Energy Tech. Share Discussion Threads

[eezymunny] 11/11/2015 23:35

Don't forget the in the money options while you all moan :) They make the take-out price rather more palatable!

[dangersimpson2] 11/11/2015 22:05

If you annualise the 600k profit at the HY and strip out the £1.7m cash then they are only paying a 6x multiple which does seem pretty cheap for a growing 34% ROCE company. That said it is a highly cyclical industry so a multiple may not be the best valuation metric.

Given the 66% irrevocable undertakings this is all over. It's not worth wasting time on what ifs, I'll take the pay out and move on to the next undervalued share.

[davidosh] 11/11/2015 11:52

I must say that although I did not attend the Agm this year the impression was that the board would not accept a low end offer and that is exactly what this feels like especially when you take the level of cash, the improving business & outlook and no dividend coming to shareholders into the equation !

Surely after nine months there were competitive bids or were Volution the only game in town for some reason clearly unknown to shareholders !

[eezymunny] 11/11/2015 11:39

My prediction of 350-400p proven a tad optimistic but not surprised. Might seem a bit cheap but this is a cyclical business with a mixed history sold at what may prove to be a good time. Happy enough.

[baner] 11/11/2015 11:07

#briangeee

pathetic comment !

[baner] 11/11/2015 09:40

gillenhammer must have made almost 10 times his money in two years here - not bad and one could understand why he was tempted to take the money and move on - well done to the ET directors turning the business around and then sell out at the peak. first class.

[woodie3] 11/11/2015 09:16

sold on the cheap

[greasynut] 11/11/2015 08:19

A nice HY report saying how great everything is going, accompanied on a done deal on a trailing PE of 9. Competing offers ruled out.
I would have expected a better outcome, but we knew the big shareholders were looking for an exit and this it the result.
Good for Volution holders.

[sailing john] 11/11/2015 07:55

Yes I agree and no surprise it's Volution

SJ

[battlebus2] 11/11/2015 07:30

Recommended cash offer at 345 by none other than Volution....Results also this morning showing the company in good health so a steal for them but glad it's a done deal and i can realise my small holding.....

[sailing john] 25/9/2015 13:02

Added a few at 305 vs 305/310 quote!

SJ

[briangeeee] 09/7/2015 20:31

The franchise opportunities are on hold until company sale negotiations are abandoned. Of course if there is a transaction, franchising may or may not proceed, but that's of little relevance to shareholders.

I had believed the sale process was due to have been completed or abandoned by the end of June, just gone. That date seems to have been extended.

Revenue is up 2.5% in Q1. Personally, I'm quite happy for them to forget a trade sale and let Gyllenhammar sell in the market or place his stake. I expect we'll know whether it's back to business as usual by the end of the Summer.

[truffle] 09/7/2015 15:14

Yes, on balance a good share to hold with minimal, if any, downside based on a market cap. of approx. 7.5 million.
However, as to-day's volume shows, there is very little interest in the company from the outside world. So, as the board has suggested, the question remains whether more value can be unlocked by being a smaller cog in a rather larger wheel, rather than remaining independent.
We shall have to wait and see.

[davidosh] 09/7/2015 09:01

No mention of the franchise opportunities in the US ?

[wywcu1] 09/7/2015 07:04

Good AGM statement. Actually I am quite relaxed re potential sale. We appear to be doing very well on our own two feet and we may be just better off going it alone in the future. All in all, a good share to hold.

[battlebus2] 09/7/2015 06:40

AGM Statement

On 26 February 2015, the Board of Energy Technique announced that it would offer the Company for sale by means of a formal sale process in accordance with Note 2 on Rule 2.6 of the City Code on Takeovers and Mergers (the "Code"). The Company is holding its Annual General Meeting at 12.00 p.m. today and Walter Goldsmith, Chairman, will make the following statement:

"Energy Technique's trading subsidiary, Diffusion, is a market leader in the manufacture of premium quality fan coils and commercial heating products. Diffusion's products are installed into commercial offices, hotels, airports, retail outlets, schools, and high-end residential developments. Whilst the Board believes that the Company has a secure future as an independent business, the Board took the recent decision to enter into the formal sale process in order to seek to unlock and crystallise value for shareholders.

The Company has received expressions of interest, which may or may not lead to a sale of its entire issued share capital. In the event that satisfactory proposals are made, the Board would expect to engage with one or more participants with a view to agreeing an offer, which it would be able to recommend for acceptance by shareholders. Further announcements will be made as and when appropriate.

The Company has appointed Cavendish Corporate Finance LLP ("Cavendish") as financial adviser to conduct the sale process. Parties with a potential interest in making an offer for Energy Technique should contact Cavendish (contact details are set out below). There can be no certainty that an offer will be made or that any sale will be concluded, nor as to the terms on which any offer might be made. The Board reserves the right to alter any aspect of the formal sale process or to terminate it at any time. The Board also reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.

On 21 May 2015, the Company announced audited results for the year ended 31 March 2015 showing sales had increased by 12.6% over the prior year to GBP10.77 million, accompanied by a 19.6% increase in group profit before tax to GBP776,000. There has been a strong start to the current year ending 31 March 2016, with sales in the first quarter increasing by 2.5% over the corresponding quarter to GBP2.84 million. Enquiry levels are high, the order book is strong and we look forward to the future with confidence."

[dangersimpson2] 21/5/2015 10:25

No major surprises given that we'd already inferred the FCF multiple from the last trading statement. OCF even better than expected though since cash increase was after 264k of mainly discretionary capex. Positive management narrative matches the high discretionary capex indicating that they are positioning themselves for future profitable growth. Shame we didn't get any more details on sales process.

[battlebus2] 21/5/2015 09:20

Yes a totally different tone to today's news.

[wywcu1] 21/5/2015 08:37

Excellent set of results. Chairman quite bullish about the coming year and a dividend increase. Should make the sale a lot easier imo. GLA

[woodie3] 19/5/2015 10:54

brought a small holding this morning spread makes it very difficult.results should be this week hoping for an increase in divi.

[eezymunny] 17/4/2015 10:18

Agree with all of that danger. Something of a punt here. I've tried looking at other players in their sector, competition etc but very hard to gauge the outcome.

[dangersimpson2] 17/4/2015 10:00

Hi EM,

I'm happy to be pleasantly surprised on the P/E if as you say they have increased WC significantly. But also remember the last few years they have had higher depreciation than capex which will work the other way on earnings.

Not that it really matters to an acquirer though. A P/E is really just a short way of doing a DCF calculation under steady state conditions - I would expect an acquirer would build their own detailed DCF model stripping out the listing costs and WC changes etc.

It really needs more than one serious interested party to get a good sale value though since whatever the DCF says a single buyer will offer the minimum the board and large shareholders will accept. Personally I'd rather they remained listed than accepted a low ball offer.

Danger

[eezymunny] 17/4/2015 09:14

Think your P/E all wrong danger. Quite a bit of cash consumed into working capital this year as they've grown, which is fine for me. P/E a fair bit lower IMO. I reckon op profit for Diffusion b4 central costs (which they say is mostly costs to maintain AIM listing etc) will be c. £1.1m as they've had a good Q4 by the looks. Tax that at 20% for pat of c. £900k

So an acquirer would be paying an EV/pat of c. 7 at 300p/share. I suspect decent upside from here if anyone is really interested but perfectly possible they'll accept a price below that if not much interest. You'll have to wait and see!

[dangersimpson2] 17/4/2015 08:28

not sure where you get the 18x earnings from, TTM P/E is 11.5 from Stockopedia.

We don't have earnings figures in the trading statement but we can infer EV/FCF. Since their cash balance went up £0.49m and they paid c£0.1m in dividends then FCF was c£0.59m.

2.39m shares in issue + 0.2m options @£3 = £7.76m fully diluted market cap, £1.36m cash gives EV £6.4m.

So EV/FCF = 10.9

We don't know if FCF is flattered by WC movements but a strongly growing company normally doesn't reduce WC significantly. Hence I expect that when the results are released we will see a historic P/E around 11.

Of course, as others have pointed out, the elephant in the room is what an acquirer will pay for the business. Given the premium brand, strong markets, high growth and high ROCE you would normally expect a much higher historic FCF multiple than 11 but when you are looking to sell you are always in a weaker position than when someone is looking to buy.