Good morning!

The US market is shut today, so that usually means a slower day in the UK.

It's worth noting again the considerable disconnect between the FTSE 100 and small to mid caps. Its high dollar earnings means that the FTSE 100 has been remarkably strong recently - because once translated into sterling, those dollar earnings have of course gone up significantly, due to the recent weakness of sterling, caused by Brexit.

At the time of writing, FTSE 100 is down 0.15% today, whilst the mid caps index is down 1.5%. If you're a small cap investor, and you benchmark (or hedge) yourself against FTSE 100, then you're using the wrong index!

Corporation Tax

There has been a very important announcement from George Osborne, saying that he intends to keep reducing Corporation Tax to below 15% in due course. This is on top of existing reductions of 1% p.a.

This is clearly a positive development, and necessary, since companies need to be persuaded to remain in the UK, and continue inward investment. Having a super-competitive tax regime is likely to achieve that aim.

Obviously it will go down like a lead balloon on the continent, as a beggar-thy-neighbour policy, but there we go.

The annual reduction in corporation tax will of course give us, as investors, a gentle tailwind. Since earnings are after-tax profits, then the lower tax rate will be a gentle boost to earnings each year, for companies with UK earnings. That's helpful in the current circumstances.


Trakm8 Holdings (LON:TRAK)

Share price: 255p (up 8.5% today)
No. shares: 32.3m
Market cap: £82.4m

Results y/e 31 Mar 2016 & contract win - for the avoidance of doubt, I don't currently hold this share, but am mulling whether to buy back in or not. The headline figures today look really good, and have benefited from 2 acquisitions in the year - both of which have been profitable so far.

Adjusted EPS comes out at 13.44p, up an impressive 115% on last year. Although note that this is flattered by a negative tax charge. The rest of the results are self-explanatory, so I won't regurgitate that here.

It probably adds more value if I outline the Q&A session that I had with the Chairman & FD this morning, to answer my particular queries on the results statement. Call me old fashioned, but personally if I have queries…

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