UK Investor Show Magazine - February 2018

UK INVESTOR MONEY // SHARES // INTERVIEWS

ISSUE 30 // FEBRUARY 2018

Time’s Almost Up UK Investor Magazine — 1 — February 2018

Intro

From The Editor INSIDE 3 Grab your Global Group UK Investor Show ticket now 5 How to give to charities in a tax efficient manner Tom Winnifrith

It has become almost a badge of pride, a running joke that

7 Time to cash out of Sky

February Edition today, the last day of the month? As we have

Chris Bailey 8 Three resource shares to buy for February Gary Newman 10 Don’t count Trump out Tom Winnifrith 12 Company Profile: Amino Technologies Steve Moore

this Magazine is so late. Do we win a prize for publishing the noted before, control of this title is soon to pass from the ShareProphets editorial team to the team that actually organises the Global Group Inverstor Show so we hope you enjoy the pene-penultimate edition in the current format.

Of course the UK Investor Show on April 21 at the QE2 Centre in Westminster, London dominates my thinking now. It is a mammoth event and I am working on it absolutely every day. In terms of speakers, exhibitors and attendees all is set for the 2018

13 The mysteries of RBS Chris Bailey 14 Three shares to sell in February Tom Winnifrith 16 Justin Webb just doesn’t get it Tom Winnifrith 17 The House View: Don’t get too distracted by the macro picture

contact us UK Investor Magazine 91 - 95 Clerkenwell Road London, EC1R 5BX

event to be the biggest and most exciting that Nigel Wray and I have put on in 17 years. Make sure you grab your free ticket on page 3.

And then, for me, as last year this bear is going fishing with my wife and toddler Joshua in Sweden. We all have our skills in life. Fishing is not one of mine. I would bet the ranch that, as ever, I will catch nothing. That does not mean it won’t be fun.

Languages are another thing at which I don’t excel. In Sweden, as in Greece, the Mrs is able to speak to the natives in their own tongue fluently. I rely on them speaking English. Better still I just go fishing and don’t speak to anyone at all and just think about what to do next.

Anyhow I digress, a) I am sure that team Wray will be a lot more

E: info@ukinvestorshow.com

punctual in delivering this magazine to you when the baton

W: www.UKInvestorShow.com

is passed in the summer and book your ticket for UK Investor

EDITORIAL

show on page 3 NOW!

Tom Winnifrith

Meanwhile the magazine contains the usual mix of opinion and

Editor

buy and sell share tips. Enjoy.

Best wishes Tom Winnifrith Editor www.ShareProphets.com www.UKInvestorShow.com www.TomWinnifrith.com UK Investor Magazine — 2 — February 2018

Global Group UK Investor Show now 60% booked out grab your free ticket while stocks last

With eight weeks to go until April 21, more than 60% seats at the Global Group UK Investor Show have already been booked and the remaining tickets are going fast we have never seen demand like this in 17 years. Get your seat while stocks last...

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ore than 20 of the most successful investors in shares in Britain today will be gathered in one building in Westminster on April 21. You know how good our shows are and this will be our biggest and most exciting yet in 17 years. Make sure you get your complimentary seat TODAY. We have another 50 complimentary tickets to give away to readers of this Magazine The Global Group UK Investor Show is now universally accepted as the dominant one day event for those who want to make money from shares.

The speaker list is packed with stars of the investment world and more than 3,000

serious investors will be attending to hear those legends and to meet the CEOs of more than 120 listed growth companies who are presenting.

We have 50 tickets worth £12 each to give away today on a first come first served basis Simply go to www.UKInvestorshow.com/tickets and book an investor class ticket using promotional code MAG50 to guarantee your place.

So who are the big name speakers?

Heading the line up is Saracens owner Nigel Wray of Domino’s Pizza fame. He will be chatting to the UK’s best known share blogger Paul

UK Investor Magazine — 3 — February 2018

Scott. Then there is secret millionaire, the man described as the enfant terrible of property Nick Leslau or perhaps you prefer the man who floated Pizza Express and Patisserie Valerie Luke Johnson. There is Ed Croft of Stockopedia the master of making money from shares through data analysis.

Or maybe you would want to hear about China frauds from Dr Johnny Hon, or perhaps how to make money in tech from the Queen of the sector Vin Murria. There are top bear raiders Lucian Miers and Matt Earl (of IQE fame) on stage as well as comedian and bitcoin guru Dominic Frisby.

The list goes on and on until the last speaker of the day, the UK’s top performing fund manager over the past decade, Mr Mark Slater.

Natural Resources, Ascent Resources, Fox Marble, ValiRx, Tern, Georgian Mining, Cadence Minerals, Eurasia Mining, Falanx, FairFX, Minoan, Amryt Pharma, Jubilee Platinum, Big Sofa and the list goes on and on and on.

To make sure you meet the men and women behind some of the most exciting stocks on AIM and the main market we have 50 free tickets to give away today . Simply go to www.

UKInvestorshow.com/tickets and book an investor class ticket using the promotional code MAG50 to guarantee your place.

We look forward to seeing you on April 21 at the QE2 Centre in Westminster

The entire ShareProphets editorial team will be there on the day and look forward to seeing you on April 21 in Westminster.

We have 50 tickets worth £12 each to give away today on a first come first served basis, to hear all these speakers and many more. Simply go to www.UKInvestorshow.com/tickets and book an investor class ticket using promotional code MAG50 to guarantee your place...

Speakers like Nigel Wray are just half of the attraction....

As well as our fantastic speakers, a real reason to go is to meet the men and women behind some of the most interesting companies on AIM. In 2018 the Global Group UK Investor Show will have more AIM and Main Market PLCs than ever attending and presenting - more than 130. And the quality and range of companies attending is better than ever.

Among the PLCs booked into attend are (in no particular order): Lionsgold, Rose Petroleum, ICAP, Obtala, Optibiotix, Skinbiotherapeutics, Alliance Pharma, Metal Tiger, Wishbone Gold, Sosandar, Columbus Energy, Powerhouse Energy, Victoria Oil & Gas, Vox Markets, Papua Gold, Thor Mining, Plastics Capital, Kibo Mining, TekCapital, Premier African Minerals, Distil, Solo Oil, Tiger Resources, Xtract Resources, Highland UK Investor Magazine — 4 — February 2018

How to give to charities in a tax efficient manner

By Tom Winnifrith & David Scott

Okay so you may up paying for some Guardian reader to use under-age hookers in the third world but some charities really are the good guys and those tend to be the ones starved of resources. At the Global Group UK Investor Show this year we will again be flagging up the excellent work of the charity I support, Woodlarks, which is very much worthy of your support. So if he are going to back a charity, how to do it in a tax efficient manner. Over to David Scott of Andrews Gwynne for this handy guide. — Tom Winnifrith

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hile giving money to charity is a worthwhile thing to do in itself, it can also be a good way of reducing tax liabilities, particularly if you have no close family or your family is already independently wealthy.

Everyone has an inheritance tax (IHT) allowance of £325,000, known as the nil-rate band (NRB).

If your assets exceed this amount your estate will face a 40% IHT bill on the amount above this. If your estate exceeds £325,000 and includes a main residence, and you have direct descendants such as children or grandchildren to pass it on to, you may be entitled to an additional residence nil-rate band. This is currently £125,000 per person and will rise to £150,000 per person in 2019-20 and £175,000 per person in 2020-21. However this is not an option if you don’t have direct descendants.

However, if you leave money or assets to a registered charity in your will, this will not count towards the total taxable value of your estate

for IHT purposes. You will still receive the IHT exemption however much you give to charity.

If you gift 10% or more of the net value of your estate to a charity, the rate of the IHT your heirs pay reduces from 40% to 36%.

For example, the estate of a single person with no children worth £425,000 would be subject to an IHT charge of 40% on the £100,000 above the NRB, or £40,000. However, if they gave 10% of their net estate to charity, in this case £10,000, their estate would only pay 36% tax on the remaining £90,000 above their nil rate band, totalling £32,400.

It would also be possible to write off the whole IHT liability by giving the amount above the NRB, in this case £100,000, to charity. You could still leave gifts to friends and family worth up to £325,000 completely free of IHT. Charitable Legacies There are three main types of legacy you can leave to charity. A pecuniary gift is the simplest form of legacy and is basically a cash amount.

This would involve you stating in your will that you wish to leave a certain amount of money to a particular charity. You could also leave assets such as property or shares. It’s also possible to make a residuary donation whereby you leave all or a share of what’s left over in your estate once other gifts have been made.

That said, there are potential issues you need to be aware of before deciding which type of legacy

UK Investor Magazine — 5 — February 2018

to use. Giving a fixed sum, for example £50,000, to charities might seem like a straightforward thing to do when you are composing your will. However, if the value of your estate falls substantially between the time you wrote the will and your death, you could end up leaving a greater proportion of your wealth to charity than you had intended. In our view, wills should be reviewed regularly (at least every 5 years) updated as necessary. If you want your heirs to benefit from an IHT discount for giving to charity, you will need to state that you want to give 10% of your estate to charity since disputes between charities, families and executors can occur if a will has not been clearly drafted, particularly when it comes to residuary donations.

Unfortunately, some charities have made a bad name for themselves by beginning legal action against executors to maximise their claim if they are named in a will. The two most important things you can do when drafting a will are planning ahead and being very clear about your intentions. Make sure you take legal advice when considering or amending your will and ensure that the wording surrounding the amounts you plan to leave to charity are clear since there is so much uncertainty surrounding death and wills.

Leaving money to charities and others should always form part of a wider financial plan. You should discuss your plans with close family members to establish expectations with all involved. The discovery of a large gift to a charity or a non-family member in a will can be an unwelcome shock, which can lead to family disputes and contested wills. It’s better to be open about your plans and set reasonable expectations for future inheritance. If you have substantial assets and wish to pass these on to charities and/or other beneficiaries, like family members, you may want to consider using a discretionary trust. These vehicles give trustees discretion as to how, when, and for whose benefit to use some or all of the capital and income of the trust fund. Beneficiaries or a class of beneficiaries are named in the Trust Deed and it is entirely up to the trustees which of the potential beneficiaries will benefit. In addition, it is a good idea to write a letter of wishes when setting up a discretionary trust, which trustees can use to guide their decision-making after your death.

What to include in your will when giving to charity Make sure your will includes all the information your executor will need to understand what you want to happen. This should include the name of the charity, spelled correctly; the charity’s registered number and address, which will be on its website or on a central register. Only registered charities are exempt from IHT; a receipt clause so the charity’s trustee or treasurer can accept it; a merger clause, so if the charity has merged or

ceases to exist, your executor can pay the legacy to the new charity or a charity with similar charitable values.

If you want a legacy to go to a local branch of the charity, rather than into a central pot, check with the charity if this is possible. Some branches are not legally able to accept gifts themselves. Some charities will help you to write a will for free if you include a legacy for them, so ask your favoured charity if it offers this.

Tax relief from charitable giving during your lifetime Tax relief from charitable giving is also available while you are still alive, and is particularly attractive if you are a higher or additional rate taxpayer. The relief in question is called Gift Aid, income tax relief designed to benefit charities and community amateur sports clubs. If you are a UK taxpayer, Gift Aid increases the value of your charity donations by 25% because the charity can reclaim the basic rate of tax on your gift at no extra cost to you.

If you’re a higher or additional rate taxpayer, you can claim the difference between the rate you pay and basic rate on your donation, which you can keep or pass on to charity. For example, if you donate £100 to a charity, it can claim Gift Aid to make your donation £125. If you are in the higher rate tax band and pay 40% tax on your income, you can personally claim back £25 – £125 x 20%.

To claim the relief you should indicate how much you’ve donated when you complete your selfassessment form.

From a tax perspective, you and the charity might be better off with a gift made during your lifetime.

For anyone considering making a gift to charity, it would be worth doing the sums first to work out whether a lifetime gift or a bequest in your will is the better option. We are happy to assist you with this if required.

However, for a charity to claim Gift Aid on your donation, you must have paid UK income or capital gains tax in that financial year. Your donations will qualify as long as they are not more than four times what you have paid in tax in that tax year.

Although cash gifts are the most common charitable gift, it is also worth considering the tax benefits of donating shares, especially as you can donate listed shares free of tax. If an individual is considering making a donation but needs or wants to sell shares first, they would incur capital gains tax if the shares have increased in value since acquisition. To avoid this, they should take a leaf out of Bill Gates’ book who in 2017 donated $4.6bn (£3.34bn) to charity in the form of Microsoft shares. Not only will they save on capital gains tax, up to 20% of the gain, they will also get a deduction against their income for the value of the shares gifted, which gives effective income tax relief of 40%.

This article first appeared on ShareProphets.com

UK Investor Magazine — 6 — February 2018

Time to cash out of Sky despite counter-bid frenzy

By Chris Bailey

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hilst Sky plc (SKY) was happily disclosing in a regulatory news story that ‘Sky Q takes another big leap forward...Next major wave of product innovation, and Spotify set to launch in spring’ (which I am sure will mean something to all the millennials out there), the big news for the company was happening elsewhere with the announcement that US media giant Comcast has made a 1250p cash bid. Now this is interesting at many levels.

As I detailed in my mid-December piece, the hedge fund boys were getting excited about a higher bid than Disney had put on the table - and which had been agreed by the significant shareholder, the Murdoch family. Back then I urged you to hold on in anticipation of something happening. Well it has with spades on today given the Comcast bid is at a cool 16% premium to the Disney one.

So surely Disney might counter the counter-bid?

Otherwise it risks losing an asset that was going to give it (among its bigger 21st Century Fox asset purchases) some more content and access to lots of new eyeballs. Well that’s very logical and frankly in a game of who has the more compelling backstory, Disney win hands down: after all Comcast did also

bid for the 21st Century Fox assets on the block and look who the Murdoch’s chose. You don’t bet against Mickey Mouse, Star Wars and related.

Unsurprisingly the market has gone into a frenzy this morning, pushing Sky shares above 1300p and hence contributing a nice end of month bonus for some of the hedge fund holders. At this level the market is not only anticipating a Disney counter to the counter-bid but possibly even Comcast having another nibble. After all - as the hedge funds have attested - roll back a couple of years and Sky shares were 11 odd quid even then, so Disney was opportunistically getting it on the cheap.

There was some logic in this - and hence why I urged you to hold on. However risk-reward here is becoming much patchier. Ultimately I think Disney will prevail but it doesn’t need to blast Comcast out of the water. Frankly the no doubt new hopes for 14, 15 or 16 quid take-out levels will start to fester (hell why not the dot com boom high of 20 odd quid?!), but that’s for the speculative experts. For me, I’m loving today’s bounce and in the manner of some Dragon’s Den luvvie: ‘I’m out’. I suggest other holders do the same...and let’s start looking for the next idea.

Chris Bailey puiblishes Financial Orbit. This article first appeared on ShareProphets.com

UK Investor Magazine — 7 — February 2018

Three resource shares to buy for February

By Gary Newman

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othing drums up interest amongst investors in the smaller oil companies quite like a drill targeting large amounts of resources.

Given that you can now buy shares at approximately 20% lower than the placing price, and with potential catalysts to drive the share price higher, I can see value in paying around 28p to buy currently. It is by no means risk-free, but I would argue that the potential upside balances that out.

Savannah Petroleum (SAVP) is already on its way to becoming a decent oil producing company, following its recent reverse takeover of Seven Energy and its oil and gas assets in Nigeria, in a deal that was valued at around $280 million, or $3.1/boe of 2P reserves.

Production from these assets – the Uquo and Stubb Creek fields – has continued to increase since the deal was announced, and in January net production to Savannah reached 17,200boepd.

There should be more good news to come on this front though, as in early February the fields were producing at 20,700boepd, and all bodes well for when the deal should finally be completed in April.

That alone should mean that the company is well placed to continue to grow and helps to underpin the current market cap of nearly £230 million.

But what will really get the interest of investors in the near future is the spudding of the first of three exploration wells in Niger. Drilling is expected to get underway sometime during Q1, and although each well will cost $6-8 million that has been funded as part of the recent placing to raise $125 million at 35p per share.

Overall the R3/R4 permit area could contain in excess of 1.1 billion barrels of gross risked recoverable prospective resources, distributed across four formations, and each of the drills is targeting resources in the 35-39mmbbls range. So if any of the drills is a success it would have a big impact on the company.

Of course with any exploration drill there is also a high risk of failure, but given the three-well programme, I wouldn’t expect the share price to collapse on a bad result, especially as it is backed to a certain degree by the Nigeria production.

Many investors like playing the stockmarket for the excitement that it can bring, but there are times when boring can be good, and I believe that to be the case with Sirius Minerals (SXX).

Shares in the company have risen recently to around 26.75p to buy, and although I preferred this stock when it was trading in the low 20s, I can still see plenty of longterm value as long as you are patient.

This is one of those shares where it should just be a case of waiting for everything to come good, as pretty much everything is in place for the building of its polyhalite mine under the North Yorks Moors.

It has huge reserves – amongst the largest in the world – and with more yet to be discovered, as just 7% of the licence area has yielded 2P reserves of 280 million tons, and with resources over 2.6 billion tons, and it is expected that it will be mined over a 50 year period.

Financing for stage one of the project is already in place, all the relevant planning permissions have been granted, and it already has customers lined up for when production begins, with various off-take agreements in place.

It will need a further $1.8 billion for stage two, but it is hoped that the treasury will act as a guarantor for debt financing of this portion. Should that proceed as planned, the project would have a net present value in excess of $15 billion, and although

UK Investor Magazine — 8 — February 2018

any production is still a few years away, there is enough going on to suggest that the company will be valued well in excess of the current £1.2 billion market cap by that stage.

as at Kyzyl, and it has also actively been adding to output, such as with the acquisition of an additional 5% of the Prognoz silver project for $72 million in Polymetal shares.

The results for 2017 are expected to show total production was up 13% to 1.433 million ounces of gold equivalent, and that trend is set to continue with forecasts of 1.55Moz for 2018, and 1.7Moz for 2019.

I’m still keen on precious metals at the moment, and one of my favourite companies is Polymetal International (POLY).

Given that it is listed on the FTSE250 and has a market cap in excess of £3.3 billion, it isn’t one that you will see fireworks from overnight, but I do see enough upside potential that it could yield a very nice return and with relatively low levels of risk, barring a collapse in gold and silver prices.

Not only is it already producing large amounts of these metals, but it is increasing at a good rate and there are new projects due to come online such

This company has a reputation for exceeding expectations, having beat production guidance for six years in a row now, and it has also been returning profits to its shareholders, with the equivalent of a 2.7% dividend paid.

It does have fairly high levels of debt, which stood at just over $1.4 billion at the end of December, but that was reduced by $178 million during the year due to free cash flows.

The preliminary results for the full year are out on March 12, but I would expect them to be well received by the market and I can see value in buying at the current price of around 770p.

Tom Winnifrith’s

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newsletters.advfn.com/tomwinnifrith UK Investor Magazine — 9 — February 2018

The Liberal media says #Trump2020 is a busted flush - have they read the latest polls? Put your money on POTUS Writes Tom Winnifrith

UK Investor Magazine — 10 — February 2018

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he narrative of folks like the BBC, The Guardian, CNN in fact the whole of the liberal media elite is that Donald Trump should not have defeated crooked Hillary in 2016.

Without admitting that their gal was useless they agree that next time around the Donald just cannot win, in fact many argue that he will not stand at all.

But have they actually looked at the polls in detail?

If they have, they ignore them as they churn out yet more fake news.

One “impartial commentator” interviewed fawningly by the BBC the other day said that there was a 1/3 chance that Trump would be impeached and so not stand, a 1/3 chance that he’d be so sure of losing that he would not stand and a 1/3 chance of him standing and being beaten soundly. In other words the chances of him winning were zero. But then again the BBC has form in getting these matters horribly wrong, in deliberately mis-reading polls.

On the impeachment level, after almost a year of Mueller nonsense a few folks associated with Trump have been charged with either financial crime pre-dating and unrelated to the campaign or of lying to the FBI. 13 Russians have been charged with interfering with the election, staring in 2014, a year before Trump decided to run. Facebook says most of the Russian money spent with it was spent after the General Election. No link has been shown between the 13 and the Trump campaign. In other words not a shred of evidence of Trump Russia collusion has emerged which is not surprising as there was none.

On the other hand the FBI, crooked Hillary and the Obama administration have been shown to have real links to Russia via the dirty dossier funded

by Clinton, via Uranium One and have been shown lying to judges and destroying evidence of Clinton wrongdoing. Russiagate is a Democrat problem and Trump will just not get impeached. But can he win the vote?

As I noted repeatedly during the General Election there is always a “shy Trump” factor in all polls something the liberal media ignores since it is their non stop vilification of Trump and his supporters that has created it. I am happy to admit to being a “deplorable” as Hillary Clinton branded 50% of her fellow Americans. And so are many others. But given the non stop attacks we Trumpsters have suffered in the press it is no surprise that some folks will pull the right lever on election day but don’t dare admit it to anyone.

At this stage of his first Administration Obama was on 45% approving of his (dismal) performance.

The most recent poll (Rasmussen) had Trump on an amazing 50% approving 49% not and he has been on the up in all recent polls. That Rasmussen poll is meant to have a margin of error of 2.5%. Now I concede that other polls (claiming a similar margin of error) taken a few days earlier have him on as low as 37% approval. One thing we can say for sure is

that at least one of those polls is wildly wrong!

The overall tracking poll currently has Trump at c43% ( and rising). Throw in the shy Trumpsters and he is basically where Obama was at this point. But Trump’s ratings are improving rapidly.

But there is another factor at play here. Trump lost the popular vote but stormed the electoral college. That is because millions of useless Dem votes piled up in safe and big Dem states like New York, California and Illinois. Whereas in smaller flyover states Trump won by a narrower margin.

His landslides in the South and Mid West were also largely in smaller states - the only big red states being Texas and Florida.

There was a state by state poll on approval ratings undertaken some weeks ago when the overall picture was that Trump was nationally in the mid to high thirties. What was clear from that was that in places such as New York, New England and California, i.e safe Dem states, POTUS was even less liked than he was back in November 2016. There has been a large swing against him. But this makes no difference at all to the electoral college.

In the States that were safe Trump in 2016 he was still safe and in the swing states, back then he was in the 40s already. In other words, at what should be a low point for Trump (mid term year) he is still very much in contention in all the states that matter.

Throw in the recent revival and the shy Trump factor and he could well be ahead or only marginally behind in all the swing states. At this point in the cycle that is a remarkably good showing.

The great unknown is how the economy fares between now and 2020. If it is stimulated by the Trump tax cuts and jobs continue to be created in those swing rust belt states the #Trump2020 victory party is s slam dunk cert. If it falters then the race is more of a toss up with a lot depending on which of the umpteen dwarfs the Dems are considering is selected as their candidate. Natch I am praying that Chelsea Clinton decides that it is her familial turn to steal the Dem nomination but the reality is that there is no strong and obvious choice bar Bernie Sanders who is a) very old, b) tainted by his wife’s financial scandals and c) a total fruitcake.

When push comes to shove will folks in Ohio or Michigan want to back a man who thinks we should #takeaknee in solidarity with transgender campaigners in a programme funded by tax hikes?

Okay I parody his position slightly, but on the big social and economic issues Trump stands with folks in Ohio, Bernie kneels with snowflakes in Brooklyn.

It is the story I have commented on many times before, one of the two Americas.

The Bottom line is that any media outlet telling you that Trump has a 0% chance of residing in the White House after 2020 is just ignoring the facts to pedal fake news.

This article first appeared on TomWinnifrith.com.

UK Investor Magazine — 11 — February 2018

company profile Amino Technologies A value opportunity worth viewing?

By Steve Moore

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ebruary has seen Amino Technologies (AMO) announce full-year results emphasising “continued progress strong margin progression and cashflow” and “a promising start to 2018… the board expects the company to deliver sustainable profitable growth in the coming year”. The shares have though responded below 200p – a level they were ahead of back in April. A value opportunity?

AIM-listed with headquarters in Cambridge, UK, and global offices in California, Finland, Hong Kong and Portugal, Amino is an IPTV and cable TV technologies (hardware and software) company. It describes itself as “a global leader in innovative Internet Protocol (IP) solutions that enable service providers to connect with consumers… with over nine million devices sold worldwide, Amino has a proven track record of working with many hundreds of pay-TV service providers in more than 100 countries”.

In its year ended 30th November 2017, this translated to revenue of £75.3 million and an adjusted pre-tax profit of £11.2 million, generating earnings per share of 15.3p – the latter up from a prior year 13.6p. After particularly £4.4 million of dividends paid, cash (net) was increased by £6.8 million to £13 million.

The dividend per share was increased by 10% to 6.655p and the board “intends to continue the company’s dividend policy of no less than 10% growth per annum for the year ending 30 November 2018”. Additionally, the company “see good opportunities for growth in the medium term as market disruption requires incumbent operators to innovate and as cable operators migrate to IP based services”.

Broker to the company, finnCap, responded that “Amino remains in a very strong position to be the enabler for delivery of the end to end

platform for TV in the cloud, anywhere and on any device, for new and existing customers. Target 275p (260p), with revenue growth prospects completing the investment case”. At 200p, on its forecasts, the current price/earnings multiple is circa 13x and dividend yield 3.7%. There is then also the cash support towards a current circa £145 million market cap.

That suggests a possible value opportunity indeed. However, I also note revenue was down 7% on a constant currency basis, a tax credit benefitted earnings per share (a slight earnings per share decline currently forecast for the current year) and the statement also including “return to our normal seasonality in terms of a stronger second half financial performance”. These thus look some significant things to look for in future updates before deciding on an investment here.

Management With experience from a variety of senior management positions in technology, outsourcing and services companies, including previously as Senior Vice President, Asia Pacific, for DHL, CEO Donald McGarva joined Amino in 2010, taking up his current role in December 2011.

CFO Mark Carlisle has prior such experience including from Crossrider, which raised $75 million as part of a September 2014 AIM IPO, and from FFastFill plc, a provider of technology solutions to the financial derivatives trading industry. He also has ten years of audit experience from the Technology Media and Telecommunications practice of Deloitte and joined Amino in 2016.

UK Investor Magazine — 12 — February 2018

RBS makes a profit...and the shares go down! Why?

By Chris Bailey

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icking shares should be easy, right? Find a company where both profits and cash flow generation are improving plus where investor sentiment is shot to bits and the Gods of both fundamental analysis and investor psychology should be on your side.

Unfortunately the market is never that easy...but I am a bit surprised to see Royal Bank of Scotland (RBS) shares down 4% odd on the day it announced that the bank had made its first attributable profit in ten years and also did improve its tier one capital position by a cool 2.5% points. I know the latter is a complete banking geek-freak measure of performance competence but take it from me that it was pretty impressive.

Now I don’t need to write at length about RBS’ various perception problems. Investor sentiment cannot help to be crushed by facts including (1) it has the government as the biggest shareholder and; (2) in terms of outstanding legal/legacy issues the bank itself casually notes that it still has ‘substantial additional charges and costs’ associated with sorting out the residential mortgage bond issues it got itself into around the time of the Global Financial Crisis a decade or so ago.

Thank god for that super strong capital position I say given they are going to be stung for many billions. I guess I should also add (3) it is still being stung for various provisions associated with bad boy issues such as PPI mis-selling and that oh-so-embarrassing report on how a previous management team dealt with some of their clients during the aforementioned Global Financial crisis (check out the press around the Parliamentary report - all provisioned up on it I would argue).

However this is a huge known issue and I don’t think it is this that is overhanging the shares today.

I think it is all about costs and more specifically cost cutting. In line with most banks, RBS has been cutting large swathes of costs over the last decade from a combination of self-preservation and technological application drivers. The company noted that ‘costs, ex. restructuring and litigation and conduct costs, will reduce vs 2017, but the rate of cost reduction will be materially lower than in 2017’ as restructuring spend continues to weigh.

This means despite reiterating some alright targets of achieving a sub 50% cost:income ratio and a 12%+ return on equity it is no longer guiding to an ‘absolute 2020 cost base’.

Now clearly costs matter for any business because it helps you to move down to those most important numbers on a P&L but everything has to be put into context including the aforementioned good capital generation. It seems to me that it has realised running it too hard internally on cost control is going to hurt customer and/or staff morale. It is always a trade-off after all in business - just take a look at Tesco (TSCO) over the last five or six years.

I could do you a bit of geek banking sector maths and suggest RBS is a 350p stock and the current 270p level is one of those interesting support/ resistance points (take a look at a share price graph over the last year if you do not believe me). Banks are always a bit of an act of faith naturally and you have to have a general glass half full view of the outlook for the UK economy. But when you start from an improving numbers/low investor sentiment perspective you have a bit of slack even if the government - at some point - will start dumping its shares.

A year ago I talked about the share being a ‘bottom drawer’ sort of investment and since then it has gone up from the 240s to today’s c. 270p level. Not the best in the FTSE-100 but not the worst either...

I think it continues to grind up and right here for the next year I would still buy the stock.

Chris Bailey puiblishes Financial Orbit. This article first appeared on ShareProphets.com

UK Investor Magazine — 13 — February 2018

Three sells for February

By Tom Winnifrith

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or a few days we bears we thought that after eight years of misery we were about to enter the sunlit uplands. The Dow was plunging dragging everything else down with it. But then it stopped and reversed and now we are pretty much back where we started the year. That is to say it is tough. Companies can be exposed as bankrupt or frauds or both and yet folks still say “so what, BTFD dude!” Such levels of denial about fraud, cashflow crises and utterly flaky valuations cannot last forever.

go tits up. The shares trade very close to nominal value making a deeply discount bucket shop spiv placing almost impossible. Anyone ponying up cash must be aware that the first £750,000 will go on adviser fees and clearing historic liabilities.

Why would anyone be so daft as to back such a proposition? If you believe in the two blockchain deals ( and I do not) you’d just offer the company £750,000 to clear its debts and take 100% of those deals in return. Why pony up that cash for only a partial share?

In the end gravity always wins. We saw that this month with a company which has featured here more than a couple of times, AIM listed Servision (SEV). Crackers revenue recognition policies, ongoing losses and cashburn, a drowning in debt balance sheet, no cash and some really dodgy looking financing deals. What was not to like? For about two years while I have been on its case it has been apparent that on a fundamental basis this piece of crap was utterly worthless. Sometimes its shares were ramped high for brief spikes on “aggressive” RNS releases. Most days the market just ignored it but the overall trend was one of share price decline.

In short Milestone is 100% screwed so is sell No 1. Also screwed is Arian Silver (AGQ) a company that has seen shareholders lose 99%+ while its boss, a bombastic Welsh prick called Jim Williams, has minted it. I sense that the market has had enough of funding Jim’s lifestyle.

The market cap at 0.22p is c£800,000. Cashburn on PLC costs ( let alone drilling ) is c$100,000 pcm.

But this company was worthless! The share price chart should have showed a drop to zero ages ago rather than a rather gentle ski slope. For all that time, and until the shares were suspended pending clarification this month, gravity was exerting its pull but was ultimately being denied. That cannot go on forever. So how about three more stocks that are, in all probability, worthless or near as damn it.

I start with an easy one Milestone Group (MSG) at 0.12p which - amazingly values this company at c £1.5 million. Its real value is less than zero. The company has net current liabilities of c£700,000 and growing.

Its businesses is effectively two jvs in blockchain both of which are at start up stage. One is with a company which is itself financially challenged, Black Cactus, has years of non delivery and is run by a proven liar Larry Cummins. The other is run by someone who does not lie as far as we know but is in a similar financial and trading position.

Milestone has admitted it needs cash fast or it will

How much cash does Arian have? We do not know as it has not revealed the cost of its last 28 hole lithium drilling campaign in Mexico. The results were poor and it won’t have been cheap. I reckon that Arian has 3-4 months cash left, assuming it does no drilling and just focuses on the important things like paying Jim Williams. As such it needs another placing PDQ but even those who back recent bailouts such as Richard Jennings at Align have had enough.

To raise enough to keep the lights on and engage in the pretense of creating shareholder value by drilling Williams needs to raise at least £500,000 or 60% of the market cap and any placing will have to be at a steep discount. And even if that is possible it would only keep the lights on for another six months. The market is bored of Williams taking the piss and there is a real chance that no-one will back the next placing. That’s the quick death. The alternative is slow death. Either way: sell.

Finally not 100% downside but 75% will do will it not? I return to UK Oil & Gas (UKOG) at 1.65p - the target is 0.4p. You may say that fundamentals don’t matter on the AIM casino. In the short run you are right - sentiment drives share prices. But in due

UK Investor Magazine — 14 — February 2018

course fundamentals always out and that inherent valuation mismatch is your opportunity to buy cheap, unloved, stock or to short over-promoted crap.

At 1.65p the market capitalisation is c £65 million. We might start with its stake in the “Gatwick Gusher” Horse Hill. The last trade sale of a stake in Horse Hill was today and the see through value on UK’s holding is c £6.5 million. But....

Transactions between a small group of AIM listed companies related to each other in one way or another are hardly transparent and all have an incentive to talk up the implied valuation by doing all share deals at inflated prices. That helps the promote allowing them to issue shares to mug punters to keep the lights on. So I would risk weight that very heavily.

Broadford Bridge is, as after recent flow testing news, at best a very small scale producer but at worst, in all likelihood, non commercial. And

then UK Oil & Gas has a raft of stakes in other UK onshore assets but you could assemble a similar portfolio from other AIM listed companies for well under £10 million. So if we, incredibly , charitably value Broadford at a couple of million quid you get a sum of the parts valuation of, perhaps, £20 million but that is incredibly generous. But hang on...what about the debt?

There are still £6 million of death spiral loan notes outstanding and that must therefore be counted as debt. There is sod all cash on the balance sheet and thus our sum of the parts falls to £10-15 million and that is being incredibly generous. But that implies a fundamentals based share price target of c0.27p-0.4p.

But that assumes that value can be realised. UK Oil & Gas is in urgent need of a refinancing. If it cannot deliver that it would need to consider firesale asset sales simply to survive and this is not going to be a sellers market.

So maybe in setting a 0.4p target I am being just too much of a nice guy. I know...it is a fault of mine

Hot Stock

ROCKETS Stocks Ready to take off hotstockrockets.com UK Investor Magazine — 15 — February 2018

The BBC’s Justin Webb - a Radio 4 Today programme apologist for the Oxfam perverts as the virtue signallers stick together Writes Tom Winnifrith

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he sort of well paid metropolitan elitist who works for the BBC will no doubt mingle socially with the numerous champagne socialists earning £100,000 + per annum working for NGOs and lecturing rich folks in the private sector about how evil we are for not tackling poverty. These are the chattering classes and they stick together.

Thus on Radio 4’s flagship Today programme Justin Webb was interviewing folks about the Oxfam scandal where highly paid workers in Haiti shagged underage hookers in lavish charity funded accommodation. Oxfam then covered this up allowing some of these perverts to go to get highly paid jobs at other charities. It now seems that there are numerous other sex scandals at Oxfam and we all have every right to be outraged since taxpayer’s cash is funnelled to this charity in very large amounts.

Yet Webb stated ( as a question) “ What a lot of people, or rather some people, think is that a lot of this is A) rather made up or B) exaggerated by those who want to attack the whole idea of aid.”

Ok Justin, how would you feel if your 15 year old daughter was forced to have sex with men in their sixties? You okay with that as long as the men are Guardian reading lefties with highly paid jobs at a virtue signalling organisation?

Webb should be fired from the, taxpayer funded and out of touch, BBC for making such a statement which is unambiguously obscene and offensive as well as A grade fake news. No, one believes, the assertion made by Webb.

Natch he will not even be disciplined.

Elsewhere on Today we were all urged to go easy on Oxfam as if its funding is cut the vulnerable will suffer. Rubbish. There is no shortage of charities helping poor kids in poor countries, each of which has a bloated central overhead back in the UK stuffed with Guardian readers on six figure salaries.

It would be very easy, in fact desirable, to see fewer charities helping poor folks and thus cutting out some of the administrative costs which are surely duplicated.

Switching funding from a charity which covers up paedophile scandals to one that does not is surely no bad thing. At the very least overall funding levels are unchanged. In reality by cutting out one set of central overheads more cash could get through to helping folks who really need it.

Yet there was no-one at the BBC making this point on the Today programme. It was almost as if folk like Justin cared more about the staff at the NGOs rather than those they were meant to be helping, when they were not sexually exploiting them.

This article first appeared on TomWinnifrith.com.

UK Investor Magazine — 16 — February 2018

the house view

Don’t get too distracted by the macro picture In terms of top-line numbers on indices and averages the start of 2018 has been nothing if not headline grabbing.

One week the Dow is plunging and when America sneezed the world catches a cold, markets across the world dive in sympathy. All of a sudden the mainstream press is taking about the end of a bull market, ludicrous valuations and the start of a stockmarket crash. When the mainstream media talks shares down, which is a rarity, it is usually a buy signal.

And so sure enough stocks have rebounded from the so called crash claiming back nearly all of their losses. Suddenly shares are relegated to the inside pages again and the talking heads go back on CNBC and Bloomberg to again reassure us all that there has never been a better time to buy.

We are not so sure of that. As we have noted here several times before, valuations are - by historic standards - stretched to breaking point. That is to, at this stage of the cycle, nine years into a bull market earnings growth over the coming 24 months is likely to be pedestrian at best and the level of profits warnings suggests that there is very little visibility. Yet shares trade on PEs you’d normally see right at the bottom of the cycle when earnings are set to rebound sharply.

Moreover interest rates are set to rise sharply this year as Central Banks grapple with rising inflation/stagflation - that genie is well and truly out of the bottle. How will over-indented consumers and PLCs cope with this? We suggest that in many cases the answer will be badly. There are other reasons for caution too. That does not mean shares may not carry on going up for a while, that is the way bull markets play out at the end. But we would not be rushing to buy shares.

Of course one can get too obsessed out the big macro picture and many of us do. Nigel Wray famously says that he never looks at the state of the markets or this macro babble. For him buying or selling a share is all about bottom up analysis - does the share price discount what THIS company will deliver or not. Wray is not a trader - his average holding period is well over 12 years.

So when he buys he is looking to compare price and value and buy with a big margin of error. When he sells it is generally because he bought into a small capo which has grown and is now a) the sort of stocks institutions are buying and b) overvalued. The real way to make money from shares is to take that long term approach which ignored wobbles as we have just seen and to engage in bottom up fundamental analysis. Oddly that is not what the talking heads, in whose interests it is that you trade like a dervish, ever seem to tell us.

UK Investor Magazine — 17 — February 2018

Saturday 21st April 2018 | London Save the date!

UK Investor Magazine — 18 — February 2018