Autoclenz Share Discussion Threads

[deswalker] 27/9/2012 12:48

smicker,

I agree the two statements are not compatible and I remain confused. However, Mr Leek said what he did at the AGM and he strikes me as an extremely genuine guy and far too wise and long-in-the-tooth for any corporate silly business.

It also needs to be remembered that unlike most delisting situations the Board own 10% in total (virtually all held be Mr Leek) and the other holders, especially the largest holder which is a Swiss investment fund, are much less likely to support a delisting.

At the next AGM I shall be pushing for a sale of the entire business to a larger support services company or private equity fund for at least double the current price. They have never tried to structure such a sale and I see no reason why they would fail to attract a number of bidders. Even double the current price would be a very good EBITDA / EV ratio for the acquirer especially with all the extra overheads stripped out.

I urge all shareholders to try and make it to Derbyshire next May. I've been twice now and I seem to recall that they've never seen anybody else since the IPO. I think they would genuinely appreciate some external shareholder input.

Des

[smicker] 27/9/2012 12:27

Des,
You reported the following

"They have no intention of delisting and Mr Leek said he was totally against such shennanigans. Nobody on the Board or external shareholders is interested in adopting such a route and Mr Leek said he wouldn't stay as Chairman should anything like that start to be seriously considered. To quote him "it's not fair to shareholders".


In the results they state

"We also referred in our Annual Report to the deliberations regarding the advantages and disadvantages of being an AIM listed company and we continue to keep this under review"

These 2 statements are not compatible. I have learned through bitter experience that what appears in formal statements issued by a company are infinitely more reliable than assurances given privately to shareholders. I couldnt invest here.

[stemis] 27/9/2012 09:05

Well, EBIT was marginally ahead of £600k (£618k) but net debt increased slightly to £500k (but includes £300k or so settlement of provided claims and the usual H1 build up of working capital). My expectation, assuming no fall in profit is that year end net cash should be ~£200k. That would give us an enterprise value of £3.0m which is about 1.7 x ebitda.

I don't really want an increase in dividend because of my tax position. I'd rather they bought back shares (assuming there is any to buy!) or acquired cheap bolt on.

[deswalker] 27/9/2012 07:48

Happy with those results which are marginally better than in my model. They keep converting Intangibles into Tangibles at a rapid rate. The dividend ought to be doubled IMO.

[stemis] 09/9/2012 19:08

Shouldn't we be getting the half year results soon? Last year they were end of August although before that they seemed to be more towards end of Sept.

In the absence of any brokers forecasts the only thing we have to go on is the AGM statement in May that "Trading during the first 4 months of 2012 has been broadly in line with our internal budgets.".

Of course we don't know what their internal budget were; hopefully not a loss of £10 million!!

It would be nice to see underlying EBIT ahead of £600k and net cash (although I think H1 is poor for cash and there is the settlement of claims).

[deswalker] 17/5/2012 12:37

David,

Mr Leek strikes me as extremely genuine as do all the Board.

The question of unlocking value remains. I asked about delisting, dividends, buybacks and trade sales. There is no stomach for the first. The last looks unlikely but I don't think they've tried since trying to sell the business for £18m prior to the IPO and having no joy. I made the point that the price might have been the reason and that now we would be looking at something much lower. Hopefully they will revisit this option. But I think the most likely scenario is to keep things as they are and hopefully spend the profits on buybacks and dividends. I'm hoping that some of the holders around the 3-5% mark might be stale and would be happy to be bought out by the company at current levels.

Des

[stemis] 17/5/2012 12:33

Hi David. The comments about delisting originate from a comment in the final results:-

Being listed on the AIM market with its detailed reporting requirements does of course give our private company competitors a lot of useful knowledge about our performance and strategies, and also entails a degree of extra overhead and management resource.  We continue to monitor this particularly in the light of the relatively low market valuation accorded to a number of profitable smaller AIM companies like us.

[davidosh] 17/5/2012 12:14

Stemis....I suspect Des will have raised the question about delisting.If they are looking to buy back stock I guess the larger investor who thinks it is 'about right' value at present might be the first place to look !

Contrast the attitude of Mr Leek with Mr Lee Foods !

[glasshalfull] 16/5/2012 21:03

Thanks Des. Appreciate the update.

Regards,
GHF

[stemis] 16/5/2012 20:46

To be honest I'd rather they bought back shares than paid a dividend, although where they'd get the shares I don't know. The point about de-listing is reassuring but why did they raise the issue then?

This is more a recovery/value stock than growth; if they just keep churning out the cash then eventually shareholders will see value.

[deswalker] 16/5/2012 15:31

Formalities took 7 mins, my questions took 30 mins and we were done in 37 mins. No other shareholders there. The Board and other management had a meeting to attend at 12.10pm so it all just about fitted in.

Not much to report really ...

- Business is going well and they intend to stick to their knitting.

- They are very comfortable that the Measham case cannot and will not be repeated elsewhere but they are not complacent and are continually making sure that all employment law is adhered to. They have had strong reassurance from HMRC that they wouldn't be interested in revisiting them for a long time. The courst case has been a real pain but has also had benefits in showing that they can't be pushed around by anybody.

- They have no intention of delisting and Mr Leek said he was totally against such shennanigans. Nobody on the Board or external shareholders is interested in adopting such a route and Mr Leek said he wouldn't stay as Chairman should anything like that start to be seriously considered. To quote him "it's not fair to shareholders".

- I said the way to improve the share price was to a) have confidence that this is a substantial business, b) share buybacks and c) a much larger divi. I told Mr Leek that the latter was the surest way of getting the market's attention and he said it would be considered now that Measham case and the debt are nearly history.

- The Board is well aware that this floated on an EV of £18m and currently sits at approx £3m and they are clearly at a loss as to why that is so. However one of their largest shareholders thinks that a PE of about three is "about right" to which I countered that he was talking rubbish and Mr Leek agreed.

- I told him that this share is on a few more radars this year than last and that a few smart PI's were now appreciating the value.

So in sum, I'm hoping to see a steadily improving performance combined with buybacks and increased dividends. A delisting is not on the agenda.

Des

[deswalker] 16/5/2012 07:52

Setting off at 9.45. Golf course beckons on my return so feedback will be tomorrow. Statement reads well. Des

[stemis] 16/5/2012 07:46

Reassuring AGM statement. Looking forward to Des's feedback.

[deswalker] 26/4/2012 19:14

Confirmation that Mrs Josephine Knott has retained the late Mr Simon Knott's shares.

[deswalker] 26/4/2012 10:46

I saw that too and it came as quite a surprise. They were adding last year I think and now that things are back on track they sell a large chunk. Not their entire stake though perhaps indicating it is just one fund. It will be interesting to see who bought.

I also noticed that the late Simon Knott's shares were switched for a small fee a few days ago. This was a bit of a surprise as his holding in RII went straight to his widow without any switch. So I'm wondering if there's been a change their too, perhaps moving the position into RII so that Simon Knott Jr can manage the situation ?

I was hoping to buy some cheaply before the xd date but there are very few available on the Offer and the actual Bid is above mid. Now that the date has passed I'll stick with my holding for now.

I shall be at the AGM on 16 May. Anyone else going to be there ?

[stemis] 26/4/2012 10:10

That's quite a big sale of shares announced today by Octopus. 467,720 is 4.6% of the company. I wonder where they went. Anyone know the background to Octopus's involved with ACZ?

[mudbath] 20/4/2012 10:45

Thanks for your response DesWalker.I could not agree more with your final sentiment.I was in no way pushing PUR over ACZ,merely highlighting the James Leek connection.

James Leek has had a long term interest in Pure Wafer.
Until going into Members Voluntary Liquidation in September 2008,Leek was a director of Chameleon Trust which then had a 3%+ stake in PUR.This holding was transferred to S&W Revera Dynamic Fund, from whom Leek in all probability subsequently obtained his shares on the occasion of Revera's disposal..

[stemis] 20/4/2012 10:43

Mudbath,

According to final accounts



As at 31 December 2011

Cash 1,454
Interest bearing loans & borrowings -6,366
Long term borrowings -10,145
-------
Net debt -15,057

[deswalker] 20/4/2012 10:36

Like SteMiS I was also intrigued and ran a few numbers but rapidly came to the same conclusion. Not only is ACZ cheaper on an EBITDA / EV basis but I much prefer ACZ's large amortization charge over PUR's large depreciation charge. Admittedly their capex is small enough but I wonder how it can remain so low against such a large depreciation.

I also don't like dollar accounting, am not sure about the sector which I gather is very volatile and subject to overcapacity and see that it has just turned profitable. I'm sure you would say that these issues show it is in a sweet-spot sector exhibiting strong growth which is fair enough. My take is that it could well be cyclical, volatile and subject to very limited visibility.

Anyway, it's what makes the stock market so interesting. You (much) prefer PUR and I much prefer ACZ.

Des

[mudbath] 20/4/2012 09:50

SteMiS.Thanks for your response.I make net borrowing @ PUR sub £10 million,and reducing rapidly.James Leek notification below.

TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARES


1. Identity of the issuer or the underlying issuer
of existing shares to which voting rights are
attached: ii
PURE WAFER PLC
2 Reason for the notification (please tick the appropriate box or boxes):
An acquisition or disposal of voting rights
X
An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached

An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments

An event changing the breakdown of voting rights

Other (please specify):


3. Full name of person(s) subject to the
notification obligation: iii
James Leek
4. Full name of shareholder(s)
(if different from 3.):iv

5. Date of the transaction and date on
which the threshold is crossed or
reached: v

21.06.2011
6. Date on which issuer notified:

22.06.2011
7. Threshold(s) that is/are crossed or
reached: vi, vii

3%

[stemis] 20/4/2012 09:30

I can't see any delcaration of interest by Leek in PUR.

PUR meanwhile is demonstrating dynamic growth and should report, in its final results, EBITDA of almost or perhaps exceeding £4million against a current market cap of just £5.3million.

Yes but also has net bank debt of £15.1m so EV/EBITDA of 5, compared to 2.3 for ACZ!

[mudbath] 19/4/2012 21:51

James Leek has recently declared a holding in PUR,a company in which I take significant interest.Much has been written here regarding the potential of ACZ to deliver significant shareholder returns,notwithstanding the stagnant market in which it operates and a possibility that it might de-list on some future date.
PUR meanwhile is demonstrating dynamic growth and should report, in its final results, EBITDA of almost or perhaps exceeding £4million against a current market cap of just £5.3million.
Well worth a look,imo, at what,mirroring ACZ,is a pretty quiet thread.
Cheers,Mud.

[deswalker] 28/3/2012 10:19

You're welcome GHF.

Good to see you and WCB joining us after the results. DoY too but perhaps he's been in a little longer ?

[glasshalfull] 28/3/2012 09:50

Well des, time to show my hand as well.

I've picked up 50k at/around 26p following results and would like to publicly thank you for drawing this to my attention.

I now see I've been competing with WCB for stock and it looks like the line at 26p with MMs finally ran out this morning. Like WORK, I feel that both are bouncing off their lows and hopefully good timing on my part to get on board.

Again, my thanks.

Regards,
GHF

[deswalker] 28/3/2012 08:42

Hi WCB,

I agree (because I've been doing likewise for the last few months) and am wondering if it is the estate of the late Simon HJA Knott. If so then presumably there is a fairly big slug to go and would make a great buyback.

That said, the online amounts have tightened up somewhat since I pinched yet another 5k first thing this morning. I'm long 165k at 32p average so new buyers can still get in well below me, but my target coincides with that at which the Directors bonuses vest, namely 75p so there's plenty of upside from my average.

I'd suggest nobody has watched this stock like me for the last 12 months (WCB replies that's because nobody has watched the stock full stop :o) and so I was staggered just how good the Finals were cf the Trading Statement. I had a feeling they might be okay as I've been speaking to the FD every couple of months and whilst they were tight-lipped they did seem to be much more upbeat when I called two weeks ago.

I think you'd get a lot out of the AGM if you could make it.

Des