January 2020 Portfolio Update

Well that was a fairly volatile start to the year with my portfolio return turning negative then leaping to over 4% before settling back at 2.4%. A decent return certainly but it does feel as though the market is searching for a direction - particularly with Brexit, Coronavirus and Trump's impeachment hearings as a backdrop. I ended up doing rather more trading than I'd like during the month as various shares either supplied unexpected good news or fell prey to concerns around their future prospects. My cash level has fallen to 11% as a consequence of so much activity which feels about right when opportunities pop up on a regular basis.

Looking at my holdings the big losers were Burford Capital (for the second month in a row), Driver Group and Craneware. Remarkably Burford has fallen almost to where it closed on the day of the shorting attack! It is a truly unloved share which may prove to be a bargain when the FY results emerge in March. Meanwhile Driver is, I think, just fluctuating in-line with ordinary micro-cap volatility while Craneware has fallen back on its poorly received trading update.

In contrast the double-digit risers have all pleased the investor community with their recent updates. At the mid-month point Games Workshop was a part of this group as the share price broke £70 on the back of some excellent interim results. Management here continue to steer the company effectively and I don't see why profits shouldn't continue to climb while they follow a strategy that works so well. If I wasn't already very overweight in this company I'd be inclined to add to my position - but there's no sense in being too greedy!

Anyway the scores on the doors were:

Risers: QTX 19%, SDI 14%, IGR 12%, FRAN 11%, HAT 11%, GAW 9%, PPH 8%, GAMA 5%, AFX 5%, BOWL 3%, CCC 1%, III 1%

Fallers: HYNS -2%, RFX -2%, GAN -4%, GRG -4%, FDM -5%, JDG -6%, MGP -6%, NRR -6%, BUR -11%, DRV -13%, CRW -26%


GAN Bought at 195p - January 20

In a moment of post-Christmas optimism I decided that the Q4 KPIs published by GAN were pretty positive, with gross operator revenue up 189%, following a quarter of strong growth. Sadly this rosy view wasn't shared by everyone and since peaking at just over 200p the price has slid lower to support at 160p. At 20% this is quite some correction but, to add some context, this is the third such correction in the last four months. In other words this is a very volatile share and a tight stop will inevitably get hit. Anyway while the news-flow remains positive I want to remain a holder and the appointment of a CFO, based in the US, along with progress on the US listing are both big ticks for me. Achieving the latter will definitely raise GAN's profile and may lead to a re-rating as new investors come on board. This isn't why I'm invested but it would be a nice bonus.

UP Global Sourcing Bought at 96p - January 20

Another slightly optimistic trade I've ventured into is UPGS as they seem to offer an unusual combination of quality, momentum and value. On the quality front they outsource all manufacturing, probably to China, which means that they don't require lots of capital to grow (which leads to a high ROCE). They are also a founder-lead company with the directors retaining very large shareholdings. So they care about the business and they're strongly incentivised to make it work. This focus is evidenced by the fact that the company stumbled badly after flotation, with profits slumping by a third, forcing the directors to roll up their sleeves and deal with the situation. They've done that with 2019 profits bouncing back by 54%. Despite this recovery the P/E remains ~10 as forecasts suggest muted 5% growth for the next two years. I believe that the board are sensibly reticent to appear too optimistic and that these forecasts will rise as the business continues to turnaround. When the share price looked to be breaking out earlier in the month, on reasonable volume, I figured that the odds of the price moving over 100p were reasonable. As it happens they've fallen back to consolidate at 90p which is just above the previous resistance level. I don't know what will happen next but the February trading update will be pivotal either way.

Greggs Bought at 2399p - January 20

This has been a great share to hold since its very positive trading update in November. From then the price has slowly, but surely, inched its way towards the ATH of 2434p. A break through this level would be very positive and while the Q4 update wasn't quite bullish enough to make this happen I found enough meat there to make a top-up worthwhile. The fact is that Greggs remains very popular with customers and their Vegan Steak Bake is flying off of the shelves. I would try one myself if there was an outlet nearby but there isn't which tells me that they've still got room to expand the store estate. On top of this you can now order Greggs products through Just Eat which is a genius move for pulling in even more sales. It's this kind of thinking that attracts me to Greggs and I think that it's only a matter of time before the share moves up to £25 and beyond.

Ramsdens Holdings Bought at 248p - January 20

As mentioned below Ramsdens put out an "ahead of expectations" announcement this month due to all areas of the business performing robustly. Given that growth this year should come in at over 25%, while the P/E is just ~12, I think that the company is still somewhat under-priced. Part of this must be down to current 2021 forecasts for no growth despite analysts pencilling in 12% EPS growth just six months ago. In other words I believe that analysts have upgraded their numbers for 2020 while incorrectly leaving their 2021 numbers unchanged (if not slightly lower). If I'm right then this is where the opportunity lies for making a decent return. The next update should appear in April, before the final results, and with luck the group will have continued to understand their customers and provide the services which work for them.

Team17 Group Bought at 417p - January 20

I've been following Team17 since they listed in 2018 to see if they would stumble post-IPO like so many other floats. This didn't happen which I mainly attribute to Debbie Bestwick (Founder and CEO) and the corporate environment that she has created. If you ever watch a video of Debbie talking about the company, with her purple hair, you'll quickly realise that she is no ordinary CEO and that Team17 is her baby. Anyway over the past year the price has steadily doubled as trading and expectations have improved. I could, and should, have bought in at any point on this path but a couple of catalysts have pushed me to invest now. Firstly today's trading update is very positive with both sales and EBITDA to be ahead of market expectations. In addition the company has a large pipeline of games for 2020 so growth isn't dependent on the success of any single title. Secondly I've read a number of articles recently about the size of the gaming industry (it's bigger than movies and music combined) and its future growth profile. Frankly the market is astounding and I'd like some exposure to this sector - hence Team17.

Liontrust Asset Management Bought at 1237p - January 20

In a similar vein I've been stalking Liontrust for a couple of years in the knowledge that it's a high quality company that I'd like to own. However I've been too clever by half in trying to find the perfect entry point. The simple fact is that it currently qualifies for three of my screens (which cover quality, momentum and improving ROCE) while almost qualifying for a value screen. In addition earnings are forecast to rise almost 75% this year, through a mixture of acquisition and strong organic growth, and 22% in 2021. Ultimately success here depends on inflows and this aspect remains strong with £2.2bn coming in over the financial year so far (the Neptune acquisition added £2.7bn to AUM so there's a decent balance here). In the recent update the Sustainable Investment team were specifically highlighted as experiencing strong flows taking them to over £5bn AUM (quite material with total AUM not quite £20bn). It's likely that this will continue to be a popular sector and it makes sense for Liontrust to have exposure here. Against this backdrop the share price is currently making an ATH and I've decided to bite the bullet on this one.

Alpha FX Bought at 1259p - January 20

A surprisingly muted reaction followed the trading update on 8th January despite sales and margins coming in slightly ahead of expectations. Perhaps the board should have been more explicit about how well they're doing? What they did do was explain in some detail where and how they are expanding. There's a real attention to detail here from management and it's clear that they're working on building a much bigger business. When other investors seemed to cotton onto this about a week later I decided to double my position and take advantage of the new momentum. So far this has taken the shares to another ATH and, despite their high rating, I see this as just another stepping stone in continued growth. Alpha FX are clearly providing a service that clients require and their focus on building long-term client relationships bodes well for the future.

Somero Enterprises Bought at 285p - January 20

This is a former holding of mine that I sold, in full, last September after reading their underwhelming interim results. At the time I wasn't sure that factors beyond lousy weather weren't at play and felt that the safest play was to watch from the sidelines. In the short-term this was a sensible move as the price fell further and then settled just under the 200p level. However, in retrospect, I should have sold on the initial weather-related profit warning in June rather than believe in the positive noises made by the board to try and ameliorate the damage. Anyhow the price started rising (on increased volume) in December after three months of consolidation and now we have a positive trading update. It turns out that US customers really did re-start their delayed projects in H2 and activity there remains strong. In addition the new SkyScreed has met initial sales targets and investment is being made to support long-term growth in this area. Other regions are a bit more of a mixed bag but, as always, the impact here is lessened by the fact that they are so much smaller than the North American market. It's not the perfect update but Somero are pretty cheap and have great cash generation - enough for me to take out a new starter position.

GAN Bought at 165p - January 20

Right at the end of January GAN put out a strong trading update which was something of a relief given the share price weakness up to that point. That's the problem with small-cap volatility. Intellectually I could deal with the almost 20% fall from 195p to 157p but emotionally it's hard to watch such a down-trend. The only thing that helps, for me, it to look at the chart and see that there have been multiple draw-downs at this level in the last few years with one 40% whopper in 2018-19. In other words it's a tough share to hold in any size. Nevertheless I'm in agreement with Dermot Smurfit, CEO, when he says this: "We are delighted with our full year performance in 2019, which proved the long-theorized margin opportunity available to GAN as a specialised enterprise software provider and provides a solid foundation for 2020 and beyond." It seems to me that the opportunity is there for the taking and GAN is in a strong position to capitalise on the Internet sports betting and casino gaming market.


Palace Capital Sold at 331p - January 20 - 1.7% gain

I've held Palace Capital for a number of years through good times and bad. Over that time I've talked about how highly I rate the management and see their York development as pivotal to the success of the company. Nothing has changed on this front. However I've been painfully aware that my position sizing here was wrong with PCA making up ~5% of my portfolio. This was too much frankly when you consider the macro-economic headwinds which the company continues to face and their relative lack of corporate activity. As a result I was psychologically happy to exit my holding at break-even (ignoring the roughly 5% yield that I've been receiving) and free up some funds for deployment elsewhere. I wish the company well but it is useful to have a touch more personal liquidity as a result of my actions.

SimplyBiz Group Sold at 233p - January 20 - 14.9% gain

The trigger for my sale here is the recent trading update with this specific phrase: "overall performance is broadly in line with expectations". This suggests to me that profits will be close enough to analyst expectations to avoid a profit warning but won't do more than that. I find this disappointing given that the acquisition of Defaqto was meant to be transformational but the cross-selling benefits don't seem to have materialised. Overall sales are up 24% but the company don't break out the organic growth figure and only say that they have delivered organic growth - so the figure must be very low. This is a bit strange because their market of financial advisers should be growing and remain keen on software that helps them to run their business. All in all pretty unimpressive.

Volex Sold at 162p - January 20 - 37.7% gain
Strix Group Sold at 186p - January 20 - 9.7% gain
UP Global Sourcing Sold at 80p - January 20 - 17.2% loss

I have a positive view on all of these companies and believe that they will all do well in the long-term. However we're all aware of the impact of Coronavirus in China and the heavy restrictions that the Chinese government is placing on movement and the operation of businesses. Now I don't believe that we're on the cusp of a global pandemic but any disruption to trade in China is bound to have an impact - particularly on companies that are largely or wholly dependent on Chinese manufacturing. On this basis I've taken a look at my portfolio and it's clear that all three of these firms are exposed to supply chain risk. The worst case scenario for them is that restrictions continue and they end up warning on profits because costs have increased or they haven't been able to deliver their contracted sales. The best case would be that Coronavirus is contained and they're able to mitigate the impact of this health crisis. What I don't see happening is for any of them to actually benefit from the issues in China and end up delivering better than expected profits! On that basis I figure that the sensible option is to close these positions and see how events play out.



Another remarkably positive update from the nation's favourite purveyor of "food on the go". Expansion continues apace with 138 shops opened in the year (and 41 closed which suggests that they're ruthless with locations that aren't performing). With just over 2000 stores in the estate this is an expansion rate of 5% which is the minimum sales growth you'd expect to see if they were standing still. In reality total sales improved by 13.5% with like-for-like sales up 9.2%. What a performance. In a move that I fully support the board are making a special payment of £7m to employees in recognition of their efforts and it's a well deserved bonus. Looking ahead there are challenges from cost inflation, which isn't a new problem for Greggs, and living up to the growth achieved in 2019. I'm pretty relaxed about both of these issues though as the former is nothing new while the latter is being addressed though additional shop openings, extended trading hours and delivery becoming an option. Put it this way I wouldn't bet against the board continuing to drive the brand forward and am happy to be a shareholder. (Update)

Ramsdens Holdings

Comfortably ahead of market expectations? Just what the doctor ordered. We already knew from previous updates that Ramsdens was doing well, with a higher gold price boosting profits, but pawnbroking and foreign exchange are also doing well. The latter was definitely a concern, with a weak pound and equally poor economy possibly putting people off travelling abroad, but Ramsdens seem to be remaining competitive in the small-amount exchange space. On top of this jewellery retail was strong over the Christmas period with premium watch brands in demand. I find this reassuring as it suggests a management team in touch with the demands of their customer base - which is critical in a customer-facing business like this. (Update)

Alpha FX

Alpha FX has been a real success story up 5x since listing at 250p. Part of this rise has come from P/E ratio inflation but equally the company has achieved high double digit earnings growth in each of the last five years with 43% growth forecast for 2019. We can be pretty confident about hitting this target since this trading update mentions strong trading and pre-tax margins slightly ahead of expectations. In line with this growth the company has been recruiting hard with the front/back-office staff count rising from 82 to 124. What's interesting is that new front-office hires add limited sales as they're learning the ropes so most of the growth has come from existing staff. In theory then the new hires should really boost revenue as they mature in 2020. As a plus additional growth levers are being pulled with the establishment of Alpha FX Canada and Alpha Payment Solutions. Both of these are early-stage, having been established at the back end of 2018, but they're both growing and should make a meaningful contribution in time. So there's a lot to be confident about so long as the board maintain their positive corporate culture. (Update)

Quartix Holdings

Being able to report on the FY trading just two weeks after a 31st December year end is excellent and suggests that the financial systems at Quartix are in rude health. Happily sales and profits are predicted to be slightly ahead of expectations. There is a caveat however. The company is migrating away from lower-margin insurance business and the number of installations here declined by 12% in 2019. As a result total revenues will be largely in-line (i.e. slightly below) with the level reached in 2018. This is all in the price though and the board have clearly articulated their plan to grow higher-margin fleet sales in the UK and abroad. On this front growth continues unabated with the total number of new installations up by 39% to 43,827 with the UK, France and USA all expanding strongly. Still it's surprising that such growth isn't pushing the top-line higher. I think that there are a couple of reasons for this disconnect apart from the drag effect of falling insurance installations. One factor is that a certain fraction of existing installations fall away every year and this effect is most apparent in the UK which is the largest market. In addition competition exists in the vehicle tracking space and there must be downward pressure on prices and margins - which Quartix attempt to mitigate through improving efficiency. A decent update then but the board need to keep their foot on the growth accelerator. (Update)

Games Workshop

With Games Workshop being by far my largest holding I always feel a frisson of excitement when they update the market. Fortunately these HY results are outstanding with EPS up 44% to 145.9p (and this is basic EPS with no adjustments in sight). Current forecasts are for 227p and I would suggest that the company is likely to make more than 81p of earnings in H2. In other words analysts are probably updating their figures right now and I wouldn't be surprised to see them come in around the 250p level at least. This would be a 22.5% rise year-on-year with the P/E being ~28. Not bad. A key driver of performance is a doubling in royalties to £10.7m but all areas of the business are growing well with trade revenues up a remarkable 24% to £76.1m. A notable point is that many of the independent trade outlets also sell online which means that there are more ways than ever for customers to buy their Warhammer goodies. It's clear that the board appreciate that success comes from the efforts of the employees and the tone of the commentary in these results is quite humble which I admire. There are no vanity acquisitions here and not a hint of EBITDA to muddy the picture. On that front alone I'm happy to own these shares but, of course, their continued performance doesn't hurt. (Results)

Gamma Communications

While EBITDA is nobody's favourite measure I'm happy to hear that it, and the adjusted EPS, will be slightly ahead of consensus expectations for the year. Helpfully these expectations are spelt out in the update and the 39.9p that they quote for 2019 is in-line with Stockopedia. A few percent above this takes us to 41p which would be a 36% improvement over 2018. Impressive. It seems that growth is occurring in all regions (UK & Netherlands) and across all services (Trunking, Communications and Broadband). With this kind of momentum I suspect that the 2020 forecast for 44.4p in earnings is overdue for an increase. This is exactly the kind of compounding share which I'm happy to continue owning. (Update)

Franchise Brands

As with Gamma this is another update which references the board's understanding of analyst expectations - which in this case is for sales of £40.55m and adjusted EPS of 4.26p. With these numbers in mind the board expect to come in at least in-line which suggests the possibility of a small beat. This means that we're looking at a 45% improvement over the 2.95p achieved in 2018 for a P/E under 30. After a rocky start to life as a public company I believe that Franchise Brands has turned a corner in the last couple of years. The drivers here are Metro Rod, with 14% growth in system sales, and the acquisition of Willow Pumps as a means to provide a full range of plumbing related services. Trading has also started strongly in 2020 and the board seem confident in future growth. Given the size of their stakes in the business I'm sure that they're very pleased. (Update)

Judges Scientific

Over the past eighteen months analyst expectations for 2019 have gradually risen from 138.85p to 209.39p. This is an impressive increase of 50% although outpaced by the share price more than doubling as investors have gobbled up JDG shares. Even so the P/E is only ~24 which seems reasonable when earnings are likely to rise by over 36% compared to 2018. What is odd is that over the same eighteen months the forecasts for 2020 continually indicated low growth with this growth falling from 3.3% to 1.6%. In other words Judges Scientific has had 3 great years but next year they won't grow at all? As this update states demand was healthy but uneven throughout 2019 and December was weaker than in the previous year. Despite this the order book is stable at 13.2 weeks of sales (compared to 14.2 weeks in December 2018) and the wheels have hardly come off. In my view the group will continue to benefit from healthy demand and current forecasts are behind the curve. If a suitable acquisition is made then this will be doubly true. So it was a surprise when the shares fell sharply, by almost 7%, on the day of this update before rebounding to close higher on the day. A great opportunity to top-up for the fleet of foot. (Update)

NewRiver REIT

When you're a holder of a share like NewRiver, which is battling against huge structural headwinds, there's little joy to be found in news announcements. Still this Q3 update starts promisingly with retail occupancy remaining high at 96.1% and long-term deals being signed on better than previous rental terms. Management's big bet on growing their pub portfolio appears to be paying off with like-for-like EBITDA growth of 4.9% and solid trading over Christmas. Occupancy here remains high, at 97.9%, and the Co-op have taken receipt of the 26th conversion of a pub into a convenience store. The other main play is a strategic decision to sell off lower-yield (~5%) assets and recycle the proceeds into higher-yield (~10%) ones such as retail parks and pubs. Done well this should leave the company with a covered dividend (currently the dividend yield is over 11% and uncovered) but it does lead to the risk of NAV downgrades if these type of assets continue to be revalued negatively. I still believe in the management here but I can't see any point in buying more NRR until the economic backdrop improves. (Update)

Strix Group

A decent in-line statement here with the bonus that net debt should come in at ~£26.3m due to strong cash generation and control. An ability to generate cash is one of Strix's trump cards so it's pleasing to see this continuing trend in reducing debt from that taken on during flotation. Set against this it's likely that debt will increase next year as Strix invest in their new Chinese factory but this is an excellent investment as it'll boost efficiency and automation across all production lines. With the board committed to launching twelve new products during 2020 it's clear that they see growth opportunities available with their technology. This is important as the group mainly operates in a mature, low-growth market and this is reflected in forecast profit growth of just 1.5% for 2019 (rising to 8.3% in 2020). On the flip-side the global kettle market is pretty robust and Strix is a key supplier to OEMs. So the chance of a profit warning is somewhat reduced by this exposure and there's perhaps more risk to the upside than downside when it comes to sales. (Update)


It's nice to read a punchy update and Computacenter deserve it after one of the most successful years in their history with profits, cash generation and growth in profits all at their best ever level. Current expectations are for 20-25% growth in EPS but in this statement the company say that they're comfortable with the upper end of expectations (which are for £136m-£143m of adjusted PBT). It's very useful having this range in the RNS as it suggests that EPS could finish at ~91p which equates to a P/E of ~19.7. This is all in spite of sales being broadly flat in the UK, their largest German customer scaling back activity and the US acquisition suffering a bumpy first-half in 2019. Looking forward the group have growth opportunities both geographically and technically with scope for another complementary acquisition should one become available. Looked at this way the low single-figure growth forecasts in place for 2020 and 2021 look rather light and I can see these being upgraded throughout the year. (Update)

PPHE Hotel Group

I'm probably a bit biased, as this is one of my best ever performing investments, but PPH just keeps delivering for shareholders. This is mainly because the hotel group keeps finding like-for-like growth in RevPAR with this generally stemming from a combination of improved occupancy and higher average room rates. For 2019 RevPAR grew by 5.1% due to room rates rising 3.4% and occupancy moving up 1.3% to 80.7%. For me this implies that PPH are choosing hotels in the right locations and that their £100m plus multi-year investment and re-positioning programme is appealing to customers and their wallets. With the company having a £300m plus development pipeline across the UK, Europe and the US I'm certainly not inclined to bet against the board's continued success. The fact is that they're a proven team, with a track-record of delivering into the hotel sector, and that's what you need with hospitality real estate. (Update)

Medica Group

This is a very recent addition to my portfolio after it looked as though the share price was going to break through multi-year resistance at ~165p. Sadly the momentum couldn't be maintained and the shares have drifted back by about 10% from the high point. Fortunately this reassuring update has steadied the ship. Market expectations are for 23% growth in EPS and the board expect to hit this number with sales up 19% to £46.5m. This rise has been driven by increased demand for NightHawk and cross-sectional services which are exactly the type of high-margin activities that the company should be focusing on. In addition contracted radiologists are up to 435 (20% year-on-year growth) which suggests that recruitment isn't currently a constraining factor. I was concerned about the previous CEO moving on recently but it seems that he didn't leave just to avoid future bad news - which is a relief. In contrast trading looks pretty good for this simple to understand business. (Update)


The other trading updates this month have all been pretty positive but this half-year update went down like a lead balloon with investors. I suspect that this reaction was a bit of a surprise for the board as the tone of this announcement is all about a resumption of growth and future sales momentum. This is a key shift as last year customers baulked at signing up to the new Trisus software platform and the subsequent profit warning halved the share price. Curiously in the end profits barely fell in 2019 but investor expectations for future growth took a massive hit and confidence on this front is yet to recover. This update doesn't really help as a large customer has been lost in the last six months (a surprise!) and the customer renewal rate has been knocked down to 73% (far below the historic range of 85-115%). This implies that perhaps Craneware's software isn't quite as sticky as investors expected but you can't extrapolate much from a single data point. On the other hand analyst forecasts for 2020 have fallen by 20% over the past year and the company is expecting to no more than hit these much reduced expectations. That's a real headwind to any near-term share price strength and it's hard to argue that a P/E of ~40 is justified at the present time. This one could take a while to recover. (Update)

H&T Group

Strong FY update here with PBT likely to come in at the top end of market expectations. What's really impressive is that this performance stems from growth across all business lines. Central to this is the pawnbroking pledge book with this growing 39% overall through a combination of organic and acquisitive growth. Alongside this jewellery retail grew 7%, foreign exchange grew 45% and a high gold price boosted returns from precious metal scrappage. The only fly in the ointment is the FCA investigation into aspects of their unsecured lending business but that's a minor contributor to revenue. Overall I think that management are doing an excellent job of running the group and I can see why they're confident for the future. (Update)

FDM Group

Forecasts for growth here are about 13% for the year which is definitely at the low end compared to growth in the past 5 or 6 years. The key reason for this is reduced demand from the UK Government due to political uncertainty and the run up to Brexit. This more than offset gains made elsewhere in the UK and Mountie numbers fell 5% during the period. However we're past these immediate issues and I suspect that FDM will benefit as Government Departments ramp up their activity in 2020. In all other regions Mountie numbers increased strongly with North America rising to 1277 Mounties, APAC growing to 497 and EMEA coming in at 240. This is excellent news and suggests that FDM is meeting a growing and consistent demand from clients. With consensus forecasts for 2020 coming in at just 6.7% I believe that there is plenty of scope for upgrades over the next twelve months. (Update)

3i Group

After a period of strong growth the share price of 3i has consolidated over the past year at around the £11 mark. The reason for this is that NAV growth has slowed lately with an increase of just 4p to 877p during the last quarter (although Sterling strength over that time created a £314m, or 32p, headwind). Operationally the business is doing fine with largest holding Action continuing to expand - driving a 6.7% rise in valuation. Infrastructure investments are also doing well with listed vehicle 3i Infrastructure recently hitting a new ATH. In contrast the automotive sector continues to weigh on performance with holding Schlemmer filing for administration in Germany and being written down to zero (total loss of £170m). So there are some ups and downs here. A key point though is that the board are running their winners, such as Action, with their interest here rising to ~49% through a recent corporate transaction, and 3i Infrastructure. I like this strategy and I like the diversification which 3i adds to my portfolio. (Update)

Haynes Publishing

Positive HY results here with adjusted profits up by over 40% on sales rising organically just 4%. This is an excellent result which validates the board strategy of pivoting towards digital sales in the professional market. In this space their vast archive of data has great value and the board are unlocking this value. This is potentially a good thing as the business is up for sale but I regret this fact as Haynes has a multi-year road-map of growth to pursue. The fact is that management have made sensible acquisitions, and picked up useful partnerships, evolving them from a simple publisher to a global supplier of automotive data. This has been something of a painful transition but now these investments are bearing fruit. The only negative aspect that I can see relates to the defined benefit pension deficit of £25.1m which is material in comparison to the market cap of £63m. This will probably have an impact on the eventual sale price but has no bearing on the operational progress of the group. In that respect I'm very positive about the future. (Results)


A really super, ahead of expectations, trading update here with tangible progress of efforts to add a dual listing in the US. For the year revenue growth should come in at a remarkable 115-120% with EBITDA margin leaping from -14% to 30-35%. This is one heck of a turnaround which really suggests that GAN has turned the corner in terms of scaling up the business. The drivers of this performance are higher than expected gambling demand in New Jersey and Pennsylvania, higher cross-selling, faster than expected ramp-ups and the launch of sports betting in Indiana. In other words pretty much every opportunity is pointing in a positive direction. In addition I expect the US listing to stimulate demand for the shares given the US appetite for start-ups and the fact that the majority (all?) of their clients are American. This is starting to look very interesting as an investment. (Update)

Disclaimer: the author holds, or used to hold, all of the shares discussed here

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