Small Cap Value Report (Tue 10 Oct 2017) - ITQ, RBG, FREE, SRT, REDS

Tuesday, Oct 10 2017 by

Good afternoon! It's Paul here. I've got the whole afternoon free, so will be updating this article gradually until teatime.

Interquest (LON:ITQ)

Share price: 28p (down 1.8% - back from temporary suspension)
No. shares: 38.7m
Market cap: £10.8m

Appointment of NOMAD and broker - this announcement is particularly important, because Interquest's shares had been suspended due to the company firing its NOMAD. Moreover, management (through a vehicle called Chisbridge Ltd) had attempted to buy out the company's minority shareholders through an offer at 42p. The offer failed to secure enough acceptances to allow the company to delist.

Yet Interquest then announced here on 6 Sep 2017 that it had given 1 month notice to sack its NOMAD on 10 Aug 2017! So this vital information was withheld from the market until just a few days before the 1 month notice was due to expire. This issue has arisen before, with other companies. It seems to me that giving notice to sack your NOMAD is very clearly price sensitive information under AIM rule 11;


So there's no question that the sacking of a company's NOMAD, leading to the suspension of its shares, is very significantly price sensitive. So a breach of AIM rule 11 has obviously happened, in my view. What will happen - nothing of course, there are rarely any consequences for breaching AIM rules. It only has a very thin veneer of regulation, which are often flouted, unfortunately.

It very much looked as if Interquest was deliberately trying to de-list by the back door, by firing its NOMAD. However, rather suprisingly the company has today announced the appointment of a new NOMAD, Allenby. The shares have therefore come back from suspension, and can be traded once again, as from noon today.

Today's announcement is worth reading, and covers the following points;

A relationship agreement has been enterered into between Interquest & Chisbridge, in order to ensure that Interquest is managed in the interests of all shareholders. I imagine that the NOMAD and broker probably insisted on this before taking on the roles.

A further NED (independent of Chisbridge) is to be appointed. Remember that during the attempted takeover, the only independent Director opposed the deal. I can't help feeling that having to put independent…

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InterQuest Group plc is a United Kingdom-based specialist technology recruitment company. The Company offers permanent and contract recruitment in various markets, such as digital, information security, analytics, telecommunications and change management. Its segments are Niche, which includes recruitment practices focused on analytics, business intelligence, cyber security, Internet of things, telecommunications and risk; ECOM Recruitment Limited, which is a recruiter in the digital market space; Enterprise, which includes Recruitment Process Outsourcing services together with legacy client relationships with customers in the financial services and retail sectors; Public sector; Business Change, which is a candidate centric spot business focused on change management and providing the Company with an alternative route to market, and Other. The Company's subsidiaries include InterQuest Group (UK) Limited, Contract Connections Limited, Contract Connections B.V. and InterQuest Asia Pte. more »

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Revolution Bars Group plc is a United Kingdom-based operator of bars. The Company has a trading portfolio of approximately 60 bars located predominantly in town or city high streets, which operate under the Revolution and Revolucion de Cuba brands. The Company's bars focus on a drinks and food-led offering, and typically trade from late morning, during the day and into late evening. Revolucion de Cuba bars are characterized by their 1940s Cuban-inspired style, with dark woods, traditional bar counters, antique tiles, vintage furniture, Havana-style ceiling fans, and original Cuban artwork and photographs. Its bars are located in various places, such as Cambridge, Ipswich and Norwich in South East; Bath, Plymouth and Southampton in South West; Birmingham, Derby, Leicester, Loughborough and Milton Keynes in Midlands; Cardiff and Swansea in Wales; Blackpool, Chester and Huddersfield in North West; Sheffield, Sunderland and York in North East, and Edinburgh and Glasgow in Scotland. more »

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FreeAgent Holdings plc is a holding company. The Company is a provider of cloud-based software-as-a-service (SaaS) accounting software solutions and mobile applications designed specifically for the United Kingdom micro-businesses. It is engaged in the development and provision of the FreeAgent SaaS solution. With its software, its offering streamlines financial management, bringing together invoice and expense management to value-added tax (VAT) and payroll. It even enables users to automatically generate and submit their self-assessment tax return filings to Her Majesty's Revenue & Customs (HMRC). Its SaaS solution comprises various features, such as core invoice generation and bank reconciliation functions. Its SaaS solution is also integrated with other suppliers and an application programming interface and associated developer portal to enable third-party developers to exchange data between the Company and their own products. It offers its services through its product platform. more »

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

28 Comments on this Article show/hide all

bwakem 10th Oct '17 1 of 28

Interquest (LON:ITQ): You didn't highlight this bit "It should be noted that Chisbridge is free to acquire further shares in the market without incurring any obligation under Rule 9 of the Takeover Code". Given they were happy to pay 42p to take the company private, why wouldn't they buy as many shares as they can at < 42p? I think these are still a buy at sub 42p for that reason.

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andrea34l 10th Oct '17 2 of 28

Please can you give an opinion on the trading statement from FREE, Paul?

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Paul Scott 10th Oct '17 3 of 28

In reply to post #227003

Yes Andrea. I'll look at FreeAgent Holdings (LON:FREE) trading update next.


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Talygarn Tom 10th Oct '17 4 of 28

Time to buy back in Paul?

Another Xero in the making?

Xero 2017 Annual Report -

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aaupfo 10th Oct '17 5 of 28

Paul, yours views on FREE would be useful. I believe FREE only missed broker targets by a small amount and the share price dropped by more than 10% at one point.
Is the margin for error in this market so small?
Holders need to hold their nerve surely, even in this market?

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Paul Scott 10th Oct '17 6 of 28

In reply to post #226998

Hi bwakem,

Good point, I probably should have highlighted that bit in the main report, that Chisbridge is free to continue buying in the market. My main worry is that I think Chisbridge has already shown that they're happy to trash the share price - presumably so that they can continue buying cheaply in the market? I'm not sure that's enough to make me want to buy shares in the company. Would they not just continue doing more of the same, and eventually buy your shares at 20p, or less?

Regards, Paul.

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simoan 10th Oct '17 7 of 28

Personally, I've top-sliced about 20% of my holding, and am sitting tight on the rest, to await developments. An exit at 203p wouldn't be a disaster. Yet there could be scope for a much more attractively priced bid. Stonegate is being far from generous at 203p, which Deltic emphasised in their announcements.

Hi Paul,

Similarly, I sold 40% of my Revolution Bars (LON:RBG) holding. It's been very easy to sell at 210p for a while now. Given the paucity of the Deltic/Ranimul proposal and the fact they don't appear able to make a worthwhile counter offer, it seemed silly not to offload some. They seem to be long on opinions and waffle but short on cash! 

I'll hold the rest for the denouement because the recent Revolution Bars (LON:RBG) results were not too bad all things considered, so the worst-case scenario is Stonegate walk away, the share price drops back 20-25%, and we all carry on as before. I don't expect this to happen by the way!

All the best, Si

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bsharman 10th Oct '17 8 of 28


 I feel we're not being told the full story here. If the Directors don't want the company to be listed, then why have they appointed a new NOMAD? I wonder if minority shareholders might have either shamed, or threatened legal action against the company?

I wrote to both AIM and the FCA about this situation as did many other minority shareholders. Perhaps they were investigated and as you say shamed into appointing a new NOMAD. I wouldn't ever invest in a company with the following members on the board and i'd also urge fellow investors to avoid them at all costs.

Remember these three names:

  • Gary Ashworth
  • Chris Eldridge 
  • David Bygrave

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 Are LON:ITQ's fundamentals sound as an investment? Find out More »

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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