Small Cap Value Report (Tue 24 Nov 2020) - MCB, CARR, TRAK, CBOX, IGP, TET, CWD
Good evening/morning, it's Paul and Jack here with the SCVR for Tuesday.
I'm putting up the first few sections late on Monday night. The reason being that something has cropped up, and I have to spend c.4 hours travelling on Tuesday (essential), hence won't have much time for writing about shares. So as not to short-change you, I'm doing the work beforehand to catch up with some loose ends.
Timing - Today's report is now finished.
Agenda -
Mcbride (LON:MCB) - AGM trading update (Paul, done)
Carr's (LON:CARR) - Final results, FY 08/2020 (Paul, done)
Trakm8 Holdings (LON:TRAK) - Interim results 6 months to 09/2020 (Paul, done)
Cake Box Holdings (LON:CBOX) - Interim results (Paul done)
Intercede (LON:IGP) - Half year report (Paul, done)
Treatt (LON:TET) - FY 09/2020 results (Paul, done)
Countrywide (LON:CWD) - Update on strategic options & board update (Jack, done)
.
Mcbride (LON:MCB)
Share price: 61p (down 7% on Monday)
No. shares: 182.2m
Market cap: £111.1m
McBride (the "Group"), the leading European manufacturer and supplier of Contract Manufactured and Private Label products for the domestic household and professional cleaning/hygiene markets, provides the following trading update ahead of its 2020 Annual General Meeting to be held later today.
It’s a 30 June 2021 financial year end.
Different product categories are performing in a varied fashion. Overall;
Total revenues are broadly flat after the first four months and are expected to show modest growth for the first half of the year.
Profits and outlook, it says;
Earnings growth is expected to be weighted to the first half of the year, reflecting weak comparatives in the prior period and improved margins from efficiencies, lower operating costs as well as lower input costs for certain raw material and packaging items.
Whilst all factories are currently operating as normal and the supply chain for inbound and outbound materials is functioning well, the Board's full year view is cautious in light of the potential for future operational challenges resulting from Covid-19, the uncertainty arising from the Brexit process and the unknown impact on consumer demand from renewed lockdowns in our principal markets.
Our full year outlook on trading therefore remains unchanged, with our current expectations for a modest improvement in year‑on‑year profitability.
That sounds reasonably OK to me, so I’m a little surprised the share price dropped c.7% in response. The worries about H2 sound more like they’re just being cautious. I wonder if there is an issue that customers might be pulling forward orders to build up inventories before a potential 31 Dec 2020 Brexit disruption? Although recent press reports suggest negotiators have come close to finalising a deal. The EU usually does things last minute, and finds a way of fudging around potential problems, so I can’t see why Brexit would be any different, particularly as both sides surely realise they have to compromise?
MCB reported 9.5p adj EPS for FY 06/2020 so the broker forecast shown on the StockReport of 9.95p for FY 06/2021 looks consistent with today’s trading update.
As an aside, when I view the broker consensus graph, I’m looking for it being constantly updated, so wiggly lines. That’s a good sign that the forecasts are probably up-to-date. Whereas, if it’s a horizontal line, then guidance was probably withdrawn, and we’re looking at outdated numbers.
.
.
Roughly 10p EPS, and a share price of c.60p, means it’s priced on a very modest PER of just 6.
What’s the catch then? Too much debt, and a pension deficit, probably!
I’ll look back at the FY 06/2020 figures now, and see if I can find anything untoward.
FY 06/2020 results (quick review);
Adj profit before tax of £24.2m is roughly flat vs LY, but relies on £13.0m adjustments, quite hefty - my worry is that there could be multiple restructuring rounds, over several years
Balance sheet - NAV is £66.9m, less £28.4m intangibles = NTAV £38.5m. It’s striking how big the balance sheet is - lots of fixed assets (capital intensive) of £134.7m, plus large current assets of £287.6m, less current liabilities of £253.9m - these are really big numbers for a business worth £111m.
It’s not really generating that much profit from such a large balance sheet.
As I suspected, interest-bearing debt is high, at £137m, less cash of £44.2m, giving net debt of £92.8m.
Pension deficit? Yes. An accounting deficit of £31.5m, so the actuarial deficit is likely to be more. Annual overpayments of £4.0m is actually quite modest in the context of a decently cash generative business.
Although cash generation before capex is very impressive, it has a recurring large capex spend.
Cashflow statement - looks impressive, but I wonder if the big cash generation last year might have involved stretching some creditors, possibly?
Dividends - paying 1.1p via a B shares scheme - I’m not entirely sure what that is, do any readers know? Note that the recent RNSs show a share buybacks of up to 10% of the equity underway.
My opinion - I think MCB has too much debt, and I’m not keen on its pension deficit either. It is a very capital-intensive business, eking out a smallish profit on big revenues. Supplying supermarkets isn’t a good sector, in my opinion, so I’m not interested in getting involved here.
On the upside, looking at the 3-year chart below, it seems to have found a solid base, and the StockRank is now close to maximum. Maybe I’m being too harsh then? We’re seeing a lot of takeover bids going on at the moment. Maybe an overseas bidder might see it as a cheap way to bolt on extra revenues & profit? Is it worth taking a small, speculative, long position on this I wonder? That PER of 6 does look appealing. Hmmm I’ll have to sleep on this one.
.
.
Carr's (LON:CARR)
124p - mkt cap £114m
Here are my notes from a positive trading update in July 2020, where I concluded that Carr’s looks a good value share.
Carr's (CARR.L), the Agriculture and Engineering Group, announces its full year results for the year ended 29 August 2020.
This is another business that is quite large, and capital-intensive, but only makes a fairly slim profit margin.
Note that it doesn’t own 100% of all its operations, so there are minority interest lines on the P&L and balance sheet. This relates to JVs and associates. Fear not though, as the EPS line adjusts for this, hence we can rely on the adjusted EPS of 11.9p. This is down 18.5% on LY - not bad considering covid. It’s also ahead of forecast (I have 11.2p) and management confirms a beat against its expectations in the text today.
The PER is 124p divided by 11.9 actual adj EPS = 10.4 - a decent value share, as hopefully the future should see earnings rise, if covid ebbs away in 2021.
Current trading - new year trading in line with expectations.
Dividends - maintained at 4.75p, a signal of management confidence, yielding 3.85 - not bad at all, in a zero interest rate world.
Balance sheet - net debt of £18.9m looks reasonable.
NAV is £134.2m, less intangibles of £41.2m, gives NTAV of £93.0m - that’s a lot of asset backing for the £114m market cap.
Pension scheme - shown as a surplus of £8.0m, so probably not something we have to worry about.
My opinion - this looks a decent value share - low PER, divis, good asset backing. Worth considering I think, especially for income seekers who want something dependable in a crisis.
The trouble is, if you look at the 5-year chart below, and even add on the decent divis paid over the last 5 years, the total shareholder return has been - nothing! Over a period when the market has produced many multi-baggers. So that makes me wonder if this is a situation where the opportunity cost could be a problem, if that trend of no shareholder returns continues?
.
.
Trakm8 Holdings (LON:TRAK)
14.5p - mkt cap £7.2m
Too small to be of interest here really, but I’ve had a very quick look at interim results to 30 Sept 2020;
Revenues down 17% to £7.3m
Adj loss of £(314)k, statutory loss of £(845)k
Says that it would have been profitable without covid
H2 outlook more positive, based on strong order book
Costs being cut
Balance sheet weakness - reliant on £4.5m borrowings from HSBC, due for renewal on 30 Sept 2021. This could be a problem and a further £1.5m loan charging 8% p.a.
My opinion - this company has disappointed too many times for me to want to get involved again. The debt is a worry too - small, loss-making companies should not have debt on the balance sheet. Look at the share price - would investors want to support a placing here to pay down debt? Possibly only if trading moved back into profit, so I think the clock is ticking here for management. Not something I would touch without some convincing progress on improved trading, and the debt being cleared.
Looking at the 5-year chart below, it’s not really clear to me what went wrong in 2018. What was a nicely profitable little company, seemed to lose the ability to make any money. Perhaps it just got overtaken by competitors with better products? Telematics is a very competitive space after all.
.
.
Cake Box Holdings (LON:CBOX)
187p - mkt cap £75m
Here are my notes on the half year trading update, issued on 12 Oct 2020. As you can see from that report, I was impressed. Strong trading, a decent balance sheet, dividends reinstated, positive LFLs after lockdown. Impressive stuff!
Today we get the full half year figures;
Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year results for the six months ended 30 September 2020.
As you can see, the financial highlights look very good, considering all shops were closed for 6 weeks during this 6 month period. How can this be?
.
.
139 franchised stores operating at 30 Sept 2020 (up from 122 a year earlier)
Strong pipeline of new franchisees, and 5 new stores opened in Oct/Nov 2020. Expect to open 20 new franchise stores this FY- that’s quite a rapid rollout, in these very difficult times
LFL sales up 12.1% in the 20 weeks since re-opening
Most stores have remained open in the second lockdown
Online sales good
Balance sheet - doesn't need a lot of capital, as the franchisees provide it. Looks fine to me, no issues that I can see.
My opinion - I’ve reported positively on CBOX before, and think it’s looking increasingly good. I must admit to not fully understanding how it’s managed to power through covid with barely a scratch.
Equity Development did a webinar today, which I missed. However, I’m about to settle down to watch the recording now, which is about 35 minutes long, here it is;
.
.
Intercede (LON:IGP)
Share price: 85p (down 5%, at 11:34)
No. shares: 50.5m
Market cap: £42.9m
(I hold)
Intercede, the leading specialist in digital identity, credential management and secure mobility, today announces its interim results for the six months ended 30 September 2020.
Jack covered its half year trading update here on 8 Oct 2020. It said revenues were up 9%, and cash had risen considerably to £8.1m.
The actual numbers today are the same, so no surprises here.
- Finncap update note is available on Research Tree, raises price target from 100p to 125p
- H1 revenues £4.8m, up 9% on LY
- Note that Intercede has an H2 seasonal weighting
- Breakeven in H1 at PBT level
- Receives tax credits for R&D, so H1 PAT is £441k (£1.0m last full year)
- Conservative accounting - no capitalisation of development spending
- Balance sheet is quite thin, with negative NTAV of £(845)k - but that’s fine, because customers pay up-front, so as with many software companies, it can operate fine with a modest balance sheet
- Cash pile of £8.1m helped by unusually low receivables, so I would expect this to fall somewhat as receivables normalise
- Convertible loan notes outstanding of £4.9m - these expire Dec 2021, and are likely to be part repaid in cash, and part converted into shares, which I believe is at the discretion of the holders. NB this is expensive debt, costing £600k p.a. in interest, so the P&L will get a £600k p.a. boost from the beginning of calendar 2022 onwards, which is quite material to profits & hence valuation upside
- Geographic spread is heavily concentrated in USA, 81% of all revenues
- The company has proven itself to be very resilient to covid, with strong recurring revenues
Nothing of concern above, it’s all as expected.
Outlook -
Sales pipeline remains strong and ahead of prior year, notwithstanding the impact of COVID-19…. there has been significant growth in the US where Intercede's MyID platform is seen as a market leader amongst US Federal government departments. Intercede is proud that the MyID platform is extremely relevant in the current climate as its derived credential and mobile technology help our customers to work remotely in a secure fashion.
It sounds like these results were impacted by covid, and otherwise would have been stronger. Hopefully that augurs well for future growth;
We currently have MyID deployments active on four Continents and each of them has inevitably been impacted by the pandemic. Europe and the Middle East has been particularly hard hit simply by the severity of individual country lockdowns. It has been very difficult for our partners to progress demonstrations and close out sales leads.
Opportunities with Government departments and public utilities have been particularly affected as their priorities have been very much focused on public health challenges rather than the commissioning and deployment of new digital ID solutions.
Whilst the broader impact of a second wave of COVID-19 on the remainder of the current financial year remains as yet uncertain, Intercede's fundamentals remain very much intact and year-on-year growth is still anticipated in FY21. As full or part-time remote working may increasingly become the norm, secure remote access to systems, applications and data will be essential and Intercede's derived credential and mobile technology is already well ahead of many others in the market. As in previous years, revenue is expected to be weighted towards the second half of the year.
Whilst the nature of Intercede's business and customer profile is such that the precise timing of orders is difficult to predict, the current sales pipeline and levels of bid activity continue to support management's revenue and profitability targets.
My opinion - these results are as expected, and we have an in line with expectations outlook comment above. It seems to me that Intercede probably would have delivered significantly stronger growth without covid. Therefore, I am hopeful of an acceleration in future growth.
This share is all about the size of the opportunity. We’ve seen from recent RNSs that the company wins quite large contracts, and if a few more of those roll in, then profitability could really take off. That’s what I’m hoping for anyway.
This is an interesting product demonstration, at a FinnCap tech day, worth a look.
.
.
Treatt (LON:TET)
Share price: 644p (flat on the day)
No. shares: 59.6m
Market cap: £383.8m
Just a quick look here, as I’m out of time.
Impressive highlights, given what a difficult year it has been with covid;
.
Note the big increase in gross profit margin. A commendable +10.7% rise in adj EPS. The divis are up too, although that’s yielding less than 1%.
Current trading sounds fine;
Building on the excellent fundamentals of our business and broad added-value product offering, we have made a strong start to our new financial year ending 30 September 2021 and the Group continues to perform in line with the Board's expectations."
Balance sheet is strong, with c.£90m NTAV
Cashflow statement - as expected, it has spent heavily on capex, for new/enlarged production facilities.
My opinion - an interesting company, for sure. The PER is 33, which strikes me as too rich. Enlarged production capacity coming on stream could help boost profits, but why would I want to pay for the benefit of that up-front? Shareholders must believe that future profits are likely to considerably exceed existing forecasts. If not, then it’s too expensive.
.
Jack’s section
Countrywide (LON:CWD)
Share price: 225.67p
Shares in issue: 50,633,756
Market cap: £114.3m
Interesting update here, as there could be longer term contrarian value to be found in a couple of well run listed estate agencies. This one is definitely at the riskier end of the spectrum, though.
Paul considered Connells’ 250p per share offer for Countrywide (LON:CWD) in a recent SCVR report. Shares spiked up some 40% on the news, highlighting the group’s distressed valuation.
This was in November and came after Alchemy’s offer to underwrite a £90m equity raise. Today Countrywide updates the market: shareholders do not support Alchemy’s offer in its current form but the potential Connells acquisition is still on the table...
Update on strategic options & changes to the Board
There’s insufficient shareholder support for the Alchemy Transaction, but also a recognition of the need for new capital and a readiness among shareholders to invest in the company.
Possible options include:
- a capital raise to be underwritten by Alchemy Partners on amended terms;
- the indicative approach received from Connells at 250p; and
- a capital raise from existing shareholders of the company.
Furthermore, there are some changes to the board:
- Peter Long has stepped down as executive chairman and is retiring.
- Philip Bowcock is now interim CEO, having previously worked as CEO of William Hill.
- Paul Creffield, managing director, will retire from on 24 November 2021.
Conclusion
Countrywide is very much ‘in play’ but the terms of any agreed upon recapitalisation are key to the investment case. That’s a big unknown right now.
And then the rapid change in senior management at such a critical juncture is a concern. If the company can recapitalise (at decent terms) and free itself from its debt burdens then there could be an opportunity here later down the line.
I’m watching from the sidelines until the dust settles a little but this is a live situation - a risky one to possibly keep on the watchlist depending on how events play out.
.
All done for today! See you tomorrow.
Regards, Paul.
Disclaimer
This is not financial advice. Our content is intended to be used and must be used for information and education purposes only. Please read our disclaimer and terms and conditions to understand our obligations.
81 comments
Thanks everyone for all the very knowledgable posts on IQE (LON:IQE). I knew nothing about this company before reading your posts and now am hopefully up to speed. that's one of the wonderful things about the SCVR. thanks
your analogy amused me, graham
A question from me, after my night time review of the day.
When to eject?
The breath-taking surge of November; when will it/we run out of steam?
For my big winners, I still see a potential 20% upside if one looks at the January 2020 peak, two year highs, Stockopedia valuation tools, and Analysts opinion data.
But the idea of "don't be greedy"...
I am starting to think about soon it will be time to "park up" and pause for breath, wait for reality to return.
XLMedia (LON:XLM) @ 46.5, doubled up what I picked up in July and September, overall +24%
EVRAZ (LON:EVR) +10%
International Personal Finance (LON:IPF) - my averaging down strategy puts me +40%.
I don't feel that clever!
IGP - The product is a market leader in the US and when Europe an ROW governments focus on their digital security requirement as Covid 19 eases then there is a strong case for sizeable contracts to be won through its channel partners. A conservative first half statement in my view with some interesting product potential.
I saw very little in that presentation that isn’t available for free from the two major identity providers - Microsoft and Google.
I should clarify “free” - I mean bundled in with other subscriptions that already utilise Microsoft and Google cloud services
Hi IGotPoesJacket, but does Intercede (LON:IGP) offer there software as a service? I know of some companies that prefer to outsource the handling of customer identity to a third party, to minimise their risk and reduce internal effort around managing GDPR, even if internally they have invested in MS Azure or Google cloud services. Maybe this is Intercede (LON:IGP) s market? Thanks Andy
Right, but even if you outsource it, to access something like Office365 you’re going to need an identity in Azure, MyID doesn’t replace that and during the demonstrations in the video you see them land at the Azure Active Directory authentication page.
I have said before that this might be an example of my industry knowledge working against - you can’t argue against the reported numbers :)
Here are my heat maps for today (prices as at around 1pm). My apologies for missing the last couple of days, but other commitments got in the way.
Overall state of the market by ICB Industry classification:
Key to the Industry heat map contents:
SVCR filtered to 'interesting' instruments (reporting soon or recently, trending, breaking out, or moving more than the 20d EMA of ATR):
Big movers today (moving more than 20d ATR EMA against either yesterdays close, or today's open - not limited to small caps):
And finally the key to the heat map contents:
The heatmaps are ordered by Stock Rank™, and are limited to the top 80 instruments.
The heatmaps are images and will be resized by your browser to fit your screen. If the heatmaps images are too small to read on your screen, right-click on the image and select 'Open image in new tab'. This will open the heatmap in a new tab in your browser where they can be zoomed as necessary.
I use heatmaps a lot and generate many as part of my research. I use them to help me quickly find instruments which pass my basic 'tradeable' criteria ('T': profitable, low-debt, reasonable liquidity), have a high Stock Rank™ and Quality Rank, and are trending (Tr+ or Tr++) or breaking out (Br+ or Br++) ideally on increased volume (V+). I then research the individual instruments further using the Stockopedia Stock Report.
How (or indeed if) you use the heatmaps is up to you, I contribute them here in the hope that others may also find them interesting or useful.
greensiax
@greensiax it might be worth you flipping the aspect ratio on these charts - ie make them more vertical than horizontal - they are hard to read on mobile etc !
Good idea Ed, I'll look into it. Of course it will make them harder for me to read on my widescreen monitor ;-)
They are too fuzzy for me to read on my 32" 4K monitor and that's opening the images in a new tab. They come up better on my iPad. No idea why.
Hi Greensiax/Ed
I would like to create my own heat maps for mid and large caps. How do I do this? I asked the Stocko helpdesk bc I did not want to trouble you and the helpdesk said it did not know the answer.....!!!
I am using new site so need some pointers.
Tks and great maps
I would love to know to:) Great work!
One thing I've never been sure about Cake Box Holdings (LON:CBOX) was how much it made from up-front franchise fees.
I seem to remember from the last update that they had a record number of people putting down deposits for a franchise. So that is at least inflating the net cash line, and I wonder if they were recognising those as revenue in the first half?
Then there were quite a number of new store openings in the first half, so maybe a big proportion of revenues were one-off franchise fees?
However, current trading of existing stores look good. Up 12% like for like in recent weeks, even with a reduced high street footfall! This must be wonderful for the profitability of franchises (less so for CAKE as their upside is limited in a franchise model), but it could mean even more people knocking on their doors looking to open a Cake Box franchise in the coming 12 months.
Either way, I'm not prepared to pay 21x PE where I'm unsure how much of the revenue (and profits) are from one-off fees, that will completely disappear once the network is mature and saturated.
(I don't hold)
You can find this out by looking at their annual report. Its on Page 51. Franchise fees go to the PnL once the franchisor obligations are met - basically the outlet is open. Its always a good idea to look at the accounts before making an investment.
Cake Box Holdings (LON:CBOX) - saw a market stall type set-up in the entrance of a shopping mall (Surrey Quays) with a branded van presumably to bring the stock in each day. VERY attractive looking cakes, but not for me. Egg free. Have seen a couple of private type cake shops - no way the same presentation/quality but popular all the same and 'home' businesses with ebay sales etc. So a weak moat in my view. But then others say the next Domino's.
#IGP.
Gross margin is 99.9%. This means additional contracts will have a significant effect on profitability.
I hold since I heard Paul Scott talking about them some time ago -thanks Paul.
Appreciate (LON:APP) - H1 2020-21 results came out today. I hold. Overall, the type of stock that was beaten and bruised by C19 but could do well post covid.
November lockdown did not materially impact them they said. Surprising. Anyway. I'm positive for it.
Debt free ; SP 1/2 of Jan 20 ; Push towards online / digitalisation growth ; they have been getting their house in order this year too (efficiency drives in various initiatives e.g. moving office) ; repaying furlough money of £0.3mn + paying divie. a turnaround has been taking place in the past 2-3 yrs with new management. Excellent free notes available on - https://www.research-tree.com/... (u just need to sign up). And Lord Lee apparently likes this one too.
I've held Appreciate (LON:APP) in the past, but looking at today's numbers I'm not confident that the consensus forecast of 1.9p EPS for FY21 can be met. It represents a tall ask for the second half, and the outlook comments were positive, but a bit muted IMO.
Even at the forward 3p EPS for FY22, it looks a bit punchy at 10x PE with no clear obvious signs that they have a growth or margin driver. Yes, there is now a focus on digital - but the traction is not proven yet. Yes, they have a big cash pile, but from my understanding that's required now that they're FCA regulated with digital gift cards, so isn't exactly cash that can be put to good use like buybacks, special dividends, or acquisitions. So should really be counted as working capital IMO. Plus there is a big £1.5m PBT headwind next year, from the lower interest it earns on ringfenced gift card balances.
For me this is more of an income share, and if you do have confidence that it can get back to about 2p dividends, then the current price of 30p makes sense.
I see lots of broker notes on Research Tree out today - haven't read them yet!
(I don't hold)
Any thoughts on CML?
Prelims are out today from Conygar Investment Co (LON:CIC) and are worth a look, albeit are a highly speculative play in the property development market predominantly operating in Wales. The company has nine property developments, including its flagship Island Quarter development in Nottingham, a retail park in South West Wales and a residential development in Wales also. Despite a fall in valuations and cash, share buybacks have meant that my stressed NAV of 140p has remained stable from the interims and remains at a c40% premium to the current share price. I continue to hold, albeit a small position.
The prelims showed valuation writedowns of just over£5m, predominantly coming from writedowns on its Holyhead/Rhosgoch project after Hitachi pulled out of its nuclear project there. The company are in early discussions with renewables companies however I note that the valuation fall is in line with my 50% stressed valuation I previously applied to the site. Elsewhere, the valuation writedown in the Cross Hands retail park was already noted in the interims due to Peacocks administration and the impact of COVID, but the high quality of tenants (Lidl, B&M, Dominos, Pets at Home etc) means I have reduced my haircut from 10% to 5%. Finally, I continue to apply a 25% haircut to the Nottingham development given the size of the project, the funding that will be required and any delays to development.
Although the cash pile backs up c60% of the current share price, rising to 66% once the sale of the Selly Oak development has completed (permitting the PBSA provider receiving planning permission on the current site), it is worth noting that a lot of this plus further funding will be needed for the Island Quarter development, although it's potential value (mixed use of residential, student accommodation, events space, restaurants and public space) could be significantly higher than its cost.
After a positive trading update today I am surprised to see Forterra (LON:FORT) is only up c.5%.
‘the Board now anticipates 2020 EBITDA, stated before exceptional items, to be at least £34m, above the previously communicated range of £27m-£32m.’
Bonus points for actually stating the previously communicated range! If we were previously taking the midpoint of £29.5m this represents an improvement of around 15%
They also announce that as long as the positive momentum continues the board expects to recommend a final dividend for 2020.
I hold but am beginning to think they look fully valued - if they get back to "normal" profit levels that would put them on a p/e of circa 10. Current 2021 forecast has them at 18.4. That looks like a lot for a company in a cyclical industry which isn't showing a great deal of growth. I have added a tight stop loss.
Not on today's agenda but given the bid situation with regard to Codemasters Group (LON:CDM) (I hold) I thought this extract from today's Times newspaper might be of interest!
Forget Formula One. The fastest stuff at Codemasters is in the video games maker’s boardroom. First, a dash for the exit, courtesy of a cash-and-shares offer from Take-Two Interactive at the skinniest premium. And now this delightful bit of chicanery: spraying non-exec Lisa Thomas with share options mid-bid.
She only arrived on April 7. But she’s already in for 210,000 options at 235p. Or, to put it another way, a gift of £480,000 at the 464p offer price agreed by the board two weeks ago, even if most of her freebie’s in Take-Two shares. In fact, thanks to a rise in the suitor’s shares since, Codemasters now trades at £5, so she’s £556,500 well in.
Anyone would think she chaired Codemasters’ remuneration committee. Which, as it happens, she does. True Ms Thomas, the former “global chief brand officer” at Virgin, couldn’t have awarded herself her own options: they were granted “in accordance with the terms of her appointment”. But they’ll vest the instant the Take-Two deal completes. Even a Codemaster’s spokesman admits: “The timing’s not great.”
Except for Ms Thomas, of course. Under best practice, non-execs aren’t even meant to have share options. But as an Aim-listed stock Codemasters doesn’t have to play by those rules. All the non-execs are optioned up, including chairman Gerhard Florin, who rolled over to Take-Two at a 6.7 per cent premium after a doubling of half-year ebitda. Meantime the Codemasters’ boss Frank Sagnier and the other executives will be joining Take-Two with the promise that it’ll be revving up the “incentive structure”. Fast bucks all round.
If this reporting is accurate (and I thought offer price was 485p) it just demonstrates that the Codemasters Group (LON:CDM) senior management are only concerned about lining their own pockets and are not acting in the best interests of shareholders.
...or not, as the case may be? According to the RNS, these are market-based options and they'll cost her 235p per share to exercise them. Secondly, “in accordance with the terms of her appointment” suggests that these. are to compensate her for the share awards that she forfeited when she jumped ship from her previous employer and so is probably contractual. As the spokesperson said, it's not great timing.
Isnt she a non exec? How is that 'jumping ship"? She has a job at Virgin.
She is a non-exec. Alistair Osborn who wrote the Times piece is, in my opinion, a cracking business journo., and picks up on many horrors in listed cos.
I think holders of the larger AIM stocks (& Codemasters Group (LON:CDM) 's mkt cap is £762m), should press for such companies to follow full listing standards of governance in areas like remunerating NEDs. The CDM board behaviour - primarily in accepting this bid but in this NED pay issue as well - is disgraceful.
Codemasters Group (LON:CDM) - I saw the RNS regading the new non- exec options and have now checked the last annual report for the other two:
Non-Executive Directors
Gerhard Florin NED 350,000
Ian Gomes NED 210,000
Both are excercisable until 31 May 2028 at 200p so if deal is worth say 500p that is a bonus for approving it of £1.05m and £420k respectively.
This stinks - add check if non-execs have options to screening list.
You say "I thought offer price was 485p". It is mainly in $TTWO shares so the value is variable. I have been putting some notes on this at https://www.stockopedia.com/co... and yesterday wrote:
"TTWO $167.12 = £125.71 at London close today making the offer worth 476p but CDM closed at 496/500 so the market definitely sees an upward revision".
If we could only know what goes on behind the scenes - if the major shareholders have anything other than a very short term view surely they would kill this and get rid of senior management - oh just woken up and fear that was a dream and ain’t happening in the real world!
Back to the nightmare of getting ripped off - my bet is that Slater etc secure a few more pennies and go along with the screwing of small investors and inherent short term approach and loss of yet another successful early(ish) stage UK tech company
Will be seething for a while yet
£TET Interested in your take on these Paul. Been a holder for many years and seen them change from basically trading in orange oil to a supplier of (higher margin) ingredients to the flavour and fragrance markets. Lots of business in the USA in growing markets, particularly beverages. Heavy cap ex on new factory in the UK now well under way, after expansion in the USA came on stream during 2020 - covid delays in build mean still has net cash at the year end. Increased dividend a pleasant surprise and sign of confidence - new year has started "strongly". Highly rated, but Spanish company in similar markets recently acquired by Croda. Don't expect fireworks in the short term, but locked away in my ISA bottom drawer.
Steady as she goes update from IQE (LON:IQE) this morning, and mildly positive market reaction. The FD is probably being cautious. Still, is a 5m "adjusted operating profit", maybe more like 15m next year, really worth a 500m market cap? Not a value share, and not Paul's cup of tea for reasons he has stated in the past, but I wondered whether anyone else here had a view on it. I hold.
I bought a small stake recently. It was a hot stock here but no longer gets much attention. They are very well positioned in terms of their technology and supply chain links. The sentence where they say "IQE retains a market-leading position in 3D Sensing epitaxy and has been central to new applications being launched for this technology in its existing supply chains" struck me as the closest you'll get to them saying they are providing wafers for the iPhone 3D sensors. They also got a record $10m order in their defence division.
There was another announcement this morning saying that the founder Drew Nelson is stepping up to President when they can recruit a new CEO and he will then concentrate his efforts on growing the semiconductor cluster initiative in South Wales. I think that's a good step and if the right new CEO is appointed they can concentrate 100% on growing IQE as a business. I'll probably hold off on buying any more to see who that CEO will be.
I also hold Iqe (LON:IQE) from about 20p so I'm not unhappy but I'd have looked much cleverer if I had sold up at 150p when the market went nuts for them. Though maybe I shouldn't beat myself up too much as I wasn't one of the poor saps who bought in the placing at north of 100p.
To be fair at the time a couple of sensible people on here commented on the fact that they always seemed to be on the cutting edge of the tech but never capable of moving the needle on profits and cash but managing to reward themselves richly in the process. Then the capital intensive nature of the business was a put off for others.
Then came the various demand side issues and resulting downgrades. Profit expectations fell away from 3.5p for this year to expected losses at one point and from almost 5p EPS for 2021 down to a measly 1.1p prior to this update. To say management haven't covered themselves in glory is a bit of an understatement in my view. I understand Trumps tariffs and China spat clearly had a marked impact and all semi conductor stocks fell away but nonetheless I wasn't particularly impressed.
On the more positive side (and the only thing that kept me in the stock) I saw an interview a few months back from the new CFO who seemed pretty switched on. He talked about the fact that most of the capital requirements/spend was now done and that operational gearing kicks in from here. Fixed costs are a high percentage of overall costs and with some cost cutting felt the company can regain strong momentum. That looked much more interesting and appears to be playing out with increased demand dropping to the bottom line and generating cashflows. So, I'm now at the point where I can see 20%+ revenue growth for the next few years as 5g and other such dynamics play out.
If I'm right £170m should grow to £205m+ for next year : from previous analysts notes I deduce that roughly 50% of incremental revenue drops to net profit now (but I don't know exactly how accurate that is) so I am looking for maybe £23m of net profit next year or 2.6p EPS. That would require some chunky analyst upgrades though so I will be interested to see if we get any better guidance.
As you say that still puts them at 25* earnings so not on the value scale and I wouldn't be surprised to see them trade sideways for another 12 months on this basis so I'm a bit undecided whether to hold or sell up and wait. On the bullish side I do see 20% compound revenue growth for the next 3-5 years at a macro level though, so if there is genuine operational gearing and the 50% continues to drop into net profit then 2022 might see 4.5p and 2023 rises to 8p at which point the share price looks very cheap. That may prove to be completely pie in the sky though and depends on the business being able to scale to £295m of revenues without large additional Capex and increasing the fixed cost base but does demonstrate how the operational gearing effect could now come into play.........hmmmmmm
re IQE (LON:IQE), I have been quite impressed by the new CFO as well. I had been under the impression they could see revenues up to £250m from current facilities. At that level they should be able to finance quite a lot of new capex out of operational cash flow.
Also struggling to build a business case for Iqe (LON:IQE)
I, like someone else on the thread, bought them also at 20p many years ago. But then sold at around 60p, kicked myself as it went to 150p+. But now its back down to that level again.
I do see they've done loads of capex in the last two years, so can see that potentially they are now a "leader" again and will generate some brisk new contracts for chips. But the semiconductor industry is so competitive - so capital intensive - and with very very big players many times the scale of IQE.
What's the end game? Will they ever grow to a massive semiconductor manufacturer? Or just a fringe supplier? Can they carve out a niche and build a moat around it?
Or will a handset manufacturer buy them, to be vertically integrated? Apple now designs their own chips. Maybe they want to also produce them. Vertically integrated mobile phone manufacturers looks like the strategic trend going forwards, instead of relying on off-the-shelf third party chips that every other phone manufacturer can procure. If IQE was based in China, Huawei would have bought them. But what about Xiaomi, Oppo, and the rest - maybe they'll be interested in beefing up their hardware advantages? Food for thought.
The handset manufacturers would have to integrate a long way down the supply chain to get to IQE. They supply the wafers to the chip makers who supply the circuit board assemblers. Fabless chip supply is the dominant model at the moment. Also IQE have a pretty diverse customer set in space and defence and 5G base stations.
But it did occur to me that a new CEO might not get long to settle in. There must be competitors or PE thinking that the move upstairs by Drew Nelson could be an opportune time to make a bid and the business looks to be in a good place to produce profits now. Personally I hope not - I'm almost always annoyed when I find a good prospect and get it taken away for a 20% or 30% upside. (Trying not to get started on the Codemasters bid..)
Regarding IQE (LON:IQE)
It's important to understand where they fit into the semiconductor industry. They don't design chips (like ARM) and they don't manufacture chips (like Intel or TSMC). They just produce wafers with slightly exotic epitaxial layers useful for things like photonics/LEDs etc. I think they buy in the base wafers rather than growing their own.
If semiconductors was in the business of making sandwiches, IQE buy in bread and add a specially flavoured butter. Other companies buy these and add the bacon, lettuce and tomatoes and then package them to sell to consumers. ARM does not even do that. They design new flavour combinations and sell the recipe to companies like Qualcomm collecting a royalty on every sandwich sold.
haha - love the sandwich analogy.........they always make me chuckle. Big thumbs up from me.
From memory I think Iqe (LON:IQE) are seen as pretty much best in class in what they do. Replicating is not easy and as we have seen, expensive, so there is a bit of a moat but of course constant innovation is key in this industry. But converting best in class to creating long term shareholder value are two different things and Iqe (LON:IQE) has not delivered on the latter to date. I think the CFO has a grip on delivering the operational gearing though so I watch to see if my hypothesis plays out. If not I will leave the party and forgo my sandwich lunch............
I've been in IQE (LON:IQE) for quite a long time. Watched them go up and up when it emerged that the VCSELs in the FaceID on iPhones used their tech and watched them go all the way back down again.
One trouble with this stock is that people are generally not willing to invest sufficient time and effort to really understand what they do, hence they are frequently talked about as if their whole business is iPhone related, or as if they are making chips so should be compared to other semi-conductor manufacturers, or they have an unquenchable thirst for capex when in fact these are very much step costs for new machines that have a relatively short pay back. It is also a bit ironic that some people who complain about the capex are perfectly happy to hold shares in companies with an unquenchable thirst for marketing expenditure as if marketing costs are somehow virtuous but capex is a black mark.
The company has been on a rollercoaster. They became too closely associated with Apple and FaceID, which never took off at the pace people hoped for. Then the FD sadly died in an accident on holiday and there was a mostly nonsense short attack from Muddy Waters. Then an unexpected tax bill relating to an acquisition and to top it all the US/China trade wars with the US ban on Huawei kit. And so on and so on.
However, the investment case at IQE has always been around 5G, both handset components and infrastructure as well as VCSELs for sensing applications like FaceID and automated vehicles. Around a year ago, it looked like for whatever reason they were not able to take advantage of the roll out of 5G in the way that had been expected. So, it became very much as case of don't believe anything about the tech being great or the surrounding story, only believe the real numbers from them.
Now it appears that the real numbers bear promise. I note the dramatic drop in debt. The other thing to know about this business is that a major part of the costs are pretty much fixed until capacity is exceeded so incremental growth should be quite profitable. But as I say, only believe it when you see it.
My conclusion is that I am happy to continue to hold as I think they are well placed for growth on the back of 5G in particular. The component suppliers who are their customers are generally reporting very good growth. They are not dependent on Apple. Margins should be good for quite a while.
I am not expecting stellar returns however but believe that they will be good enough to be a good place to be.
IQE (LON:IQE)
I can't really agree with that graham. There are plenty of people who know in mind numbing detail exactly what the company does. What they don't know though is if and when they can start making money out of it.
It could be argued that the company has been serially unlucky over the last couple of years (I prefer companies that don't need to rely on luck).
I actually do that they could be a substantial success story but that time is probably 3-4 years into the future. 2 years ago it looked like it was maybe 2-3 years away.
Having said all of that I do currently have a recently bought small position in IQE for the first time in about 18 months, but this was just based on an hope/expectation of short term technical bounce.
The fact there was only a muted reaction to today's upgrade, suggest that I may have misjudged that.
Personally I think they need to show some sustained earnings momentum before I would start to get interested in a longer term investment again.
hey Gromley - broadly agree, though Graham also has a point.
You are right that investors do know in mind numbing detail the tech Iqe (LON:IQE) has......BUT.......there were definitely a bunch of investors who got on board the "we're supplying Apple" train and nothing else mattered. What this translated into was an exponential rise up to 150p and then as people worried about Face ID uptake and iPhone sales dropped quickly as the hot money exited. At this point they found it very hard to dispel the idea they were not just an Apple supplier even though a number of us pointed out regularly that it wasn't the case.
Whilst you are correct that it could be argued the company has been serially unlucky I think those events mask a reality that investors got way ahead of themselves with regards to when demand for their kit would start to grow consistently. I think management did a really poor job of guidance around this period and failed to understand the timings of the demand growth and that's probably where I have my biggest issue with the company. That coupled with the unlucky events that we know about elongated that demand curve even further out and thus investors lost confidence. At that point there was a lot of huffing and puffing about CAPEX. As Graham points out there is nothing at all wrong with CAPEX but the real problem in my view was that investors didn't think management could make the required IRR to justify the CAPEX.
Where I am somewhat encouraged by todays update and this market in general is that at a macro level I can now see a path to 20%+ consistent compound growth for a few years in 5G and the like. If (and this is of course the million dollar question) Iqe (LON:IQE) can capture that then the company could be viewed as good value, but previous hiccups will temper investor enthusiasm until they see it come through more regularly in my view. The problem for investors will be the timing.
Re IQE (LON:IQE)
Respect Gromley’s view that commentators understand the stock, however, I really think that there wouldn’t have been so many way off beam comments in the past about them being bought by handset makers, or them being in the same game as chipmakers, or being an Apple supplier etc. If that was really the case. But it’s water under the bridge so no matter and I pretty much agree with the forward looking comments.
David’s summarised it very well and more eloquently than me.
Where I am somewhat encouraged by todays update and this market in general is that at a macro level I can now see a path to 20%+ consistent compound growth for a few years in 5G and the like. If (and this is of course the million dollar question) Iqe (LON:IQE) can capture that then the company could be viewed as good value, but previous hiccups will temper investor enthusiasm until they see it come through more regularly in my view. The problem for investors will be the timing.
Could not of put it better myself. Was there at 20p went in and out, sold out and rebought again North of £1.30. So just waiting - sadly no doubt it will be a long wait.
So are they a squeezed supplier in a middle of a long chain, or do they genuinely have the secret sauce (sorry, secret butter) that no one else can produce?
I think that, for me, is the key to understanding whether Iqe (LON:IQE) is worth its high rating or not.
If IQE (LON:IQE) were a single technology, single product and single market company that would be fairly easy to answer but they are not.
I suppose that your question is essentially asking does this company have pricing power in a growing market or not? You’ll find any number of opinions out there but I do really think that it is only the trend of actual financial results that can be relied on here. And that’s now looking quite positive as they seem to be more in an under promise and over deliver mode.
But to try and answer the question a bit more fully. They are one of a small number of companies doing expitaxy for compound semiconductors and while not unique they may be best in class in certain categories. However, historically compound semiconductors were too expensive. As cost has come down and the need for some of their special properties emerged for specific applications in sensing, 5G and defence, volumes have started to increase. So, high costs have thus far meant that the products have not been high margin. That is gradually changing due to lower costs and new markets less reliant on a small number of customers.
great share on the presentation for Cake Box Holdings (LON:CBOX) .. those guys are fab (not a holder..yet)
re Carr's (LON:CARR) (don't own or really follow, yet) anyone else struggling to see how a mix of agriculture, robotics and nuclear?(!) can complement eachother? Is this why the stock has had a 5 year sad-on?
I looked at that question re Carr's a while back and decided that it's based in Cumbria and that mix reflects the economy there.
Just to mention that Versarien will be one of the companies to be discussed in the MelloMonday BASH panel next Monday https://melloevents.com/mellomonday-30th-november/
Additionally we have a bonus MelloTuesday Investing in GOLD evening webinar tonight and if you would like a last minute ticket with 66% discount just enter the code StockoG when registering...
https://melloevents.com/upcoming-event/mellotuesday-24th-november/
Paul
Thanks for the update on Carr's (LON:CARR) .
If you have time, I'd welcome your opinion on the announcement today by Ekf Diagnostics Holdings (LON:EKF) that they will distribute their entire £5m investment in Trellus Health to EKF shareholders in specie ahead of Trellus Health's possible IPO next year.
Thanks.
£EKF
Does this not mean that we'll receive a small number of shares in Trellus which won't be publicly tradeable and probably highly illiquid?
Well they will be tradeable when it goes to through to IPO though?
Re distribution of Trellus in specie to shareholders
Ekf Diagnostics Holdings (LON:EKF) has a great record for this sort of thing: they did this with Renalytix Ai (LON:RENX) and indirectly with Verici Dx (LON:VRCI) which after a few months unquoted went public very recently.
I am not sure why other companies keep their subsidiaries which have great potential, whilst Ekf Diagnostics Holdings (LON:EKF) spins them off (keeping a decent stake itself). Maybe it is to spread the development costs and to incentivise the management? Any views welcome. But the business model seems to be working for them (and for shareholders) so far.
I hold
Ricardo
Hi FREng,
That deal with Ekf Diagnostics Holdings (LON:EKF) sounds self-explanatory, not sure there's anything I can add to it.
Regards, Paul.
Thanks, Paul - and thanks to others for their comments on the Ekf Diagnostics Holdings (LON:EKF) announcement.
I don't understand why EKF imade their "strategic investment" on the day that Trelius announced their intention to IPO, unless perhaps it was to provide the funding required to IPO. Nor do I understand why EKF has decided to transfer all their shares in Trelius to EKF shareholders rather than waiting for the IPO and (probably) realising a profit on the investment that they can put to use elsewhere.
@ricardow says EKF have in the past "kept a decent stake themselves" when spinning off subsidiaries, but it seems not to be the case this time.
I'd welcome any views, as this seems to be a time either to buy or to sell EKF - and I can't decide which!
Id be interested to know more about why you are thinking about selling as regardless of the new shares for this new company, the financial fundamentals of EKF are still the same. Or thats my thoughts on this subject anyway
I think it's the Christopher Mills of Harwood Capital connection. Trelius, EKF, Renx, Verici all have a Mr Mills connection. Perhaps its his way of maxing out value?
Here is an excellent podcast at vox where Mr Mills talks about these biotech/science companies. https://www.voxmarkets.co.uk/a...
International Personal Finance (LON:IPF)
To note: IPF was as low as below 40p in April. Currently 96.28p +5% on the day on tiny tiny volume.
Still showing a broker target of 202p so possibly a long way still to go.
No news since last week where Aberforth Partners LLP raised from 12.03% to 13.1%.
This position is my largest holding ever and largest paper win ever.
As always, I am looking for clues as to what is going on. Next calendar event: 24/02/2021.
Well done. 8888. A few months, this stock was untouchable given the "material uncertainty as a going concern" opinion with concerns by auditors in respect of their bond refinancing. With the bond refinancing sorted, I duly forgot to buy in and saw the SP rocket ! Master stroke.
Paul, are you planning to look at Intercede (LON:IGP) intercede, which I believe you hold. At a first glance they look good. But perhaps the narrative is more glowing than the actual figures?
Yes, I'll be looking at Intercede (LON:IGP) next.
Treatt (LON:TET) Full Year Results
Revenue down 3.3%, however, as they state Profit before tax and exceptional items1 up 11.3% and dividend per share increased by 9.1% - a strong performance in unprecedented times
and Cash generated from operations in the year was £15.7m (2019: £20.5m) and free cash flow2, excluding the costs associated with the UK relocation, was £10.0m.
Strong TU from £rnwh today in spite of some suspensions. Good to see that Paul's other day job is going well. I wonder how he manages it
The last TU from Renew Holdings (LON:RNWH) was on the 4th of September so I don't know what you are taking about.
#IGP.
Strong H1 and cash flow derisks FY expectations. Cenkos raises target to 125p (100p)
Very strong in US:
"MyID platform seen as a market leader amongst US Fed Govt departments"
My tweethttps://twitter.com/Michael514...
I hold.
Phoenix Group (LON:PHNX)
Does anyone know what the rumours and speculation are that Phoenix Group (LON:PHNX) refer to in their RNS this morning? The RNS is very vague........
Proposed sale of European business for €650 million.
Bonitabeach
My morning smallcap tweet: Versarien real news!
Countrywide (LON:CWD) AA (LON:AA.) Zoetic International (LON:ZOE) Versarien (LON:VRS) EKF Diagnostics Holdings (LON:EKF) Funding Circle Holdings (LON:FCH) Devro (LON:DVO) Headlam (LON:HEAD) Tharisa (LON:THS) Ilika (LON:IKA) IQE (LON:IQE) Conygar Investment Co (LON:CIC) Ten Lifestyle (LON:TENG) ReNeuron (LON:RENE)
Countrywide (CWD) instos won't back proposed rescue placing underwritted by Alchemy Partners "but also a recognition of the need for new capital and a readiness among shareholders to invest in the Company." Co looking at another way to refinance inc Connells indicative approach. Major board changes. [SP=230 Cap=116m]
AA (AA.) PUSU deadline extended to 25 Nov following possible 35p offer. [SP=31.95 Cap=199m]. I hold.
Zoetic (ZOE) gets 'landmark' agreement to distribute products in up to 88k small US shops. [SP=43.6 Cap=85m]
Versarien (VRS) an actual money order! A typo? Wins £1.95m order from MoD body to develop graphene loaded polymer composites for certain (confidential) defence related applications. Runs to Mar 2022. [SP=35.5 Cap=60m]
EKF Diagnostics (EKF) circular re spin-out of holding in Trellus Health as shares certs. Possible IPO next year. [SP=62 Cap=282m]
Funding Circle (FCH) guides adj EBITDA profitable in H2, materially ahead of previous guidance of close to breakeven. First 4 months income up 38%. [SP=89 Cap=314m]
Devro (DVO) recent 4 months trading remained robust. "For the full year we still expect good growth in emerging markets to offset a decline in our mature markets leading to broadly flat collagen volumes, with an estimated 2% net negative impact from COVID." [SP=157.4 Cap=263m]
Headlam (HEAD) has been hacked. "Certain back office systems were affected, including the email system which has now been restored. The Company's operating ERP system, containing customer and supplier information, was not accessed, and there has been minimal impact on operations." Perp is a "well-known newer organisation which has carried out multiple such incidents recently. There is currently evidence of extraction of a small amount of data." [SP=363 Cap=308m]
Tharisa (THS) guides FY EPS 16c to 17c up 300-325%. Stmt required under Jersey Stock Ex because nos are >20% different to prior year. Unhelpfully doesn't say if it's different from expectations. [SP=79.5 Cap=4551m]
Ilika (IKA) decides an Ilika-operated facility offers the lowest implementation risk and best financial return for increasing Stereax battery prodn. [SP=103 Cap=143m]
IQE (IQE) up FY rev guidance by £5m to at least £170m with mid-single-digit £m adjusted operating profit. Reduced capex cuts net debt to low-single-digit £m from £16m in prior year. Expects "underlying demand for the technologies that IQE’s products enable will remain strong heading into 2021." Also founder and CEO will leave when new CEO found. Naturally he is thanked - you can't diss the founder. [SP=60.4 Cap=483m]
Conygar (CIC) FY(Sept) NAV 165.8p/sh (178.2p). Outlook is highly uncertain. [SP=108.4 Cap=58m]
Ten Lifestyle Group (TENG) FY(Aug) rev down 3.5%, as guided in trading stmt. "Until the effects of COVID-19 ease globally, we expect that Net Revenue will continue to be reduced due to lower demand for our core services in dining, travel and live entertainment in each of the regions. The timing of this recovery is uncertain." [SP=90 Cap=73m]
Renuron (RENE) [last night] placing at 70p, a 28% discount [SP=96.45 Cap=31m]
Intercede (LON:IGP), Half Year report is encouraging...
Chuck Pol, Chairman, said:
Intercede has delivered continued growth during a period of worldwide social and economic turbulence; revenues are 9% higher and operating profits and cashflows have substantially increased to deliver significantly higher gross cash balances thereby demonstrating the relevance and resilience of Intercede and its MyID Platform.
Ig Design (LON:IGR) H1 results overview by Paul Fineman, CEO & Giles Willits, CFO. Stronger than expected start to 2021, revenue up 41% driven by CSS acquisition, but EPS down due to increased share issue due to the increased shares from the equity raise for CSS. Net debt improved, average leverage 0.2x. Maintaining their interim dividend. Orderbook in excess of 80% of FY revenue forecasts, higher than this time last year. Capital investment spending lower, but benefiting from earlier years investment. Outlook: the full year performance will be ahead of expectations. Watch or listen to the overview video or podcast (hyperlinked) with Paul Fineman CEO & Giles Willits, CFO.
Ig Design (LON:IGR) management will give a H1 presentation followed by Q&A tomorrow 25.11.20 at 2.30pm. To join register here.
Other results presentations forthcoming:
Tracsis (LON:TRCS) FY20 results: Thursday 26th November, 1pm
Chris Barnes, CEO & Max Cawthra, CFO will pesent results followed by Q&A. They've been lying low since Chris took over, but a great opportunity to catch up on this quality business. Register here.
Panoply Holdings (LON:TPX) H1 20 results: Monday 30th November, 12 noon
Neal Gandhi, CEO & Oliver Rigby, CFO will pesent results followed by Q&A. They've been on a roll during CV19, helping Government and Local Authorities gear up for all the challenges. Great insight to what's going on behind the scenes generally, and how they see it translate for their business going forward. Register here.
Sosandar (LON:SOS) H1 results webinar: Tuesday 1st December, 12 noon
Julie Lavington, Joint CEO & Steve Dilks (new) Finance Director will present results followed by Q&A. This is one Paul has followed from the very beginning and written extensively about. They're always so busy, so difficult to track down, but we're delighted we've been able to do so. Register here.
$ head
Headlam Group plc (LSE: HEAD), Europe's leading floorcoverings distributor, announces that it has been subject to a cyber security incident which involved unauthorised access to some of its computer systems...
I remember Paul wrote a report on another company recently with a similar situation cam anyone point me in the direction of this report?
Thanks
Morning Michael. That was Nwf (LON:NWF) which suffered similar cyber related issues recently. They suspended trading for a day or two but returned to the market with a reassuring update and the share price appears not to have suffered any lasting damage. Details are here:
https://www.stockopedia.com/sh...
Todays incident with Headlam (LON:HEAD) appears also to be fairly limited with no major disruption and no announcement of suspended trading (as yet at least) so it might present a buying opportunity for those inclined.
The bigger issue here is the warnings that these incidents are flagging up. One only has to look at the recent incident at $GRMN ,who paid up a $10 million ransom to get their systems back up and running after hackers encrypted their servers, to see the worrying direction of travel.
It scares me to think that this could be the fate of any one of our investments at any given moment. Garmin have illustrated the lucrative viability of such attacks. Criminally minded short sellers might also see this as a useful strategy to make a swift profit.
No matter the strength and performance of a business, the IT systems will always be vulnerable and the extent of the vulnerability will never be easy for any investor to weigh up until it's too late.
The only sensible hedge in my opinion would be to invest in the cyber security field but there are lots of players and it's hard to know where to place the bets. I think Jack did a good piece recently assessing some of the runners and riders. It would be interesting to hear of any good candidates that readers here have experience of.
Perhaps Intercede (LON:IGP) who reported today may be one such candidate although they appear to be a tiddler.
The bigger issue here is the warnings that these incidents are flagging up. One only has to look at the recent incident at $GRMN ,who paid up a $10 million ransom to get their systems back up and running after hackers encrypted their servers, to see the worrying direction of travel.
This has been going on for years, it's just that no one ever said anything. Since the introduction of GDPR the requirement to notify has been mandatory and the potential fines from the ICO eyewatering - up to 4% of global turnover. Reporting promptly and transparently is one of the mitigations the ICO will take into account when considering punishments.
Intercede (LON:IGP) don't really operate in this space, it's primarily a heavy duty government centric solution. There are lots of companies that do but if you're looking at cyber-security as an investment then an ETF is far and away the easiest way given the complexity of the market and the potential exposures to things going wrong.
Something like: https://www.stockopedia.com/et...
timarr
Michael
The "other" company was Nwf (LON:NWF) - which reported a cyber attack on 2 Nov. It shares were suspended while it investigated, until it came out with a second RNS on 12 Nov - giving figures on the impact.
It's getting late in the evening, so I may be overly curmudgeonly by now, but I had to reread one of the lines Paul quoted from the McBride (LON:MCB) statement.
I think this means.
I once had the misfortune to be responsible for "briefings" and spent a lot of time battling senior management's desire to accentuate the positive and hide the negative. I mostly lost, so ended up having to write some utterly meaningful nonsense of which I am embarrassed. I am not sure I wrote any gobbledygook of this calibre however.
I had McBride (LON:MCB) on one of my watchlists (can't remember now why) but if this is the standard of the management speak - I will not be prioritising further research anytime soon.
I have an overly sensitive presentational-BS trigger, so if I have been overly harsh here I would welcome feedback.
Curmudgeonly or not, sharing your insightful thoughts should be welcomes. Hope I have used this new word (to me) correctly.
Overly harsh? On balance probably not - plus you made me chuckle - so a definite thumbs up.
Given Covid and the obsession with cleanliness shouldnt a business selling such products have reported better growth?
McBride
At McBride plc's General Meeting on 24 March 2011, shareholders approved the issue of non-cumulative redeemable preference shares with a nominal value of 0.1 pence each (B Shares) as a method of making payments to shareholders rather than paying a cash dividend. However, you can still receive cash from the Company provided you complete and return an Election Form by the relevant deadline.B Shares are non-cumulative redeemable preference shares of 0.1p each in the capital of the Company that can, during defined periods, be redeemed for cash. The Company expects to issue B Shares to ordinary shareholders in May and November each year in lieu of a cash dividend.
Hi Paul,
Tuesday will be the 24th.
Ah yes, so it will! Thanks for the correction, I've amended it now. I don't know what it is with dates, I seem to have a bit of an issue with them. That's the problem when you write things at half past twelfty! (or fourteen hundred hours, or whatever it is)