My Shares

TASTY: Formal Blog Coverage Ceased After Woeful £2m FY 2022 Loss Exposes Flawed Cost Structure And Suggests Wildwood Format Is Now Broken

30 May 2023
By Maynard Paton

FY 2022 results summary for Tasty (TAST):

  • A woeful H2 performance delivered a full-year £2m loss following a trio of Christmas-trading “impediments” combined with “unprecedented inflationary costs“.
  • Rising staff wages, stagnant revenue per employee, a return to pre-pandemic rents and a debatable depreciation policy do not suggest TAST’s cost structure will improve any time soon.
  • Comparisons with Restaurant Group and Fulham Shore suggest TAST’s menus are in fact inherently flawed and confirm a radical business overhaul was needed during the pandemic. 
  • The departure of an experienced industry manager after only a year as a TAST executive may well indicate the main Wildwood restaurant format is broken.
  • TAST now looks a lost cause with a de-listing a possibility. I continue to hold with vague hopes of a recovery, although formal blog coverage has ceased.

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TASTY: H1 2022 Shows Encouraging £797k Sales Per Restaurant But Higher Costs Reduce Profit To Breakeven And Curtail Plans For 5-6 New Outlets

30 May 2023
By Maynard Paton

H1 2022 results summary for Tasty (TAST):

  • The absence of pandemic restrictions ensured H1 sales returned to pre-Covid levels, with sales per restaurant of £797k encouragingly at their best H1 level since H1 2016.
  • A “steep rise in inflation in relation to wages, utilities and input supplier costs” limited underlying profit to just £0.2m and will “inevitably impact” the H2 performance.
  • Pandemic-prompted rent reductions seem to have run their course, with annual lease costs appearing to return to £5m and total lease obligations staying at £52m.
  • Management curtailing plans to open 5-6 new restaurants was disappointing but understandable given the “prevailing economic uncertainties“.
  • Can TAST ever achieve a worthwhile margin from revenue now running at almost £45m? No evidence has emerged that TAST’s restaurant formats can easily pass on, reduce or absorb much higher costs. I continue to hold.

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MOUNTVIEW ESTATES: £115 Shares Trade At Lowly 13% Premium To NAV Despite Positive H1 2023 Revealing Sold Property Prices Gaining 19% And Welcome £10m Special Dividend

16 May 2023
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A positive H1 2023 performance, with revenue up 21% and profit up 17% due to property selling prices gaining 19% and a greater number of properties sold. 
  • A significant £26m spent on new properties implies buying opportunities are emerging as “difficult times” and “economic storms” are forecast.
  • A 54% sales premium was realised against the 2014 Allsop valuation, and the remaining Allsop-valued properties now represent less than half of the property estate. 
  • Net debt remains very modest at just 6% of the property estate and allowed the welcome declaration of a 250p per share/£10m special dividend. 
  • The £115 shares trade at a lowly 13% premium to net asset value, which inched higher to a fresh £102 per share high, although the balance sheet could one day still be worth £200 per share. I continue to hold.

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ANDREWS SYKES: 90% Family Ownership May Explain 4.7% Yield After Satisfactory H1 2022 Reveals European Revenue Up 17%, £34m Net Cash And Welcome £7m Special Dividend

30 April 2023
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • A satisfactory performance, with H1 revenue reaching a new £38m high, H1 profit gaining 8% and the welcome declaration of a £7m special dividend.
  • Assisted by strong Italian progress, European revenue climbed 17% to represent 27% — a record proportion — of the total top line.
  • A healthy 22% margin and favourable cash conversion lifting net cash to £34m left the accounts in good shape. 
  • A bombshell delisting on AIM brings greater attention to ASY’s 90% family ownership and the associated ‘relationship agreement’ small-print.
  • The 10% free float may explain why the shares yield a useful 4.7% despite the robust financials, upbeat company-blog commentary and potential further European expansion. I continue to hold.

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SYSTEM1: Proposed Board Changes Still Have My Support After Stefan Barden Explains Data-Platform Sales Focus, 5-Bagger Exit Ambition And ‘Now Or Never’ Vote Decision

07 April 2023
By Maynard Paton

Notice of general meeting summary for System1 (SYS1):

  • Confirmation of a vote on 21 April to i) appoint former director Stefan Barden as executive chairman; ii) demote founder John Kearon from executive to non-executive, and; iii) retire two non-executives.
  • Data and Data-led revenue advancing 33% during FY 2023 and 50%-plus during Q4 2023 suggests SYS1’s mooted 25% growth target is achievable.
  • My conversation with Mr Barden revealed his data-platform sales focus, plans for a £100m-plus exit and the reasoning behind SYS1’s $1 billion market-cap ambition.
  • SYS1’s proposed new US advisory team emphasised Mr Kearon’s advert-creative sales approach, which I now believe explains the group’s lowly revenue and lack of profit.  
  • Shareholders have, according to Mr Barden, a “now or never” decision to support SYS1 becoming the “definitive” marketing-data platform with a potential 5-bagger outcome. I still support the proposed board changes and continue to hold.

UPDATE 17 April 2023: Following the publication of this blog post, Stefan Barden/James Geddes and SYS1 have referred to its contents within this RNS announcement issued on 13 April 2023. Mr Barden has since provided a further statement that is now published at the end of this blog post.

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S & U: Record H1 2023 Prompts Management To Cite Broker’s £33 Price Target As £22 Shares Trade At Possible 1.2x NAV And Yield 6%

24 March 2023
By Maynard Paton

Results summary for S & U (SUS):

  • A seemingly lower-than-normal bad-debt charge underpinned a record H1 performance, which in turn supported fresh highs for net asset value (NAV) and the dividend.
  • Mixed signals remain at the primary motor-finance division, with encouraging collection rates offset by lingering pandemic-related provisions and talk of “choppy waters ahead” testing “policies and procedures“.
  • Bumper progress at the property-loan operation heralded the subsidiary declaring its maiden dividend and another divisional executive appointed to the board.  
  • Debt remains under control at 42% of customer loans, although admin and other costs have reached their highest combined proportion of revenue since at least FY 2016.  
  • Management’s webinar commentary cited a broker’s £33 price target, with subsequent RNSs suggesting the £22 shares are not expensive at a potential 1.17x NAV with a 6% income. I continue to hold.

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SYSTEM1: Proposed Board Changes Have My Support After H1 2023 Cash Outflow Of £2m, Underwhelming Strategic Review And Frustrating Management Q&A

09 March 2023
By Maynard Paton

Results summary for System1 (SYS1):

  • H1 2023 revenue falling 15% to FY 2012 levels and underlying cash losses running at £2m-plus raised further doubts about SYS1’s services, marketing, pricing and expenditure.
  • Despite encompassing “all strategic options” and the board’s composition, a three-month strategic review simply “validated” SYS1’s existing plans with a greater focus on the United States. 
  • A management presentation revealed the transition to automated Data services still requires old-style consultancy work, and overlooked questions about partnerships, cash flow and expenses.
  • The unsatisfactory H1, underwhelming strategic review and frustrating Q&A were thankfully followed by two former executives proposing very welcome board changes.
  • Fresh executive leadership seems needed to maximise SYS1’s “superb, proven suite of products” and re-establish worthwhile levels of profit. I support the proposed board changes and continue to hold.

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MINCON: First Greenhammer Contract Heralds ‘Transformational Potential’ As H1 2022 Reveals Profit Up 18% Following 55% Construction Sales Surge

21 February 2023
By Maynard Paton

Results summary for Mincon (MCON):

  • A very satisfactory performance buoyed by healthy post-pandemic orders, showing revenue up 27% and profit up 18% to set new H1 records.
  • Positive progress was reported throughout the group, with construction-related sales up 55% helped by greater demand for specialist drilling.
  • The long-awaited Greenhammer system has won its first commercial contract and now offers “transformational potential” to MCON and the mining industry. 
  • Greenhammer and other new developments may hopefully improve MCON’s financials, given the group’s modest margin, significant stock level, net debt and poor cash conversion.
  • The shares do not appear outrageously expensive on a possible 16x P/E, although the group’s expansion led by the dominant family owners has yet to deliver superior returns to outsiders. I continue to hold.

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FW THORPE: FY 2022 Celebrates 20th Consecutive Annual Dividend Increase After Profit Up 29%, SmartScan Sales Up 49% And Encouraging Start Within EV-Charging Market

01 February 2023
By Maynard Paton

Results summary for FW Thorpe (TFW):

  • A record FY outcome (profit +29%) bolstered by the acquisition of Spanish firm Zemper that supported TFW’s 20th consecutive annual dividend increase.
  • Progress at Thorlux was supported by impressive SmartScan sales (+49%), with the innovative lighting system reducing running costs for customers by as much as 62%.
  • A positive Dutch performance has led to a reassuring non-exec appointment and an encouraging start within the electric-vehicle charging market.
  • Net cash of £39m may arguably be only £9m following the subsequent purchase of TFW’s largest customer plus the eventual earn-out for Zemper.
  • A possible 24x P/E seemingly reflects TFW’s healthy order book, savvy acquisition approach, distinguished operating history and growth opportunities beyond the UK and lighting. I continue to hold.

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TRISTEL: Pandemic-Disrupted FY 2022 Reiterates Reassuring 10-15%/Year Sales-Growth Ambition As US Regulatory Approval Now Relies Upon FDA ‘Negotiation’ Over Product Batches

12 January 2023
By Maynard Paton

Results summary for Tristel (TSTL):

  • Another pandemic-disrupted performance, although 10-15% per annum sales-growth guidance suggests hospital customers will soon resume normal purchasing activity.
  • Progress was complicated by an accounting U-turn, with Brexit stock-piling, share options, US costs and write-offs creating a wide range of profit outcomes.
  • Management webinar comments suggested a positive US regulatory verdict is dependent on a “negotiation” with the FDA concerning data tests using different product batches. 
  • A useful 17% operating margin, net cash of £10m, worthwhile cash conversion and low capital requirements imply the group’s disinfectants still enjoy favourable economics. 
  • An estimated 24x P/E for FY 2025 is not an obvious bargain, but a premium rating may be justified by a US product approval and hefty royalties appearing soon thereafter. I continue to hold.

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My Portfolio: Year In Review 2022

01 January 2023
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,680-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2022 as well as provide a few remarks about valuation. 

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. Any upsets I will suffer during 2023 will most likely be caused by the shares I already own rather than any new shares I will buy.

I undertook the same annual review at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022.

My portfolio lost 23.3% during 2022. This other post explains that performance in more detail and clarifies how my portfolio begins 2023.

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BIOVENTIX: Exceptional H2 Profit (+30%) Plus Promising Biotins Sales (+67%) Support Better-Than-Expected FY 2022 And 7th Consecutive Annual Special Dividend

22 November 2022
By Maynard Paton

Results summary for Bioventix (BVXP):

  • A somewhat better-than-expected FY performance, with record revenue and earnings supported by an exceptional H2 profit (+30%) that was bolstered by a post-pandemic recovery and stronger USD.
  • Encouraging sales progress from best-seller vitamin D (+13%), future big-seller troponin (+81%) and sudden surprise-seller biotins (+67%) more than offset lost income from an expired product. 
  • Tweaks to management’s commentary plus a revised pipeline grid suggest the development work on dementia research now offers a greater chance of becoming a real money spinner.
  • The accounts remain in great shape, with an astonishing 82% H2 margin, terrific employee productivity and robust cash conversion leading to the company’s seventh consecutive annual special dividend.
  • Troponin’s finite income and a basic sum-of-the-parts valuation may explain why the £36 shares have not made headway during the last three years. I continue to hold.

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M WINKWORTH: Yield Approaches 7% Despite Acceptable H1 2022, Quarterly Dividends Lifted 23% And Confidence Towards £2m Profit Forecast 

04 November 2022
By Maynard Paton

Results summary for M Winkworth (WINK):

  • An acceptable H1 performance that would always struggle against the comparable (and exceptional) H1 but encouragingly matched the preceding H2.
  • The subsequent Q3 update provided reassuring ‘mini-budget’ commentary, reiterated an earlier £2.1m profit forecast and announced a further 23% quarterly dividend lift.
  • Claims of a leading SSTC market share may contradict statistics from Foxtons, with fresh leadership at the London rival set to create stiffer competition. 
  • A robust 25% margin plus £4m net cash left the accounts in good order, although cash conversion was impacted by rising intangible expenditure and more franchisee loans.
  • The gloomy outlook for the economy and housing market looks responsible for the possible 10-13x P/E and yield that approaches 7%. I continue to hold.

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