Small Cap Value Report (Wed 2 Oct 2019) - RBG, TPT, ABDP, KCT, TEG

Wednesday, Oct 02 2019 by

Good morning, it's Paul here.

I'll be writing all afternoon, as there are no meetings today. Estimated time of completion: 6 pm. There are not many updates today, so once I've covered those, I'll circle back to a few more items of news from yesterday. Today's report is now finished.

Meeting with Revolution Bars (RBG)

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

I had a very interesting meeting with the management of Revolution Bars (LON:RBG) last night. They ran through a very informative slide deck, with me asking questions along the way. With an improving sales trend during FY 06/2019, and LFL sales having moved into positive territory more recently (+1.2% in Jul - Sep 2019), it seems very obvious that the business is on the mend under the new management. This is shown clearly in slide 4.

A busy schedule of refurbs is proving very effective at lifting sales, and has an excellent ROI - proving that this strategy is better than opening new sites. See this extract from slide 18:


Net debt - was £15m at the year end, and is set to reduce by £5m this financial year, now that the new openings programme has stopped. Refubs only cost about £200k, whereas new site openings cost £1m each. I think there is tacit admission that it was a mistake for previous management to fund lots of new sites with debt.

I very much like this cautious strategy, as it prepares RBG for a potential recession - which could wipe out some of its competition, so not necessarily a bad thing.

I think in more normal markets, the share price would definitely be recovering by now. As with many other shares though, there's a buyers' strike, because people are too nervous to buy before Brexit is resolved, I suppose. Plus there's macro-economic uncertainty everywhere right now. That's definitely creating some pricing anomalies, in my opinion.

People are probably sick of me talking about RBG at the expense of covering other shares, so I'll park this to one side for now.

As an aside, I got caught up in the London rush hour, when the meeting finished at 5:15 pm. What a nightmare, how do people do…

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

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Topps Tiles Plc is a United Kingdom-based retailer of tiles. The Company is engaged in the retail distribution of ceramic and porcelain tiles, natural stone, and related products. It operates in the Topps Tiles stores and online business segment. It supplies tiles and associated products to both trade and retail customer base, primarily for the refurbishment of the United Kingdom domestic housing. Its product categories include new products, bathroom wall tiles, kitchen wall tiles, mosaic tiles, kitchen floor tiles, bathroom floor tiles, ceramic tiles, porcelain tiles, underfloor heating, wet rooms, outdoor tiles, fireplace tiles and metro tiles. Its brands include Tile Adhesive, Tile Grout, Tile Preparations, Hardiebacker Board, Rubi Tools and Accessories, Warmup, and Homelux Tiles Trims. It offers tiles in various colors, such as beige tiles, black tiles, blue tiles, brown tiles, cream tiles and gold tiles. It has over 350 stores across the United Kingdom. more »

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AB Dynamics plc is a holding company, which is engaged in the provision of testing systems to the global motor industry. The Company is a designer, manufacturer and provider of testing and measurement products for vehicle suspension, brakes and steering to the global automotive research and development sector. Its geographical segments include the United Kingdom, Rest of the European Union, North America and Rest of the World. It designs and manufactures specialized testing systems to produce equipment for its customers to develop suspension, brake, chassis and steering systems; evaluate vehicle dynamics and safety systems on the track; employ driver in loop simulation for prototyping; develop and evaluate the next generation of safety systems in vehicles; test and evaluate the technology for use in future driverless cars/autonomous vehicles, and carry out end-of-line noise/vibration (NVH) testing of power train assemblies. more »

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

21 Comments on this Article show/hide all

tomps3 2nd Oct 2 of 21

Video: finnCap (FCAP) investor presentation from the piworld - Progressive Equity Research event September 2019.

Introduction by Gareth Evans, Progressive Equity Research. Then, Sam Smith, CEO, outlines the business model for finnCap, the rationale behind the recent IPO and what’s happened since. Tom Hayward, CFO runs through the financials, and combining with Cavendish. c.30mins.

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InvestorJohn 2nd Oct 3 of 21

iEnergizer (LON:IBPO) looks good but there cant be much liquidity with EICR Cyprus owning what looks like 82% of the company...

Spread is massive at 9.1% today

Anyone have any views on this?

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laurie 2nd Oct 4 of 21

In reply to post #518326

iEnergizer (LON:IBPO)
2 RNSs from 2015:
iEnergizer Limited (AIM: IBPO.L), an international and full service business process outsourcing business, is pleased to announce that it has raised 1.1 million by way of a placing of 22,000,008 new ordinary shares of 1 pence each ("New Ordinary Shares") with EICR Cyprus Limited ("EICR") a company of which Mr Anil Aggarwal, Non-executive Director of the Company, is the ultimate shareholder (the "Placing") at a price of 5 pence per Ordinary Share (the "Placing Price").

The Placing Price represents a discount of approximately 78.72 per cent. to the closing price of 23.5 pence per share on 14 August 2015, (being the last practical date prior to the announcement of the Placing).

iEnergizer Limited (AIM: IBPO.L), an international and full service business process outsourcing business, is pleased to announce that it has raised GBP2.12 million by way of a placing of 15,120,000 new ordinary shares of 1 pence each ("New Ordinary Shares") with EICR Cyprus Limited ("EICR") a company of which Mr Anil Aggarwal, Non-executive Director of the Company, is the ultimate shareholder (the "Placing") at a price of 14 pence per Ordinary Share (the "Placing Price").

The Placing Price represents a discount of approximately 49 per cent. to the closing price of 27.5 pence per share on 6 July 2015, (being the last practical date prior to the announcement of the Placing).

Mr Aggarwal is the founder, CEO and majority shareholder.  No other directors own shares.

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rmillaree 2nd Oct 5 of 21

As today is a quite day (??:) thoughts on Ten Entertainment (LON:TEG) would be appreciated if you have any time for catchup comments - they had results out last tuesday and Graham ran out of time that day to comment - everything seems to be ticking over reasonably nicely from my normal sketchy look at the numbers.

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Tony1249 2nd Oct 6 of 21

In reply to post #518326

Hi Investor John. I was taking a look at this too this morning, with some great stats. Div yield of 3.75% and its currently 14.5% off its 52 week high, plus RSI et al. Simply put off by the crazy spread!

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Benson 2nd Oct 7 of 21

In reply to post #518326

iEnergizer is illiquid  It should be treated as high risk

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Howard Adams 2nd Oct 8 of 21


This might interest some.

Ceres Power Holdings (LON:CWR) released Finals RNS today (link here)

To add some context to it. This is a summary about it's Final Results RNS update from today by Investors Chron.

'With chairman Alan Aubrey describing 2019 as an “inflection point”, Ceres Power (CWR) more than doubled its revenue to £15.3m in the year ending 30 June, as pre-tax losses narrowed by more than a third to £7.4m. The fuel cell developer saw gross profit rise to £11.5m, with higher margin license activity delivering an improved margin of 75 per cent. The group now has license agreements with four of the world’s largest engineering and power companies, including Bosch and Weichai, both of whom have made equity investments. The first commercial product launch is due later this year in Japan.'

To me, it's at the top of an uptrending (volatile) trading range (47.5% 1yr volatility - as per Stocko metric) and it's a loss making company at present. Also, only has 29% of shares held by institutional investors (others might become interested soon, possibly).

It could offer an option as a longer term buy/sell within the upward trending lows/highs. Especially as it's in an emerging fuel cell & engineering sector. We shall see.

I now hold a v.small probe position (probably should have waited for the inevitable pull back though ... note to self for the upteenth time, must learn patience)


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greensiax 2nd Oct 9 of 21

In reply to post #518326

Hi Investor John,

I held £IBPO briefly earlier this year, from when it gapped up on 25-Jun.  When I wanted to sell in early Aug I simply couldn't! So I can confirm that it is hideously illiquid!

I did eventually manage to get out with a profit but it has put me off such illiquid stocks in the future.

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dmjram 2nd Oct 10 of 21

One thing for Revolution to consider is shifting to AiM - being in the Fledgling index isn't attractive to many while being a trading company on AiM will generate lots of interest from those looking to shelter IHT, be it individual investors or the fund managers/brokers offering the service.

Is this something that has ever come up in discussions Paul? Might be worth mentioning to them.

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JohnEustace 2nd Oct 11 of 21

In reply to post #518381

Re £CWR, in addition to the institutional investor holdings, the licensees Weichai Power and Robert Bosch own 19.9% and 3.9% respectively.

I have a rather smaller stake.

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Paul Scott 2nd Oct 12 of 21

In reply to post #518391

Hi dmjram,

Interesting idea about Revolution Bars (LON:RBG) moving from a main listing, to AIM.

I don't recall that ever being discussed at meetings I've attended.

I'll make a note, and mention that next time I see them.

I suppose it would depend on what the existing institutional holders want.

Regards, Paul.

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Paul Scott 2nd Oct 13 of 21

In reply to post #518356

Hi rmillaree,

OK, I'll take a look at Ten Entertainment (LON:TEG) next.

Give me about an hour to go through the numbers & write up a section on it.

Regards, Paul.

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doublelutz 2nd Oct 14 of 21

Kin and Carta (LON:KCT) - I would just make the point that this company is undergoing significant change. It was an entirely UK company (I think) that was known as St. Ives and which printed cheque books, CD covers and other outdated products. Its intention is to become a worldwide company with currently 1,500 employees that will probably in due course have the larger slice of its business in the US. My reading of the annual report is that they have some good clients. So it is a question of whether they will be successful in their aims. Maybe they could have a US listing in the future with a PE of 40 as a tech company! If you base your investment decisions purely on figures as most Stockopedia subscribers will then it is not for you. It could be worth nothing in 10 years or be taken over at far more than its present value. It is also the case that there have been quite a number of shorts over recent months.  At this stage it is a gamble but one that I will continue to watch.

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Snoo 2nd Oct 15 of 21

Bit of a bloodbath today.

Can't just be me that's scared to press the 'Folios' button....

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Trident 2nd Oct 16 of 21

In reply to post #518441

Quite interesting to see a Howard Marks interview and his comments on catching falling knives, as this present real opportunities.

In principle he is in favour of buying them, no doubt subject to various value criteria being fulfilled.

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rmillaree 2nd Oct 17 of 21

Ten Entertainment (LON:TEG)
Thanks for the comments on this one Paul - interesting comments about the issue with major shareholders.

I would agree with you that if someone has history and form in similar situations then that should be factored in - so i will factor that in now. Particularly with smaller companies there will always be periods where the shareprice may be week or it would be easy to be glass mostly empty if management are the same bods that control alot of the shares - or who have crony types who have those shares.

I bought in as the price was deflated a while back when Woodford appeared to be a forced seller.

Ok lets get straight to the main shareholder register to see if there is any mention of you know who.
Ok top shareholder at a very high 28.7% is Harwood Capital Plc - and you can probably guess that Christopher Mills is heavily involved i think in Harwood Capital.
Chris Mills also has 3.71% owned personally.
There is approx 40% owned by what i would call recognised fund managers so hopefully that wad is fully independent.
Chris Mills is only a Ned nowadays so perhaps he can only be executioner and not judge jury and executioner all at once.
The CEO and CFO are new and newer and the ceo looks like he is independant as he was previously with punch.
I don't know who else on the board may have had ties with the prior incarnation that was essenden when it was listed so that's the end of the search i guess.

So slight worry that Chris Mills and Harwood have a combined 34% of the company - does anyone else have any thoughts as to how independent the shareholder register is?

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doug2500 2nd Oct 18 of 21

In reply to post #518456

I like Howard Marks, where might one find some video's?


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InvestorJohn 2nd Oct 19 of 21

In reply to post #518386

ok thanks for that

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Trident 3rd Oct 20 of 21

In reply to post #518476

I saw his comments on youtube:

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Trident 3rd Oct 21 of 21

In reply to post #518786

Sorry I meant this one:

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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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