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Real-Time news about Grampian (London Stock Exchange): 0 recent articles
|cwa1: Think the cashback figure is set too low.
I will be going for underallocation if that(90p) is the best offer they can make.
Think it is worth significantly more and will consider topping up if there is any slippage in share price at all.
Thoughts of the board on the buyback figure?|
|cwa1: Hi all
Still all quiet on the Grampian front.Still at least the share price isn't crumbling,so far,because of the delay.
I notice that the bid has ticked up 1p today despite desultory volume for days now.Does that mean that someone is trying to get hold of some stock?
Anybody got Level 2 to let us know how the MM spreads look at the moment or if there are any trades lined up out there.
Please,pretty please :-)|
|jon skint smith: The following are comments from the iii board
"Company comments and brokers reports suggest share buy back of 45m. They say that could be approx, 50m shares at 90p.However key question is what will be resulting share price and ongoing dividend."
"Where have you got the news of a share buyback from, I have not seen anything in the press or any info from the company. I understood that the £45m was to be returned to shareholders at 38p per share."
"Chairman at e.g.m.and also at interim stated that they would discuss with shareholders best way to return cash. Cannot see anyone wanting cash dividend most I believe would prefer capital reduction hence capital repayment.In a brokers report at time of disposal of retail, Charterhouse Tilney suggested a buy back at around 90p.All this has been public for some time."
"E mailed them today to ask for details on buy back.
A circular to shareholders is in the process of being drawn up - I would not wish to comment until then.
John D Douglas Deputy Company Secretary"
It follows that a share buyback cannot proceed until the shares have gone ex-dividend! GRMP would in effect be paying themselves a divi on the stock they acquired!!
Last day to get in before this stock soars to 90p+ !!!|
|hotrod21: Help me out on this. They give us all a nice fat lump of money per share. The share price drops by the same amount since no one will pay as much for the share since the company doesnt have as much surplus cash. So what the hell is the point to this?
Even if the share is undervalued the share price will drop by exactly the amount they give us per share. I'm lost, I must have missed this lecture at school.|
|jrb: Hi, Wannabee, nice to hear from you again. I'm afraid that usually companies 'return cash to shareholders' simply because they have no better use for it themselves, or because the shareholders don't trust them to make good use of it. It also enables them to buy out unhappy shareholders and consolidate control in the hands of those large holders who do not sell, in this case probably the board and family.
There may well be plenty of willing sellers, including all those who opposed the EWM sale. Any attempt to unload large quantities of shares in the present market would obviously hit the share price for six. Many people would probably jump at the chance of getting out at something close to the present price.
A buyback at a price below the net tangible asset value per share does have the effect of increasing the net tangible asset value of the remaining shares. But if those assets are underused warehouses and trucks rapidly losing value anyway in a recession, some of them bought from family members at well above market prices, that may be small comfort to holders.
I don't want to depress you, and it may well be that I am wrong and Grampian is a Scotch swan in duck's clothing. But I wouldn't count on it and Grampian's history suggests otherwise.|
|jrb: Peter: no, I bought at 82p, about the current price. If that's meant as a jibe, I'm not sure how it helps your argument. I might just as well ask whether you are a member of the Malcolm family.
Assuming that you are not, I wonder whether you realised, before the announcement of the recent 'earnings enhancing acquisition', that your directors were running a private transport company whose sole customer (97% of sales) was Grampian, the public company of which you are such a large and supportive shareholder? Did you realise that they were already planning to sell the assets of this private company to Grampian for appraised value plus a substantial payoff for 'goodwill' (the goodwill of the sole customer, Grampian)? I certainly did not, but it was this announcement that made it clear to me what kind of a private club I had become a minority member of. Are you aware of any other arrangements the directors may have made that could raise questions of possible conflicts of interest?
It may well be, of course, that if the board entered into serious negotiations with a view to agreeing a bid, they could get a better price than 100p from Alchemy or from someone else. Unless they do negotiate, we shall never know.
Meanwhile, I think you are being a bit optimistic about the price for which they are actually planning to sell EWM. Let me draw your attention to the text of the announcement. EWM is being sold 'on a debt free and cash free basis' for £49m. The properties are being sold for £13m. That makes £62m gross. But what does 'debt free and cash free' actually mean? I suggest it means that EWM has debts which Grampian has to pay off before it can sell it for this price, or the properties may be mortgaged. An indication of the actual amount of cash to be generated by this sale is given further down in the announcement, where it is said that 'net debt of £31.8m will become net cash of ... £23.5m'. This suggests that the net cash value of the sale is not £62m, but £55.3m.
£55.3m is 58% of the current market capitalisation of Grampian. Last year EWM made 65% of Grampian's sales and 62% of its profits. Mid-market retailers are currently booming, while logistics companies are struggling. I simply cannot share your view that this is a great deal for shareholders. Nor does the market: the share price fell on the day of the announcement.
Let me also draw your attention to what is said about the return of cash to shareholders: 'the board will consider with its advisers the most appropriate manner of returning cash to Shareholders'. This may of course result in a special dividend of 38p per share. Equally, it may simply mean that the company will spend £45m buying back its own shares. In the latter case, a number of recent examples (notably Tomkins) suggest that the buyback will do nothing for the price of the remaining shares and will simply strengthen the control of those family members who do not sell.
8 ball: of course Alchemy think they can make money by managing the business better than the present board. Many people would agree that this might not be difficult. That is not an argument for sticking with the present board.
As for the Stevenson family, I don't know when they sold to Grampian, but I doubt whether they will have much tax to pay, if any. Grampian is a badly managed company and its shares have been falling for years: they were over 160p in 1997. Tax is certainly not an issue in my own case: it is always preferable to make a profit and pay tax on it than sit for years with an underperforming investment.
If anyone has an address for John Elliot, named in the Scotsman as leader of a shareholder protest group, it would be helpful if they would post it here. He will certainly have my support.
Dear me, why am I wasting my Sunday chewing the fat with you fellows? Time for a spell in the garden, I think.|
|retchtub: hi guys,
every thing about grampian is possotive,
i have a large quantity ,of shares in grmp i looked at the medium term
return,i first came in at 56p,and have added twice since,my average price is
65.5,post payout they will stand me in at 27.5p ,iam getting nearly 12%divi,twice what is being offerd ,high intertest ofshore,
when this all unravelsgrampians shares i believe will be 70p+ ,and i wont be a seller before that as regards the remaining company(malcolm),forget last years one off,look at the possotive ,tradeing is strong ,the recent aquisition of the malcolm family buissness is p.e. enhancing,divi will still be good,and the first half year finishes 31st july another divi in october.
i think the price will move up between now and the payout ,
markets are very tight at the moment ,but i believe sentiment will change ,later in the year
if any one can,show me a better home for my money please tell me if the share price does not move after the ex divi payment i will be a buyer of grampians shares,
on a final thought,whats the chance of a smallish logistics,transport company with rail facilitys,being gobbled up ,by bigger company when this is all sorted
quite good i would have thought.
just my own thoughts for you to reflect on .
Think you're right about it being undervalued.
However. If GRMP is worth, say, 81p including EWM (which is worth 38p), and it then sells EWM for the equivalent of 38p, there is no change in the value of the company (ignoring other issues for now). In theory, if it then returns 38p to shareholders, the price should fall by 38p. Of course, if the market thought EWM was worth more than 38p, the share price would be likely to fall, whereas if it thought 38p was a good deal, the share price might rise. And all this has been around, as d80gs says, for some time, so has been in the price to some extent.
The "other issues" might include that the disposal helps the company focus, the state of the market, costs, prospects for the new business etc. The share price has been rising partly due to anticipation of this news, because "value" has come back into fashion, because of the yield, and on speculation of a bid.
Hope this helps.|
|cwa1: Hi all
Nice to see the EWM deal firmed up.
I had thought that news that appears to be as good as this would have fired the share price up a little.
The chunky div. plus the cashback will be all very well and good but as noted above the share price will fall back accordingly.
The rump transport business seems to be priced in at around a PE of 10 or so to me which seems cheap,esp. when you consider the book value of the co. that is left as well.
I am swithering over more but having looked at today's trade it seems to me that they have been predominantly buys yet the price has dropped.I wonder why?Is there a large seller in the wings,market makers having a shake or something else?Any thoughts welcome.
Anybody got Level 2 to give us an idea of where market makers stand on bid/offer or what's lurking in the undergrowth?
Ta in advance for any comments.
|peter shone: I hold a lot of these, over 70,000 in fact. My average price is 76p a share. been chatting about them over on Moneyworld
Boring bits first
Shareprice : 77 bid - 80p offer. Up 50% from rock bottom of 55.5 earlier this year.
Market cap : £85.9m
Turnover : £244m(up 3.8% against £235m last year)
Net cashflow : £32.5m (level from last year)
EPS : 9.08 pence against 5.78 pence in 2000 and 3.3 in 1999. (IIMR headline earnings per share fell from 10.95 pence in 1999/00 to 9.08
pence this year, disguising the underlying figures. Previous headline figures due largely to profits on a disposal programme - VERY IMPORTANT for later)
pe ratio : 8 ish
Dividend : Final 5.7p (xd 4th July) making 8p total for a 10% yield against current offer price.
Reserves : £87.7m including £109m fixed assets.
Pre-tax profit history : (year ending Feb) 1999 £7.7m, 2000 £10.7m, 2001 £14.7m.
Subsidiaries: The Edinburgh Woollen Mill Ltd; The Heather Mills Company Ltd; Gibson & Lumgair (Scotland) Ltd; W H Malcolm Ltd; Wm Wilson & Sons (Johnstone) Ltd; Malcolm Plant Ltd; Mackinnon of Scotland Ltd; Wilfred Holden (Blackburn) Ltd
Latest broker forecast : Seymour Pierce Ltd
14-May-01 2002 pretax £19.0m eps 10.9 div 8.00 2003 pretax 21.0 eps 12.3 div 8.00
Major shareholders : Issued shares 116.17m 25p Ords - Phillips & Drew Ltd 4.67%, Prudential Corp PLC 3.60%, D D Stevenson CBE 5.21%, A B Malcolm 2.61%, C Birrell 2.52%, Other Dirs 0.34%. (Lots of small holders in other words, noone with a controlling stake - ALSO IMPORTANT)
Final results were released on 24th April 2001, headlined:
* Year to 2 February 2001
- PBIT up 30.7% to £17.9m
- Headline earnings per share 9.08 pence (1999/00 : 10.95
- Dividend per share maintained at 8.00 pence.
* Current trading
- The Malcolm Group: Activity levels strong and margins have
improved against early trading last year
- EWM Group: Sales up 16.4% and like for like sales up 15.4%
against last year. Like for like gross margin up 17.4%. Easter
trading has been encouraging. Looking ahead, too early to
assess full impact of foot and mouth.
* Disposal of EWM Group
- Negotiations on the disposal are now well advanced. A further
announcement will be made shortly.
So why then?
Apart from the very high yield, the near trebling of underlying eps in three years, and the positive trading report released as part of the results? Ok, so the fuindamentals are solid, but there are plenty of solid companies around.
The real interest comes from the two sources below.
1. The disposal of EWM for approx £50m, or 60% of the market value of the whole group. Where will the money go? Shareholders? That's 49p a share or so.
2. A possible bid at 95p ish from Alchemy, AFX article below:
19-2-01 LONDON (AFX) - Shares in Grampian Holdings PLC, the Scotland-based retail
and transport group, were sharply higher in midday trading with sentiment
boosted by weekend reports which said private equity firm Alchemy Partners has
made a takeover approach for the group.
At 12.33 pm Grampian was marked up 8 pence, or 12 pct, at 74-1/2.
The Scotsman newspaper reported that Alchemy has tabled an indicative offer
worth about 90 pence per share or a total of 110 mln stg. It said Alchemy
delivered a letter to Grampian's financial advisers last Friday.
The newspaper noted that Alchemy's offer could force Grampian to either
abandon or postpone its planned disposal of its Edinburgh Woollen Mills retail
arm. It said Grampian is just weeks away from closing the EWM sale for 50 mln
stg as part of a restructuring that would allow the company to focus more its WH
Malcolm transport business.
So in summary, the reasons (lots of them) to be interested:
1. 10% dividend yield, 7.3% payable if you're on the register on 4th July.
2. 270% underlying eps growth in three years.
3. Positive trading report in April
4. Imminent announcement regarding a very significant disposal, with a possible shareholder payout(speculating here a bit.)
5. Possible bid situation.
6. Extensive capex programme completed, with rail freight terminals and new (huge) warehouse facility now in full (profitable) operation.
7. Involvement in highly profitable PFI construction projects.
8. Recovery from poor year for Malcolm group. Fuel is still high, but new contracts will now incorporate the higher fuel rates.
Once the EWM disposal is complete, the Malcolm group will be left. Its year was summed up in the results as:
The Malcolm Group
The year was notable for the opening of our new operation at Crick, our entry
into rail transport, and the growth in contracting activities, all of which
are expected to bring benefits in the immediate future. However, largely as a
result of the cost of fuel, in financial terms, the year was disappointing.
Turnover showed an increase of 20.8% from £71.6m in the previous year to £
86.5m. Operating profits, however, declined from £9.4m in 1999/00 to £7.2m
for the year to 2 February 2001.
For the Logistic Services division, the opening in August of the new facility
at Crick, in Northamptonshire, was significant both in terms of additional
warehousing capacity and in the introduction of rail distribution. In
February 2001, we opened a new rail operation at Grangemouth. Rail business
is now conducted on a regular basis between these two well placed locations.
These new facilities enable us to meet growing customer demand for a
comprehensive road to rail service.
Our warehousing capacity throughout the UK now exceeds 3.5 million square feet
and we are well placed to fulfil customers' needs.
Over the last two years we have been developing European links, with haulage,
into France and the Benelux countries in particular. With our increased
capacity at Crick and the setting up of a rail network, the potential for more
business in Europe has increased significantly.
The Construction Services division showed a significant growth in turnover,
particularly in the contracts business. A combination of our 'one stop shop'
approach and the formation of partnerships with our customers will stand us in
good stead as market conditions and margins improve. The division completed
several major contracts with partners in PFI, house building and major school
projects. Operating margins in this business were impacted during the year by
costs associated with developing the contract side. A key to success in the
coming year will be to deliver higher margin business in this sector.
Oh, one last thing. The last time they made a decent sized disposal they made it to 121p a share. In 1998 they were over 140p a share. Alchemy's offer seriously undervalued the company, and has almost certailnly pushed along the EWM disposal as a means to raise shareholder value.
All only opinions.
and a reply from:
Subject: Re: Grampian Holdings
Author: Brian Pendlebury (Brian Pendlebury) [i]
Date Posted: 30 May 01, 15:51
A useful and interesting post Peter.
I would comment/query on the following:-
1) The Company has not acknowledged the approach from Alchemy reported by AFX(quoting a newspaper article)back in Feb.
2) Divi yield is very good. Are you concerned by dividend cover? Dividend to EPS is very high (generous).
3) EWM accounted for £11.7m out of £17.9m of Group profit. The other half of Grampian, Malcolm Group saw t/o up 20% and profits down +20%. Logistics is a tough business in the UK. Future earnings, following sale of EWM, are down to Malcolm and what the Board do with the EWM sale proceeds.
4) A perfunctory comparison with larger Scottish Logistics company C.Salveson(SVC) would suggest Grampian today undervalued on P/E basis by as much as 50%.
All in all I would think its a good punt for short/medium gains on the back of divi return, ewm disposal options and bid interest.
Subject: Re: Grampian Holdings
Author: Peter Shone (Peter Shone) [i]
Date Posted: 30 May 01, 21:52
I have to admit I thought long and hard about the impact of the F&M thing, and concluded that as EWM was in the late stages of disposal that any impact would most likely be on the disposal price. No doubt the company will have argued (successfully one hopes) that the F&M thing is a once in thirty years event, and should not be considered in the underlying value of the company. But perhaps not. It is undoubtedly a small but not insignificant risk.
1. - Perhaps it's just as important that the company didn't deny it either? Surely if there was no basis in an AFX reported article the company would have had to comment?
2. - Yes I am concerned about dividend cover. However I think that the EWM disposal will have had some influence on the decision to maintain the dividend. There has been no indication of the likely destination of the £50m from the EWM sale though, it is by no means certain that shareholders will figure in the equation.
3. - The company blamed fuel prices for the fall in margin at WH malcolm, I don't have a problme believeing that. Fuel prices appear to have stabilised, at leats for the short term, enabling profits to be reconstructed. Also the rising price of fuel will have the (desired?) effect of driving (sic.) more freight onto the rails, perhaps the main reason for WH M's shift into this business. Lots of emphasis on this in the results, they obviously see it as the way to go. DIRFT is just across the M1 from Crick, (Daventry International Rail Freight Terminal). Who will benefit most then? WH M seem to be at least up with the game if not ahead of it. See www.dirft.com for some useful background info. Eddie Stobart and Tibbett & Britten are there, WH M with no large block holders may be a tempting morsel? TBG are on a historic pe of 19, ok so they're much larger, but... Their chart is also quite informative, if you do a three year comparison to GRMP, the two charts are parallel lines up to Jan 2000. Then GRMP dived with the retailers.
Surely an EWM disposal would lead to something of a rerating as they change market sectors to transport from general retail? Perhaps this also is driving the EWM disposal?
4. I agree, they are 50% underpriced compared to SVC (pe 12.5). Comparison to Tibbett & Britten TBG (pe 19.6) is even more favourable. Excel also on a similar rating (pe 19.2). TRansport sector as a whole rated at around a pe of 18. For GRMP to be on that rating the share price would be ~ 200? I'm not saying that will happen, there's a lot of water and bridge interaction to go on between now and then. But it's hardly a depressing thought is it?|
Grampian share price data is direct from the London Stock Exchange