In our trawl through hundreds of RNS statements each month we see many director share purchases. Frequently, in today’s conditions, directors have been able to pick up shares at a discount to the prevailing market price. However, today’s snippet concerns a director buying shares at a considerable premium to the market price.

Shares in Relax Group opened on 20 February trading at 70 pence (Bid: 68p Offer: 72p). On that day the Group’s non-executive chairman, Bernard Asher, made his inaugural purchase of Relax shares. He bought 50,000 shares at a price of £1.00 per share. We calculate this to be at a premium of 43% to the mid-market price of the shares prior to the purchase – quite a price to pay. The shares spiked up to over 80p after the purchase but have subsequently retraced somewhat.

Relax, formerly Debts.co.uk, ‘provides a range of services for over-indebted individuals’. These include: IVAs (Individual Voluntary Arrangements), Trust Deeds, Debt Management Programmes, Bankruptcy, Secured and Unsecured Loans and Mortgages. Like many companies in this field the Group has had issues following the fall off in IVA business. The falling share price up until late in 2008 reflects these problems.

Relax made two strategic acquisitions in 2008 and has restructured its operations. Certainly the Group’s most recent results and AGM statement seemed very bullish about future prospects and the group is benefitting greatly from current economic conditions. The results in particular make interesting reading. The Group’s broker, Seymour Pierce updated their forecasts for Relax when the Final Results were issued in November. These indicated profits for the year to July 2009 at £4.0 million with earnings per share at 13.1 pence.

Mr Asher’s share purchase certainly shows his enthusiasm for the Group’s prospects.

Aimzine never recommends that investors buy or sell any share or derivative. The AIM Snippets feature highlights just one piece of information which may be a consideration in evaluating that company.

Retec Digital

Last month in ‘Aim Snippets’ we featured Retec Digital which delisted from AIM on 20 February. Retec’s shares traded at 0.35 pence on their last days on AIM – approximately 90% below the share price one year ago and one quarter of the price immediately before the delisting announcement. It remains to be seen whether Retec will be able to achieve the trade sale of its business in the 2 to 3 years that directors anticipated in their recent statement.

To see the Retec article and read more about Aim Snippets please click here

The author of this article holds shares in Relax Group.

He bought

50,000 shares

.......at a premium of 43% to the

mid-market price

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Written by Michael Crockett

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