Author Archives: Maynard Paton

Record: 2017 Results Herald Welcome Larger Dividends And £10m Tender Offer To Help Company Founder’s Retirement Planning

23 June 2017
By Maynard Paton

Quick update on Record (REC).

Event: Final results and shareholder presentation for the twelve months to 31 March 2017 published 16 June 2017, and proposed tender offer.

Summary: There was a certain irony about these figures. REC makes its money by managing currency movements for clients… yet the group itself has prospered of late largely because the weaker GBP has translated into greater management fees. Whether REC’s clients have actually prospered is harder to say, as there still seems little evidence of a growing customer base. Still, I welcome REC’s decision to hand excess cash back via larger dividends, but the accompanying £10m tender offer does appear as if it was devised primarily to help REC’s founder plan for his retirement. With operating costs expected to rise, too, I reckon the tender price equates to an underlying P/E of 14-15. I continue to hold. Continue reading

Mountview Estates: Bumper H2 Rescues 2017 Performance And Pushes Potential NAV To £206 Per Share

20 June 2017
By Maynard Paton

Quick update on Mountview Estates (MTVW).

Event: Preliminary results for the twelve months to 31 March 2017 published 15 June 2017

Summary: These figures were somewhat better than I had expected. The regulated-tenancy property trader produced a record level of revenue during the second half to counterbalance a rather disappointing first half, and the end result was not far off the very strong numbers delivered for the previous year. I was also pleased net asset value advanced further to a new high while borrowings were reduced to a fresh low. My updated sums now point to a possible NAV of £206 per share based on the firm’s previous gains on sold properties. I continue to hold. Continue reading

System1: News Of 26.1p Per Share Special Dividend Tempered By Mild Q1 Warning

16 June 2017
By Maynard Paton

Quick update on System1 (SYS1).

Event: Annual results and shareholder presentation for the twelve and fifteen months to 31 March 2017 published 15 June 2017

Summary: A change of year-end meant SYS1 had a second opportunity to impress shareholders with a bumper set of annual results. However, this time the group admitted recent trading had been “a little slower than expected” and the highly rated share price reacted accordingly. Still, the group’s executives remain confident about the long term and underlined their confidence by declaring a super 26.1p per share special dividend. I continue to hold.  Continue reading

Castings: Annual Results Are Worst Since 2011 As Management Talks Of ‘Robotic Handling’

14 June 2017
By Maynard Paton

Quick update on Castings (CGS).

Event: Annual results for the twelve months to 31 March 2017 published 14 June 2017

Summary: A lack of work at CGS’s smaller machining division meant these annual figures were the engineer’s worst since 2011. Thankfully there were no worrying omens for 2018 — the group’s order book apparently remains “steady” while the second-half performance even showed some promise. The hefty cash pile and a resilient dividend continue to be shareholder centrepieces, and talk of “robotic handling” suggests margin improvements may be on the way.  My P/E of 13 does not indicate a bargain and I continue to hold. Continue reading

Andrews Sykes: Best-Ever H2 Helps P/E Re-Rate To 15

23 May 2017
By Maynard Paton

Quick update on Andrews Sykes (ASY).

Event: Final results for the twelve months to 31 December 2016 published 11 May 2017

Summary: These results were very satisfactory and showcased ASY’s best-ever second-half. Notably, this supplier of air conditioners, heaters and water pumps said “robust operational management” rather than “extreme climatic conditions” had supported its positive progress. The accounts remain in good shape, too. With earnings now at their highest level since 2008, the share-price has re-rated to a P/E of 15. I continue to hold. Continue reading

World Careers Network: Record H1 Revenue But Profit Recovery Delayed Until At Least 2019

19 May 2017
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Interim results for the six months to 31 January 2017 published 28 April 2017

Summary: These first-half results were not too bad, not least because they included a record £5.1m revenue figure. However, the software developer did warn that rising costs would hurt earnings significantly during the second half of 2017 and throughout 2018. WOR recovered very well from its previous investment phase of 2009 and 2010, and I am left trusting the firm can repeat the trick once again. At least the accounts remain simple and flush with cash, and you could argue the underlying P/E is just 5. I continue to hold. Continue reading

Getech: Oh Dear… The Only H1 Highlight I Could Find Was The 18% Reduction To The Workforce

07 April 2017
By Maynard Paton

Quick update on Getech (GTC).

Event: Interim results for the six months to 31 January 2017 published 06 April 2017

Summary: Oh dear… you know you have a ‘debatable’ holding in your portfolio when the highlight of a results statement is an 18% reduction to the workforce. That sadly is the case with GTC, as the geoscience data specialist has slashed its cost base and now hunts for income sources away from its cash-strapped oil clients. These H1 numbers were otherwise quite unremarkable, although the new boss has issued a few glimmers of hope for some sort of turnaround. I continue to hold. Continue reading

M Winkworth: Annual Profit Dives 26% But Performing Better Than Foxtons

06 April 2017
By Maynard Paton

Quick update on M Winkworth (WINK).

Event: Final results for the twelve months to 31 December 2016 published 30 March 2017

Summary: These were never going to be great figures from the London estate-agency firm. However, at least WINK outperformed larger rival Foxtons while the favourable economics of the group’s franchising model remain quite clear. True, the immediate outlook for WINK is rather mixed and there is online competition to consider, too. However, all that seems priced into the P/E of 8 and 7%-plus income. I continue to hold. Continue reading

Q1 2017: 1 New Buy And 1 Sell

31 March 2017
By Maynard Paton

Happy Friday! I hope you continue to find my Blog useful… and that your portfolio has started 2017 in good shape!

After experiencing a somewhat mixed performance during 2016, I am pleased my investments have generally performed well during the last few months.

Certainly the two new holdings I acquired last year — BrainJuicer and Bioventix — have helped powered my portfolio higher of late. And up until the other day at least, this full-time investing lark was becoming quite comfortable…

But then came another reality check.

Sadly I’ve been humbled yet again by a profit warning — on this occasion from Tasty.

Still, I have survived various ups and downs before…  and I need no reminding that it was only nine months ago that my entire portfolio was looking rather sorry.

Anyway, I’m up 7.4% so far for 2017, and my portfolio has not witnessed too much trading during the last three months. I bought one brand-new holding and sold another holding entirely. Continue reading

S & U: Annual Results Signal The End Of The Favourable Lending Trend As Impairments Jump 60%

30 March 2017
By Maynard Paton

Quick update on S & U (SUS).

Event: Preliminary results and presentation for the year to 31 January 2017 published 28 March 2017

Summary: These results from the car-loan specialist were quite respectable, although a 60% increase to bad debts does suggest the favourable under-writing conditions of the last few years may now have turned. Still, the veteran family management does not seem too concerned and, encouragingly, appears more interested in developing the business towards 2028 rather than 2018. That length of investment horizon suits me just fine. I continue to hold. Continue reading

Tasty: Annual Results Dish Up Unsavoury Profit Warning And 33% Share-Price Sickener

28 March 2017
By Maynard Paton

Quick update on Tasty (TAST).

Event: Preliminary results for the 53 weeks to 01 January 2017 published 28 March 2017

Summary: Oh dear — I did not expect these annual results to include a profit warning for 2017. The share price has dropped by a third and I’m no longer so sure the long-term potential here is as great as I had assumed. That said, the restaurant group’s 2016 figures were not too bad while the lowered rate of expansion looks far more achievable based on current cash flow. Everything now rests on the experienced managers to resolve the problems — which I think they can. I continue to hold. Continue reading

Bioventix: H1 Results Showcase 48% Profit Surge As I Keep My Fingers Crossed For New Product Launch

27 March 2017
By Maynard Paton

Quick update on Bioventix (BVXP).

Event: Interim results for the six months to 31 December 2016 published 27 March 2017

Summary: The latest RNS from this antibody developer contained yet more bumper figures, and showcased impressive all-round growth and a record H1 operating margin of 79%. One startling achievement was that the extra £754k of revenue brought with it additional administrative expenses of only £1k. Progress may be interrupted later this year by the loss of certain product income, but the share price suggests there won’t be any problems with a new antibody about to launch. I have my fingers crossed everything works out, and continue to hold.  Continue reading

Electronic Data Processing: ELEVEN Months On And The Strategic Review Has Gone Nowhere… And I Have Given Up Waiting

23 March 2017
By Maynard Paton

Quick update on Electronic Data Processing (EDP).

Event: Strategic review and pensions update issued 06 March 2017

Summary: Oh dear — EDP’s strategic review has not gone as well as I had hoped. The software minnow has taken ELEVEN months to finally own up to holding early-stage talks with just the one interested bidder. Other approaches have disappeared, due in part to unfavourable developments within the group’s defined-benefit pension scheme. I doubt EDP’s main shareholders can force anyone to bid and, without any sign of EDP having a Plan B, I have sold my entire holding. Continue reading

Mincon: Chief Exec Turns Bullish As New Accounting Policy Avoids Earnings ‘Distortion’

22 March 2017
By Maynard Paton

Quick update on Mincon (MCON).

Event: Final results for the year ending 31 December 2016 published 21 March 2017

Summary: These were quite reasonable results, given MCON is still plugging away serving the subdued mining sector with its heavy-duty drills and bits. The introduction of a new accounting policy was disappointing, although the chief exec’s bullish commentary was encouraging and suggested the group’s expansion could accelerate in the years to come. Such growth ought to improve MCON’s rather average margin and return on equity numbers — at present those ratios may not be doing justice to the group’s competitive position. I continue to hold.      Continue reading

FW Thorpe: Impressive H1 Results As All Divisions Grow By 15% Or More

17 March 2017
By Maynard Paton

Quick update on FW Thorpe (TFW).

Event: Interim results for the six months to 31 December 2016 published 16 March 2017

Summary: Once again this lighting specialist has issued a very satisfactory set of results. The highlight was the performance of the group’s main division, which following a few subdued years has suddenly enjoyed a step-change to its financial progress. TFW’s other divisions reported impressive numbers, too, while the balance sheet remains teeming with surplus cash and investments. Throw in a coded management ‘upgrade’ for the full year and it’s perhaps no surprise the shares presently trade on an extended rating. I continue to hold. Continue reading

Goodwin: I’ve Decided To Keep Watch Despite The High Debt And New LTIP

15 March 2017
By Maynard Paton

Today I’m continuing my hunt for Watch List shares by revisiting Goodwin (GDWN). I first looked at this company during March 2015.

Here are the attractions that prompted this revisit:

* Resilient long-term dividend: The payout was last reduced in 2000 and has since increased 28-fold

* Owner-orientated executives: Veteran family management control a 53%/£69m shareholding

* Opportunity for recovery: Significantly reduced earnings have caused the shares to fall 50% during the last three years

As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible. Continue reading

Ashmore: I Can No Longer Watch After Clients Lose $2.8bn

03 March 2017
By Maynard Paton

Today I’m continuing my hunt for Watch List shares by revisiting Ashmore (ASHM). I first placed the company on my Watch List during March 2015.

Here are the attractions that prompted this revisit:

* Fantastic financials: The books showcase a 67% operating margin and a £601m net cash and investment hoard

* Boardroom billionaire: Management continues to be led by the company’s founder, who has £1bn riding on the share price

* Conducive (post-Brexit) currencies: Group revenue is earned almost entirely in USD while costs are expensed mostly in GBP

As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible. Continue reading

Tristel: H1 Results Showcase Impressive 20%-Plus Revenue Gains, Although North American Potential Remains As Distant As Ever

02 March 2017
By Maynard Paton

Quick update on Tristel (TSTL).

Event: Interim results, City presentation and investor webinar for the six months to 31 December 2016 published 23 February 2017

Summary: These first-half figures were slightly better than I had expected, with the finer details confirming December’s AGM statement had downplayed the group’s underlying progress. Impressive 20%-plus revenue advances — both in the UK and abroad — were delivered by the group’s main medical disinfectant products, while adjusted profit would have soared 29% were it not for the costs of entering North America. Sadly it remains anyone’s guess as to when those costs will first see any payback. Nonetheless, TSTL remains on course to meet management’s ambitious three-year growth projections… and the shares are priced accordingly. I continue to hold.   Continue reading

BrainJuicer: Bumper 2016 Results Suggest Growth Accelerated Towards 20% During H2

10 February 2017
By Maynard Paton

Quick update on BrainJuicer (BJU).

Event: Annual results and shareholder presentation for the twelve months to 31 December 2016 published 09 February 2017

Summary: These impressive annual figures confirmed BJU had enjoyed a magnificent second half. The market-research pioneer confirmed all of its core products had performed well, including the group’s best-selling system that had suffered a wobble during H1. I’m also pleased the accounts remain first class, while it’s not surprising the share-price rating is now expecting further robust growth. However, the usual “limited visibility” of client orders remains a drawback. I continue to hold. Continue reading

Shoe Zone: I’m Worried About Revenue And Have Given The Share The Boot

08 February 2017
By Maynard Paton

Today I’m continuing my hunt for possible investments by revisiting Shoe Zone (SHOE). I first placed this company on my Watch List during March 2015.

Here are the attractions that prompted this revisit:

* Owner-aligned boardroom: The executive family management boasts a 50%/£90m shareholding

* Generous dividend payments: The group will soon have distributed all of its earnings as ordinary and special dividends for the last two years

* Straightforward accounts: The books showcase net cash, modest capex and high returns on equity

As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible. Continue reading