Elektron are to have a number of City Institutional Presentations, Sept/Oct 2009
http://www.cityinsights.co.uk/default.aspx
Tuesday, 18 August 2009
Wednesday, 12 August 2009
Highlights of 2009 Broker note. (millions)
Sales 2009a £35.64 2010e £28.45 2011e £36.30 2012e 41.50
PTP 09a 1.71 10e 0.01 11e 3.00 12e 5.22
eps pence 09a 2.27 10e 0.01 11e 3.50 12e 4.58
Div pence 09a 0.45p 10e 46p 11e 50p 12e 60p.
Margins 09a 34% 10e 38% 11e 40% 12e 42%
Cash on deposit. 09a £834,000 10e £347,000 11e £2,858,000 12e £5,903,000
Net (debt) cash 09a (3.263) 10e (4,250) 11e (1,739) 12e 1.306.
The company will be ungeared in 2012. The dividend cover will be over 7 times in 2012. I think the company could be paying a far higher dividend and will be pressing the company to do so nearer the time. Bear in mind the company will be ungeared in the same time scale if they meet brokers forecasts.
The brokers regard the strategy off offshoring and investment in IP offers significant returns in the long term. The brokers have forecast that the ECD division will be making pre tax profits of £1 million in fy10 and the other divisions a small loss. However the brokers have indicated that as a conseqence of most of the exceptionals already been taken to the profit and loss account any uplift in sales should enhance current year performance. Having said that the most profitable part of the group being ECD, and the economies starting now to see growth, the brokers forecasts could get beaten on a full years trading. Surprising news today both France and Germany seem to have come out of recession and resumed growth.
Sales 2009a £35.64 2010e £28.45 2011e £36.30 2012e 41.50
PTP 09a 1.71 10e 0.01 11e 3.00 12e 5.22
eps pence 09a 2.27 10e 0.01 11e 3.50 12e 4.58
Div pence 09a 0.45p 10e 46p 11e 50p 12e 60p.
Margins 09a 34% 10e 38% 11e 40% 12e 42%
Cash on deposit. 09a £834,000 10e £347,000 11e £2,858,000 12e £5,903,000
Net (debt) cash 09a (3.263) 10e (4,250) 11e (1,739) 12e 1.306.
The company will be ungeared in 2012. The dividend cover will be over 7 times in 2012. I think the company could be paying a far higher dividend and will be pressing the company to do so nearer the time. Bear in mind the company will be ungeared in the same time scale if they meet brokers forecasts.
The brokers regard the strategy off offshoring and investment in IP offers significant returns in the long term. The brokers have forecast that the ECD division will be making pre tax profits of £1 million in fy10 and the other divisions a small loss. However the brokers have indicated that as a conseqence of most of the exceptionals already been taken to the profit and loss account any uplift in sales should enhance current year performance. Having said that the most profitable part of the group being ECD, and the economies starting now to see growth, the brokers forecasts could get beaten on a full years trading. Surprising news today both France and Germany seem to have come out of recession and resumed growth.
Broker forecasts July 2009
The link to the broker forecasts is here...
http://www.mediafire.com/?ixymltywvjj
This thread will be updated later showing the highlights and my own comments on the outlook.
http://www.mediafire.com/?ixymltywvjj
This thread will be updated later showing the highlights and my own comments on the outlook.
Tuesday, 11 August 2009
Elektron's 2009 AGM.
A brief summary of EKT's AGM is as follows.
At the start of the meeting the company indicated they could answer no questions on their recent acquistion news. This is not unusual they are governed by FSA rules.
Various shareholders placed a number of questions to the board of directors.
Firstly one shareholder questioned the auditors fee of about £170,000 as being on the high side. The FD Chris Leigh indicated one of the reasons for this was some of Elektron's operating companies were abroad. There were other minor figures questioned in the accounts.
Another question was concern that the Howle subsidiary was not performing when EKT had previously stated the subsidiary would benefit through new products to the oil and gas sector. The new director of Howle answered the question and indicated the oil and gas sector had reduced their orders however he seemed confident things would improve once the oil and gas sector picked up. He also commented on Howle's new website the subsidiary to be renamed Total Carbide. This is their new Total Carbide website... http://www.totalcarbide.com/
I put a number of questions to the board. First I asked the directors about their new product development and whether they could give me an example of some of their new products. Unfortunately due to confidentiality agreements with their customers it was not possible to provide details albeit the company indicated there would be new product announcements before the year end.
My next question was whether they company were happy with their top team they had in place and whether or not there would be further appointments. The company has taken on a number of key staff on lately with excellent credentials. Keith Daley indicated the company were happy with the team they had in place however they still had in mind more appointments in due course. Details of new director appointments are here.. http://www.totalcarbide.com/media/HowleTitmanDirectorAppointmentsJuly2009.pdf
The company had indicated previously they hoped to achieve a turnover of circa £100 million per year and I asked whether or not they were still on track in the medium term. It was confirmed they were.
My last question was with regard to the brokers dividend forecast for the next few years. I stated to the company they had paid on average a dividend cover of about 4 to 5 times the last few years. I thought over 7 times cover for 2012 was too high. One shareholder interupted my question indicating he would rather see the company reinvest rather than paying higher dividends. Keith Daley indicated the board had every intention of enhancing shareholder value apart from any dividends.
The meeting ended.
At the start of the meeting the company indicated they could answer no questions on their recent acquistion news. This is not unusual they are governed by FSA rules.
Various shareholders placed a number of questions to the board of directors.
Firstly one shareholder questioned the auditors fee of about £170,000 as being on the high side. The FD Chris Leigh indicated one of the reasons for this was some of Elektron's operating companies were abroad. There were other minor figures questioned in the accounts.
Another question was concern that the Howle subsidiary was not performing when EKT had previously stated the subsidiary would benefit through new products to the oil and gas sector. The new director of Howle answered the question and indicated the oil and gas sector had reduced their orders however he seemed confident things would improve once the oil and gas sector picked up. He also commented on Howle's new website the subsidiary to be renamed Total Carbide. This is their new Total Carbide website... http://www.totalcarbide.com/
I put a number of questions to the board. First I asked the directors about their new product development and whether they could give me an example of some of their new products. Unfortunately due to confidentiality agreements with their customers it was not possible to provide details albeit the company indicated there would be new product announcements before the year end.
My next question was whether they company were happy with their top team they had in place and whether or not there would be further appointments. The company has taken on a number of key staff on lately with excellent credentials. Keith Daley indicated the company were happy with the team they had in place however they still had in mind more appointments in due course. Details of new director appointments are here.. http://www.totalcarbide.com/media/HowleTitmanDirectorAppointmentsJuly2009.pdf
The company had indicated previously they hoped to achieve a turnover of circa £100 million per year and I asked whether or not they were still on track in the medium term. It was confirmed they were.
My last question was with regard to the brokers dividend forecast for the next few years. I stated to the company they had paid on average a dividend cover of about 4 to 5 times the last few years. I thought over 7 times cover for 2012 was too high. One shareholder interupted my question indicating he would rather see the company reinvest rather than paying higher dividends. Keith Daley indicated the board had every intention of enhancing shareholder value apart from any dividends.
The meeting ended.
Saturday, 27 June 2009
Elektron results year end Jan 2009
Elektron results came out June.
http://www.elektronplc.com/news/news-11-06-09.html
"Key Points:
Sales £35.6 million (2008: £34.9 million)
Operating profit before exceptional items slightly ahead of guidance at £1.1 million (2008: £2.1 million)
Exceptional charges previously announced of £3.2 million (2008: £1.0 million); cost base substantially reduced
Proposed final dividend up 2.2% to 0.46p per share; scrip issue alternative
Cash of £0.8m (2008: £2.0 million) "
A growth in the dividend shows confidence in the company.
For the last few years the company has been concentrating on cost cutting although that will continue the company is moving forward with more capital spend on Inovation...
"The major focus in the current year will be on Innovation. Elektron has started to implement an Innovation Project, drawing on talent already available within the Group, with a view to achieving substantial growth and greatly enhancing shareholder value. The Group is budgeting £1.4 million in technical spend in the current financial year and we are determined that as much of this as possible will be used to develop new products for growing markets rather than simply maintaining the existing product range."
http://www.elektronplc.com/news/news-11-06-09.html
"Key Points:
Sales £35.6 million (2008: £34.9 million)
Operating profit before exceptional items slightly ahead of guidance at £1.1 million (2008: £2.1 million)
Exceptional charges previously announced of £3.2 million (2008: £1.0 million); cost base substantially reduced
Proposed final dividend up 2.2% to 0.46p per share; scrip issue alternative
Cash of £0.8m (2008: £2.0 million) "
A growth in the dividend shows confidence in the company.
For the last few years the company has been concentrating on cost cutting although that will continue the company is moving forward with more capital spend on Inovation...
"The major focus in the current year will be on Innovation. Elektron has started to implement an Innovation Project, drawing on talent already available within the Group, with a view to achieving substantial growth and greatly enhancing shareholder value. The Group is budgeting £1.4 million in technical spend in the current financial year and we are determined that as much of this as possible will be used to develop new products for growing markets rather than simply maintaining the existing product range."
Tuesday, 17 February 2009
Stakebuilding in Elektron.
Most of the big holders and directors been stakebuilding in Elektron PLC the last 12 months...
Latest update:-
8th July 2008 Keith Roy director buys 5,000
9th July Keith Daley buys 200,000
23rd July Keith Roy buys 100,000
4th Aug KD buys 100,000
6th Oct KD buys 150,000
13th KR buys 25,000
15th Oct Andrew Perloff buys 525,000
20th Oct KR & KD buys 500,000
24th Oct John Kinder buys 100,000
24th Nov Keith Daley buys 100,000
17th Feb 2009 Keith Daley buys 2,000,000
Total 3,850,000
Latest update:-
8th July 2008 Keith Roy director buys 5,000
9th July Keith Daley buys 200,000
23rd July Keith Roy buys 100,000
4th Aug KD buys 100,000
6th Oct KD buys 150,000
13th KR buys 25,000
15th Oct Andrew Perloff buys 525,000
20th Oct KR & KD buys 500,000
24th Oct John Kinder buys 100,000
24th Nov Keith Daley buys 100,000
17th Feb 2009 Keith Daley buys 2,000,000
Total 3,850,000
Sunday, 31 August 2008
Elektron stake in Hartest Holdings.
Elektron has recently taken a 23% stake in Hartest PLC.
Both Amshare and EKT's brokers Finncap have mentioned EKTs stake HTH therefore it would seem appropriate to form some kind of analysis of various options open to both companies. After looking at Hartest in depth lately it seems to me there are 2 options.
The first option being whether there is any future for HTH as a stand alone business. The second option what effects any acquisition would have on Elektron.
Option 1 Hartest prospects as a stand alone business....
Hartest PLC has had poor growth on turnover the last 5 years and erratic profits .
In 2004 turnover was £20.08 million and the year just gone year end 2008 turnover was £21.72 million. That's less than 10% increase in turnover in the 5 year period or put it this way an average of 2% a year. Though the company was in profit year end 2004, it lost money 2005 and 2006, 2007 the company made 0.38 million pre tax and year end 2008 the company made 0.88 pre tax. Forecast profits for 2009 are £1.01m.
However since the financial year end the company had a trading update on the date of the AGM on the 12th August 2008. This is what the company said....
"Sales by Group companies in the current financial year are in line with expectations but
margins are coming under pressure in some areas. The Group is not immune from the
general economic climate and the potential deferral of capital expenditure projects by
some customers.
Operating overheads remain under close control, but a number of additional expenses
are being incurred in respect of Group development and the necessary relocation of two
of our companies later in the year."
In order to evaluate Hartest prospects as a stand alone business I have analysed its various operations. as best I could with the amount of information available. What a right rag bag of operations it has too.
Based in Stansted, Essex, Agar Scientific is a leading international supplier of consumables, accessories and specialist equipment for all disciplines of microscopy.
Carnation Designs produces integrated electrical solutions and power management systems for specialist vehicles at its factory at Heckmondwike, Yorkshire.
Hartest Precision Instruments operates from two facilities in the Greater London area; Kingston and Croydon. The company manufactures, sells and distributes a range of specialist instruments and supplies for use in testing, measurement, performance improvement and research around the world. The company has the following separate branded activities - ASL, Sheen, Tinsley, and Wallace.
Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
On the medical side...Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
Financial analysis
The year just ended the largest turnover division was the instrumentation manufacturing/distribution operations which had a turnover of approx £14.082 and made a pre tax profit of £1,141m However within this division they have Carnation designs , (click onto link for accounts ) which had a turnover of approx £1.5m and pre tax profit of approx 84k, Carnation had a deficit of £526,000 on its balance sheet at year end.
The medical distribution side had a turnover of £7.6 million and made 340k pre tax. As a rough analysis this division had approx £1.7 million of net assets.
Future as a stand alone business.
Quite honestly I don't think HTH has a future as a stand alone business. As I said previously HTH has a rag bag of businesses some of which are experiencing difficulties. The company needs to make its mind up whether its a manufacturer or distributor. The healthcare side is making little money and needs to be sold off. As for Carnation its done very little the last few years and I dont rate its future. Carnation would fit in better with a telematics related company. The problem being it has a deficit on its balance sheet and in these markets I am not certain who would buy it I suppose a MBO could be considered but uncertain where they would get finance!
The directors appear to have held on too long to a bad mix of operations in the hope of "jam tomorrow" that some posters have indicated on bulletin boards. I agree! If HTH attempt to dispose of various operations themselves they would end up with a small turnover business with relatively high overheads. Moreover the future for manufacturers is off shoring and HTH do not have offshoring facilities. To look into this now is too late in my opinion. But more concerning for the company is that they lost an important vote as to share issues at the last AGM. That will restrict the company developing the business from here on and obtaining more finance.
In conclusion as a stand alone business HTH future does not look good.
Option 2 to be acquired by a larger company.
The second option is to be acquired by a larger company and as we know EKT has taken a 23% in the company at a cost of £1.3 million according to Finncap.
To be acquired by EKT would make good sense for both companies. EKT has established offshore factories which would improve margins. In particular the instrumentation divisions would fit in well with Sifam, ideal for cross selling and less duplication on products. If EKT was to acquire HTH I would have thought they would sell off or give away Carnation for a nominal sum. With a bit of luck the distribution side could be sold off and reduce EKTs purchase for the entire group.
However EKT are not known for paying a premium price for any company. In the majority of occasions previously they have purchased businesses at a discount to net asset value.
At the moment based on a mid price of approx 51p the market cap of HTH is valued at just over £4 million. That compares to EKT's market cap of just over £10 million on a share price of 11.5p. Looking at the future profitability and growth prospects in both businesses HTH is set to have little prospects in growth going forward and a small growth in profits albeit they have now indicated difficulty going forward. The most that can be expected out of HTH the next few years is just over £1 million pre tax profits in my opinion. EKT brokers have forecast over £3.47 million pre tax for EKT 2010/11 compared to pre tax of approx £2 million last reported. Thats growth of approx 50%. Furthermoe Finncap forecast approx 20% growth in EKT turnover in the same time scale. Bear in mind growth in turnover and profits excludes any acquistions.
Compared to EKT the market cap of HTH looks expensive on growth prospects turnover/profits. Looking at prospects for HTH one would have thought EKT was reluctant to offer any premium if at all for HTH, more so now due to the world economics at the moment.
Private businesses are being sold for about 5 times earnings these days, if EKT was able to acquire HTH on a similar valuation once Carnation and the healthcare side are disposed of and the remaining operations consolidated within Sifam, with cost cuts and further offshoring I would expect earnings enhancing in the short to medium term for EKT.
Conclusion.
In conclusion if any HTH investors are thinking about the future HTH is going nowhere the next few years as a stand alone business in my opinion. They may well think its a good time to accept an offer should one come to the table. Moreover should they invest in EKT the company looks to have very bright prospects going forward.
Both Amshare and EKT's brokers Finncap have mentioned EKTs stake HTH therefore it would seem appropriate to form some kind of analysis of various options open to both companies. After looking at Hartest in depth lately it seems to me there are 2 options.
The first option being whether there is any future for HTH as a stand alone business. The second option what effects any acquisition would have on Elektron.
Option 1 Hartest prospects as a stand alone business....
Hartest PLC has had poor growth on turnover the last 5 years and erratic profits .
In 2004 turnover was £20.08 million and the year just gone year end 2008 turnover was £21.72 million. That's less than 10% increase in turnover in the 5 year period or put it this way an average of 2% a year. Though the company was in profit year end 2004, it lost money 2005 and 2006, 2007 the company made 0.38 million pre tax and year end 2008 the company made 0.88 pre tax. Forecast profits for 2009 are £1.01m.
However since the financial year end the company had a trading update on the date of the AGM on the 12th August 2008. This is what the company said....
"Sales by Group companies in the current financial year are in line with expectations but
margins are coming under pressure in some areas. The Group is not immune from the
general economic climate and the potential deferral of capital expenditure projects by
some customers.
Operating overheads remain under close control, but a number of additional expenses
are being incurred in respect of Group development and the necessary relocation of two
of our companies later in the year."
In order to evaluate Hartest prospects as a stand alone business I have analysed its various operations. as best I could with the amount of information available. What a right rag bag of operations it has too.
Based in Stansted, Essex, Agar Scientific is a leading international supplier of consumables, accessories and specialist equipment for all disciplines of microscopy.
Carnation Designs produces integrated electrical solutions and power management systems for specialist vehicles at its factory at Heckmondwike, Yorkshire.
Hartest Precision Instruments operates from two facilities in the Greater London area; Kingston and Croydon. The company manufactures, sells and distributes a range of specialist instruments and supplies for use in testing, measurement, performance improvement and research around the world. The company has the following separate branded activities - ASL, Sheen, Tinsley, and Wallace.
Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
On the medical side...Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
Cross Technologies operates from facilities in Sandhurst, Berkshire and is engaged in the distribution of specialist healthcare and medical equipment in both the public and private sectors throughout the UK and Ireland. The company trades under two separate brand names, namely CrossTech and QADOS.
Financial analysis
The year just ended the largest turnover division was the instrumentation manufacturing/distribution operations which had a turnover of approx £14.082 and made a pre tax profit of £1,141m However within this division they have Carnation designs , (click onto link for accounts ) which had a turnover of approx £1.5m and pre tax profit of approx 84k, Carnation had a deficit of £526,000 on its balance sheet at year end.
The medical distribution side had a turnover of £7.6 million and made 340k pre tax. As a rough analysis this division had approx £1.7 million of net assets.
Future as a stand alone business.
Quite honestly I don't think HTH has a future as a stand alone business. As I said previously HTH has a rag bag of businesses some of which are experiencing difficulties. The company needs to make its mind up whether its a manufacturer or distributor. The healthcare side is making little money and needs to be sold off. As for Carnation its done very little the last few years and I dont rate its future. Carnation would fit in better with a telematics related company. The problem being it has a deficit on its balance sheet and in these markets I am not certain who would buy it I suppose a MBO could be considered but uncertain where they would get finance!
The directors appear to have held on too long to a bad mix of operations in the hope of "jam tomorrow" that some posters have indicated on bulletin boards. I agree! If HTH attempt to dispose of various operations themselves they would end up with a small turnover business with relatively high overheads. Moreover the future for manufacturers is off shoring and HTH do not have offshoring facilities. To look into this now is too late in my opinion. But more concerning for the company is that they lost an important vote as to share issues at the last AGM. That will restrict the company developing the business from here on and obtaining more finance.
In conclusion as a stand alone business HTH future does not look good.
Option 2 to be acquired by a larger company.
The second option is to be acquired by a larger company and as we know EKT has taken a 23% in the company at a cost of £1.3 million according to Finncap.
To be acquired by EKT would make good sense for both companies. EKT has established offshore factories which would improve margins. In particular the instrumentation divisions would fit in well with Sifam, ideal for cross selling and less duplication on products. If EKT was to acquire HTH I would have thought they would sell off or give away Carnation for a nominal sum. With a bit of luck the distribution side could be sold off and reduce EKTs purchase for the entire group.
However EKT are not known for paying a premium price for any company. In the majority of occasions previously they have purchased businesses at a discount to net asset value.
At the moment based on a mid price of approx 51p the market cap of HTH is valued at just over £4 million. That compares to EKT's market cap of just over £10 million on a share price of 11.5p. Looking at the future profitability and growth prospects in both businesses HTH is set to have little prospects in growth going forward and a small growth in profits albeit they have now indicated difficulty going forward. The most that can be expected out of HTH the next few years is just over £1 million pre tax profits in my opinion. EKT brokers have forecast over £3.47 million pre tax for EKT 2010/11 compared to pre tax of approx £2 million last reported. Thats growth of approx 50%. Furthermoe Finncap forecast approx 20% growth in EKT turnover in the same time scale. Bear in mind growth in turnover and profits excludes any acquistions.
Compared to EKT the market cap of HTH looks expensive on growth prospects turnover/profits. Looking at prospects for HTH one would have thought EKT was reluctant to offer any premium if at all for HTH, more so now due to the world economics at the moment.
Private businesses are being sold for about 5 times earnings these days, if EKT was able to acquire HTH on a similar valuation once Carnation and the healthcare side are disposed of and the remaining operations consolidated within Sifam, with cost cuts and further offshoring I would expect earnings enhancing in the short to medium term for EKT.
Conclusion.
In conclusion if any HTH investors are thinking about the future HTH is going nowhere the next few years as a stand alone business in my opinion. They may well think its a good time to accept an offer should one come to the table. Moreover should they invest in EKT the company looks to have very bright prospects going forward.
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