Small Cap Value Report (Tue 14 Nov 2017) - ITQ, TRI, SRT, ESCH, CAR

Monday, Nov 13 2017 by

This is the usual placeholder article, ready & waiting for your comments on RNSs from 7am.

Main article to follow.

Good morning it's Paul here.

I'm multi-tasking this week, being a NED for a small restaurant/pub chain in which I invested - setting budgets, KPIs, reviewing accounting procedures, etc. So my apologies, but the SCVRs will have to be a little briefer than usual.

Interquest (LON:ITQ)

I was asked the other day to nominate the small company which seems to worst treat its outside shareholders. Interquest was the obvious choice. Our archive here contains the details of shareholder value destruction by management who seem incompetent, and not to be trusted. They seem hell-bent on taking the company private by whatever means they can, after their lowball takeover bid was not accepted by enough shareholders to push it through. Then they sacked their NOMAD, and took so long to find another one that the shares were suspended.

Today's latest wheeze is that they're trying to dilute existing shareholders, presumably to make it easier for them to have another go at taking it private. Or it might be in order to raise monies for an acquisition possibly?

The purpose of the meeting is to extend the director's authority to allot shares from one third of the issued share capital of the Company as currently authorised pursuant to the Annual General Meeting held on 23 May 2017 to 75 per cent. of the current issued share capital of the Company.

The purpose of which is to authorise the directors so that they may have flexibility to issue shares in the case that these are required as part of any future acquisitions or other dealings.

Clearly the last thing outside shareholders would want, is to give authority to issue shares to Directors who have repeatedly acted against the interests of minority shareholders (something which can actually be challenged in court).

Anyway, it's an awful company, with awful Directors. I have little doubt that they will succeed with their grubby plans to take the company private. I've made a mental note never to invest in anything these people bring to the stock market in future. Leopards don't change their spots.

Trifast (LON:TRI)

Share price: 238.25p (down 3.9% today)
No. shares:…

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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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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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SRT Marine Systems plc, formerly Software Radio Technology plc, is engaged in the marine technology business. The Company's principal activity includes development and supply of automatic identification system (AIS)-based maritime domain awareness technologies, and derivative product and system solutions for use in a range of maritime applications from safety and security to fishery management and environment protection. AIS is a mesh network radio communications system technology specifically designed for the marine domain, and it uses a combination of global positioning system (GPS) and high frequency radio to enable real time, simultaneous data communication between multiple, independent entities providing information, such as identity, GPS position, speed and other customized data. It offers a range of AIS products and maritime domain monitoring system solutions, which also fuse other maritime sensor technologies, such as radar, closed-circuit television and communications. more »

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  Is Interquest fundamentally strong or weak? Find out More »

53 Comments on this Article show/hide all

Geronimo9999 14th Nov '17 34 of 53

ITQ - Thanks Paul for confirming my suspicions as to the likely intentions of the ITQ directorate! I suspect that they have misplaced their apostrophe and do, indeed, mean more than one director - maybe I am being very pedantic now, but this firm makes me read stuff very carefully.

I take it that even as an electronic shareholder I may somehow signal an objection from this minority shareholder without being present at this GM?

Cheers for all you do.


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Paul Simmons 14th Nov '17 35 of 53

Hi Paul, like tightfist, I would like to see your views on B&M (BME)

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barnetpeter 14th Nov '17 36 of 53

RBG revolution bars tanking away I see. Now just 153p after the failed bid at 200p.

Would be interested in this a long / short and is this going down to nearer 100p? The price suggests the next results will be dire.

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Billlynch 14th Nov '17 37 of 53

Many thanks to all who commented on the STM price drop
Can of worms indeed!?

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fwyburd 14th Nov '17 38 of 53

Fellow posters,
1. Please put a £sign before the ticker. Out of 37 posts today, 15 don't do this.
2. Paul said he was done for the day when he posted this morning so there is no point making requests after that for stocks he hasn't covered.
3. There is little point filling this board with vacuous commentary or questions of stocks not covered by Paul and Graham today unless the RNS has arrived late. The place for such hypothesising about current or future price falls/rises is not here. Posts about Revolution Bars (LON:RBG), Patisserie Holdings (LON:CAKE), Boohoo.Com (LON:BOO), SRT Marine Systems (LON:SRT) are examples.
4. Paul and Graham cover small caps (mostly) with occasional reviews of large caps that illuminate the investing landscape. I don't recall them ever talking about B&M European Value Retail SA (LON:BME) in that vein.

Less noise and more intelligent discussion makes this place worthwhile.


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gsbmba99 14th Nov '17 39 of 53

In reply to Geronimo9999, post #34

If you hold shares in uncertificated form, you should still be able to vote them. Check with your broker. Some charge money.

By way of example, Halifax send me a photocopy of the resolutions, a form to indicate how I want to vote (or if I want to attend) and a free reply envelope for all AGMs and EGMs. They do this automatically "in accordance with my instructions." I can't imagine that's economical for them.

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Sutherland 14th Nov '17 40 of 53

B & M Retail interim results today. Does have any comment?

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gus 1065 14th Nov '17 41 of 53

In reply to fwyburd, post #38

Hi fwyburd.

Fair comment, but SRT Marine Systems (LON:SRT) is the third stock covered on Paul's list today so is presumably fair game for discussion.


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fwyburd 14th Nov '17 42 of 53

In reply to gus 1065, post #41

Hi Gus, sorry, my mistake. I was so incensed with red mist I got that one wrong.

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fwyburd 14th Nov '17 43 of 53

In reply to Sutherland, post #40

Really? Please read post 38.

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Chris123 14th Nov '17 44 of 53

Re. Carclo (LON:CAR) I had it on my shortlist in August as the trading outlook sounded promising, but then removed it because of the balance sheet. This was based on a very quick look: basically £100m market cap, £200m pension fund with £30m net liability, a further £30m net debt, combined with inconsistent operating profit oscillating around £5m-£6m per year from 2012-16 (also low margin).

You don't find many genuine growth companies with that profile, hence the low PER. My takeaway from a skim-read of today's H1 results is they expect full-year to be 'in-line' but this relies on strong improvement across the divisions in H2 following some issues in H1. So some risk there.

I'm putting it back on my watchlist but I think it needs to prove itself by meeting the full-year expectations in six-months time, and by beginning to demonstrate that profits can rise consistently from here.

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Redrichmond 14th Nov '17 45 of 53

In reply to barnetpeter, post #36

"Revolution" of turning pubs into flats

Noticed a new one in putney recently, opposite all the dives and cheap places.. Being local to here for 10 years that wont last long, prices too expensive. If there was a way to see how many sites they own the building freehold.

The site in richmond by the river must be worth £20 million +(houses up behind there are for sale for £15 million) - google and ebay have offices next door

Selling these london sites off for flats would be a goldmine..

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VegPatch 14th Nov '17 46 of 53

In reply to fwyburd, post #43

£fwyburd - personally if investors want to discuss the days newsflow that hasn't been covered by Paul or Graham then that's fine by me. That's what this forum is for. Mixed views, some positive some negative. In fact Paul often comments on large caps in the retail sector like Next (LON:NXT) or Marks and Spencer (LON:MKS). Strictly speaking he shouldn't be commenting on Boohoo.Com (LON:BOO) or Fevertree Drinks (LON:FEVR) as they all have mkt caps over £1bn. But that for me is the beauty. Informed comment and everyone welcome to comment as long as it's constructive in approach. Anyone can be negative on a stock as long as it's a reasoned argument. If you want to rant and rave please ask them to go to ADVFN. that place is a proper loony asylum !!

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fwyburd 14th Nov '17 47 of 53

In reply to VegPatch, post #46

I agree. But there are several posts today which should be committed to the ADVFN asylum.

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iiimurray 14th Nov '17 48 of 53

Hi Paul
I am a long term holder of Carclo but for all of the progress being made particularly with Wipac division they still suffer from legacy of failed conductive ink technology business which in space of 6 months had board moving from statement of significant positive impact that will transform the company to decision to withdraw from sector and write off large capital investment as US partner failed to convince major equipment manufacturers that technical superiority justified higher price than other alternative systems. This U-turn was then exacerbated by another board blunder as declared dividend had to be cancelled as pension fund trustees demanded surplus disposabe cash be directed at shortfall. Share price still way below where it was 3 years ago. Current performance and forecast growth encouraging and perhaps first target should be restoration of a dividend.

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hayashi22 15th Nov '17 49 of 53

I seem to recall also the then ceo of Carclo piled out of the shares near the all time top -left a very unpleasant taste. Shares got to near 500p from memory and don't look like going back there anytime soon.

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Howard Marx 15th Nov '17 50 of 53

In reply to Redrichmond, post #45

Interesting angle, but sadly Revolution Bars (LON:RBG) is not an asset play given that its Fixed Assets are almost wholly leasehold.

In fact of the £59m of its Fixed Assets, only £1m relates to Freeholds (possibly their HQ)

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Redrichmond 15th Nov '17 51 of 53

Thanks for this, An all bar one recently closed that was behind the Richmond revolution, just too expensive... and now is the ivy restaurent in richmond and another restaurent opened next to revolution. With west london licencing laws very strict. Richmond Revolution is 11.30pm closing every day, I cant see how this is a feasible business. Fantastic location by the river but tarquin and the other stock traders and magistrates who own multi million pound houses dont want drunk kids loitering around fighting and causing trouble.. Friday and Saturdays used to be horrific with police vans everywhere. Now people go to kingston for nightclubs /late drinks

I have no experience in this sector but do know hundreds of pubs closing in the Uk and more restaurants wine bars opening, especially in richmond. Recently a tiny nightclub closed and was rebranded in a coffee shop.

I would say the vultures are circling, good luck to any that hold that it. Hopefully a take over but the 80s/90s yuppies have long gone and now go to posh restaurents that can have late licences

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tightfist 15th Nov '17 52 of 53

I am astonished by post#38, "incensed with red mist" and comments of the ADVFN asylum. Is this an open community or one that is operating it's own private rules and repelling anyone new who dares to want to contribute?

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Geronimo9999 16th Nov '17 53 of 53

In reply to gsbmba99, post #39

Interquest (LON:ITQ) Thanks gsbmba99 - I have now written to Interactive Investor to request relevant pro forma or whatever other mechanism they may offer - I appreciate your helpful suggestion. :-)

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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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