quite a significant revolt against this at the AGM - 13.9% voted against. That may not sound much, but considering so many shareholders are not able to vote at all (due to nominee accounts, shares held via Spread Bets/CFDs, etc), then any vote of more than about 10% shows considerable underlying shareholder dissatisfaction.

So management should stop, and think again about this plan, which I've not looked at.

Solid State (LON:SOLI)

I see it's down another 65p to 467p, after yesterday's bigger fall on a profit warning. Having slept on this one, am still no further forward on how to value it. For that reason, even though it looks tempting having fallen a lot, I'm not yet convinced that it's a bargain - but it's certainly gone on my watchlist.

As a general point, I feel that this market is significantly over-valuing a lot of small caps…

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Shoe Zone plc is a footwear retailer in the United Kingdom and the Republic of Ireland. The Company offers women's shoes, men's shoes, boy's shoes and girl's shoes. The Company's online offering combined with its store network enables customers to shop through multiple channels. The Company operates from a portfolio of approximately 550 stores. Its customers purchase all of the products available in stores, as well as an additional approximately 400 product styles. The Company sells over 20 million pairs of shoes per annum. The Company has operations in various countries, including Germany, Italy, Spain and France. The Company's distribution center is located in Leicester, England. The Company's subsidiaries include Castle Acres Development Limited, Shoe Zone Retail Limited, Zone Property Limited, Zone Group Limited, Shoe Zone (Ireland) Limited, Shoe Zone Pension Trustees Limited, Stead & Simpson Limited, Zone Footwear Limited, Zone Retail and Walkright Limited. more »

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Seeing Machines Limited is engaged in developing, selling and licensing products, services and technology to detect and manage driver fatigue and distraction, including continued market development to secure sustainable channels to market for the product. The Company's segments include automotive, off-road, fleet, aviation, scientific advance and other. The Company is also engaged in developing driver-monitoring technology to incorporate into passenger cars; entering commercial agreements with partners for the development, manufacturing and sale of products into target markets, and research and development of the Company's processing technologies to support the development and refinement of the Company's products. It also offers driver monitoring system (DMS) technology. more »

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Solid State PLC is engaged in manufacturing of electronic equipment and distribution of electronic components and materials. The Company is a manufacturer and specialist design-in distributor to the electronics industry. Its segments are Distribution division and Manufacturing division. The distribution division comprises Solid State Supplies Limited and Ginsbury Electronics Limited. The manufacturing division includes Steatite Limited and Q-Par Angus Limited. Its geographical segments include UK and Non UK. The Company is a supplier of computing technologies, electronic components, antennas, microwave systems, secure communications systems and battery power solutions. It markets its products through brands, including ndura RUGGED and RZ Pressure. It acts as both a distributor to original equipment manufacturers (OEMs) and manufacturer of specialist units to clients with complex requirements. It serves aerospace, environmental, government, oil and gas, and transportation markets. more »

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

15 Comments on this Article show/hide all

dmjram 30th Oct '15 1 of 15

Hi Paul,

If you have the time, could you take a look at Bloomsbury's interims from earlier in the week please. You last looked at them back in July.


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Chrisfarrell21 30th Oct '15 2 of 15

And Redde (LON:REDD) if you have time, thanks.


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imranawan 30th Oct '15 3 of 15

Hi Paul

I note that the cancellation of AIM listing for Camkids is a link to a Youtube video of 'Another one bites the dust' which made me chuckle. I assume this was deliberate to see if readers click on your links.

Best wishes,

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Paul Scott 30th Oct '15 4 of 15

In reply to post #110160

Haha, well done Imran, you spotted my little joke! :-)


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achenaton 30th Oct '15 5 of 15

Hello Paul, just going back to UTW, I am struggling to understand the significance of the prior year adjustment. Has the effect of it been to take around £3.9m out of the turnover and pre-tax profits of 2013 and put £0.3m of that in 2014 and £3.6m of it in 2015? If so it follows that without the adjustment the earnings for 2015 would have been around £3m less on an after tax basis which equates to eps of around 4p less and the decline in gross margin from 2014 to 2015 would have been even greater. Also, in 2013 turnover and pre-tax profit were £25.5m and £6.2m respectively so £3.9m is a highly material sum to have taken out. Any comments appreciated. Thanks.

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Firtashia 30th Oct '15 6 of 15

Paul, if you have time please could you take a look at Prime People (PRP) who issued their interims a couple of days ago.

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jraitt 30th Oct '15 7 of 15

Hi Paul,
I was expecting one of your pithy comments about the LWB RNS a couple of days ago. Takes Investor relations to a new high.

Low & Bonar PLC
Brett Simpson, Group Chief Executive
Mike Holt, Group Finance Director
020 7535 3180

Instinctif Partners
Matthew Smallwood
Helen Tarbet
020 7457 2020

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity may differ materially from the impression created by the forward looking statements contained in this announcement. In addition, even if the results of operations, financial condition, and liquidity are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business and market conditions. In light of these risks, uncertainties and assumptions, the events described in the forward looking statements in this announcement may not occur.

Other than in accordance with its legal or regulatory obligations, the Group does not undertake any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise.

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troytea 30th Oct '15 8 of 15

You've earned the right to blow your own trumpet - please do keep it up.

I have no issue with TWs more abrasive style just so long as the dodgy companies keep being called out

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AstonGirl 30th Oct '15 9 of 15

Love a bit of Freddie on a Friday, thanks Paul

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cig 30th Oct '15 10 of 15

In reply to post #110175

Isn't it standard lawyer boilerplate? While it's a pity as it dilutes actual information, it's everywhere. IPO/right issues prospectuses seem to have about 20% of actual text these days.

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DJCP 31st Oct '15 11 of 15

This may be of interest to people (where you can download 1000+ AIM companies with their NOMADS) :

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martinthebrave 1st Nov '15 12 of 15

Loved the Nick Taylor interview but had to listen via my Chrome browser. The audio on your website doesn't work with my Windows10. Not sure if the glitch is with your website or at my end? Anyone else having any issues?

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Cleeve 3rd Nov '15 13 of 15

Paul am away greetings from Costa Rica, have you sold out of shoe zone or did you just miss it by accident
Well done on globe I was never in or out but it came up on some of my screens in stockopedia which I never bothered looking into so you saved me some time

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TangoDoc 3rd Nov '15 14 of 15

Rumour has it that he CEO of SHOE who already owns a small farm near where I live, is in the process of buying another chunk of agricultural land. That may be a more relevant to sales of shares than any implication for the company.

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laynab 10th Nov '15 15 of 15


I've subscribed to Stockopedia for 3 years, upgraded to the US/Europe version last year, and think it is superb.

I've been looking over your articles through this year, and find them insightful. Notwithstanding your usual disclaimers that are perfectly sensible, I still use your observations to inform my choices for my pension funds, and slow the rate at which my hair falls out, turns grey, or does both.

I'd therefore welcome any further observations you may have on SOLI, as I bought it twice in the last 9 months or so and am now nursing a 40% loss on a large holding, in my pension (ouch). Firstly, the stock reports for Feb and June both look excellent, with a good Stockrank, passing 3 screens and a PE of 14 (whereas you thought it was 20?) Does it deserve such a hiding or is Mr Market over-reacting.

Best wishes.


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

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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