Avesco Share Discussion Threads

[interceptor2] 16/6/2015 16:24

QuePassa, you have summed up the bullish case very well, and good to see all the recent news condensed into bite sized pieces.

I always like to see powerful forces coming together at the same time, normally I am content with just two combining, increased revenue and increased margins, but with directors buying also, there is the third.

Margins are increasing due to previous 2 years of restructuring, with efficiency savings coming through strongly.

The reason I mention revenues despite not seeing much in the way of increases so far, is because I am expecting revenues to start increasing now after the restructuring. I have noticed before that margins are the first things to improve, which is followed by revenue as the management turn their attention to growth.

[quepassa] 16/6/2015 15:46

A great deal of very positive news so far this year for burgeoning Avesco.

Here is resume of news (via RNS) over the last six months.

Quite extraordinary. Haven't seen anything like this for any AIM company for as long as I can remember.

Four vital ingredients coming together at the same time create a very potent and compelling proposition

- Repeated announcements of Trading ahead of expectations
- Strong figures at BOTH the full 2014 year and 2015 half-year
- Dividend twice increased. 20% at the full year and a further 33% at the 2015 current half-year
- Strong and repeated significant Director Buying



1. 16/12/14. Trading Update.

Final quarter extremely busy. Particularly strong performance from North America. Earnings expected to be ahead of current expectations.


2. 15/01/15. Prelims.

Strong figures. Basic earnings per share 23.4p vs. (-1.8p)
Final Dividend increased 20% to 6p.
Record profits for Avesco (apart from UK Olympics year)
Strong start to Q1 announced.

3. 16/01/15. Director Buying

Founding Chairman, Richard Murray buys 113,000 shares taking his holding to 5.721 million shares

4. 09/02/15. Director Buying

Director Graham Andrews buys 10,000 shares taking holding to 279,183 shares

5. 18/02/15. Director Buying

Director Graham Andrews buys a further 13,000 shares

6. 05/03/15. Trading Update

Announce that Board expect results to 30/9/15 will be comfortably ahead of previous expectations

7. 11/06/15. Half-year Report

Strong figures announced again.
PBT announced at £4.6m vs (-£1.1m)
Basic Earnings 0f 13.3p per share vs (-12.4p)
Dividend INCREASED by 33% from 1.5p to 2p for half-year

Board state that earnings likely again to exceed prior expectations.
Reconfirm strong performance at Creative in North America


8. Director Buying

Graham Andrews buys 270,000 shares
John Christmas buys 50,000 shares
Dave Crump buys 200,000

all at full market price from Chairman





This is a very strong and supportive set of factors which cannot be ignored in my opinion.

Strong figures plus statements of ahead of expectations supported by significant Director Buying of shares is a strong signal.



ALL IMO. DYOR.
QP

[interceptor2] 15/6/2015 16:23

Great to see directors keen to buy shares with their own money at this level, a strong indication that there is undervaluation here.

Agree Michael with your price target, my first target price is similar at 306p which I would expect within a year. Last weeks results were one of the more impressive RNS releases I have seen so far this year, and likely to be one of those turning points in the fortunes of the company imo.

[sailing john] 15/6/2015 11:29

Bulk of trades today at 181/182 and decent volume for Avesco

So on the basis that price unmoved I assume there is a seller in the background

For now!

Brokers still playing catch up though (with forecasts) - nothing new there then!

SJ

Edit re sell order - 20k at 180 just posted - perhaps that was it - high price to sell in bulk! if that is what it was - trades at mid (or wrong side of mid) usually a good sign of MM confidence in direction.

[sailing john] 15/6/2015 11:17

And another small Director buy at 185p

They are very keen!

SJ

[sailing john] 15/6/2015 11:10

Michael - good point re enhanced divi - I hadn't thought of that.

They are very happy to return cash and no doubt the Chairman with nearly 30% has some say in these matters!!!!

SJ

[battlebus2] 11/6/2015 22:14

Very interesting michaelmouse, any possibility a predator may bid? I guess not by the red tick lol.

[michaelmouse] 11/6/2015 21:56

The growth story continues. Excellent performance with plenty of room for further improvements. In the medium term I'd fully expect the share price to rise above £3. Still one of the cheapest shares on the market.

Director purchases have already been commented upon in terms of the amount they have spent, but what is perhaps even more significant is the increase in their percentage holdings:- Crump and Andrews doubled their holdings and Christmas(FD)increased his holding by one third, an incredible vote of confidence particularly given that the prices they paid were after today's 27% rise at £1.75.

33% increase in the interim dividend (2p) is rather nice too, but this bit of the report is interesting :-

"14. Post balance sheet events

As at 31 March 2015 the Group had an unrecognised contingent gain of GBP1.0m in respect of the receipt of its share of funds received from the historic Disney litigation (See Note 11). The gain was contingent on indemnities given in respect of the settlement.

No notice of claim has been received under these indemnities and, subsequent to the period end, the Group believes that any claim under the indemnities would now be time barred. The post period end lapse of the indemnities, and hence the ability to recognise the contingent gain, is a non adjusting post balance sheet event and as such no adjustment has been included in these accounts. The gain of GBP1.0m will be reflected in the second half of the year."

I wonder if they will distribute the extra £1m from the Disney litigation as a special dividend. This would amount to 5p. Combine that with perhaps another 5p final dividend and that would be very acceptable. 12p for the full year would represent a healthy 6.7% yield at the current share price

Very delighted LTH.

All the best.
Michael. :)

[battlebus2] 11/6/2015 18:06

Been out all day so great to come home to the news of the directors dealings, fantastic!! Pencilled in £2.50 in 12/18 months time..

[sailing john] 11/6/2015 17:31

Meijiman - Edison is paid research and I assume completely independent and therefore they won't give companies editorial rights by consulting prior to publication. Edison have a view but it isn't always correct and in this case I think their research (produced very quickly today) will be revised upwards in due course

We shall see in late 2015/Jan 16 when we get next TS/FY results. Avesco don't appear to be bothered about pushing stock price with contract announcements etc. as others do and I think they are also pretty ambivalent to Edison's view. Last year there were no RNS's between now and the December TS.

[sailing john] 11/6/2015 17:22

Edison's FY forecast prior to March 2015 was £3m
Today it was increased to £5.2m
An increase of £2.2m in just over 2 months
Clearly they are struggling to keep up with events!!

Given outlook statements in 1H - I'm expecting H2 in the range £3-5m
Giving a FY PBT of £8m - £10m
Just my reading of 1H report outlook statement

[meijiman] 11/6/2015 17:10

Interesting . Assume the Edison note is paid for by the company and 'approved' by them. But their numbers do look conservative for sure.

[the big fella] 11/6/2015 17:02

I2

Yes have to agree with you there. Topped up my already sizeable holding this morning.

[interceptor2] 11/6/2015 16:54

To my simple way of looking at the P/L report, 13.3p is a fair reflection on the performance in H1, they look a very clean set of numbers with nil exceptionals. The last major exceptional charge was in HI 2014 £5.1m, with only a small addition for the full year which made £5,385m.

Tax charge seemed normal at just over 40%.

I am not sure is there is an historic difference between H1 and H2, but reading today's statement I feel that H2 will be rather good. And believe broker estimates for the full year are way too low, I know that brokers like to leave room for increased estimates later in the year, but 13p EPS estimate just looks silly imo.

[quepassa] 11/6/2015 16:01

Strong sign of commitment to see the well-respected FD, John Christmas and Exec Directors, Dave Crump and Graham Andrews all dipping their hands into their pockets to buy so many shares in the Company, especially as the price has risen so much recently.

They are buying the shares at 175p each.

Not at some knock-down Directors' option price but at the equivalent of today's full market price.

To buy 50,000 shares, The FD has coughed up £87,500

-and Dave Crump has spent £350,000 on 200,000 shares

-and Graham Andrews has splashed out nearly £half-a million or £472,500 to be precise on a big parcel of 270,000 shares

In total , the three TOP MEN behind the Founding Executive Chairman, Richard Murray, have collectively bought £910,000 of shares.

That's a lot. That's a real sign of commitment.

Great news to see the top echelons of the Company prepared to put their "cohones" on the line in such style.

Adds confidence. I guess they must sincerely believe that things look pretty good going forward. And if anyone knows, I guess it's them.

ALL IMO. DYOR.
QP

[meijiman] 11/6/2015 13:50

Its all to do with adjusted earnings. The 13p is after a restated 12.4p for last year.The Edison figures exclude exceptional items and the normalised EPS is after current and deferred tax.
But feel free to use different EPS figures if you wish anisha -you have a perfect right!

[anisha] 11/6/2015 12:46

how are digital eps 13p for whole year when 1st half was 13.3p tia

[meijiman] 11/6/2015 12:10

The adjusted Edison numbers are EPS of 13p for 9/15 and 16.8p for 9/16.
I would assume those numbers have been passed across the company.
My contact says the Chairman is very well respected at Charlton which may not add to the investment case but is certainly a positive.
I'm thinking of a top up here as could see 200p here quite easily.

[sailing john] 11/6/2015 12:01

Sellers around it appears - and why not given the recent rise

Managed to buy again at just under 175 current quote 170/177

[sailing john] 11/6/2015 11:38

PS - just rechecked Digital Look forecasts for current full year (assume not yet updated!!!)
DL FY forecast 2015 - PBT £4m EPS 10.25
Actual 1H today - PBT £4.6m EPS 13.3p
I think DL forecast needs updating!
Of more note is just how far ahead of market expectations 1H actually was!
ie 1H actual ahead of DL FY!
and by some margin!!!!

[sailing john] 11/6/2015 11:27

Interesting Director deals RNS
Massive buy by Directors of nearly £1m assuming they paid the quoted sale price
Chairman sells 540k at 175p to facilitate above purchases.
Chairman still holds over 27% previously just under 30% from memory
Looks very positive to me
SJ

[zoomydoo] 11/6/2015 09:40

Top sliced some of my holding @ £1.675 happy holding the rest but that has been quite a leap this year. Thank you to Michealmouse for pointing this share out to me some years ago, it has been a great investment with good dividends to boot. The monies will probably be allocated to LLPC to provide further income. With my capital appreciation from this share it will be yielding me 9%!on my original capital outlay. I am happy with that.

[shanklin] 11/6/2015 09:33

You can see the note on Twitter if you follow Glasshalfull. Its not very illuminating.

[interceptor2] 11/6/2015 09:30

Today's results were simply stunning imv, too good to ignore so I have taken a large (for me) position.

Well done to holders here :o)

Not sure why I didn't buy on the last trading update, I was well aware of the company thanks to Sailing John. Better late than never and still a long way to go in the rerating imo.

[quepassa] 11/6/2015 09:09

FinnCap have reconfirmed their " corporate rating" on Avesco this morning with a Price Target of 200p - according to market reports.

This information is from a reliable source but I would appreciate if someone who has seen the full FinnCap report could kindly flesh out the details.

ALL IMO. DYOR.
QP