Small Cap Value Report (Mon 13 May 2019) - ANG, WEY

Tuesday, May 14 2019 by

Good morning, it's Paul here.

Right, let's get this show back on the road.

Today, I'll be looking at;

Angling Direct (LON:ANG) results

Wey Education (LON:WEY) interims

Anything else of interest.

I'm putting the finishing touches to Friday's late report here.  I've covered Premier Technical Services (LON:PTSG) - and the recent shorting attack on it, and a positive update from T Clarke (LON:CTO) . So that's something to get you started today, whilst I'm looking at other announcements. I'm very sorry it was so late, due to me being unwell (am tons better today though, so hopefully that issue is now fixed).

** It's Mello week! **

I'm looking forward to catching up with many subscribers at Mello London later this week.

There are two, back-to-back, events, in London (Chiswick) as follows;

Wed 15th May - Mello Investment Trusts & Funds - excellent speakers arranged, with what should be some great insights into how top fund managers do things.

Thu & Fri, 16-17 May - Main Mello event - this was a fantastic success last year, and I'm sure will be wonderful again this year. Above all, Mello events are so friendly, they're tremendously enjoyable.

The schedule of presentations are now on the websites.

I'm booked in for the usual small caps talk on Friday, but I'll be around on both days. Graham will be speaking several times, and he seems to have been roped into doing a SCVR live at 9:00am on Friday. I refused to do any live SCVRs this year, as the stress in previous years of having to produce the material to present in about half an hour after breakfast, was just too much!

Pre-8am comments

Angling Direct (LON:ANG) -

 (I have a long position in this share) - the financial highlights bullet points look really good. However, the company/advisers have been deceptive in how the results are presented - with lots of positive bullet points in the highlights, and positive commentary, but a key omission - that last year's (pre-exceptional) profit of £941k profit has fallen away to a…

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Angling Direct plc is a United Kingdom-based fishing tackle retailer company. The Company is principally focused on selling fishing tackle products and related products through retail stores and also online via its own Website ( The Company’s product categories include reels, terminal tackle, rods, bait and additives and bivvies and shelters. The Company fishing tackles products, including capital items, consumables, luggage and clothing. Theses all fishing tackle products sells under its own brand Advanta. The Company operates approximately 15 retail stores. The Company has developed angling superstores. more »

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Wey Education plc is a holding company. The Company, through InterHigh Education Limited (InterHigh), operates online independent secondary school in the United Kingdom, offering The International General Certificate of Secondary Education (IGCSE), AS Levels and A Levels. The Company's subsidiaries include Wey ecademy Limited, Wey (Newco 1) Limited, Wey (Newco 2) Limited, Wey (Newco 3) Limited and Wey (Newco 4) Limited. more »

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

18 Comments on this Article show/hide all

matylda 13th May 1 of 18

Cheers Paul - Hope you're back to 100% health wise.

Blog: Briefed Up
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MrContrarian 13th May 2 of 18

My morning smallcap tweet: Death dive drags Dignity down

Dignity (LON:DTY), Escape Hunt (LON:ESC), GCP Student Living (LON:DIGS), Angling Direct (LON:ANG), Victrex (LON:VCT), Sabien Technology (LON:SNT)

Dignity (DTY) deaths fell off a cliff in Q1 with a 12% fall. U/L rev down 15%. "Historical data indicates that it is likely that this proportional decrease will not continue throughout the remainder of the year and that the full year will finish within approximately three per cent of the previous year."
Escape Hunt (ESC) placing to raise $4m at 60p, a wafer thin 1.6% discount.
GCP Student Living (DIGS) proposed placing at 162.5, a 1% premium. Closes 30 May.
Angling Direct (ANG) FY rev £42, missing f/c £44m. EPS -0.55 vs f/c -0.8. Recent trading strong with rev up 51%, LFL 29%.
Victrex (VCT) H1 proos as guides with rev down 16%, EPS down 21%. Some recent improvement but says it will now be challenging to achieve growth in H2. RNS-preview service working for some holders with SP off 10% in a week..
Sabien Technology (SNT) £300k placing at 0.1p, a 29% discount.

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johnsmith68 13th May 3 of 18

Welcome back Paul, hoping you're finally free of the flu. Your late Friday report is an excellent example of the kind of insight that I value so highly from the SCVR. I have no accounting or share analysis background to draw on and the bare Stocko numbers do not always draw attention to the wilfully creative or downright fraudulent (e.g. Patisserie Holdings (LON:CAKE) ). As you point out in Friday's report, there may well be nothing amiss at Premier Technical Services (LON:PTSG) but there really is no point taking the risk and I for one will happily give a wide berth as a direct result of your experience and considered analysis. Thanks once again for all of your entertaining, educational and sometimes lucrative analysis.

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Wimbledonsprinter 13th May 4 of 18

The Wey Education (LON:WEY) results read very well (I hold) although I am surprised at the share price reaction (up c50%, which given the positive net cash is almost a doubling of the EV). Trying to justify this move, presumably the market is reassured that Interhigh and Academy21 can succeed, following the death of David Massie. Also the restructuring seems to have been largely completed, without unwanted surprises, and the recent complaints on sites like mumsnet, about class sizes, do not seem to affected financial performance at Interhigh.

WH Ireland has not changed its forecasts this morning, but states that risk is now on the upside. The RNS does not break out the 55% top line growth, although in its note, WH Ireland estimates organic growth of c35%.

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andrea34l 13th May 5 of 18

Please can you cover Mycelx Technologies (LON:MYX) Paul? In my mind they look to have released the most positive news today, with very good results indicating revenue +96% and net profit $3.2m (loss 1.2m); on the face of it, they seem good value.... with the only immediate negatives being potentially lumpy contracts and no obviously explicitly positive noise on outlook.

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MBFP 13th May 6 of 18

Air Partner.
(I hold)

I emailed Air Partner last week and on Friday afternoon had a conversation with Kate Patrick (Investor Relations)
My email can be found in last week's SVCR. I was unhappy that their report did not appear at 7am especially after the accounting problems last year. Kate was very apologetic. She said it was intended that the report came out at 7am. It arrived 5.45pm. I explained that this is not good for investor confidence which needs to be restored. I asked when private investors might get the opportunity to meet the company. Mello, I asked? She seemed a little vague and said the road show was busy next week visiting institutions. I suggested an appearance at Mello would help sentiment with private investors.
It was a positive conversation. Hopefully we private investors will be able to meet management.
Kate also said Air Partner was trading well and the underlying business is strong.


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Zipmanpeter 13th May 7 of 18

It’s unfashionable B2C Retail but much to like in today's Angling Direct (LON:ANG) results.

Scale increasing sharply – revenue £42Mn is +39% vs 2018 but that’s still only +/-6% of UK market
• Online up to £22.3Mn (+30% inc international sales)
• Stores grew to £19.7Mn (+50%) with LfL by +6.2% adding new stores via new organic sites and acquisitions of Mom&Pop stores at very low multiples
• Lots of cash left from last years placing (at 92.5p) for more growth actions

Key questions remaining are around long term potential & margins (& thus dividends):
• What is scale/potential of Advanta own label brand – which gives ave. 50% GM (vs 31/36% GM for branded goods sold online and instores)
• What is scale, trajectory and potential of international sales – native language sites for D, Fr and BeNeLux are now in place
• What is max. no of productive stores in UK (and I’d like 1 store each in D, Fr, Be & NL maybe)

Opportunity for ANG to tell a surprisingly good story despite threat from Amazon etc

In short, if you like £G4M or Pets at Home (LON:PETS) on a 3-4yr basis (I do and now hold both), the same deal is on the table here: no. 1 (mostly online) specialist, consolidating a niche market for the mass market + engaged but not professional hobbyists.

Angling Direct (LON:ANG) therefore seem to have a small but sustainable position against the really big generic aggregators like Amazon based on data + qual insights for a distinctive consumer base. Fishing Republic (LON:FISH) has gone so now can takeover in Coarse fishing space as well.

If I did not already hold so much/many retail stocks in an uncertain, rapidly changing world I would be tempted.

Biggest query might be long term size of the market in a digital age: will young people sit by a riverbank for 6 hours?

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MBFP 13th May 8 of 18


Hoping to hear your view on Superdry. My teenage son loves the stuff and it seems great quality.


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fwyburd 13th May 9 of 18

Hi Paul, good to have you back.

Re Wey Education (LON:WEY)

It sounds like Wey is not sure how to spend on marketing, and is trying out different things. 

I recall about eighteen months ago that they decided to advertise at Waterloo station at high cost and for a negligible return (as was predicted on this board at the time). I think  it's worrying to see them still struggling to work out how to market themselves given this is core to their growth plans. 



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timarr 13th May 10 of 18

In reply to post #475806

RE: Air Partner (LON:AIR)

She said it was intended that the report came out at 7am. It arrived 5.45pm. I explained that this is not good for investor confidence which needs to be restored.

While agreeing that the report should have appeared at 7pm, once it hadn't they were right to delay it to after the end of trading. There's nothing worse than companies putting out mid-session announcements.


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Gromley 13th May 11 of 18

I previously had a small short on Wey Education (LON:WEY) (closed out at just a smidgen below today's recovered price).

Had I not already closed, I would be doing so today as it seems to me today's results have removed some of the negatives.

As previously announced they have withdrawn from their overseas adventures (as well as the proposed acquisition of a B2B provider) and today's results tell us that this has not been overly costly; in my view these adventures would have proven to be a more costly distraction. They would also, I believe, have needed at least one more cash injection to support them - cash now looks pretty good and potentially no need for any further to be raised as it stands.

If you accept the exceptionals (which seem reasonable at face value) the they were pretty much breakeven in H1 (I'm not sure if there would be any seasonality to their profitability?). However as Paul points out, they are upping their marketing spend (and as Francis notes they haven't proven that they know how to use that effectively), which could delay full profitability further. Of course marketing spend can to some extent be dialled up or down to match available resources.

Overall then, I think that they have a much more credible path to a stable and profitable business, than was previously the case.

Not a buy though for my money as I just don't see the massive upside predicted by some.

The Company's vision is for the Wey Group to become a provider of online education to a level where it is, in terms of numbers of students, the largest secondary school in the country and for it to go on to become the size of a Multi Academy Trust.

In my view that is a relatively bold but sensible ambition given where they are but I would say is an order of magnitude short of some of the bold claims I have read from 'bulls' elsewhere.

I think that they are at the point of moving beyond being a "story stock" but I wouldn't put my money on them becoming 'the next big thing' at this stage.

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MBFP 13th May 12 of 18

In reply to post #475856

Thanks for your comment Tim and I agree.
However, my point was that the results were late again, particularly after last year's debacle. It reinforces the concern that Air Partner may not be reliable when they should have making sure of the opposite. Also they could have posted an RNS stating the results would be delayed until the end of the day.
Happily the issue appears to be poor organisation.


Prior to the accounting issue just over a year ago the shares were around 150p, now 90p. Shows the power of sentiment.

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smegster 13th May 13 of 18

Angling Direct (LON:ANG) didn't even bother to publish a full cashflow statement (are they just lazy or do they have something to hide?). There is a "cash generated from operation" value of (3,415)k at the end of the 'over-PR'd commentary, is this made up of operating cash flow or working capital? Who knows, personally I'm not going to bother to wait to see the annual report to find out.

Andrews Sykes (LON:ASY) also failed to publish a full cashflow statement yesterday. I see this as a big red flag

Paul - it is good to see that your feeling better

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Paul Scott 14th May 14 of 18

In reply to post #475876

Hi gromley,

Re your Wey Education (LON:WEY) comments above - that was a nice balanced summary. I agree with most of what you say.

Best wishes, Paul.

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12barblues 14th May 15 of 18

Re Andrews Sykes (LON:ASY): Smegster, the cashflow statement is included in the results announcement and very healthy it is too!

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smegster 14th May 16 of 18

In reply to post #476141

RE: 12barblues Andrews Sykes (LON:ASY) includes a incomplete cashflow statement in the results announcement as it does not include the cash flow from operating activities statement. 

The published cashflow statement states £22.8m was "Cash generated from operations"

As full details are not provided how this £22.8m was generated, there is no way to definitively say that the results were healthy (even though it does look like they were).

Was the £22.8m generated through operating cash (which would be good)
Was the £22.8m generated through the sales of assets (which would be a one-off and would therefore be bad)
Was the £22.8m generated through changes in working capital (which could be bad)

or what was the combination of each of these.

Although it could be possible to back solve the cashflow statement using the balance sheet, we shouldn't need to do this, as the company should provide these figures ( Andrews Sykes (LON:ASY) seems to have just been lazy as they will be publishing full accounts on 17 May).

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Gromley 14th May 17 of 18

In reply to post #476001

Thanks Paul,

Would have been great to catch up with you on this and everything in general at Chiswick, but sadly I can't make it on this occasion so I'll have to leave that great pleasure to others. Hopefully David is already hard at work, on another Mello Winterfest!

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bestace 14th May 18 of 18

In reply to post #476161

You're over-egging the situation in my opinion. There is a cash flow statement included in the Andrews Sykes (LON:ASY) announcement; what you're quibbling about is the lack of a reconciliation from operating profit to operating cash flow, which the vast majority of companies disclose as a note at the back of the accounts rather than as part of the primary cash flow statement.

And given that these full year results RNSs are not intended to be a complete set of audited accounts with all the notes and trimmings, it seems overkill to me to describe one omitted note in particular as a 'big red flag', all the more so when operating profit was £20.7m and operating cash flow was £22.9m (i.e. a conversion rate of 111%) and as you say, you can work out most of the numbers that will appear in that missing note from the rest of the RNS.

However it is possible to say for sure that cash from 'sales of assets' won't form part of that missing reconciliation because that line already appears under the 'investing activities' section of the cash flow statement.

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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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