Small Cap Value Report (Thu 18 Apr 2019) - D4T4, TRI, MONY, FCH, RWS, AVST, Loungers

Thursday, Apr 18 2019 by

Good evening/morning, it's Paul here!

These 7am flying starts have been a bit of a shock to my system this week (being more of a night owl), so I'm jolly glad that it's the long Easter weekend coming up, to chill out a bit!

I'm off to Munich for a couple of nights, tomorrow. No particular reason, other than it was a £150 per person special offer from BA, flights and a nice hotel - pretty good, eh! I can recoup a fair proportion of that in the executive lounge before take-off too.

So I'm brushing up on my O-level German. A phrase I remember from school is, "Was?! Du lieber gott! Das ist doch nicht moglich!", or something like that.  I'm looking forward to using that phrase, in an indignant tone, if presented with an extortionate bill of any kind.

Let's hope I don't cause a diplomatic incident over Brexit. I've always liked Germans anyway. They make fantastic cars & machine tools, love their beer, and have a wonderful sense of humour.

Early Skim of the RNS

(7-8 am brief reviews)


Year end trading update - 31 Mar 2019 - adjusted profit "slightly ahead" of expectations.

Strong pipeline, so confident will achieve market expectations for 31 Mar 2020.

Share price has risen c.60% since end 2018, so good performance looks to be already baked into the share price.

An interesting company, so I will take a closer look later this morning.

Trifast (LON:TRI)

Trading update - for FY 03/2019.

Underlying profit "slightly ahead of management expectations".

New banking facilities agreed, gives headroom for more acquisitions.

Positive outlook, despite macro headwinds.

I'll write an enlarged section below.

Moneysupermarket.Com (LON:MONY)

How are the friendly meerkats getting on?

Q1 2019 trading update today. 

Revenues up 19% - driven by more people switching energy suppliers, but growth expected to moderate during the year.

Confident of meeting market expectations.  Confirms special divi of 7.46p.

Share price has been strong this year. Price looks a bit toppy to me (fwd PER of 18.4) for an intermediary with no moat. Terrific track record of growing profit each year.

As nearly £2bn market cap, I won't expand on this. Was just curious to see how they're trading, and…

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D4t4 Solutions Plc, formerly IS Solutions Plc, is a United Kingdom-based company, which focuses on data solutions for its clients to provide end-to-end management of the entire data lifecycle, from its initial creation through the manipulation, analysis and management of the data all the way through to its eventual retirement into industry-compliant archives. Its segments include License sales, Project work and Recurring revenues. Its market focus areas include Data Collection, which captures data from any digital channel through its division, Celebrus Technologies; Data Management, which includes the secure storage and management of all forms of data, either in the cloud or on client premises, for presentation through multiple devices and applications; Data Analysis, which focuses on delivering value through analytics capabilities, and Data Solutions, which includes areas, such as Web and mobile application development, systems migrations and upgrades, and Software-as-a-Service. more »

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Trifast plc is a manufacturer and distributor of industrial fastenings and category C components to a range of industries and customers. The Company designs, manufactures and distributes mechanical fasteners on a global basis to both distributors and to original equipment manufacturer (OEM) assemblers. Its geographical segments include the United Kingdom, Europe, the United States and Asia. It owns a range of fastener solutions for specific industries and applications, including fasteners for sheet metal, fasteners for plastic, security fasteners, thread-locking nuts and micro-diameter fasteners. Its brands include Pozidriv, Polymate, Binx and Hank. Its products are used in various markets, such as automotive, electronics/telecoms and domestic appliances. It operates in Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany, Poland, Malaysia, China, Singapore, Taiwan, Thailand and India. Its subsidiaries include Trifast Overseas Holdings Ltd and TR Formac Fastenings Private Ltd. more »

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2.0 Group PLC provides online services, through its brands, MoneySuperMarket, MoneySavingExpert and TravelSupermarket. The Company's segments include Money, Insurance, Travel, Home Services and Its Money segment offers customers the ability to search for and compare products, including credit cards, accounts, mortgages, loans, debt solutions, savings accounts and business finance. Its Insurance segment offers customers the ability to search for and compare insurance products, including breakdown, home, life, motor, pet and travel insurance. Its Home Services offer customers the ability to search for and compare products, such as broadband, mobile phones, vouchers, shopping and utilities. Its segment offers customers car hire, flights, hotels and package holidays, among others. Its MoneySavingExpert is a consumer finance Website, which is dedicated to journalism, great tools and a community. more »

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  Is LON:D4T4 fundamentally strong or weak? Find out More »

43 Comments on this Article show/hide all

TheShareWhisperer 18th Apr 24 of 43

I used to like Henning Wehn, but don't now the more I watched him.

In the clip you have linked to , Henning Wehn dies on his ass at the end because he tries to tackle a subject that he doesn't understand, and is way to big for him. And all he succeeds in doing is insulting the audience, who regularly boo him.
He really has got a lot to learn about the craft of being a comedian.

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tomps3 18th Apr 25 of 43

(LON:AQX) investor presentation by Alasdair Haynes, CEO & Jonathan Clelland, CFO & COO

Not related to any news today (AQX had FY results 20.3.19). However, we've just published this video presentation, and quite aside from the investing opportunity it presents as a MiFIDII/compiance play (mentioned by Stephen English's interview Pt 1, the insight it gives to how pricing and liquidity in equity markets works, is fascinating, and a must watch for any equity investor.

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maxwright 18th Apr 26 of 43

Hi Paul

Congrats on the new format and starting work so early.

Like you I have never realised what the Cosy Club in Bournemouth was, I will certainly have a look at it soon. Do you live locally, I do. If you do organise any Investor clubs or meetings locally, do count me in, please!

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SundayTrader 18th Apr 27 of 43

In reply to post #470436

I don't myself understand why they are choosing to lose so much money. Other people in this space are managing to make money at a more modest scale. I don't believe this is a Facebook, winner takes all, sort of business. Making money out of SME lending is all about weeding out those who are never going to pay you back. That does not need scale.

On the other hand, from the short-side perspective, there must be an awful lot of cost could be taken out quickly.

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Neil Atkins 18th Apr 28 of 43

Re Loungers I have been a regular customer of one of their lounges in Glossop called The Pico for the last 5 years or so.

In that time they have grown significantly, initially selecting locations like Glossop, Market Harborough and Rugby where they could make a big impact.

I have always believed in investing in companies where the service you receive is good ( that theory of course was blown apart by my investment in Valarie Patisserie!!) but there is a lot to admire in Lounges operation and they respond well and positively to feedback.

One word of caution though, the outlet management does seem to change quite often, they may need to do something about staff retention but if the price is right, I might be tempted to invest.

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dscollard 18th Apr 29 of 43

In reply to post #470466

I set my parents in law up with an Avast (LON:AVST) subscription and prepaid for a 3 year licence naively believing that would be helpful for them

Not so: the constant push and pop-ups with warnings caused them to sign up for yet another subscription fearful of the barrage of warnings (on a PAID sub)

On principle that annoyed me, it's no different than doorstep rogue traders exploiting OAPs

I then undertook the task of getting a refund from the fragmented organisation that is the post acquisition estate of Avast (LON:AVST): they really don't seem to do backend integration and are not really sure who bills whom in their various profit centres.

Coupled with that , they use fairly sharp practices in embedding software on their downloads, hijacking browsers and search engine functionality : all the bad old stuff of 10- 20 years ago

Clearly I am jaundiced by my experience and biased beyond objectivity. In the Peter Lynch school of investing I'd be a short

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Ljhrunner12 18th Apr 30 of 43

I agree that the Greggs vegan sausage roll is great, as is yours and Graham's commentary on here. Keep up the good work

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moolahcoast 18th Apr 31 of 43

This new format makes me hungry

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simoan 18th Apr 32 of 43

In reply to post #470466

I have also used AVG anti-virus software, free, for years.

They try very hard to get you to upgrade to other products, such as PC tune-up things, etc.

Hi Paul,

The great irony is that all this additional software only further slows down your PC because there will be all kinds of CPU processes running in the background and using up memory. I've never had to recover from a computer virus but I have wasted many hours of my life trying to uninstall  "free" AV software!  It's a menace and almost as bad in hammering your PC performance as what it is supposedly protecting you against.

Thanks for the great reports this week. Enjoy Munich! 

All the best, Si

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Gostevie 18th Apr 33 of 43

I too really enjoy the new format. Thank you. But please don't feel under pressure to feel you have to do it that way all the time if you feel like a lie-in or duvet day.

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Merlotman 18th Apr 34 of 43

Not sure whether your reference to meerkats was a case of brand confusion or simply to highlight the competitive landscape in price comparison websites. Moneysupermarket.Com (LON:MONY) of course had its somoneysupermarket campaign which it has now swapped for a calmer ad campaign. I was a holder principally because of the company's consistently good cashflows but also reached the view that the valuation had become tippy, sold out recently and then missed the bounce today! I am not feeling quite "so" now.

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jonesj 18th Apr 35 of 43

In reply to post #470506

Many software companies have updates which try to get you to install other software. For example, every time I upgrade Flash player, I need to make sure boxes are unticked so nothing else gets installed.
This problem is not specific to Avast (LON:AVST), although they are among the many guilty software companies.
All the pop ups and other irritations can easily be turned off, so you forget it's there.

In response to some comments from others, Avast claim over 400 million users and their accounts suggest there is significant revenue, so whatever each individual here thinks, people DO use Avast and some are prepared to pay for it.
As for the importance of reputation, well yes that matters. Reputation also matters with many other industries - airlines, aircraft makers, car makers, food producers, jewellery retailers -it is almost endless.
Boeing have suffered a recent reputational hit, but despite a few crashes along the way, anyone buying the stock for 20 cents in 1973 would still be quite happy with the $380 current share price.

As another example of reputation, anyone owning Ratners stock might not have done so well.

I don't own Avast (LON:AVST) but may research it further.

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timarr 18th Apr 36 of 43

In reply to post #470541

Many software companies have updates which try to get you to install other software. For example, every time I upgrade Flash player, I need to make sure boxes are unticked so nothing else gets installed.

Hi jonesj

You must be resident outside the EU (or disguising your location): under GDPR they're not allowed to do that - you have to specifically consent to the update, not have to de-select it. Since GDPR came into force the Flash upgrade display I get has changed to the opt-in model.

One of the many advantages of the much derided GDPR ...


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jared007 18th Apr 37 of 43

Funding Circle Holdings (LON:FCH) is a bit of a mixed bag for me. I have interest in two respects 1) I opened an ISA with them in August 2018 so I earn money from loans with them 2) I bought into the IPO at launch.

As a lending customer of Funding Circle, I really like the hands-off approach to getting a better return than 0.2% in the bank account. I just drop money in, and every day I can see it grow with the principle and interest repayments (which is reinvested automatically for me). I think they sell this point well to the public, and it is attractive. Helping small british business is a marketing point that got me interested. I can earn good returns and help Britain (that's the speil anyway). I think this is the niche area that they cater well for - punters who want to make their money work more than cash ISA accounts with their bank, but aren't quite ready to get down with picking funds, trusts and shares (or have no desire to learn). I'm aware of rate setter and others, but for some reason funding circle spoke to me - I liked the name, the logo, and the way they "big up" helping small business thrive. So in that respect, the marketing spend has worked on me!

However, I am nursing a loss as an investor in funding circle in the region of 30% - 5% depending on the price action. I still hold because I want to see this share stare me in the face everyday to remind myself to do proper research next time (don't just blindly buy an IPO which is what I did).

As far as I can make out, FC is one for the distant future. It's all about them growing the US business (and other regions) and growing more organic origination (and essentially becoming the household name for innovative finance). I actually think the business model is good - they take 1% of the interest payments and then pass the rest onto you. They never have capital at risk, it's always the investors money that will be lost to defaults. So originating more loans, and ensuring they have investors willing to fund the loans is the growth strategy. Which going by their reports is working!

Time will tell on this one ...


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dscollard 18th Apr 38 of 43

In reply to post #470541

Many software companies have updates which try to get you to install other software. For example, every time I upgrade Flash player, I need to make sure boxes are unticked so nothing else gets installed. 
This problem is not specific to Avast (LON:AVST), although they are among the many guilty software companies.
All the pop ups and other irritations can easily be turned off, so you forget it's there.

No doubt, but it is a confused business model : that can be tolerated in ad-financed freeware or monitisation by affiliate marketing or  search-redirect  when the core product is FREE. My point is that in PAYING for a software licence this kind of nonsense is unacceptable.  Most software providers of any repute simply don't use these practices in paid-for-services  and those that do are barge pole for me. 

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dscollard 18th Apr 39 of 43

Re £d4t4;
There is another thread on £d4t4 on Stocko, wrote the below material in quote last Dec 18 which gives a little bit of background on what the company does and the Celebrus offering - other thread is here

While probably innocuous enough , the FD gave 3 month notice  a couple of weeks ago: she is leaving on good terms

Finally, most of today's 6.5% drop is probably attributed to a very big holder selling ( a hedgie selling 0.25%  issued a  TR-1 this afternoon) most of the buys today were small PIs

The Celebrus platform ties together all customer/customer touch points across all digital channels including voice, email, web, social media etc and integrates these to allow much deeper management and development of prospects. Apart from the obvious e-commerce/abandoned carts scenarios, this is particularly useful (and used) by call centres and B2B applications. Their IP is patented and I see enormous growth opportunities for them especially in an increasingly more fragmented multi-channel world: they are actively going after the elusive "omnichannel" conundrums

Some good case studies on their sites to give a better insight of what they do

Worth noting they have partnerships with big houses like teradata, sas, microsoft

Blue Prism (LON:PRSM) really took-off when they partnered with Accenture on roll-out .

Clearly I am long .....

finnCap has published a recent note following the interims : it is worth a read

from finnCap

New segmental analysis: The Interims present a revised segmental analysis
breaking down the previously rather opaque and lumpy ‘Projects Work’ revenue. It
reveals the high level (46%) of high-margin own-IP product in the H1 sales mix, as
well as suggesting c.£5.5m annually of recurring support & maintenance revenue (in
addition to the growing SaaS revenue, which has yet to reach material levels).

Website: runpr
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psin 21st Apr 40 of 43

In reply to post #470481

mind-blowing really and I know where my first port of call will be on Tuesday morning.
thanks for bringing it to our attention.

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Paul Scott 22nd Apr 41 of 43

In reply to post #470471

Hi, TheShareWhisperer,

Yes, I know what you mean, when you say;

I used to like Henning Wehn, but don't now the more I watched him. 

I enjoy his contributions to panel shows, mainly because he has such a funny accent.

Reminds me of my German-Swiss cleaning lady, many years ago, called Rita. At the time, I was a heavy smoker, and she would always say to anyone who would listen, "Oh, I wish he (i.e. me) would schtopp schmoking! The whole place schtinks!!!"

If my Mum was around, she would crease up laughing. The time Rita asked Mum how to clean the new "non-schtick" frying pan, I think Mum almost collapsed.

Then I accidentally spilt an entire packet of coffee all over the worktops that Rita had just cleaned, and she yelled, "Ahhh scheise!" (that means oh shit in German)

Best wishes, Paul.

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bobsandy12 23rd Apr 42 of 43

Love your new approach Paul and wish you courage to keep it up..........early mornings can be a great time of day and after a challenge you can reward yourself o a well deserved basis......great way to start the day.

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HHR 16th May 43 of 43


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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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