Small Cap Value Report (Thurs 4 March 2021) - K3C, FRAN, AIEA

4th Mar '21 by Jack Brumby

86 comments 11277 reads

Morning, it's Jack here starting off Thursday's SCVR. Do leave a comment if anything catches your eye.

So yesterday was The Budget: the furlough scheme has been extended until September; fuel has been frozen again and the stamp duty holiday has also been extended. Meanwhile, corporation tax will increase from 19% to 25% from April 2023 for companies earning more than £250,000 a year.

Pension tax relief, annual and lifetime allowances, IHT rates and CGT remain unchanged for private investors. Mortgage guarantees up to 95% looks like it could inflate house prices even further (and the ratio of house prices to average earnings is already stretched).

There’s also much-needed help for the hospitality and arts sectors.

Longer term, there’s no getting away from the debt that COVID has created. We’ll need to address that with tax rises, spending cuts and borrowing at some point but politicians and central banks are adept at kicking the can down the road. Rising rates would be a real concern.

In the short term though, things are looking up. The Office for Budget Responsibility (OBR) forecasts a ‘swifter and more sustained recovery’ than what was expected last November and is penciling in economic growth of 4% in 2021 and 7.3% in 2022.

Another interesting tidbit: the government is looking to modernise listing rules to allow dual class share structures and reduce free float requirements. If accepted, these changes might encourage more firms to list in London. It already feels like we’re seeing quite a few IPOs at the moment, so maybe that will become more of a trend?

K3 Capital (LON:K3C)

Share price: 277p (+3.75%)

Shares in issue: 68,624,309

Market cap: £190.1m

K3 Capital (LON:K3C) is a professional services firm providing advisory services to SMEs. The company was incorporated in 2007, is headquartered in Bolton, and employs around 450 staff across 18 UK offices (with another three overseas).

It tends to advise on M&A, tax, and financial recovery matters across a collection of subsidiaries including KBS Corporate, Quantuma, Knightsbridge, and Randd.

The group floated in 2017 with the intention of diversifying revenue streams by acquiring complementary professional services businesses.

Two target segments were promptly identified: specialist tax reclaim and business restructuring / insolvency. One £30.5m fundraise later and the group acquired both Randd (a research and development tax reclaim specialist), and Quantuma (a…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Gromley

4th Mar '21

I have a similar problem with shares in my Barclays share trading account. Apparently shares stay listed until they are 'fully wound up' whatever that means.

Two possibilities.

Not sure if it is still the case but I believe it used to be, that you could not claim a capital loss until HRMC ruled the shares to be of zero value.

More likely though I suspect is that it relates to holding shares in a nominee account.

I have had three de-listings (from memory) where I was actually on the shareholder register.

1. Was a planned wind up of the company and on delisting I received a share certificate and a frustrating number of years later I received the final proceeds of liquidation - It was a decent profit but took way too long.

2. Was a company that went 'bust'. A year or so later I actually received an unexpected pay-out from the liquidator. Only pennies in the pound, but as I didn't expect anything.

3. Also went bust, for few years thereafter I got a nice letter annually from the liquidator explaining their progress and emphasising that there would probably not be any cash left for me (there wasn't.)

For a nominee account, I don't think it would be practical for any of these things to happen unless they keep a record of you holding the shares.

ridavies

Sorry coming in late today but have of my friends who have an interest in Angle (LON:AGL)

Berksbee

Hi Terry,

I hold W7L and whilst I'm up by ~15% I'm still a bit undecided. My reason for holding is the Stocko score. Additionally they have started to get aggressive on the marketing front - saw them briefly on SKY Sport last night. Think I will continue to hold and top slice if rises a further 10%.

You might get more response if you post your question under the specific share topic as the SCVP, whilst lively, refreshes daily. Responses may take some time but they do come in my experience.

timarr

To add to a comment I read earlier about the UK remaining isolated due to the risk of variants, I imagine this would be a good thing for Revolution Bars (LON:RBG) ... I can certainly foresee that this is what will happen this summer given the rapid UK vaccine rollout relative to other countries.

Seems likely. Certainly the government keeps trying to talk down the possibility of overseas travel. Although there are ongoing discussions with Spain and Greece about opening up travel corridors subject to vaccines. I think that's reasonably likely.

However, given the quite alarming research coming out of Manaus, the UK needs to rethink its approach to guarding its borders if we're to get back to anything like normality this year. Although I imagine it'll only take a couple of people being jailed for a few years for lying about where they've been to concentrate minds.

But when we are allowed out I imagine the "Go Big or Go Home package" is going to go very big indeed ... :-)

rmillaree

From memory i don't think you need to officially wait from hmrc to do anything you just need to have your own reasonable evidence that the shares are worthless.

Over to the direct link with further details

https://www.gov.uk/government/...

Norfolk'n'Good

That's a very good question, Smithers. Jack was going to have a look at this comapmny last month but then got overtaken by events. I'm hoping he will be able to get some time to look at it soon.

Ps Is Paul ok? Having a few days rest? Or advising HM Government on The Budget??

Sorry Im late to the party today. I wonder if any of my friends who are interested in Angle (LON:AGL) have anything to say on the market response to the RNS this morning. I realise that the primary interest on this board today is the budget and especially the effect on another small company, Revolution Bars (LON:RBG), but there are other companies too!

The Angle (LON:AGL) RNS in effect said that the likely date for any approval by the FDA in the US would come in the second half of 2021, rather than the first half as was originally hoped. The FDA are far too busy with Covid 19 matters it seems. Nothing to do with the fact that this is a British company with seemingly a better product than a number of US companies with enormous Mkt Caps (or am I getting into a conspiracy theory mindset?). Admittedly the company's SP had been on a sharp upward trajectory in recent months but a sharp 12% fall today would seem to be overdone? Perhaps not.

Conversely, it had been running at 60p-70p for much of 2019 and the first period of 2020 before the March crash.

Thoughts anyone please?

Momoko Miyamoto

I also picked up some Spire Healthcare (LON:SPI) recently. I think the company will benefit from the huge and growing backlog of elective NHS work. Either because the NHS will have to outsource to bring down the waiting list or because those who can afford it will self fund treatment. Today’s RNS reports that self pay enquiries are up. The Budget super-deduction may also be material as modern healthcare is pretty capital intensive. There was no mention in the Budget of extra cash to deal with NHS waiting lists.

Dennis Ayling

Spectra Spectra Systems (LON:SPSY) seem to be well en-trenched in polymer notes & authentication. I have been un-able to determine if they are direct competitors or there is collaboration between them. Anybody know ?

Edit: Just read the Crystal Amber report on De La Rue (LON:DLAR), they state:

'De La Rue is exploring the potential to use blockchain technology'

Oh no, the dreaded B word (well at least not Bitcoin). This may explain some of the rise - God help us !

Disclosure: I Hold both.

Dennis.

Thanks for that clarification rmillaree - in the past IIRC - WIMN (which I might not) HMRC maintained a list of shares they had accepted as having zero value - I think possibly you could still apply if your share was not yet listed.

There is still a degree of uncertainty if you make a claim - as mentioned before I had written off a delisted share as zero previously but still got something back ultimately - it wasn't material at the time.
It could be if an administrator is able to recover damages from some entity that caused a company to bust.

Anyway, I have digressed from the original topic - plus ça change.

MS1967

Excellent report Jack - there is something other-worldly about the way you and Paul get through these companies.....!

OldSchool05

Hi Dennis,

I could be completely wrong but I suspect the relationship between Spectra Systems (LON:SPSY) and De La Rue (LON:DLAR) may depend on the ultimate customer (i.e. central bank) which they are supplying. They could potentially work vertically in the supply chain i.e. SPSY provide one aspect and DLAR produce the notes for one bank. But with another central bank they could be in competition.

It's a pretty top secret area. Whilst I hold both too I often feel slightly concerned that I may be over exposed here to similar risk profiles.

Bullygig

Absolutely my thinking too. I work in the pharma industry. I was looking at the (publically available) NHS elective surgery and GP admissions data today as it's started to come through for the start of the pandemic.

Elective surgeries were running at 6-700k per month, that dropped to 181k and 220k in April/May 2020.
GP referrals were running at 1.1m per month, that dropped to 280k and 389k in April/May 2020.

Massive backlogs to catch up on.

Data here: https://www.england.nhs.uk/sta...

Zoiberg

5th Mar '21

I do not currently follow Angle but five years ago I seem to recall the FDA approval was 'imminent'. Parsortix has been around all that time and probably longer. My concern would be has technology overtaken it and also does it only has a use in the lab rather than any commercial use. However as I said I lost interest years ago and so I may well be out of date.

Martin VT

Smithers,

Avoid any punctuation after the share code, else the Stockopedia link doesn’t work. So Boohoo (LON:BOO) does, but £BOO. doesn’t.

Hello Zoiberg. Thanks for your comment on Angle (LON:AGL) which as you may have guessed I have followed and been an investor for around 7 years. If you are minded to, there are a couple of recent presentations (Jan 21) on YouTube which you may find interesting. Take your pick. The first is where the CEO is making a presentation which would normally be live in the US. The other contains similar material but which is targetted at US investors. You will find them at :
https://www.youtube.com/watch?v=dmihuELlhDM

Biotech Showcase – normally live Jan 21

https://www.youtube.com/watch?v=5gx3zy9iJes

Similar presentation, but targeted at new investors particularly in US.

Two really key points that I have taken out of a range of presentations he has made in the last year is that there is a compelling financial case for the introduction AND this patented and superior technology is available at a really critical time - when there is a huge backlog AFTER Covid 19 of cancer cases in particular where this can help speed up the process of finding the right treatment to save lives. As investors we are naturally interested in the former, financial, case; as human beings, we should perhaps feel that we should be even more interested in the latter, urgent medical case.

peterg

Well the broker should (hopefully!) be keepinng a record of who holds, and the registrars will know which nominees hold what. So there is a perfectly clear chain of communication. It's quite possible, of course, that a nominee may reasonably decide passing on an annual letter saying "there's probably no cash left" is not worth doing, but they should have records of this stuff if asked.

But it makes perfect sense that shares have to remain listed until a final wind up, which might take years. The nominee can't know that a payment (even for a few p) might not arrive in the future, so they have to keep stocks listed. It shouldn't really be an issue - though it might get interesting If you change brokers.

Rusty2

Depends which site you use Boohoo (LON:BOO). Works for me on the old site.

But does not on £BOO?

It may not work if you use a mobile?

Terry Dickens

Thanks, Berksbee I think I will try that

Boon

7th Mar '21

If you think elective surgeries will boom, there's a more direct way to play it.

Medica (LON:MGP) does outsourced radiology assessment work. Basically, NHS or Private hospitals do the scan, send it to MGP, and their network of radiologists do the analysis of the scan.

As you can imagine, many elective surgeries need some sort of scan pre-surgery.

Small Cap Value Report (Thurs 4 March 2021) - K3C, FRAN, AIEA

K3 Capital (LON:K3C)

Unlock the rest of this article with a 14 day trial

About the Author

Jack Brumby

86 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...