Tom Winnifrith Bearcast 23 March

Comments

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   Doc H

   23 March 2015, 14:50

   Thomas Old Boy!

   It sounds like the granddaddy of stocks may have a point….

   Doc

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   Bubbidy

   24 March 2015, 03:01

   Tom, Have you come across Gate Ventures plc? If not, it seems to me to be the sort of AIM company you like to investigate:

   http://boards.fool.co.uk/wow-a-16-bagger-in-just-2-weeks—13184563.aspx?sort=whole#13184563

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   Richard T

   24 March 2015, 03:59

   Tom, I wonder if the current story in Private Eye from City Slickers bears mention on the site? Looks like Monsieur Green has handed over BLS (British Liability Stores) to an assortment of gentlemen who despite his ‘assurances’ that asset-stripping is ‘not on the agenda’ look as capable as me of running a high street retail empire. Any previous connections to favourite AIM POS of yours?

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   Vojti

   25 March 2015, 02:37

   Hi Tom,

   Today, TGL/GOS released yet another wooly RNS. I wonder whether the contents of RNS needs to be based on true information or substance whether you can make it up because a department in a government is a broad term giving you a substantial freedom to operate.

   I do not see what the point of a wooly RNS is unless
   a) there is no real news or
   b) they think they will be able to inflate the price before the placing.

   Maybe if it is worth you might want to bring some light into this in today’s Bearcast, which will extremely likely include TGL as well.

   Cheerio

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   Paul Scott

   27 March 2015, 10:53

   Tom,

   Very unfair criticism of Spaceandpeople. The results on Monday this week were actually ABOVE revised forecast! So it’s a mystery as to why the share price dropped 20% on the day, which was completely illogical.

   The timeline went like this;

   Mar 2014 (145p) – the company said it expects another record year

   Apr 2014 (71p) – the company warns on profit, blaming 4 separate problem areas, lowering guidance from £3.0m profit to £1.5m

   Sep 2014 (44p) – second profit warning, blaming much worse than expected performance in Germany.
   - guidance lowered to £0.8m to £1.0m profit (pre exceptional), with £300k exceptionals.
   - noted £700k of annualised cost savings have been made.
   - anticipates having £750k net cash at year end, plus £2m overdraft facility (unused).
   - 2.0p dividend confirmed.

   Jan 2015 (60p) – positive trading statement, saying last 4 months have been “robust”, and profit for 2014 will be “at the upper end of market expectations” (i.e. £1.0m).
   Higher than expected cash inflows, with net cash at year end of £1.5m (versus previous guidance of £750k). Confident outlook for 2015.

   Apr 2015 (the figures you comment on in this Bearcast);
   Profit (pre-exceptional) £1.14m (14% ABOVE last guidance)
   Net cash at £1.6m (versus £1.5m last guidance)

   So you can clearly see from the above that, anyone who had done their research correctly would have been pleased with the results published on Monday. I have no idea why the share price plunged – somebody must have decided to sell, for reasons unknown, and with an illiquid micro cap, the price goes down.

   So to hear you launch into a rant about how terrible the figures are, is so frustrating, when you’ve clearly not done your research! Nobody should have been displeased with the numbers, quite the opposite – the company out-performed guidance. Maybe the outlook wasn’t punchy enough for some people, I don’t know? But existing holders were left scratching our heads as to why the price had fallen.

   Also, your other points about the balance sheet being weak, it shouldn’t be paying divis, etc, are not accurate. It’s a capital-light business model, where SAL receives cash up front from the stallholders, and it then sits on the cash for a few weeks before paying it over to the landlords. So it has a favourable working capital profile. There is also a £2m overdraft facility available when needed. The company did not face any solvency issues in 2014 whatsoever, and they can safely pay out a 2p dividend.

   Mgt have taken a lot of criticism for events in 2014, rightly so – they screwed up big time – and have taken it on the chin. They’ve fixed the problem areas, and have admitted their own failings, bringing in experienced new NEDs to help mentor the Execs. I think it takes courage to admit your own failings, and do something to fix them.

   Also, the budgeting process has been overhauled so that they now forecast no new business wins, hence the broker forecasts now are much more conservative than before. There’s always the chance of another profit warning, you can never rule that out with any micro cap, but it’s a lot less likely now than it was before under the more aggressive previous budgeting process (where they baked in new clients they were hoping to win).

   SAL had an excellent track record from 2009 to 2013, so it was a pity to see a lot of things go wrong in 2014, but you shouldn’t say a business is terrible & management are terrible just because of one good year.

   I do worry that by taking an extreme negative stance on every company you report on, you could be doing real damage to good small companies like this one, that have just hit a temporary bump in the road. Competitors might latch onto your comments, and gleefully show them to SAL’s clients, etc. I’ve heard of that happening (not with your comments), and a company losing sales as a result of intemperate posts on bulletin boards.

   Mgt at SAL are sound people, who pay themselves relatively modest salaries, and are open with shareholders. They are good guys, not bad guys.

   What your bearcast SHOULD have said, is that SAL results are actually better than forecast, and that the company seems to be on the mend. Instead, because you hadn’t done your research properly, you were appalled by the figures and thought they were terrible, apparently not realising they were 14% ahead of revised forecast.

   It’s good to turn your wrath on the basket cases on AIM, but I don’t like it when you start slating fundamentally good companies which have just had a temporary setback. SAL is a nice little niche business, market cap is under £11m, and with a new product (short term rentals on promotional pods) having been successfully trialled at rentals of up to £1k per week, per unit, there should be a lot of new, higher margin business coming through from 2016. So a very good reason to hold or buy more of the shares in my opinion, as I reckon profit could double from here once the new promotional pods have been rolled out.

   Regards, Paul.