Small Cap Value Report (Fri 16 August) - RGD, EQLS, CNS, QRT

Friday, Aug 16 2019 by

Good morning folks,

The market has crawled higher this morning, giving frazzled investors a little bit of relief after a tricky week.

There is supposed to be a Weekend Effect, with stocks doing worse on Monday compared to Friday. Is it really true? I have no idea! As discussed in yesterday's report, investors are jittery at the moment, so perhaps we can have another big sell-off on Monday.

There are updates today from:

I'm likely to run out of content after discussing these shares. So if any of you are still here this afternoon, you can read my review of Once Upon a Time in Hollywood.

Real Good Food (LON:RGD)

  • Share price: 6.5p (-10%)
  • No. of shares: 100 million
  • Market cap: £6.5 million

Final Results

Real Good Food plc, (AIM: RGD) the diversified food business, today announces its final results for the year ended 31 March 2019.

This company has been causing headaches for investors for quite a while. 

The long-term performance helps to tell the story:



In May, it was fined and censured by the London Stock Exchange for "multiple and serious breaches of the AIM rules and a pattern of unacceptable conduct by the Board". The disciplinary notice can be downloadedhere (PDF file).

The Directors responsible for those breaches are gone, and we have a new Board.

It has completed four disposals, leaving it with two core divisions. So hopefully a much simpler story from now on:


Today's results pertain to FY March 2019 - doesn't it seem quite late to publish them?

  • Revenue at the continuing businesses falls by 3.4%
  • Huge goodwill impairment (£18.7 million)
  • The two divisions are said to be profitable, before impairment

Good improvement in Adjusted EBITDA is reported, but I doubt that this is a relevant metric for investor since depreciation will be a real and significant cost at the underlying businesses.

Indeed, the adjusted EBITDA comes out at £1.9 million for the year, but the depreciation charge is…

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

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Real Good Food plc is a food manufacturing and distribution company. The Company is engaged in the sourcing, manufacture and distribution of food to the retail, foodservice and industrial sectors. The Company's segments include Cake Decoration, Food Ingredients and Premium Bakery. The Company’s Cake Decoration segment manufactures, sells and supplies cake decoration products and ingredients for the baking sector in the United Kingdom and abroad. Its Food Ingredients segment manufactures and supplies a range of food ingredients, such as chocolate coatings, sauces, jams, dry powder blends and snack bars to the retail, wholesale and foodservice sectors. Its Premium Bakery segment manufactures, sells and distributes bakery and dessert products to the United Kingdom retailers and foodservice customers. more »

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Equals Group Plc, formerly FairFX Group Plc, is a provider of foreign exchange (FX) payment services to both private clients and corporations through prepaid currency cards, travel cash and international money transfers. Its segments include Currency cards, FairPay, Dealing and Central. It sells foreign currency through technology platforms offered on the Internet. It has a cloud-based peer-to-peer payments platform that enables personal and business customers to make multi-currency payments in a range of currencies and countries, and across a range of FX products through an integrated system. It offers prepaid currency cards, including Euro Card and US Dollar Card. Its travel cash service offers delivery of banknotes directly to customer using Royal Mail. Its international payments service includes FairPay, which offers a solution for payment of property maintenance and mortgages; payment of expenses abroad; buying goods or services, and sending money to family and friends. more »

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Corero Network Security plc is a provider of Distributed Denial of Service (DDoS) defense solutions. The Company's DDoS protection solutions provide automatic detection and mitigation of DDoS attacks for Internet service providers, hosting providers and the online enterprise. It operates through Corero Network Security segment. Its product offering includes SmartWall Threat Defense System (TDS), which is a network security appliances configurable to meet the needs of service and hosting providers and online enterprises, all of which are impacted by the challenges of DDoS attacks. The SmartWall TDS appliances include SmartWall Network NTD Appliance and SmartWall Network Bypass Appliance. It provides SecureWatch PLUS, which offers a suite of DDoS defense configuration, optimization, around the clock monitoring and attack mitigation services. Its technology provides a First Line of Defense against DDoS attacks. It has presence in North America, the United Kingdom and Other countries. more »

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

21 Comments on this Article show/hide all

Snoo 16th Aug 2 of 21

FTSE 100/250 opening delayed. Some technical glitch.

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tomps3 16th Aug 3 of 21

If you're trying to get your young relatives into investing, perhaps they'll be inspired by Ryan? He started investing at 11 yrs, with £1,000 capital generated from car boot sales. Six years later he's generated an average return of 100% pa. Currently studying for 'A' Levels, he will have less time for trading, instead will keep his interest, with his recently launched investing research website, and a daily podcast covering latest company announcements.

Weekend watching: piworld interview: The Perspective of a teenage investor

Just 30 minutes, but well worth a watch.

In the same theme, next week we'll have interview with Lord Lee, who has just published his second investing book, a primer for newbie investors, primarily aimed at teenagers: Yummi Yoghurt: A first taste of stock market investment.  In the interview, we discuss the book, and his investing caveats, which led him to becoming the first ISA millionaire in 2003.  Today, he earns an annual dividend income from his ISA, which is equal to the total invested capital.

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laurie 16th Aug 5 of 21

In reply to post #505266

From Exchange:
All GTD orders on partition 1 and 2 have been expired.

Instruments on partition 1 and 2 (FTSE 350) will resume in an opening auction call at 09:20 and will uncross at 09:40. EDSP auction for FTSE100 securities will commence as per today’s standard schedule at 10:10. Users that receive rejection messages, are advised to log out their trading sessions and log back on to the relevant gateways again.

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HumourMe 16th Aug 6 of 21
From Exchange:
All GTD orders on partition 1 and 2 have been expired.

Instruments on partition 1 and 2 will resume in an opening auction call at 09:20 and will uncross at 09:40. EDSP auction for FTSE100 securities will commence as per today’s standard schedule at 10:10. Users that receive rejection messages, are advised to log out their trading sessions and log back on to the relevant gateways again.

On Reddit, when people have no clue what something means, they use the abbreviation ELI5, which is short for 'explain it like I'm five'. If possible can someone ELI5 this, please?

I've been able to work out that something is up with FTSE100 & 250 ( partitions 1&2). Everything else is normal?

Edit: To be fair 'trading issue' is pretty vague as an explanation so probably no one outside the LSE knows!

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laurie 16th Aug 7 of 21

Dear ELI5,
Everything is normal from 9.40.
Any limit or good-'til-cancelled orders have vanished on FTSE 350 stocks. Your broker may be re-instating them now, but it might be a good idea to check.
There is no what-went-wrong explanation.

This is educated guesswork. I won't be offended if people wish to correct the above.

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imranawan 16th Aug 8 of 21

Hi Graham,

Looking forward to your review of Once Upon a Time in Hollywood. Hopefully it may work some magic on the Cineworld (LON:CINE) share price.

Best wishes,

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sharmvr 16th Aug 9 of 21

Out of left field, but a question for those that may be kind enough to assist -
how would one go about getting exposure to inflation linked bonds, ideally globally
Many thanks and have a great weekend.

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Martin Verlaine 16th Aug 10 of 21


Not related to today but have you any thoughts on Rock Rose Energy as I see the share price has come back somewhat from the highs post the return from suspension. Not sure how much there’s is in the balance sheet for de commissioning costs from some of the fields bought with the Marathon purchase and do you see this as adequate? 



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Mark Carter 16th Aug 11 of 21

Real Good Food (LON:RGD) When an AIM company is censured, you know it must be bad.

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JohnEustace 16th Aug 12 of 21

In reply to post #505421

£IGIL iShares Global Inflation Linked Govt Bond UCITS ETF

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Graham Neary 16th Aug 13 of 21

In reply to post #505431

Mark; how true!

Real Good Food (LON:RGD)

The previous directors are all gone (I think) so at least it has that in its favour. Still looks like a bargepole job on the basis of the debt, sadly.

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Graham Neary 16th Aug 14 of 21

In reply to post #505426

RockRose Energy (LON:RRE)

Martin - I'm afraid I've stuck to my rule and stayed away from that, as it's beyond my sector coverage. Well done to those who've profited from it.

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Steves cups 16th Aug 15 of 21

In reply to post #505421

I think you have to first ask what volume/value am I looking to invest, then look at the broker to see if you can deal online, and at what prices and volumes, although most brokers will tell you its better to deal over the phone when spreads are high. Good place to start might be
Which has a lot of good info and I used this to educate myself when investing in corporate bonds via LSE order book for retail bonds (ORB). I used iDealing

Good luck

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FREng 16th Aug 16 of 21

In reply to post #505421


I use £INXG


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Trident 16th Aug 17 of 21

I see FT Alphaville have referenced your analysis of Burford Capital (LON:BUR)

A nice hat tip

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tombuz 16th Aug 18 of 21

I see the FT film critic gave Once Upon a Time in Hollywood five stars while two comments that followed rubbished it. Perhaps they took it too seriously - contra Graham's advice.

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phil140158 16th Aug 19 of 21

In reply to post #505441

Hi Graham, like you, Real Good Food is not the sort of company I would normally invest in. However, I took a punt on the Downing Strategic Micro-cap IT which is heavily committed to Real Good Food - think I might be leaving this one to my grand-children!

Thanks for your good work.


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LeoInvestorUK 16th Aug 20 of 21

In reply to post #505486


Real Good Food (LON:RGD) is Downing Strategic Micro-Cap Investment Trust (LON:DSM) 's largest position, but almost all of it is in the form of loan notes. I'm not too keen on Real Good Food's equity either, but I think the debt looks pretty secure, especially given that it ranks ahead of the pension fund.

Incidentally, Downing Strategic's second largest holding is Volex (LON:VLX) , a company that I am very keen on at the moment, and most of their other holdings look pretty solid now that FireAngel's share price has fallen back and Redhall has gone.

I cover RGD, VLX and FA. on my blog.

Blog: LeoInvestorUK
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WDWombat 22nd Aug 21 of 21

The scene at the end had us holding our hands over our eyes.  He doesn't hold back. But lots of gentle moments in between. I saw it at a Cineworld (I am a so far disappointed shareholder).  Price of a small popcorn and a bag of wine gums?  £7.46. Price of a ticket for an old man? About the same.

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 Are LON:RGD'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 »


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