Cloudcall Investor Meeting, Sophos, RPI and Brexit

Yesterday I attended a “Capital Markets Day” for Cloudcall (CALL), a company in which I hold a few shares. But not many because it has been one of those technology companies with fast growing revenue but it has been slow in actually reaching profitability. The result has been multiple share placings, the last one in October 2017, to plug the negative cash flow hole. So cash flow was no doubt on investors minds at the meeting, as you will see.

The company sells unified communications technology to businesses using CRM systems. A couple of their major partners are Bullhorn (a recruitment/staffing software business) and Microsoft with their MS Dynamics product and there were speakers from both companies at the meeting. They helped to explain the attractiveness of the product to their customers, which I do not doubt.

CEO Simon Cleaver covered the latest product enhancements which will potentially enable them to integrate with 4 or more new CRM products in 2019. It will also include broadcast SMS messaging and mobile support which their customers need. Apparently there will be an increased focus on the US market, but the company is also looking at the APACS region and Brazil from later comments, where there are obvious opportunities. Pete Linas from Bullhorn made an interesting comment that the company has been missing out on business growth due to lack of finance – suggesting perhaps that a more aggressive strategy be adopted as per early stage US technology companies, i.e. ignore the losses and negative short-term cash flow and raise more finance.

CFO Paul Williams, covered the recent trading statement which was positive. Group revenue up 29% but cash burn was £1.5m in H2 2018, i.e. still consuming cash rather than generating it. Cash available was given as £2.75m. Paul also covered how the growth in users converts into revenue and future profits but they seem to have a relatively high churn rate for this kind of business, i.e. customers dropping out subsequently. It was not made clear why they lose some customers/users and what the customer contract durations actually are. However in response to one of my questions it was stated that forecast revenue growth for this year will be 40% (that’s higher than analyst’s forecasts so far as I can see).

Paul also said cash burn was reducing and Simon said that it was down to £240k per month, with sufficient cash to break even, if the sales numbers are met. He suggested that if more cash was needed (e.g. to fund US expansion) then they could raise their existing debt level from £1.8m to £3.0m and the board would prefer to raise the debt than more equity. The impression was given that conversations around that had already taken place and Paul Scott questioned whether the bankers would want to lend to a loss-making business – it seems they might. Comment: they might but at a hefty cost and with tight mandates. I simply don’t believe that companies like this should be financed via debt. Equity is what is needed for early stage, high-risk technology companies as I said to Simon later. But another placing may not be enthusiastically welcomed by investors at this time.

One interesting comment from the audience questioned whether the company was charging too little for the product. But it appears that they need more functionality to be able to charge more, and that would require more investment of course. But will the company ever become such an essential part of the customers’ business operations that they cannot do without, or even more to the point switch to a competitor? That was not really clear.

Concluding comment: The company is making progress and Simon communicates his enthusiasm well, but I suspect the business will continue to burn cash and financing that with debt makes no sense to me.

Sophos (SOPH) is another technology company that issued a trading statement today. The good news is that it has reached profitability and revenue has increased by 14% year-to-date. The share price promptly dropped by more than 25% in early trading! The reason was no doubt the lackluster growth in “billings” (i.e. invoiced sales) of 2%. Why is that different to the revenue figure? Probably because the revenue includes some accrued from last year on subscription billings. It otherwise looks like it is likely to meet the year-end targets forecasts of analysts. With the share price fall it’s starting to look relatively cheap for a high-growth software business so the key question investors have to ask is whether growth will return? It was no doubt exceptional last year because of IT security scares and new product releases, but is it simply nearing market saturation? An article in Shares magazine has questioned whether the cause of billings slowing is increasing competition from new market entrants so that’s certainly an issue to look at also. There is more explanation of the reasons for billing trends in the audio presentation available here: https://investors.sophos.com/en-us/events-and-presentations.aspx . I have a small holding in Sophos and bought more on the dip today.

RPI concerns. A House of Lords committee has apparently questioned the continuing use of the “discredited” Retail Price Index (RPI) when CPI is a more accurate reflection of inflation. RPI is still used for many purposes, such as rail fare costs, and for index-linked savings certificates and gilts. Personally having just signed up to extend my investment in savings certificates even with minimal real interest on them, I would be most concerned about any change and I would not have done so if the index used changed to CPI which typically gives a much lower figure.

Brexit. Everyone else is giving their views on Brexit so why not me? Here’s some.

Firstly, in case you have not noticed, MPs have apparently been advised that it might take over a year to organise another referendum. So those who are calling for another one are surely misguided. Putting off the EU exit that long, with the uncertainty involved surely makes no sense. And most people are fed up with debating Brexit even if the questions in a new referendum could be decided. Parliament and the executive Government alone need to come up with a solution.

Should we rule out a “no-deal” Brexit? No because it would not be a nightmare as remainers are suggesting. As I was explaining to my wife recently, grapes and bananas might become cheaper because EU tariffs would be removed on food from the rest of the world. What about UK farmers who would face problems in exporting to the EU? Well that just means that beef would also become cheaper in the UK. Secondly to rule out a no-deal Brexit would totally undermine our negotiating position to obtain a good Withdrawal Agreement with the EU. Only the threat of a no-deal Brexit with the risks to exports from the EU to the UK (where of course the trade flow is in their favour at present) will focus the minds of EU politicians. So Jeremy Corbyn’s insistence on ruling out “no-deal” before he will discuss the matter just looks like an attempt to throw a spanner in the works in the hope of getting a general election.

Can Mrs May get enough support for the Withdrawal Agreement as it stands? Undoubtedly not. She has to go back to the EU with proposals for substantial changes to meet the concerns of MPs and the public, e.g. over the Irish “backstop”. If she acts quickly and decisively, I think that could achieve success. If she cannot do so then surely someone else who can provide the required leadership needs to take over – including someone willing to support a no-deal Brexit if required. The current Withdrawal Agreement is not all bad, but contains some significant defects, probably because it appears to have been written by EU bureaucrats rather than as the result of mutual negotiation. It needs revising.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Market Bouncing Up or Down – Sophos, Greggs, Apple and Fundsmith

 

After a dire market performance before Xmas, we seem to be back to the good times in the last 3 days. Is it time to get back into the market for those who moved into cash as the market fell down and down and down in the autumn? Rather early to generalise I suggest although I have been picking up some shares recently.

One which I purchased a small holding in was Softcat (SCT). Yesterday it issued a trading update simply saying that trading was strong and they are materially ahead of where they expected to be at this stage in the year. The share price promptly jumped by 20%. I no doubt should have bought more. But there was a wider rise, no doubt driven by a rise in US markets and effectively ignoring the political turmoil in the UK.

Another company issuing a trading update yesterday was Greggs (GRG). They reported total sales up by 7.2% in the year and like-for-like sales up by 4.2% in the second half. The share price rose over 6% yesterday and it rose again this morning. CEO Roger Whiteside has done a remarkable job of turning around this company from being a rather old-fashioned bakery chain to a fast “food-on-the-go” business. New products have been introduced and new locations opened. The latest product initiative which got a lot of media coverage was vegan sausage rolls, now combined with “vegan-friendly” soup in a meal deal for just £2.25! A good example of how new management with new ideas can turn a boring and financially under-performing one into a growth story. But this comment of Lex in the FT is worth noting: “The positives, like the mycoprotein, are baked in. At almost 20 times forward earnings, the stock rating is well above the long-term average. Investors should wait for this dish to cool before taking a bite”. I remain a holder.

There have been lots of media comment on the profit warning from Apple with questions about whether we have hit “peak i-Phone”. Sales in China are slowing it seems and folks everywhere are not upgrading as frequently as before. Apple phone users may be loyal but they are now tending to upgrade after 3 years rather than 2.

Having just recently upgraded from a Model 6 to an 8, I can see why. The new phone is slightly faster but battery life has not significantly changed. Phone prices have gone up and I could not justify the even higher priced models. Software functionality is of course identical anyway.

Apple is the sort of company I do not invest directly in for two reasons. Firstly it’s very dependent on one product – iPhones are more than 50% of sales revenue. Secondly, all electronic hardware is vulnerable to being leapfrogged by competitors with newer, better products. With growing price competition in smartphones, particularly from low-cost Chinese producers, the world is surely going to get tougher for Apple.

Hargreaves Lansdown have reduced their recommended fund list down from 85 funds to 61 and it’s now called the Wealth 50, but Fundsmith Equity Fund is still not included even though it was one of the best performing funds last year. But they have kept faith in the Woodford Equity Income Fund which is most peculiar given its recent performance. It seems they think the big bets that Neil Woodford has been making on companies and sectors will come good in the long term, as they have in the past. We will see in due course no doubt.

But their reluctance to recommend Fundsmith seems to be more about the discounts on charges that some fund managers give them, which they do pass onto customers of course. It’s worth pointing out that the lowest cost way to invest in the Fundsmith Equity Fund can be to do it directly with Fundsmith rather than via a stockbroker or platform. That’s in the “T” class with an on-going charge of 1.05% which achieved an accumulated total return of 2.2% last year, beating most global indices and my own portfolio performance.

Indeed one commentator on my fund performance reported in a previous blog post suggested that an alternative to individual stock picking was just to pick the best performing fund. Certainly if all of my portfolio had been in Fundsmith last year rather than just a part then I would have done better. But that ignores the fact that my prior year performance was comparable and having a mix of smaller UK companies helped to diversify while Fundsmith is subject to currency risk as it is mainly invested in large US stocks. Backing one horse, or one fund manager, is almost as bad as buying only one share. Fund managers can lose their touch, or have poor short-term performance, as we have seen with Neil Woodford. Incidentally the Fundsmith Annual Meeting for investors is on the 26th February if you wish to learn more. Terry Smith is always an interesting speaker.

Stockopedia have just published an interesting analysis of how their “Guru” screens performed last year. Very mixed results with an overall figure worse than my portfolio. For example “Quality Composite” was down 19.7% and Income Composite was down 13.9%, with only “Bargain” screens doing well. It seems to me that screens can be helpful but relying on them alone to pick a few winning stocks which you hold on for months is not a recipe for assured success. It ignores the need to do some short-term trading as news flow appears, or to manage cash and market exposure based on market trends. As ever it’s worth reiterating that there is no one simplistic solution to achieve good long-term investment performance without too much risk taking.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Taxation of Trusts, LTIPs and Technology Stocks

The Government has announced a review of the Taxation of Trusts. You can read the consultation document and respond thereafter here: https://www.gov.uk/government/consultations/the-of-taxation-of-trusts-a-review

It’s not about investment trusts, but all kinds of traditional trusts whose origin goes back hundreds of years and enables “settlors” to move assets into a trust and out of their personal wealth. There are a number of different reasons why trusts are created as the above document explains. The Government does not dispute that they have genuine uses but wishes to ensure that they are not used for tax avoidance. They also wish to try and simplify the taxation of trusts if possible.

One particular concern they have is about foreign resident trusts controlled by UK residents where they cannot necessarily see what is going on, i.e. they lack “transparency”.

I do have an interest as a settlor in a simple UK based family trust. These are not straightforward things to set up but as for many people it was created to try and move some assets out of the scope of inheritance tax. However, apart from the fact that you can retain some control of where the money goes as a trustee, you may almost as well just give your money to the beneficiaries directly. But you can include minors and unborn offspring as beneficiaries so there are some advantages in the trust form.

Taxation is paid on trust income and capital gains but in a somewhat different form to personal tax. I won’t even attempt to explain the differences here as it would take too long. You can be worse or better off than having it in a personal name, but it won’t be as tax free as ISAs or SIPPs. The major income tax benefits of trusts have long ago disappeared. But certainly one problem with trusts at present is that calculating tax and making tax returns is no simple task so trusts tend to be used by those who can afford professional assistance or have a trustee who can do the necessary work.

But the expense of preparing trust accounts and tax returns are deductible which does not apply to personal tax returns. They suggest this is unfair in that trusts are being favoured which I certainly would not agree with! Of course if the taxation of trusts was simplified so that any amateur could do the work, I might take a different view. But certainly dealing with trust accounts at present is not simple.

Indeed the whole area of trust creation and management is too complex but no doubt there are lots of professionals who make a good living out of advising on them so their consultation responses might be somewhat biased.

I have not yet gone through the document in detail and I’ll probably even need to take some advice on it before responding, but this consultation will be very important to some people.

Postscript: My submission to the HMRC Consultation is present here: https://www.roliscon.com/Taxation-of-Trusts-Roliscon-Response%20.pdf

LTIPs

The case of Persimmon and the value that departing CEO Jeff Fairburn obtained from their LTIP scheme continues to get a lot of media coverage. Best guess seems to be about £75 million, but there are similar every large sums of money to other executives and there could be millions also to each of more than 100 staff under the same scheme.

This comment in the FT’s LEX column this morning is very much apposite: “There are two lessons. First, UK boards should ditch LTIPs in favour of vanilla stock awards. LTIPs are too complicated, sometimes delivering fat payouts when investor returns are thin. Second, chief executives should avoid saying they have no responsibility for their own pay. No one believes them”.

Why did shareholders vote for the original LTIP at Persimmon? Probably because nobody anticipated what the scheme might pay out after the housing market became buoyant and the Government introduced the “Help-to-Buy” scheme. There was of course no cap imposed on the payout which should have been done. But LTIP schemes are so complex many shareholders can’t be bothered to read the details (as I found out talking to one investor at the recent Abcam AGM).

I very much agree that LTIPs would be best replaced by conventional share options.

I have never liked LTIPs for a number of reasons: 1) typically too complex with confusing targets rather than simple numeric ones; 2) they are too long term – incentive schemes need to pay out quickly if you want behaviour to be incentivised by them. Short term cash bonuses are simple to administer and have some merits but there was a demand a few years back to make remuneration relate to long-term performance as short-term schemes can create perverse incentives. Share options do at least align employee interests with that of shareholders.

One change that is also required to avoid executives determining their own pay is to take remuneration setting out of the control of directors and into the hands of shareholders, e.g. via a Shareholder Committee for which ShareSoc has been campaigning.

Technology Stocks Due a Revival?

Sophos (SOPH) shares tumbled yesterday. The cyber security group closed down 28% after a disappointing report about future revenues in a half-year statement. This was one of those UK stocks that reached very expensive valuations until about July since which it’s been heading south. Indeed that’s a common story among small cap technology stocks with many having fallen back sharply in the last few months. That’s despite the fact that many are still growing revenues and profits well above inflation, i.e. they are still growth stocks. Sophos did have a particular problem of comparability with previous year’s figures which were very buoyant after numerous cyber attack scares. The valuation of Sophos now appears more sensible and it would seem other folks also feel it is time to dip their toes back in the water because the share price rose. Or was that a “dead-cat” bounce today? But there do appear to be some buying opportunities appearing in this area, although nobody would say it’s not a high-risk field for investors. At least the valuations are not so daft as they were only a few weeks ago.

Note: I do hold both Persimmon and Sophos shares.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Productivity, Sage, Sophos and Investment Trust Discounts

There was an interesting article last week in Investors Chronicle where Bearbull attempted to analyse the variations between company productivity. Productivity, or the lack of it in the UK, is one of the big issues weighing on the minds of politicians of late. Is the productivity of UK companies getting better or worse was one of the questions he attempted to answer.

For investors, productivity is surely one thing we should look at when deciding in which companies to invest. Those businesses that get the most out of the capital they employ (measured by Return on Capital, or ROCE), and also get the most out of their employees, are surely the ones most likely to be successful and generate the profits and dividends we like as investors.

But one needs to combine the two because obviously employees can be traded off against capital. By investing in more automation, employees can be reduced. But there is also the problem that businesses vary in nature. So natural resource companies such as oil producers can have large revenues and profits generated by relatively few staff, while retailers generate equivalent profits from much larger staff numbers.

Bearbull had a stab at producing a combined productivity index for a range of large cap companies, but as the results were still very wide ranging ended up focusing on whether their productivity was increasing or decreasing. Results were still varied.

There is a way to make use of such figures and that is to compare companies in the same business sector. For example software companies employ a lot of staff, but generally little capital apart from their past investment in developed software or in acquisitions. One way I used to look at companies in the software industry when I worked in it was to look at the revenue and profits per employee and I still find those useful measures. They can tell you a lot about the nature of the business.

It’s informative for example to compare two of the larger UK software businesses – Sage (SGE) and Sophos (SOPH). Sage has recently been the subject of a downgrade by analysts at Deutsche Bank and the shares have been heading south for some time as competition from new entrants into the accounting software space seems to be increasing. But at least they are making profits. Sophos is in the hot IT security sector but is still reporting operating losses.

But it’s interesting to look at their sales per employee – that was £124,320 in the case of Sage (13,795 employees) and £116,975 in the case of Sophos (3,187 employees) from the latest Annual Reports that are available. In other words, very similar. Operating profits per employee were £25,154 at Sage while Sophos reported a loss of £8,000 per employee.

The big difference was in average employee costs which were £57,194 at Sage and £95,387 at Sophos. The latter is a very high figure which helps to explain why they are losing money.

Sophos looks to be an example of where the directors and employees are taking most of the profits leaving very little for shareholders – indeed a negative return to them.

Investment Trust Discounts

I mentioned in a previous article the high share price discount to Net Asset

Value at RIT Capital Partners which encouraged me to sell the shares. The discount was actually a premium of 6.8% which I reported although I am advised it had actually been even higher in the recent past.

It is common knowledge with anyone who invests in investment trusts that discounts have narrowed in the last year with popular trusts now often on premiums. The dangers of buying trusts that trade at a high premium was recently evidenced by the fall in the share price of the Independent Investment Trust (IIT). As reported by Citywire recently, the share price unwound by 10.9% in one week after the premium shrank from a peak of 20% in June. It’s now only 6.2% but that’s still too high in my view.

The company performed exceptionally well in 2017 (NAV up 53%) but even so this is surely a case of investors expecting “past performance to be indicative of future performance” when every health warning on stock market investments tells you the contrary. The long-term performance record is good but there is a limit to the price one should pay for anything.

You can track the company’s performance, and the discount it trades at on the Association of Investment Companies (AICs) web site. There are many other relatively high performing investment trusts that still trade at a discount.

Why should investment trusts trade at a discount? Because just looking at the income they produce, if the management and administration charges reduce their income by 1%, when their yield was otherwise 5%, then the share price should be at a discount of 20% because otherwise people can buy the individual holdings of the company directly and increase their income in that proportion. That ignores the relative proportion of dividends paid out of income versus capital growth. Of late we have had lots of capital growth but that is not always the case. If the market starts to go down then share price premiums on investment trusts could well collapse.

A particular problem with investment trusts, and the reason why discounts, or premiums, can sometimes become extreme, is the relatively low volume of share trading even in large trusts, i.e. there is low liquidity. Buyers are often long-term holders with few active traders speculating in the shares. This problem tends to worsen in the summer months when many investors are on holiday so one needs to be wary of trading such shares in that period.

I hold none of the companies mentioned above, for the avoidance of doubt.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Sophos, Interquest and the Government

Yesterday I missed the Sophos (SOPH) AGM due to having a clashing engagement, but I noticed that in the announcement of the voting results that there were substantial votes against the Remuneration Report (29.8% against) and also high votes against most of the directors. One only needs to glance at the Remuneration Policy to see why.

The maximum bonus opportunity is 200% of salary, and the maximum LTIP award is 500% of salary in normal circumstances and up to 750% in exceptional circumstances. So total incentive payments can reach nearly 10 times normal salary. That’s the kind of scheme I always vote against.

For what is actually a relatively small company that has never reported an annual profit, the actual pay figures are way too high – CEO got a base salary of $695,000 last year and total single figure remuneration of $2.32 million. Other directors, even the non-execs, have similar generous pay figures. It might be a rapidly growing company in a hot sector (IT security) but I am beginning to regret my purchase of a few shares.

Although I missed the AGM, I did “attend” the previous days Capital Markets Day. I was refused physical access but anyone could log into the web cast of the event. Not quite the same thing but it was exceedingly boring with a lot of the time spent on the wonders of their technology rather than important business questions. Is it not despicable though that companies and their PR advisors try to keep such events solely to institutional investors?

Interquest (ITQ) is an AIM listed company that received an offer for the company from some of the directors but they only got 58% committed support. That’s not enough to delist the company under the AIM Rules which requires 75% so the offer was abandoned. What did the directors do then? They notified their Nomad of termination of their contract and subsequently said they would be unlikely to appoint another Nomad within the one month period allowed. This means the shares will automatically be suspended from AIM and subsequently delisted if no Nomad is appointed.

The moral is that if directors or anyone else control 58% of the company then minority shareholders are in a very difficult position because they will have the ability to do lots of things that prejudice the minority shareholders – for example pay themselves enormous salaries. A legal action for prejudice of a minority is available but as my lawyer said yesterday, these are complex cases, as I well know from having run one myself in the past, and successfully (we were discussing my past legal cases). It’s difficult enough in a private company, and even more so in a public one. In summary, having an AIM Rule about delistings may not help if one cannot win a vote of shareholders on other matters that require just 50%.

Having control of a public company in the effective hands of a concert party of a few people is something to be very wary about, and something all AIM company investors should look at.

Government policy on tackling excessive pay levels for the directors of public companies has taken a step backwards this week. Tougher measures which Theresa May threatened have been watered down, and the core of the problem – the fact that Remuneration Committees consist only of directors, whose appointment and pay is controlled by other directors, has not been tackled. In addition, the potential to control pay by votes at General Meetings has been undermined by the disenfranchisement of private shareholders as a result of the prevalence of the nominee system and the dominance of institutional voters who have little interest in controlling pay.

Another bit of news from Government sources this week is that the hope of some change in shareholder rights that might have improved private shareholder voting is fading away after a decision to postpone yet again the issue of “dematerialisation”. The staff involved in that project have been moved and expertise will be lost. This is likely to be the result of both lack of interest in tackling a difficult and complex problem, and the need to put in effort on Brexit matters at the BEIS Department.

Will we ever get a proper shareholder system where everybody is on the share register and automatically gets full rights, including voting rights? It remains to be seen but I will certainly continue to fight for that. Without it we will never get some control over public companies and their directors. I suggest readers write to their Members of Parliament about this issue.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Halma AGM and Sophos Capital Markets Day

On Thursday (20/7/2017), I attended the Annual General Meeting of Halma Plc (HLMA). Not exactly a household name so you may not know what they do. In summary, they have a “diversified portfolio of businesses” that are focussed on safety, health and environmental products. Lots of niche businesses in growth sectors and they define their segments as Medical, Infrastructure Safety, Environmental & Analysis, and Process Safety. Revenue last year was £961 million, with post tax profits of £129 million.

What attracted me to this business was the steady, consistent growth over many years and good return on capital (they give as 15.3% Group Return on Total Invested Capital) with good cash flow and moderate gearing. This has been achieved under CEO Andrew Williams who has been in the role since 2005 which must make him one of the longest serving CEOs in a FTSE company. In addition, the Finance Director, Kevin Thompson, has been in the role since 1997 although he is planning to retire in 2018.

Mr Williams gave a short presentation (interesting to note that the Chairman said little and the Annual Report only contains a statement from the CEO, not the Chairman, as would be more normal.

He said that Halma has a simple growth strategy. Focus on growing markets, e.g. healthcare, while looking to acquire businesses with technology or application knowledge. Wrapped around this is a simple financial model – they aim to double earnings every five years, without becoming highly geared or seeking further equity, provided there are similar rates of organic, acquisitive and dividend growth (to quote from the Annual Report – which is a very comprehensive document if somewhat weighty). Yes they do make acquisitions but these seem to be mainly smaller ones that are complementary and easily integrated.

As Mr Williams said, this strategy has “consistently delivered”.

Questions from shareholders were then invited.

I asked whether they hedged against currency fluctuations because I noted that the increase in profits last year (up 16.9% on an “adjusted” basis) included 10.5% that arose from exchange rate movements (Note: pound falling as a result of the Brexit vote when the company is a very international business – clearly it may be that the pound will move in the opposite direction sometime). The answer given by the FD was that they don’t hedge profits in the group structure. I also asked about the possible impact of Brexit. The CEO said as only 10% of company trading was to/from Europe they did not consider it likely to be a significant problem. No plans to counter had apparently been made.

In summary, on a prospective p/e of 25.3 and yield of 1.3% this company does not look particularly cheap but that’s true of most quality businesses in the current bull market. As most of their revenue and profits are from outside the UK, you might look at it as a hedge against Brexit damage but the company is certainly vulnerable to swings in the pound/dollar/Euro exchange rates.

There is a fuller report of this AGM available to ShareSoc Members.

Sophos

One thing I noted when I read the Annual Report of Halma was that the Chairman was also a director at software security company Sophos. They are holding a “Capital Markets Day” on September 6th, the day before their AGM. As I hold the shares, I asked investor relations if I could attend. They suggested it was really only for “analysts” and “institutional investors”. Now this is prejudicial to private investors and I reckon I have enough knowledge of the sector, and a large enough investment portfolio to justify attendance. But they fobbed me of with an offer of being able to attend on-line. Will that happen? We will see. For those who are not familiar with Capital Markets Days, these are much more in-depth reviews of a company than most investors see.

But in the meantime, I complained to Paul Walker who will take it up. I may go to the AGM also to complain.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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