Small Cap Value Report (Tue 2 Apr 2019) - IGP, BON, HSW, WIN, SDRY, G4M

Tuesday, Apr 02 2019 by

Good morning, it's Paul here.

I got up early to finish yesterday's report, so a new section on Instem (LON:INS) is now up. Unfortunately, the section on Low & Bonar (LON:LWB) vanished when technical gremlins struck, so I'll reconstitute that once we've got some of today's news up in this report. Although to be honest, I don't think you're missing out much if you ignore LWB.

Please see the header for announcements which I'll cover today. Plus anything else that crops up which looks interesting.

Intercede (LON:IGP)

Share price: 23.0p (up 39% today, at 08:09)
No. shares: 50.5m
Market cap: £11.6m

(at the time of writing, I hold a long position in this share)

Trading update

Today's update covers the year to 31 March 2019.

Intercede is a cybersecurity company specialising in digital identities, derived credentials and access control, enabling digital trust in a mobile world.

I was fearing a profit warning here, because the share price has been drifting down (albeit on negligible volume). However, I'm delighted to read this morning's trading update, where the company has achieved a big last-minute success, namely a major contract win on the last working day of the financial year - talk about cutting it fine!

... pleased to announce that a large US Federal Government order totaling $4.3m was received on 29 March 2019.

The order includes software licenses and annual support & maintenance; $2.05m (£1.57m) of which will be recognised in the financial year ended 31 March 2019.

As a result, revenues are now ahead of expectations;

Subject to the completion of the year end audit, revenues for the year ended 31 March 2019 are expected to be in excess of £10.0m, which is ahead of market expectations and approximately 10% higher than the previous financial year.

This reflects the impact of follow on orders from existing customers plus new contract wins via partners in the US, Europe and SE Asia.

The establishment and further development of these and other partner relationships is critical for the Group's future growth prospects.

Note that in H1 the company reported revenues of £4.17m. Therefore H2 must be over £5.83m - a 40% growth rate from H1…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

Do you like this Post?
65 thumbs up
0 thumbs down
Share this post with friends

Intercede Group plc is a United Kingdom-based software and service company. The Company is engaged in developing and supplying of identity and credential management software. The Company provides MyID software, which is an identity and credential management system that enables organizations to create and assign trusted digital identities to employees, citizens and machines. Its MyID software protects the networks, facilities and intellectual property of governments, agencies and other enterprise customers. In addition, it provides MyTAM, which is a cloud-based service that provides Android application developers and service providers to deploy trusted applications to the trusted execution environment (TEE) on mobile devices. It offers its solutions to various sectors, including aerospace and defense, finance and telecommunications; governments and federal agencies, and mobile developers. The Company operates in the United States and the United Kingdom. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Bonmarche Holdings plc is a multi-channel retailer of womenswear and accessories. The Company offers clothing and accessories in a range of sizes for women through its own store portfolio, Website, mail order catalogues and through the Ideal World TV shopping channel. The Company's subsidiaries include Bluebird UK Topco, Bluebird UK Holdco and Bonmarch Limited. The Company has approximately 310 stores across the United Kingdom. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Hostelworld Group plc is an Ireland-based company, which provides hostel-focused online booking platform. The Company operates through over 20 different languages by connecting young travelers with hostels around the world through its brand Hostelworld and supporting brands Hostelbookers and The Company, through its subsidiaries, provides software and data processing services that facilitate hostel, hotel and other accommodation across the world, including ancillary online advertising revenue. The Company focuses on hostels, which maintains a global hostel database with over 13,000 hostels and approximately 22,000 other forms of budget accommodation available across the world. The Company builds a progressive internal training policy that includes ongoing skills training, personal development training plans and management development. The Company has over eight million reviews across approximately 33,000 properties in over 170 countries. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

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

44 Comments on this Article show/hide all

Zipmanpeter 2nd Apr 26 of 44

Now a mudslinging Board fight is breaking out in the nil premium takeover fight between Woodford/Invesco controlled Non-Standard Finance (LON:NSF) (combined 65.6% share at 31/1/19 on NSF website) and the Woodford/Invesco/Marathon) controlled (combined 49.4% share) Provident Financial (LON:PFG) (!!!).

Woodford/Invesco/Marathon have already declared for the NSF plan which basically sacks the PFG and replaces them with the NSF Board and merges the 2 operations (selling off 2 "non-core" businesses

Provident Financial (LON:PFG) challenges NSF about several (technical) issues especially relating to the right of NSF to have paid dividends over the last couple of years:

NSF has responded re-iterating the benefits of its plan but not directly addressed the points raised. From what I can see the amounts are small and thus more a smear campaign against NSF - who have previously labelled the PFG Directors personally as poor managers still carrying out sharp practices and with poor relations with the FCA etc. (ie PFG's claims may be true and breaches of the law (I cannot judge and not good if true!) but don't seem to me to be worth derailing a decision - in an audit if found (and to my knowledge they were not raised), they would be highlighted but it would not be a big deal.

Frankly, I like the inference that NSF are straining every sinew to give me dividends since I see the underlying business progressing very well on an operational basis - which is why I supported NSF's plan to "takeover" much bigger PFG. However, getting involved in a personal slanging match is not good and will leave a bad taste in regulatory mouths even if it does not stop the takeover.

i ) Does anyone have insight into whether PFG's (mis-) accounting claims make sense
ii) If true, do have any serious implications for NSF's bid ???

Disclosure: I hold NSF I preferred it when they were running solo but now they have made a bid for PFG, I agree the tie up makes sense with lots of synergies. Indeed I had thought PFG might bid for NSF !

| Link | Share | 1 reply
Emperor 2nd Apr 27 of 44

In reply to post #464529

Richard Belvoir Lettings (LON:BLV) are based in Grantham - they don't run the town! As I understand it the 58,000 properties are managed property portfolios held by investor landlords across their brands (and across the country) which deliver a chunk of their Management Service Fee income. They are actively encouraging and assisting franchisees to increase this part of the business with 'assisted acquisitions'. Probably loans to you and I.

| Link | Share
David Bagley 2nd Apr 28 of 44

Intercede state that "The order includes software licenses and annual support & maintenance; $2.05m (£1.57m) of which will be recognised in the financial year ended 31 March 2019." I don't want to be a party pooper (hard anyway given a 70% share price increase) but doesn't this smack of front end loading? They only won the contract on 29th March so there has been no opportunity to deliver goods or services upon which profits could be realised before the year end.

| Link | Share | 2 replies
sharmvr 2nd Apr 29 of 44

In reply to post #464776

To be honest, if these claims have any basis, then I would suggest the auditors would have some serious questions to answer.
They do assess free from material mis-statement (expectation gap as it may create) and compliance with Companies Act 2006.

Playing fast and loose with the term interesting, but this could be interesting to look into in more depth. Not sure I will as seems quite a complicated matter and I don't have time or position! Would love it if someone else did!
#Freeriding #nothumbsdown

I sincerely hope GT are not their auditors - for their sake!

| Link | Share
rambutan2 2nd Apr 30 of 44

In reply to post #464806

David, it's not a new contract and the US Govt is always a late payer. That is the reason why it was not included in the broker forecast, having caused much angst over the years as to whether or not they would pay up before the 31/03 y/e.

| Link | Share
IGotPoesJacket 2nd Apr 31 of 44

Intercede (LON:IGP)

I've had a quick look at their website - I can't see what the fuss is about? There's already better solutions out there, and their's doesn't outwardly appear to provide Single Sign On capability.
The TSA solution highlighted on their website relies on smartcards - my company did away with these years ago, and so did most of the banks and other secure environments I've worked at.
Ultimately I think that Identity is going to be handled by the big players, and these guys are too small. Happy to be proved wrong but it's not for me.

| Link | Share | 1 reply
gbjbaanb 2nd Apr 32 of 44

Superdry (LON:SDRY) - Dunkerton wins back his board seat (at 50.75% of the vote, which is perfectly fine even though he thinks 52% is unacceptable and requires a second vote.. arf!)

price down 7%, so the markets don't like having him back.

| Link | Share | 1 reply
davidjhill 2nd Apr 33 of 44

In reply to post #464861

Superdry (LON:SDRY) the markets are schizophrenic! The share price was rocketing when he was rumoured to be coming back as investors cheered the move. It falls once he is confirmed :) Another case of buy the rumour, sell the fact I guess.

I think on balance it is a good thing. The two of them own circa 30% of the company so will be highly incentivised / aligned with shareholders. I suspect the board compensation will be dramatically reduced too. Hopefully re-invigorates employees outside of board/snr mgmt as they focus on brand. Will be interesting to see what board resignations occur overnight.

| Link | Share | 1 reply
dscollard 2nd Apr 34 of 44

Just saw how Reuters reported a 5% move .... apart from being arrant nonsense as d4t4 has dropped 30% in a day as recently as 2017, it is the kind of sensationalist clap-trap that nudges itchy fingers.  I could append that it went on to "plunge" to -8% before "soaring" back to close down a "mere" 0.8%

thomsonreuters_favicon.png Thomson Reuters Tue 2nd April, 2019 9:00am
** Shares of data solutions provider D4T4 Solutions D4T4.L down ~5 pct; on track to post biggest pct loss ever ** Co's chief financial officer, Carmel Warren, plans to leave; to take a career break and to pursue other opportunities; co starts external search for replacement ** Carmel will remain with company during her three-month contractual notice period*:nFWN21K069 ** Over half of 30-day average vols of shares through within 1 hour of trading

TBH, was surprised by  the initial reaction this am : reckon it is the prevailing market where an FD leaving has presaged pretty grim outcomes. I have been long for a couple of years so very much in profit and still adverse to selling, £d4t4 rode out the pre-Christmas sell-off with impressive strength and hasn't been below  its 200 MA since July 2018 when it was at 130p. Its uptrend has been intact since April '18 which is a rare thing in recent markets

Celebrus, their Customer Data Platform, is a very compelling offering given media fragmentation and martech madness.  d4t4 has great fundamentals, technicals, a real differentiated and IP protected  product in a market  that is growing ( and getting more complex for customers).  Teradata is a channel partner as is SAS and Dell.  Stocko scores it 82 to boot. Institutions have been adding , up 6% in the past 3 months across a few instis.  No reported open interest. If anything, it is still under the radar and arguably still in accumulation before it "storifies" as it has great AI and ML credentials as well.

As for the initial sell-off  today , that has reversed intraday: will wait to see if that was  part of the share buyback operation but if not, it's an impressive reversal and in itself bullish. Did I mention I was long ;P

| Link | Share
fwyburd 2nd Apr 35 of 44

In reply to post #464876

Re: Superdry (LON:SDRY)
They've already happened. Most of the board has gone today and the remaining four go in three months.

Fast work


And the two brokers have resigned too. 

| Link | Share | 1 reply
davidjhill 2nd Apr 36 of 44

In reply to post #464886

Missed that - thanks fwyburd. Was fast indeed.

Well, holders now have an owner run business again I guess. Now let's see what they do!

| Link | Share
Edward John Canham 2nd Apr 37 of 44

Superdry (LON:SDRY)

Well I guess the one thing you can guarantee is they'll kitchen-sink the year end accounts.

Plus, are the guys leaving really "suits" ?

Interesting to see how this plays out, but I for one would not rule out it getting worse.


No position

| Link | Share
mikemorris 3rd Apr 38 of 44

In reply to post #464806

I agree with David Bagley and his concern with Intercede booking profits up front. The order was only won on the 29th March, and it concerns me that if this is their norm, what confidence can one have in their accounts. Quindell got away with this for years, and look what happened there. Surely a profit is only a profit when the services have been delivered and paid for?

| Link | Share
mikemorris 3rd Apr 39 of 44

In reply to post #464846

Re Intercede, If there are better solutions out there for ID security, can you name one. I am sure the US government has done their homework and chosen what they consider best in the field, for the budget available!

| Link | Share | 1 reply
IGotPoesJacket 3rd Apr 40 of 44

In reply to post #465151

Sure, there are plenty of identity providers, Microsoft, Google and Facebook for a start. I can't remember if it's Mastercard or Visa that are investing heavily in this area too, to provide secure identities for everyone, not just corporates..
Whilst I still have a "badge" to get me into our secure buildings, all my identity verification for data services is multi factor. I can sign in securely from any machine or device and my experience is altered depending on what device I am on. For example, if I am on an unknown PC I can only access webmail and my rights to copy data or save emails is severely restricted. If I am on my work PC I can do pretty much whatever I want, when I go to company webpages it knows who I am automatically and logs me in to the site. None of it requires me to have my badge, and if I was on my phone, where would I plug my badge into anyway?

This might be one of those instances where you can have too much knowledge which makes you miss something. But I'm wary of getting into small companies that solve problems massive companies have already tackled / are tackling. Is also why I'm avoiding cloudcall.

| Link | Share | 2 replies
rambutan2 3rd Apr 41 of 44

In reply to post #465186

IGotPoesjacket, the reason IGP is in the rather unique position it is in ie supplier of highest quality kit to the likes of Boeing, Lockhead, Airbus, Gruman, highest priority US, UK govt depts, large banks etc etc, is because it was in at the start of the ID revolution. That is why ARM, Microsoft, Intel and others have worked with them. Their kit is of the highest quality, always has been multi factor (!) and they don't lose contracts once they are in. The problem has been a lack of sales drive to more commercial sectors. Hopefully that is what the new management are tackling.

| Link | Share
mikemorris 3rd Apr 42 of 44

In reply to post #465186

I am left wondering whether the Intercede solution for ID identity, is more universal and less restrictive. If as you say you sign in on an unknown computer, your access is greatly restricted. Perhaps IGP have a solution which solves the problem for staff on the move, that need high level access to data. A much more difficult security problem to solve, then one for office staff using their work pc.

| Link | Share
Zoiberg 22nd Apr 43 of 44

From IGP website:
"However, whilst PKI offered a robust process the organisation needed the means to connect PKI on-site within their server environment and the software necessary to issue and lifecycle manage credentials provided to the third-party companies and governmental organisations requiring access to their data."

That's one red flag !

| Link | Share
Zoiberg 22nd Apr 44 of 44

Intercede (LON:IGP) The logos of the following companies (and more) scroll across the bottom of their website pages. I cannot see what relationship they have with them. If they are customers why isn't IGP profitable ? If they are not customers what point is IGP trying to make?

Wells Fargo, Airbus, Department of Homeland Security, Boeing, Deutsche Telekom, Lockheed Martin, USA Social Security Adminisration

| Link | Share
Zoiberg 22nd Apr 44 of 44

Intercede (LON:IGP) The logos of the following companies (and more) scroll across the bottom of their website pages. I cannot see what relationship they have with them. If they are customers why isn't IGP profitable ? If they are not customers what point is IGP trying to make?

Wells Fargo, Airbus, Department of Homeland Security, Boeing, Deutsche Telekom, Lockheed Martin, USA Social Security Adminisration

| Link | Share

Please subscribe to submit a comment

 Are LON:IGP'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 »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis