Shearwater Share Discussion Threads

[spot1034] 16/6/2010 13:42

I doubt very much any hike in CGT would happen mid-year, and taxes are very rarely applied retrospectively. I think the inevitable rise will come in next April, which will give people the chance to sell before then and pay any CGT due at the present rate, which might well bring in more revenue as assets which might previously have been retained are disposed of to crystalize the gain.

[philjeans] 16/6/2010 08:49

My view is simply that any successful t/o would have to be north of 123p!

Amazed it's still this low.

[dickbush] 16/6/2010 08:47

Given everyone is looking for a hike in capital gains tax to 40% or more in the budget next week, I'd have thought SWG's directors would want a deal agreed asap. Any views?

[spot1034] 16/6/2010 08:45

Bored punters slipping away - a great example of Warren Buffet's comment that the stock market is a device for transferring money from the impatient to the patient!

Of-course it could all come to nothing, but with more than one potential bidder that must surely be less likely - also of-course we don't know who else might been watching without making any approach and might now come forward following last week's announcement.

In addition, there has been talk of consolidation within the sector for many months now. It's got to be worth holding on.

[wormcatcher] 16/6/2010 08:26

Still holding here phil, just wish I'd bought more a few weeks ago at 80p.

[philjeans] 16/6/2010 08:19

And it's all gone very quiet.

Bored punters selling.

Price slipping away.

Time to buy then!

[indomie] 12/6/2010 16:44

there are said to be two bidders!

[philo124] 12/6/2010 15:09

155p Bid only my guess

[spot1034] 11/6/2010 10:23

At least the volume of trades has picked up this morning. It did seem very strange how little business was being done a couple of days ago, given the situation the company is now in.

[wormcatcher] 11/6/2010 09:37

Pushing on nicely now.

[indomie] 10/6/2010 20:52

Probably has more to do with this -

[spot1034] 10/6/2010 16:28

Moving up a bit in the last hour or so - does this mean there's some news coming?

[indomie] 09/6/2010 11:41

The Times.....SWG mentioned at the bottom.....

Hyder Consulting

This month's emergency Budget should hold little fear for Hyder Consulting. Unlike most of its London-listed peers, this small-cap consulting engineer has only a modest exposure to its home turf - only 30 per cent of sales and 20 per cent of profits are booked in Britain and only 9 per cent of sales are from the UK public sector. That suggests that any cutback in the new Government's capital expenditure on Hyder's areas of expertise (transport, property and environmental services) should have relatively little effect.

It also explains the resilience of yesterday's full-year figures, which showed a 7 per cent rise in adjusted operating profits and a 33 per cent increase in the full-year dividend for the 12 months to March 31. Hyder also did better than expected in generating cash, such that last year's £5.7 million of net debt has become a £3.6 million balance sheet surplus.

The company's operations in Australia did especially well, helped by the company's short-lived dip into recession and a government programme to refurbish 500 schools. Its pipeline of prospective work in Australia also looks strong, with Hyder well placed to pick up contracts for designing new road and water projects. In the Middle East, its second-biggest region, Hyder continues to shift its focus away from indebted Dubai to stronger Gulf states, such as Bahrain and Qatar.

Hyder's shares are not as lowly rated as those of its rival Scott Wilson, which on Monday said that it had received multiple bid approaches. However, at 278p, less than eight times current-year earnings, Hyder looks too cheap, given the scope for further strong growth overseas. Hold on.

[indomie] 08/6/2010 15:54

wonder what edmund jackson makes of all this at iii....

* Panmure Gordon upgrades Hyder Consulting to buy from hold, raising target to 313p from 291p, and a buy and 127p target for Scott Wilson

* Numis has a buy and 379p target for Hyder Consulting.

[dickbush] 08/6/2010 15:20

I'm not sure I agree with you re institutional behaviour. If someone bids 150p, 10% above the high for the last 12 months, against a background of a market down 10% from its high, they are going to grab it and run. I used to be an institutional fund manager and I went blue in the face arguing with management at shareholder meetings re acquisitions. Logic counts for nothing when management has made up its mind. Saving face is all. I count as a badge of honour being called into my boss's office to answer the charge that I had been rude to the Board of Imperial Tobacco when they bid a ludicrous price for a US motel business, Howard Johnson. I wasn't, but they didn't like hearing the facts. They got it through though. Turned out to be a total disaster and subsequently sold for a pittance. Where the Pru went wrong was NOT getting all the institutions in a room and selling their story.

[indomie] 08/6/2010 13:54

I am finding this all rather odd, most expect a take out price between £1.45-£2.00+ a share - yet no nudge higher today.....

alot is going to hinge on the orginal entry levels of the big institutional holders.

[abcd1234] 08/6/2010 13:28

That's from the Financial Times market discussion on alphaville a little earlier today...

[dickbush] 08/6/2010 13:18

Great find, abcd. Many thanks.

[abcd1234] 08/6/2010 13:02

Bullish broker updates on the bids:



~~~~~~~~~~~~~~~~~~~~~~
Altium view:

We flagged SWG as one of our two preferred plays among the consultants back in October last year. Today's disclosure of two or more approaches reflects the significant relative discount on which the stock has been sitting – too great in our view to be accounted for by the UK and public sector weighting, particularly given SWG's exposure to attractive sectors such as renewables. After SWG, the more obvious remaining valuation plays include the consulting groups with the lowest levels of UK exposure, notably WSP (mkt cap: £217m, SP: 340p, Buy), which boasts two thirds of its earnings or more overseas, and which is well diversified internationally, with European and global earnings in equal measure. Hyder Consulting (HYC, mkt cap: £104m, SP: 276p, Buy), with 80% of its earnings overseas, and which reported a strong set of results this morning, is also a potential candidate.
Implications for estimates / valuation / recommendation: We retain our Buy recommendation on SWG, with a raised target price of 145p, reflecting the increased valuation potential following yesterday's announcement

~~~~~~~~~~~~~~~~~~~~~~~~
Panmure view:

Likely suitors behind the bid: No details were given on who was behind the approach,but we suspect US companies AECOM or URS may find the company interesting given its growing international exposure and firm UK base/sterling exposure. We believe Arcadis and Grontmij may also find the business interesting given the valuation discount and Scott Wilson's presence in the industry, and were suspected suitors behind the White Young Green approach nearly two years ago. UK players may also not be discounted given the value in the shares; however, such companies may still be in a position where they want to preserve capital at this stage of the cycle given uncertainties in the UK
public sector.
~~~~~~~~~~~~~~~~~~~~~~

[philjeans] 08/6/2010 12:52

Let's hope we aren't saying "Bloody directors" as well in a day or two; I hold here - ISA,CFDS and Spreads - but also Trafficmaster where the directors have just sold us down the river for a pittance, to a US private equity outfit.

Instead of an 80p plus bid, we're offered 47p!

Directors keep their jobs, perks and options and we can all envisage coming back to the market in three years time at £3 plus!

Here's hoping this isn't a low ball and that we get a higher counter bid over at TFC.

[dickbush] 08/6/2010 12:45

I'm not completely on top of the ins and outs of actuarial "rules" but I think I read that Hyder has frozen pension benefits through 2012. That must be worth something. I don't think that can be IMPOSED on the pension fund's trustees so I guess they must have agreed to it. I can envisage an all out strike at any unionised firm that tried to do it but, if similar changes are not adopted, more than a few UK companies are going to go to the wall, which doesn't help their employees' job prospects. I know we all have to expect a cut in our standard of living over the foreseeable future to get the budget deficit under control, but this is b.s.

Bloody bankers!

Bloody actuaries!

Any of them want to leave the country rather than pay 40% capital gains tax? As Vince Cable said "good riddance". Go and bankrupt somewhere else. I'd just add to that...and surrender your British passport as you leave. We don't want you back.

[indomie] 08/6/2010 11:46

My take is that that the valuations of defined benefit schemes under 'IAS 19' are always volatile and this hasnt been a major barrier to most takeovers in the past.

It would be interesting to know whether HYC's actuaries have applied the same discounts to their pension deficit as SWG - which were both very similar (circa £25m until last SWG re-valuation)

About 1/3 of the stock is still held by employees (this was a former worker owned firm) and the directors have done very well from the conversion to plc status (where have we seen that before!) So I guess this has always limited trading volumes.

It's amazing really that this stock is still priced BELOW the level it was floated at in 2006 - esp considering the progress the firm has made in that time - but as I've said before I dont think the mgmt team have done the transition from employee owned to plc status very well.

Does anyone know anyone who works at SWG and what the view is on the inside?

[dickbush] 08/6/2010 10:57

Hi, Indomie. Yes. Just a best guess, no more, hoping the increase in the fund's assets has offset the decline in the discount rate for liabilities. Honestly, I think that may be optimistic, and it will almost certainly have deteriorated since the end of April.

Like most senior managements, they have probably been used to spending a couple of hours each half year looking at the pension fund-until this past year. Now the deficit has become so large relative to EBITDA and, almost certainly, having zero expertise in fund management, they may have stopped saying "No" to takeover proposals. I don't think I'm going to get the chance to see SWG still quoted by the time its pension fund deficit is taken care of by higher equity prices and higher corporate bond yields.

My best guess is that they've raised the white flag. If so, let's hope they play a mean game of poker.

Bloody actuaries!

[dickbush] 08/6/2010 10:12

Good results from Hyder. I make the EV/EBITDA about 7 times historic, including the pensions' deficits. Hyder has 70% of revenue and 80% of operating profit coming from abroad, a much better mix given the outlook in the UK. Also, the pensions' deficits plus net cash is only 1.5 times EBITDA. For SWG the ratio is probably going to be about 3 times. Note that Hyder's two pensions' deficits have, in aggregate, barely changed over the past year. A nice trick, and one we could have done with.

FWIW. On 7 times my optimistic estimate of £28 mil EBITDA and the previous assumptions about the pension deficit and net debt, that would give a takeover price of £1.45. Every 1 point increase in the multiple of EBITDA is worth almost 40p.