I like the great new look for the magazine but I am surprised you have not featured Expansys (XPS:AIM). It is 41% owned by Peter Jones, massively undervalued and well worth a review, I would have thought. I would appreciate your thoughts.

Daniel Corby, via email

James Crux replies:

Thanks for your kind comments on the magazine. Rest assured online consumer electronics retailer Expansys is on our radar and we are always keen to champion small-cap companies. Yet the web-based smartphones seller’s micro-cap valuation, penny share status and the dominant 41.5% stake held by canny ‘dragon’ Peter Jones mean liquidity could probably be better and the picture would have to brighten considerably for retail investors to make a return.

We will certainly seek out a meeting with management to check out your belief the business is undervalued. The share price chart suggests the market is unconvinced and the £6.4 million cap’s latest trading figures hardly demonstrate high earnings quality.

Full-year results (30 Jul) revealed adjusted pre-tax profits of £1.5 million, down from £4.3 million, after 14% sales slide to £93.2 million. That is a wafer thin pre-tax margin of 1.6%, even ignoring the reported losses of £18.8 million, which include a chunky write-down of its 2010 Data Select Network Solutions acquisition as well as restructuring and abortive acquisition costs. Still, that could have been a ‘kitchen sink’ exercise so we will investigate further.