Essenden Share Discussion Threads

[battlebus2] 17/1/2014 22:12

Indeed it does but with a larger turnover and larger profits as the current business has limited growth potential without acquisitions. Borrowings might not be that much of a worry given the current cash generation.

Mr Basing said that he had yet to identify a target, although he confirmed that the the group's biggest shareholders - Chris Mills's Harwood Capital Management and Schroders - were supportive of the idea of a significant deal - potentially worth more than £100 million.

[glennborthwick] 17/1/2014 21:24

this wet weather is perfect though for trading. My company provides vending machines at several indoor play centres/leisure centres and volumes rocket on wet weekends for obvious footfall reasons.

[glennborthwick] 17/1/2014 21:23

true but with that comes dilution and/or debt

[battlebus2] 17/1/2014 21:14

Let's also not forget there will be a transformational acquisition soon.
That will also transform the share price.

[glennborthwick] 17/1/2014 20:38

strip out the 15p's worth of cash gives a forward PE of 2. On a growth share Id expect at least 8 and possibly ten. My target price is therefore 90p by interims and 120p by March results 2015

[glennborthwick] 17/1/2014 20:35

Ok so I expect them to have 3 million in cash year end. There start to the year has been stellar all be it against easy comparatives so lets say they up turnover by 3% virtually all of that should go to the bottom line. As they are operationally debt free that will save a whole chunk of interest so quite possible 14p eps next year without a "transformatinal purchase".

[chrisis33] 17/1/2014 19:55

Davidosh ... nice post this morning. I was going to say something similar, but you expressed my exact sentiments. All about the cash generation, margins and operational profit.

ESS turns over around £50m per year - so as with many a share I hold, small % improvements would translate to comparatively huge leaps in performance at the bottom line.

[nfs] 17/1/2014 14:54

Exercise David? Hmm

[davidosh] 17/1/2014 11:46

Maybe at the bar...not so sure that investors would expect to pay to check out the quality of the equipment and their investment though lol
Sounds a cracking idea for a night of leisure, exercise and investment all rolled into one !

[mjcrockett] 17/1/2014 11:38

A ten bowling event. What a good idea. It would even generate a bit of extra revenue for ESS!

[davidosh] 17/1/2014 11:06

Mike....these days I have such huge demand to present at a Mello it could be another three months but there are always opportunities to do one off events.....we could even have an investor ten pin bowling evening with a presentation of course !! lol

[mjcrockett] 17/1/2014 10:25

David, Have they agreed to come to a Mello? If so, when?

[davidosh] 17/1/2014 08:47

When they come to Mello I am sure we can get the full story and their views on the loan notes as holders and creators of them. I am much more interested in the clear growth story and personally I am a long term investor but not so sure I will still be involved as long as 2020 !

[kempy1] 17/1/2014 08:40

Trying to buy 1k and I can't!

[glennborthwick] 17/1/2014 08:06

they are perpetual though and 9 million of them are actually owed to the directors so if 2020 comes too quickly it isnt a do or die situation.

[davidosh] 17/1/2014 07:57

It is all about operational leverage and building profitability as the economy recovers. The loan notes are not costing the company anything in reality until they choose to repay them and meanwhile profits can be invested into the estate or additional opportunities as they emerge. As the value of the company ie. market cap increases significantly (in line with the clear growth of profits that we are seeing) then those loan notes will look relatively immaterial moving towards actual repayment.

[glennborthwick] 17/1/2014 07:50

thanks nfs. I think they made about 7 million previously but on a bigger estate

[drsmessguide] 17/1/2014 06:34

My assumption is that as the economy recovers and with it disposable income, a business like this will flourish. If it is producing EBITDA of £6m now next year could show significant upside. Stong incentives to pay down the loan notes early, then the cash flow goes to dividends or a 'transformational oppertunity'. And it's a £10 company! Undiscovered as yet

[nfs] 17/1/2014 05:53

Note 19 of the 2012 accounts( from the website) shows the liability at 15.1m and it seems this liability goes up by each year(660k in 2012 which forms part of the interest cost in note 4) until October 2020 when they are to be redeemed
A change of control,insolvency or change if operation requires repayment immediately
Early redemption can also be done

Initially the liability was booked at the initial fair value less amortisation of the initial discount
That last bit requires more of an expert than me to explain the mechanics

So it seems to me each year sees the liability value edge towards the full value according to a formula and that change in the BS liability goes through the PL as an interest cost

[nfs] 17/1/2014 05:39

The fixed assets are 10.4m short leasehold and 9.4 fixtures and fittings and 3m long leasehold
Thus means ,re the leasehold assets,the money spent inside the building rather than the building itself ,so this can be enhancements to the internal facades,reception ,bowling lanes,dining area etc etc
Depreciated over the life if the lease,the long leases use 50 years and the short lease over the life if the lease
The 50 year rate seems unusually high so it must be structural stuff,I hope

I am studying the loan notes and interest but have a busy day today!

[glennborthwick] 16/1/2014 22:55

another wierd thing. zeroes are clearly zero interest yet interims show 300plusk on loan note interest. Defeats me

[glennborthwick] 16/1/2014 22:36

Need an accountant to look at this. My gut feeling is that most of the assets are non property such as bowling lanes, machinery etc but not 100% sure as they clearly sold a few properties in 2011/12

[glennborthwick] 16/1/2014 22:22

looking into it now, main 2 directors get 2.5 million bonus if the loan notes are paid off by january 2013 but reduces 25k a month after that so i guess down to 2.2mill now

[drsmessguide] 16/1/2014 21:59

Bit confused by the 'property' listed of £22m as in the accounts it talks of the sale and lease back of all its freehold properties. Anyone got to grips with what the property listed as assets includes?

[glennborthwick] 16/1/2014 21:45

interesting the board hold 9 million of the 20 million