Small Cap Value Report (Wed 27 Mar 2019) - GOAL, DEB, CALL, SAA, ABDP, ACSO, CHH
Hi, it's Paul here.
Please see the header for the results/trading updates today which have caught my eye. I''m on a tight timetable today, so will work my way through as many of those as possible, before I have to head off around noon, to an investment seminar.
Goals Soccer Centres (LON:GOAL)
I think this is probably the end for shareholders here. The company has today announced a "substantial mis-declaration of VAT" estimated at £12m. Presumably that means underpaid VAT. The shares are now suspended.
The Company intends to enter into discussions with HMRC immediately and remains in discussions with our lenders to agree new facilities.
Good luck with that.
I'd be amazed if the bank is prepared to continue supporting this business, now that it has become clear that the books were incorrect, by a substantial amount, over several years. Worse than that, the company's announcement today appears to be disclosing what might be VAT fraud, or at the very least, gigantic errors.
It seems improbable to me that a business of this small size can accidentally underpay £12m VAT. That's serious incompetence, possibly worse. We don't yet know the full facts, so I'm basing the above on what we've been told so far.
I imagine administration is almost certainly the outcome here, which would be a 100% loss for shareholders.
So here we have yet another accounting scandal. As we always seem ask - why didn't the auditors pick up the errors earlier?
Note that the long-standing (since 2000) CFO, Bill Gow, stepped down in July 2018. Once again, an unexpected departure of a CFO, turned out to be the precursor of trouble ahead.
Current trading is strong, but that doesn't really matter, given the problems above.
I warned here on 8 Mar 2019 that this share was uninvestable, when accounting problems were first disclosed. The moral of the story seems to be that, when any kind of accounting problems surface, the safest thing to do is to hit the sell button as quickly as possible, and definitely don't average down.
The only recent exception to that rule that I can think of, is Staffline (LON:STAF) - where its accounting problems turned out to be minor, despite a long suspension of its shares.
My commiserations to shareholders. Hopefully none of our readers got caught out on this one.
Debenhams (LON:DEB)
Sports Direct announces today that it is considering a possible offer for Debenhams at 5p per share. Although note that it's highly conditional;
- Sports Direct is also considering other options (not stated what these are)
- The offer is likely to be 5p cash, but might be other forms (not stated, but I presume could be SPD shares, loan notes, or a mixture)
Previous announcements have also insisted that SPD wants to oust the Board of DEB, and have Mike Ashley take over.
The Possible Offer is pre-conditional upon Debenhams immediately appointing Mr Mike Ashley as its CEO and terminating the noteholder consent solicitation process it announced on 22 March 2019.
In addition, the Possible Offer is pre-conditional upon the Debenhams group agreeing not to enter into any third party funding arrangements (including those outlined in Debenhams statement of 22 March 2019), granting any new security over any of its assets or entering into any administration, CVA or other insolvency process.
Each of these pre-conditions must be satisfied or waived before any firm offer can be made.
My opinion - given that the DEB Board's restructuring proposals seem to indicate a wipe-out of existing shareholders, then accepting a 5p bid from Sports Direct is a complete no-brainer for shareholders. That's assuming that an actual bid appears (there isn't one yet). This could all be a ruse to topple the Board, who knows?
My view remains that DEB is not viable in its current form, due to its onerous leases, and declining LFL sales. How the carcass is divided up doesn't really interest me. With a high risk of a 100% loss on the shares, my stance remains, why get involved? Shareholders should pray that Mike Ashley's interest does turn into a 5p cash bid, as that's by far the best outcome out of the current possibilities.
It looks like a grudge match between Ashley, and the Board of DEB. Whether there is enough time to implement Ashley's proposals, is the big question mark. So risk of a 100% loss for shareholders still looks very high to me.
Hence risk:reward is not favourable, in my opinion, at the current c.3.5p per share. The upside is you make 1.5p profit on a cash bid from Sports Direct. The alternative is you lose 3.5p on the Board's refinancing (debt to equity probably, wiping out shareholders). Why risk 3.5p, just for a possible 1.5p profit? That doesn't make sense to me.
Cloudcall (LON:CALL)
Share price: 88.25p (down 15% today, at 08:40)
No. shares: 26.6m
Market cap: £23.5m
(at the time of writing, I hold a long position in this share)
Today's results are in line with expectations, so it's rather surprising to see the share price down 15% today, at the time of writing. Although, being a micro cap, the volume is small (only 127k shares traded so far today). Therefore the share price movement after results is caused by the initial reaction of a few small investors. This can lead to strange, and not necessarily logical price movements.
Revenues up 28% (all organic growth) to £8.8m (year end run rate is £10.0m)
EBITDA loss widened to £2.9m - as (recently) planned. The company is increasing overheads, in order to maximise growth - e.g. adding new features to its software, recruiting more sales staff.
I don't have time to go through everything in detail, so here's a summary;
Bull case - as set out here, in my report on the recent Capital Markets Day. The company has lots of specific sales & growth opportunities. The customer lifetime value is over 7 times cost of acquisition, which makes expansion a no-brainer, if you take a longer term view.
Bear case - the company consistently misses its targets, especially on cash burn. Whilst revenues are rising strongly, breakeven keeps getting pushed further out, as the company cranks up overheads to drive growth.
My opinion - for me, the glass is very much half full here. Management would be crazy not to drive the business forward, and that costs money in the short term. The return on extra spending is excellent, and that will show through in future years.
I don't think the UK equity market is the right place for this company, as investors don't seem to have the patience, or vision, to tolerate a prolonged cash burning phase. There again, the company itself hasn't exactly helped its own case by being consistently over-optimistic in its forecasts, and running out of cash repeatedly!
Bottom line for me, is that the product is great, and getting better all the time. We've heard from its largest customer (Bullhorn) that the CloudCall product is very positive in terms of improving Bullhorn's relationships & profits from customers.
With patience, I think there's potentially big upside from the current lowly £23.5m market cap. But I share other investors' frustration at how long it's taking to get to breakeven.
Arden has considerably increased its forecast 2019 loss today, from -£0.9m to -£2.5m. That's not particularly because anything much has changed, it's rather that the previous forecasts were just not realistic. I pointed this out to management at the Capital Markets Day, when I spotted an obvious under-estimate of costs in the broker forecasts at that time.
This is a pattern of behaviour, in that CloudCall has a long history of leaving clearly inaccurate/unrealistic forecasts out in the market, rather than getting brokers to revise forecasts in a timely manner.
LoopUp (LON:LOOP) is an interesting comparison, in being a high growth, high margin, recurring revenue business. CALL looks to be about 4 years behind LOOP in terms of revenues (with a similar growth rate). The market cap of LOOP is almost 10x that of CALL. That gives a rough idea of the potential upside from CALL, I reckon, if the bull case plays out.
On the downside, given CALL's repeated disappointments historically, I can also understand why many investors remain sceptical.
M&C Saatchi (LON:SAA) - results look reasonably OK. Adjusted EPS of 23.38p is a bit below 24.5p consensus shown on Stockopedia. Note that there's an unusually large non-controlling interest figure here, as it doesn't own 100% of some subsidiaries. Outlook comments sound upbeat, with 2019 having started well. Looks priced about right.
Ab Dynamics (LON:ABDP) - share price flat on the day, which looks correct given that it's an in line with expectations trading update out today. Commentary sounds upbeat. This share has done very well in the last year, rising strongly, in a lousy market - impressive stuff. The valuation looks high though, so no room for anything to disappoint.
accesso Technology (LON:ACSO) - this section is a bit of cop-out, but (partly because of time pressures) I have to file this group's 2018 accounts in the "too difficult" tray. The main problems with its accounts, are that the amount capitalised in R&D parked onto the balance sheet is so enormous, that it's difficult to decide whether or not the company really makes any money. The adjusted numbers look impressive, but the cashflow statement looks pretty awful to me. Also the balance sheet is weak, with negative NTAV.
The bull case, that the company has lots of growth potential, in a niche that it seems to dominate, is also quite persuasive.
I haven't got a clue how to value this share. Nor has the market, as it recently peaked at 3000p per share, and is now 749p per share. Arguably, not much has actually changed over that period, other than market sentiment.
It's worth taking a look at the large, repeated, Director selling, going back over quite a few years.
Churchill China (LON:CHH) - 2018 results look excellent - strong earnings growth, and it looks like a beat against EPS expectations of about 5%. This is a very nice business - with a strong operating margin (indicating good products, and pricing power), strong balance sheet, and very good growth having been achieved in recent years. I'm kicking myself for not having put this in my portfolio, as I've liked it for a long time, but usually baulked at the valuation. It just goes to show - sometimes it's best to just pay up for a quality business, rather than quibbling over valuation.
I have to leave it there for today - sorry it was a bit rushed in places.
See you tomorrow!
Regards, Paul.
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35 comments
What has happened to most of the stock comments mentioned at the start of the article?
Bring back Graham. We might get something complete & on time without excuses
Hi jetman100
I’d rather idiosyncratic & honest than timely but bland bollox ...but thanks for all your contributions over the years
Edit to add that Graham does sterling work too & i am delighted that we get both of them for the modest subscription price...it’s a struggle not to inadvertently be rude
Professional hecklers add nothing of value to other readers, unlike Paul & Graham who do a great job.
Incidentally, the first part of that article was posted when I turned my PC on between 8:00 and 9:00 am, which is pretty good going.
Are you for real?
You clearly have no idea that both authors do this report, in the main, to openly share their often detailed and excellent analysis - Due to their kind nature. Neither of them need the remuneration large or small (I believe small) they receive from Stockopedia.
More wise to let both authors get on with what they both do to their own timetables - Without comment on those timetables. This is the approach sensible fellow investors take.
Rant over!
these reports are great and very useful - and free..
if the authors work on an ad hoc basis - fine.
i just find frequent excuses / explanations irritating and tiresome.
I mentioned this to Stockopedia some time ago...
If you are going to quote a normalised eps number, for goodness' sake, quote the actual one as well at least for the forecast number. No wonder there is confusion. Many people don't have another source for consensus.
I understand exactly what Paul is saying about Cloudcall (LON:CALL) possibility producing a lot of profit in the future.
However, I have been following this company (and its previous incarnation) for five years. I've been waiting for the P&L and cash burn to turn the corner before investing. In fact, it is always just around the corner.
Looking at the cash burn (about £4m pa. including capitalised R&D and other investment), taking into account the recent placing and cash on the balance sheet I think you would have to be optimistic to suggest that there won't be another cash call in a year's time. Probably best not to wait until they have eaten too far into the debt facility. Will the call be higher or lower than today's price? Who knows? But I'm prepared to wait - I'd pay more if I were confident they really were turning the corner.
Delighted with Debenham "offer" today.....but then I first bought Monday morning. Still think around 8p might end up the final offer but not brave enough to keep them all. There is some value in the High Street it seems....certainly MA thinks so.
Got made redundant from Debenhams over 35 years ago; good thing too. I reckon they owed me a few quid for that.
I think that Paul may be unduly generous to Cloudcall (LON:CALL) , this is a company which has lost £21.8 mm in the last 7 years (funded by £21mm from frequent placings). The idea, much promoted by the company that UK growth companies do not get market support is - in Cloudcall's case at least - not true.
By the time it gets to the end of 2019 its SALES for the year, after a decade of trading, will barely exceed 50% of the amount invested. It appears to have only one really serious CRM partner and does not even forecast breakeven or profit. In fact statutory Profit or Loss (as opposed to EBITDA, adjusted this and adjusted that) is not mentioned at all.
As Paul acknowledges, the company has made a tradition of missing forecasts on its way to not making any money and my feeling is that the market has bent over backwards to accommodate the company's obsession with its "investment in sales" pitch at the expense of any talk of earnings. A deep and appreciative thank you to shareholders for their forbearance would seem to be in order, from a company that is a tiddler now and will be small for many years yet
Hi Aislabie,
Well that's certainly a glass half empty view on Cloudcall (LON:CALL) !
It's fair enough, mostly. If you look backwards, then the track record to date has been disappointing. However, investing really isn't about looking backwards, it's about the future - that's how shares are valued.
What I think you're missing, is the upside if you combine rapid (28% in 2018, and set to increase in 2019) revenue growth, at 80% gross margins, of mainly recurring revenue. Put that together, and there's immense operational gearing - which at a certain inflexion point leads to profits exploding upwards.
Frustratingly, the development phase at CALL is taking longer than expected, as they increase development spending, and S&M spend, which masks the strongly rising gross profit.
We're getting towards the end of the development spending phase, in terms of big increases. That should see the company become strongly profitable in a couple of years' time. Bear in mind also, that the company could switch on profits any time it likes, by slashing development spend - but you would then end up with a profitable, but barely growing little company, which nobody wants.
Customers want new features, like SMS messaging, and you just have to have the vision to see that the company's strategy is correct. The deeper you research things, and understand why they're doing what they're doing, then the more it makes sense. This video is excellent in explaining everything.
As mentioned in the main article, this could be a 10-bagger over the next 4 years, if it continues to follow the same growth path as LOOP (which it has done until now).
At £24m mkt cap, what's the downside? It's not going bust, as it can turn on profits any time it likes (at the price of reduced growth). Even if it has to do another small top-up placing, so what? The last one was less than 10% dilution, and was well-supported at 100p.
The only thing that worries me, is if revenue growth really slows down, then the bull case would be wrong. But so far, that's not the case at all. Growth accelerated as 2018 went on, as the new S&M people gradually began to make a difference - obviously there's a time lag between taking on a new sales person, and getting them trained up, then making new sales.
If you remain fixated on the past, then you'll easily miss a very lucrative re-rating, once the market perceives that a positive tipping point has been reached. I've done very well on things like this before. The best one was Indigovision (LON:IND), which 30-bagged after reaching an inflexion point of rapid sales growth combined with high gross margins. Everyone thought it was a terrible company (which historically it had been), but I made £5m on it between 2004-2007, by buying heavily when the shares were bombed out. OK, I lost it all later, but that was just because I didn't sell until the GFC smashed everything up.
Hence why I keep my eyes & ears open for high gross margin growth companies that are under the radar, but beginning to make strong progress. CALL looks promising in that regard. This really could be a 5-10 bagger, you know, given a few more years' sales growth.
Regards, Paul.
Paul made a good point about “Averaging down”. The practice seems to be endemic with smallcap investors. And it's particularly acute in the resource sector. This is only my opinion but I think that many inexperienced investors misunderstand the writings of Warren Buffett. When Buffett suggests buying when others are fearful, he is focusing on extremely well run large businesses where there is a strong likelihood of reversion to the mean. He does not suggest that investors should become even more financially exposed to poorly run small companies that are very loosely regulated.
Broadly speaking, private investors are at the end of the food chain for information. Buying more of a stock after a sharp fall in its price may not be a smart move. It seems to indicate that private investors know more than any other investors when the reality is likely to be the opposite. The people who do know have sold out.
Purely anecdotal, but a quick glance across the bulletin boards tells me that many posters believe that sharp falls in stock prices are arranged by market makers to trigger stop-losses. This may indeed be the case on some occasions. And market makers can hold up to 10% of the stock without notification. They can clearly manipulate prices. But, in general, sharp falls seem to be telling us that the insiders are getting out and maybe we should take note.
Buffett used to concentrate and average down into small/micro caps early in his career, but he did much more detailed research than the majority of investors do and only invested in situations where he had a high degree of conviction (for example asset plays where he could take control of the company and the asset value was easily calculable with significant margin for error).
Buffett essentially used the scuttlebug technique laid out in Philip Fishers "Common Stocks and Uncommon Profits" to get to know a company inside out. A brief scan of most stock forums will show you that most posters do minimal research before pulling the trigger and then develop significant cognitive biases and become delusional.
'A brief scan of most stock forums will show you that most posters do minimal research before pulling the trigger and then develop significant cognitive biases and become delusional'
Sounds like you have been looking over my shoulder!
I would add that actually doing a lot of research could also actually lead to cognitive biases and delusions.
Hi
For those watchers of the UK fashion retail space. An interesting insight into the un-listed portion of the sector.
https://www.hl.co.uk/news/2019/3/27/river-island-family-takes-control-of-mint-velvet-in-100m-deal?cid=halDM64858&bid=269373421&e_cti=2135170&e_ct=T&utm_source=AdobeCampaign&utm_medium=email&utm_campaign=EONRM_Daily_newsroom_TYE%20message_27.03.19&theSource=EONRM&Override=1
The article title is - River Island family takes control of Mint Velvet in £100m deal
Regards
Howard
Just to say Air Partner (LON:AIR) which had accounting problems has been OK. But yes, generally agree with your "Sell on the first hint of trouble" heuristic.
Bruce
I used to hold Air Partner (LON:AIR) (at the time of the "scandal") and if I remember the isues were non cash in nature but I may be wrong.
They did recover quite substantially and I took the opportunity to sell at 102 because I lost confidence in management. At the moment that was a lucky call as they are now nearly 50% of their 52 week high.
Hi Paul,
Thank you as always. Boku Inc (LON:BOKU) had news out yesterday and look interesting, particularly after Apple’s announcement of a credit card.
Do you or anyone else here have an opinion on these. Stockopedia has them as a sucker stock.
TS
Cloudcall (LON:CALL)
Ramridge
Doesn't look good. EPS Broker forecast = -6.8p ; Actual -12.9p.
It would be worse if software development costs of £1.1m were not capitalised.
In this equity market, it is not what investors want to hear from small caps.
No position.
I think this discrepancy is most likely to be a calculation method difference rather than an actual wide miss of actual expected targets - oh bring back the days when we had easy access to brokers notes for nothing that laid everything out easily for this year and next.
The reason i say that is that Stockopedia also had estimated 2018 loss of £3.2 million and were slightly better than that total- i would take the view the the profit figure is more likely to be accurate than EPS for whatever reason.
It would be worse if software development costs of £1.1m were not capitalised.
I immediately went to the intangibles when looking at the figures and came to the conclusion that an 877k increase in intangibles all year was the right side of being fair, it was lower than i expected- it's highly worth pointing out that £1 mill has been capitalised but based on where they are in the development cycle one has to presume the totals are reasonably modest if they are producing new products that will last several years. Note capitalisation in H1 of this year was similar and capitalisation all of last year was also at a similar level - so a bit of a non surprise in this regard IMHO.
Anyway the marekt has spoken and as always seems to be the case when this company releases results they are not perceived well - thats a big shame if they are on target for their plans and have simply poorly communicated this ??
Re Goals Soccer Centres (LON:GOAL) Although,as Paul syas, long standing CFO stepped down from the board in July, he stayed on as CFO until the new interim CFO (Martin Johnson) came on board - only last month. I also see that the head of the Audit Committee is new, as of February and the auditors (BDO) are also doing their first set of accounts for the company this year (having been appointed in June 2018). So the current team, primarily responsible for the accounts are all new and seem to have unearthed the current issues quite quickly. No position.
Goals Soccer Centres (LON:GOAL)
I think goal may have always been trading within the murky world of partly exempt and partly non exempt sales. This gives a few "easy" routes to failure
(1) you may overclaim your input vat due to the fact the apportionment between exempt and non exempt costs is not done in a manner that hmrc is happy with.
(2) You can fall foul of the somewhat complicated rules that must be followed for exemption to apply with regard to sales and therefore find out later on that your sales were in fact standard rated rather than exempt. there are 7 conditions that must ALL be met to allow exemption to apply (742 section 5.4)
(3) you can do apportionment between exempt and standard rated sales wrongly if there is a multiple supply - Goals seem to have had form in this area years ago winning a FTT case that allowed them to apportion sales between exempt and standard rated.
If this was my business i would have had monitoring of the calculations done periodically by insured experts to minimise the chances that they would drop a biggie by not having adequate procedures in place or have a misunderstanding of the rules or how changes in rules may affect the,m. the part 2 bit looks a pretty tricky rule and the nightmare is that practicably speaking its minimum wage type bods taking the orders and probably entering the correct coding on their computer systems?
Goal Soccer Centre has a projected annual turnover of £32.4M. The output vat on that figure would be £5.4M and the actual vat payable would obviously be lower after deducting input tax. How could an underpayment of £12M being over twice their annual output tax have arisen? I was always concerned to understand the vat treatment of clients and to at least roughly reconcile the output liability to sales. It seems that neither the auditors nor the vat office have the capability of identifying even the largest of errors. I am glad to say I don't hold!
Goals Soccer Centres (LON:GOAL)
Hello doublelutz
Goal Soccer Centre has a projected annual turnover of £32.4M. The output vat on that figure would be £5.4M and the actual vat payable would obviously be lower after deducting input tax. How could an underpayment of £12M being over twice their annual output tax have arisen? I was always concerned to understand the vat treatment of clients and to at least roughly reconcile the output liability to sales.
The excuse here could be down to the complexity of the partial exemption rules - in some respects their original win at tribunal that they were allowed to apportion (rather than treat as wholly standard rated) a single supply in the first place was possibly somewhat lucky and meant from that point onward they are doing calcs that can beof the type "push as far as you can" to keep the bill down.
If we take a period of 6.5 years and 20% of sales incorrectly treated as being exempt when not - say 32 mill * 6.5 * .20 /6 = £7 mill add on 50%+ for penalties and interest and you are into the area where a bit of sloppiness in the paperwork/calculations/understanding of rules could result in such an understatement. It might even be as sloppy as them not having the relevant proof that an actual exempt sales was exempt rather than it being calculated wrongly.
rmillaree - yes, thanks for pointing out the complexities. With regard to the specific rules in section 5.4 I would have thought they may not have met step 5 as I would have expected groups of young people to pay weekly for the facility rather than in full for a series of sessions but I wouldn't really know. As you say the figures mount up over the years.
Goals Soccer Centres (LON:GOAL) (last post i promise)
doublelutz
I would have thought they may not have met step 5 as I would have expected groups of young people to pay weekly for the facility rather than in full for a series of sessions but I wouldn't really know.
I am not sure it explicity states they can't pay weekly - the term "paid for as a whole" is a bit wishy washy - thats the problem with these wishy washy hmrc rules its easy to presume the wrong thing as an innocent error. Either way i can see its very hard for the lower level or higher level "untrained in vat" employees to be able to make the correct decision whether its vat or not with 100% certainty with these rules as they are.
PTSG from yesterday?
My morning smallcap tweet:
Goals Soccer Centres (LON:GOAL), Gresham Technologies (LON:GHT), accesso Technology (LON:ACSO), Debenhams (LON:DEB), Frontier IP (LON:FIPP), LXB Retail Properties (LON:LXB), Mirriad Advertising (LON:MIRI)
Goals Soccer Centres (GOAL) Previous CFO left a hand grenade in the accounts tray. GOAL owes at least £12m VAT after 'misdecleration' over several years. Future profits may be hit. DIscussions with lenders. Shares suspended.
Gresham Technologies (GHT) wins £5m contract over 5 years. £0.9m is expected to be recognised in 2019.
Accesso (ACSO) FY rev up 16%, adj EPS up 24% but U/L FCF down 69% to £2.4m. Organic rev up 8%. Will be spending more on R&D oner 2-3 years to meet customers needs. Guides high single digit organic rev growth this FY. I hold.
Debenhams (DEB) Mashley makes indicative offer of 5p, a 127% premium and would also assist Debenhams in addressing its immediate funding requirements. Guess what the condition is? Mashley as CEO immediately, and to stop refinancing talks. I think that's a good deal for holders.
Frontier IP Group (FIPP) H1 NAV/sh 38.8p up 5.6p in half. Guides FY ahead of management expectations.
LXB Retail Properties (LXB) will delist on 29 April as part of winding up. I hold.
Mirriad Advertising (MIRI) New CEO rubbishes previous strategy, outline his great plans. Lots of MBA talk: "Pursue one vision, one strategy and one plan that focuses the company on its path to success and ensures that all resources are aligned to the opportunity."
My morning smallcap tweet:
Goals Soccer Centres (LON:GOAL), Gresham Technologies (LON:GHT), accesso Technology (LON:ACSO), Debenhams (LON:DEB), Frontier IP (LON:FIPP), LXB Retail Properties (LON:LXB), Mirriad Advertising (LON:MIRI)
Goals Soccer Centres (GOAL) Previous CFO left a hand grenage in the accounts tray. GOAL owes at least £12m VAT after 'misdecleration' over several years. Future profits may be hit. DIscussions with lenders. Shares suspended.
Gresham Technologies (GHT) wins £5m contract over 5 years. £0.9m is expected to be recognised in 2019.
Accesso (ACSO) FY rev up 16%, adj EPS up 24% but U/L FCF down 69% to £2.4m. Organic rev up 8%. Will be spending more on R&D oner 2-3 years to meet customers needs. Guides high single digit organic rev growth this FY. I hold.
Debenhams (DEB) Mashley makes indicative offer of 5p, a 127% premium and would also assist Debenhams in addressing its immediate funding requirements. Guess what the condition is? Mashley as CEO immediately, and to stop refinancing talks. I think that's a good deal for holders.
Frontier IP Group (FIPP) H1 NAV/sh 38.8p up 5.6p in half. Guides FY ahead of management expectations.
LXB Retail Properties (LXB) will delist on 29 April as part of winding up. I hold.
Mirriad Advertising (MIRI) New CEO rubbishes previous strategy, outline his great plans. Lots of MBA talk: "Pursue one vision, one strategy and one plan that focuses the company on its path to success and ensures that all resources are aligned to the opportunity."
Cloudcall (LON:CALL)
Not exactly an inspiring update today, I am guessing the lack of news ref profit or cash flow break even might see the shareprice open down?
They seem to have hidden away in the middle of the release the one bit of very good news which seems strange.
Ok here is the good bit
“”However, the investments made are really targeted at 2019, and I hope to see further acceleration in net user growth being driven from these four key areas.””
The user growth rate was very good at the end of 2018 so further acceleration in that regard is excellent news.
I still don’t feel positive with this company at present though, with current cash burn rates and no predicted profit expected for 2019 I have to presume expenses will carry on increasing at a fast lick. The accelerated growth rate though does give one hope that I may be wrong with regard to my cautious outlook with regard to this business.
Re. Cloudcall (LON:CALL)
Doesn't look good. EPS Broker forecast = -6.8p ; Actual -12.9p.
It would be worse if software development costs of £1.1m were not capitalised.
In this equity market, it is not what investors want to hear from small caps.
No position.
Hi Ramridge,
No, you've got that wrong re CALL results.
Cloudcall (LON:CALL) results today are in line with expectations. That's specifically stated by a couple of analyst reports today. Looks like you may not be comparing apples with apples, which is always the risk with micro caps.
There are updates today from Cenkos and Arden, both of which are available on Research Tree.
The market reaction today doesn't make sense to me. But people don't always have access to broker notes, so may not have known what the expectations were. Everything was explained at the Capital Markets Day, videos of which are available online here - well worth watching to properly understand the upside case.
The main change (as I mentioned in the main article) is that Arden has belatedly factored in increased costs into its 2019 forecasts, which it should have done a few months ago, as that is not new information.
Regards, Paul.
Paul- Re. Cloudcall (LON:CALL)
Stockopedia's consensus eps forecast for FY2018 was -6.8p . Reported results are -12.7p .
I am confused. So who is wrong?
In this case, I think it is the Stocko consensus eps that is incorrect.
If you look at the consensus forecast for net profit it was - £3.23m and the actual -£3.06m so actually a small beat. So it looks like there is a mismatch there in terms of the number of shares.
Cloudcall (LON:CALL)
Stockopedia's consensus eps forecast for FY2018 was -6.8p . Reported results are -12.7p .
I am confused. So who is wrong?
Note the stocky quoted EPS number you have quoted is the "normalised" one (explained below) - not the reported total. Looking back at the past there has been quite a bit of variability between the two figures 4p diff in 2015 and 8p diff in 2013 - so it looks fairly clear that some material adjustments are regularly made with this share to find the normalised figure. There is nothing obvious to me this year though that would reduce expenses by the full amount (£1.5 mill) .
What is the definition of Diluted Normalized EPS?
Earnings per share (EPS) is the amount of last year's earnings per each outstanding share of a company's stock.
NOTE: This is calculated on a Diluted Normalised basis, i.e. taking into account options and other sources of dilution and any unusual/one-time/special items in order to better reflect underlying results.
Stockopedia explains Diluted Normalized EPS...
EPS is a carefully scrutinized metric that is often used as a barometer of a company's profitability. It is also used as the denominator in the P/E ratio.
Goals Soccer Centres (LON:GOAL) has announced an estimated £12m misdeclaration of VAT. The issue goes back a number of years. It's likely to have an impact on profits going forward. Shares are suspended until the issue is fully investigated.
The announcement on 8 March stated the accounting misstatements would be non-cash in nature. Perhaps there is more still to come?
https://www.investegate.co.uk/goals-soccer-centres--goal-/rns/trading-update/201903270700040985U/