Ensor Share Discussion Threads

[dorset64] 24/8/2015 11:32

I believe there will be an announcement here in the next day or two regarding the sale of parts of the business. Just a hunch.

[jeanesy2] 20/7/2015 09:47

Why the drop today? I see we are now moving back up !

[shanklin] 20/7/2015 08:51

Its currently possible to get an online quote to sell 15k at 102p (the mid-price). I got an online quote for buying 1k at just under 104p, but no online quote for 1.25k.

[stegrego] 20/7/2015 08:18

Why is this off 10 percent?
EDIT clearly some kind of MM trick as it won't let me buy even 1000 yet I can sell 5000.

[davidosh] 26/6/2015 16:25

Ensor were discussed on the radio .....Ensor, HML Holdings, Quindell, Telecom Plus & the next @ShareSocUK Masterclass all discussed on @ShareRadioUK show …

[cockerhoop] 26/6/2015 15:22

That'll be the 2nd wave of IC readers (the paper copy only brigade).The 3rd wave may appear on Monday morning (the read it at their leisure over the weekend brigade). :-)

[bally101] 26/6/2015 15:08

Nice 10p increase today so far ! :)

[shanklin] 26/6/2015 13:39

Blimey, I added a few ESR at 77p on 27-May when the Strategic review was announced. In less than a month, the bid is up almost 50% from there :-)

I suspect there's more to come.

[shanklin] 23/6/2015 14:23

Interesting read. I would like to think ST's £1.25 is on the conservative side.

[davidosh] 23/6/2015 10:41

As this is the article which seems to have stirred things up yesterday I am copying it over to our dedicated shareholders here but will not be posting it on a general forum as the writer deserves copy protection. I suggest others do not further copy it onward but whilst we are in a bid situation I do think all shareholders bound by the takeover rules deserve to know what causes spikes upward or downwards in price.

For the record I have no plans to sell any of my shares until a firm offer is made but will reserve the right to add to my holding if the price falls materially under £1 again as I totally agree with Simon Thompson or more appropriately as I have been a holder for eight years I should probably say Simon appears to have read my notes and agrees with me !

Text from IC Online...

For good measure, I have found another sitting duck which is likely to reward shareholders with a tasty bid premium, Ensor (ESR:97p), a Manchester-based products and services company focused on the manufacturing and supply of physical security products and packaging. Ensor has a market capitalisation of £29m, having listed its shares on the London Stock Exchange in 1989, and was founded in 1880. But its days as a listed entity now look numbered after the board in effect put the company up for sale at the end of May.

It's an opportune time for shareholders to sell because Ensor has just reported a surge in revenues and profits in its latest financial year to end March 2015. In fact, operating profit soared by 84 per cent to £3.4m on revenues up 18 per cent to £36.1m to drive up EPS by more than 110 per cent to 9.2p. On this basis, the shares are rated on 10 times historic earnings, hardly a punchy valuation for a company in play.

Moreover, the board of Ensor have been clearing the decks for a clean sale of the company, having sold off property in Normanton in September, and freehold land and buildings in Woodville, Derbyshire and Stockport post the financial year-end. Those latest two disposals, one of which was made to a residential property developer, generated cash proceeds of £3.13m, a hefty £843,000 premium to book value. As a result I reckon that the company now has pro-forma net funds of almost £1.6m, so is in a very strong financial position to extract the best possible price for its businesses. BDO LLP have been appointed advisors to conduct the sale process.

Moreover, there is scope for further chunky cash receipts from property disposals as Ensor has a residential planning application for its site at Brackley, Northamptonshire in the planning stage with South Northampton Council. The company has applied for permission to demolish the buildings on the site and build seven dwellings with landscaping and parking. The land is in a great location close to the Great River Ouse at the former Hawkins Salmon site, Mill Lane, Brackley.

It's prime property as a six bedroom house with a floor space of around 3,000 sq ft on the same street has recently gone on the market for £575,000. Ensor intends to market the land to residential property developers as soon as it gets planning consent. Bearing this in mind, the land is in Ensor's accounts at only £550,000, but clearly is worth significantly more with residential planning consent. Indeed, a figure well north of £1m would be well in order and I don't see the company having any problems offloading the site.

It's worth pointing out too that Ensor's board are in talks with the management of its building products business to sell that unit to them. This operation distributes specialist roofing and drainage products, supplying the merchant trade and contractors, and has seen growth in its market as the construction industry improves. Operating profit more than doubled last year, so it's a rather good time to sell to maximise returns for shareholders.

Bearing this mind, the Harrison family have four members on the board, led by 85-year old chairman Kenneth Harrison, and 60-year old chief executive Roger Harrison, and control 54 per cent of Ensor's issued share capital. They have a combined age of 283 years, so it's not difficult to understand why they have decided to cash in their chips at this stage in their lives. Importantly, with such substantial shareholders, they have a vested interest in achieving the best prices possible for the assets of the company they control.



Sound business prospects

The other major positive for me is that irrespective of whether the board can sell the company as a stand-alone entity, it's still worth significantly more than its current market value.

That's because Ensor's building & security products division not only enjoyed a strong year operationally, posting turnover almost 20 per cent higher at £32.6m and a near doubling of operating profit to £2.78m in the 12 months to end March 2015, but prospects are robust for the year ahead across the board.

Firstly, Technocover, the company's subsidiary which manufactures physical high security products for the utilities sector started the new fiscal year with a good forward order book. Although Ofwat's AMP5 asset management programme has concluded, a carry-over of orders has resulted in an unusually strong order backlog to support results into the current year as the new AMP6 programme gets underway.

Secondly, Ellard, a supplier of electric motors, automation and accessories for doors and gates, has significantly improved its position within this niche sector and boosted share of an expanding market too. Investment into a graduate recruitment programme, new products and planned expansion of the premises, have been initiated "in anticipation of continuing buoyant markets", according to chairman Kenneth Harrison.

Thirdly, Ensor's subsidiary OSA has had a similarly progressive year. This unit supplies ready-to-install industrial sectional overhead doors, residential garage doors, steel hinged doors and repair materials to the same market as Ellard. Prospects look good, underpinned by continued growth in market share and a key supply agreement securing exclusive rights to supply certain products within the UK.

Finally, the company's packaging subsidiary, Wood's Packaging, is enjoying buoyant demand from the retail sector and is also benefiting from competitive sourcing of products though Ensor's offices in China. The unit continues to complement Ensor's security orientated businesses. In the last financial year, both revenues and operating profit from this business increased by around a fifth to £3.3m and £530,000, respectively.



Robust cash position

Although there is no analyst coverage on the company, and Ensor's management are bound by Takeover rules from issuing guidance, I think it's only realistic to expect further revenue and profit growth this year. Indeed, irrespective of progress on the trading front, the company will make a saving on interest costs given that it's now in a robust cash position and one that is large enough to wipe out a £2.1m pension deficit too.

Ensor's working capital position is worth quantifying too. That's because after a strong end to the financial year, trade receivables ended the 12-month period up almost £2.9m to £8.4m; there was a heavy investment in stocks to service higher sales levels which skewed the working capital flows; as did accelerated payment for foreign supplies to secure better prices. As a result current assets rose by £6m to £16.2m in the 12 month period to end March 2015, or twice the £3m increase in current liabilities which ended the financial year at £9.4m.

Most of these working capital changes will unwind in the first half to end September 2015 with the net result that the cash inflow should exceed operating profit in the six-month period. To put this into perspective, in the first half of fiscal 2015, Ensor generated operating profit of £1.5m on revenues of £17m, and a positive operating cashflow of £1.7m. In other words, I would not be surprised at all to see Ensor ending the first half with net funds close to £4m, and that's after factoring in the cash payment of £390,000 for the final dividend of 1.3p a share, up 30 per cent year-on-year to take the total payout to 1.9p a share.

Add to that a potential windfall of £1m from the Brackley site, and Ensor could potentially have £5m of cash on its balance sheet within the next six months. That's a chunky sum for a company with a market capitalisation of £29m. The net funds position could even be higher if a disposal of Ensor's building products division to its management takes place.



Fair valuation

The bottom line is that, based on 29.9m shares in issue, excluding 922,000 shares held in Treasury, I can easily see a value of at least 125p a share for Ensor's equity, valuing the company at £37.5m. This is based on the company having a net cash position of £5m, including proceeds from a sale of the Brackley site using a £1m valuation, or £140,000 per plot, and valuing all its businesses on a multiple of eight times their cash profits of £3.93m. Note that Ensor has a £530,000 non-cash depreciation charge which explains the difference between its reported operating profit of £3.36m and cash profits.

Needless to say, with Ensor's Aim-traded shares trading on a bid-offer spread of 93p to 97p, offering almost 30 per cent share price upside to my target price, I rate them a decent buy with very limited downside risk in the unlikely event that a sale of the company fails to materialise. In that scenario, and given that the company is now in a strong cash position, I would not be surprised at all for the board to sanction a special dividend to return excess capital to shareholders. Buy.

[shanklin] 22/6/2015 12:36

Not particularly insightful as they just put themselves up for sale.

[ramridge] 22/6/2015 12:23

Simon Thompson thinks it is a sitting duck for a bid. Won't disagree!

[cockerhoop] 22/6/2015 12:21

Simon Thompson has just tipped ESR in the IC, he values the company at 125p to include £5m of cash from recent and future asset sales and the unwinding of the working capital position in H1.

[rp19] 22/6/2015 12:14

Flurry of activity.

[shanklin] 16/6/2015 10:47

Bit surprised at today's selling. Would have thought it was worth staying put for a fair bit more whilst this plays out.

[battlebus2] 11/6/2015 17:54

Sorry David, I'll change that to small cap shrewdie. :))

Some of these days my name will be in one of these RNS's....

[cockerhoop] 11/6/2015 17:51

Yes, very high grade. In fact bumped into 1 of those declaring at the IDM Agm this morning :-)

[davidosh] 11/6/2015 15:40

Excellent results and well done to all the staff in all the divisions as we appear to be firing on all four cylinders and with turbo charge at some.

Not so sure that i want to be known as an old shrewdie lol especially as i can still get across the tennis court as quick as most half my age lol

Anyway there are plenty more shrewdies declaring their interests and some very high grade names they are too !

[shanklin] 10/6/2015 08:41

Given the next scheduled update is the H1 results in early December, perhaps the next news will be the sale of the Building Products Group in a management buyout.

[battlebus2] 10/6/2015 08:03

Well a great reaction from the market to the results..

[shanklin] 10/6/2015 07:52

Lets hope so...

[battlebus2] 10/6/2015 07:34

It's a term of endearment is it not..

[shanklin] 10/6/2015 07:29

LOL bb2, not sure David will like the "old" part of your description :-)

[battlebus2] 10/6/2015 07:17

An excellent set of results this morning, buyers should be knocking on their door...