Green & Smart Share Discussion Threads

[simon gordon] 17/4/2007 14:00

Couple of points:

- The 550,000 new shares are not for employees. According to GSH, 'the shares were allotted to KBC Peel Hunt under an option arrangement set up on admission to AIM.'

- There are no members of the Scarr-Hall family working at GSH.

[simon gordon] 15/4/2007 18:02

I have tweaked the Jack Welch post as more thoughts come from my right brain.

-------

I think in the passage below, written by George Marsh, you will get an insight into the character of Colin Tennent:

'In Zen Buddhism there is a great enlightenment called satori, sought through many years of disciplined meditation. There are also many little flashes of enlightenment, called kensho, which are intense forms of those everyday noticings that surprise us or please us because they seem to reveal a truth, or to be exemplary, or to connect us again, momentarily, with the sense of awe. Haiku is a momentary, condensed poetic form and its special quality is that it is perfectly adapted to give the reader that little instant of kensho insight. Basho developed the haiku form so that each haiku became a little burst of awakening. It is this that is the essence of haiku, not its number of syllables.

Some haiku are explicitly about moments of kensho, and words like "awakening" are the clue:

Awakened at midnight
by the sound of the water jar
cracking from the ice
(Basho, trans. Hamill)

A pattering of rain
on the new eaves
brings me awake
(Koji, trans. Chiyoko/Marsh)

Zen Buddhism is centred on the practice of meditation. In meditation the trainee stills the hectic surface activity of the mind: the constant planning, speculating, fantasising, hoping, dreading, assessing, recalling, self-congratulation, self-doubt and so on, to which we humans are prone. When a measure of control over the runaway mind is established, a calmer space appears.

As the trainee attends to the life-rhythms of this calm space, he or she begins to experience the things mystics of all religious traditions have always said are true of the ultimate reality: its unity, love, boundlessness. The calm space beneath thought has various names, but the sort of words that have been used traditionally for describing it are 'stillness,' 'silence,' 'emptiness,' 'nothingness,' and 'void.'

You might imagine, from this list, that Buddhism was a form of nihilism, but that is not the case. The 'nothingness' is not barren. Zen master Lin-chi said, 'It is vibrantly alive, yet has no root or stem. You can't gather it up, you can't scatter it to the winds. The more you search for it the farther away it gets. But don't search for it and it's right before your eyes, its miraculous sound always in your ears.' (The Zen Teachings of Master Lin-chi translated by Burton Watson, Shambhala Publications 1993 p.58). Poets are struggling to convey the inexpressible, to find images for the 'miraculous sound' in the heart of the silence. Zen poets hear the sound of the life-force emerging from emptiness to fill everything:

The skylark:
Its voice alone fell,
Leaving nothing behind
(Ampu, trans. Blyth)

The silence;
The voice of the cicadas
Penetrates the rocks.
(Basho, trans. Blyth)

The sense of nothingness or emptiness unites everything:

Fields and mountains
all taken by snow;
nothing remains
(Joso, trans. Horioka, amended by Marsh)

Meditation can be indicated by the word 'sit' or some phrase referring to stillness, but it is a stillness in the midst of the rush of active life:

Deep within the stream
the huge fish lie motionless
facing the current
(J.W. Hackett)

On a rock in the rapids
sits
a fallen camellia
(Miura Yuzuru, trans. Chiyoko/Marsh)

The posture for meditation sitting, cross-legged on a cushion, is a matter of balance:

the gull soars on nothing
but slight corrections
to the tilt of its nose
(George Marsh)

The meditation hall, called a zendo, is the place for going from the particular to the universal:

In the zendo
when the coughing ceased
all sound ceased
(Satokawa Suisho trans. Marsh)

The black robes of a crow might remind one of a priest:

The crow sits
on a dead branch –
evening of autumn
(Basho, trans. Marsh)

Why flap to town?
A country crow
going to market
(Basho, trans. Marsh)

Lao Tsu was the original archetype of The Sage. He lived five hundred years before Christ and wrote The Book of The Way (Tao Te Ching). So references to paths, roads, ways and so on are always resonant. Living the religious life of meditation practice has been known in the East as following 'The Way' or 'The Path' from the time of Lao Tsu, more than a thousand years before Buddhism came to China. By extension, the arts through which people express their meditative understanding are also known as The Ways: flower arranging, archery, tea ceremony, acting, dancing and poetry are among them. Since meditation is essentially something one can only do focused on the inner life, even when many people meditate together, the references often have a lonely quality - even more so in the case of Basho, who struck out on his own poetic path:

My way -
no-one on the road
and it's autumn, getting dark
(Basho, trans. Marsh)

Beyond the crossroads
deep into autumn
the hillroad disappears
(James Norton)

The acceptance of an essential loneliness in the human condition is a characteristic of the Buddhist meditator. It is a loneliness that we recognise in others, too:

The scarecrow in the distance;
it walked with me
as I walked
(San-in)

The long night –
made longer
by a dog's barking
(Santoka, trans. Stevens)

An octopus pot –
inside, a short-lived dream
under the summer moon
(Basho, trans.Ueda)

To Basho the road was not just a literary or religious metaphor. He was a traveller, walking the open road on journeys the length and breadth of Japan. In the twentieth century another Zen Buddhist haiku poet followed in his footsteps. Santoka Taneda lived as a wandering mendicant monk, a 'gentleman of the road.' For him the lonely path was a daily reality:

There is nothing else I can do;
I walk on and on.
(Santoka, trans. Stevens)

Going deeper
And still deeper -
The green mountains.
(Santoka, trans. Stevens)

Wet with morning dew,
I go in the direction I want.
(Santoka, trans. Stevens)

The road is a palpably real experience to Santoka and Basho, as well as a metaphor for one's chosen life-path. Fish do lie facing the current; gulls do soar on the wind adjusting the angle of their beaks; and snow does take the features from the landscape. Haiku imagery is always first and foremost a real observation. It never merely illustrates an idea. It is not simile. The poems that have the most resonance and power, however, are those that are observations which have a symbolic after-taste. The symbolic dimension is an echo of the primary meaning, uniting the particular detail which is being noticed - often natural - with a human significance.'

GEORGE MARSH

[simon gordon] 13/4/2007 14:34

Courant,

It is tough to find Bearish angles.

I agree it ain't no bargain but it's an excellent GARP stock. There is no point sitting in Cash as money slowly dies. Equity is were the real returns are to be gathered. GSH is the safest upside/downside stock I can currently find that allows me to .

One key factor that makes me uber bullish is that as an organisation GSH are winning. Below is an article on the importance of winning:

WINNING IS NOT MERELY A DESIRABLE THING, IT'S EVERYTHING by Rosabeth Kanter

For many years I have observed the ups and downs of organisations as well as countries and also life. During up-times it's clear that confidence swells and people feel they can do anything, which motivates feats of high performance, because confidence is just an expectation of a positive outcome. When I have confidence, I believe that success is possible, and so those with confidence put in the effort to do the work. It's really the work that produces success.

During downtimes, confidence ebbs. People, organisations and whole countries get depressed, defeatist and they stop trying. The task of leaders is to produce confidence, to motivate performance, and that requires an organisational culture with certain underpinnings and foundations in place that produce a culture of confidence not just for individuals but confidence in the team, confidence in the system and confidence by investors, stakeholders and the public that the organisation will deliver on its promises.

I have studied the difference between sustained success, or what I call "winning streaks", just like in sports, and perpetual mediocrity or decline, or as I call them, "losing streaks", again like sports. I have studied this in businesses such as Gillette, Siemens, Seagate Technology, General Electric, Continental Airlines, the BBC. I have studied this in community and government organisations and in whole countries. I have looked at this phenomenon in microcosm in sports teams, where we can draw many lessons that are applicable to business.

First, winning is a whole lot better than losing. Think about it a moment: it's not just, of course, the obvious, that we all want success in our organisations and all of our endeavours, but it's also that the very fact that winning, succeeding, produces better behaviour. It produces better behaviour that will help the team or the organisation perform better in the future.

First of all, people are in a better mood and when people are in a good mood they're attracted to one another, they want to gather, they want to talk over the past performance. Therefore, they get all of the advantages of learning because they are comparing notes: on how did we win that big sale, how did we make the acquisition, how did we accomplish that incredible conference? When they do that, they have the advantage of learning, whereas losers slink off into the corner, don't want to talk about it and, therefore, have no opportunity to learn. It only reinforces them in their depression.

Winning brings greater resources, investment by external people. It brings better press. Winning provides more opportunities to be part of better networks, to get better deals. Those who are seen as successful often get bigger discounts. They get sponsorship opportunities. They get first crack at the best people. They get invited to receptions or parties or events where they're going to meet other people, gain business intelligence and, therefore, have an advantage for the next race.

A second lesson about the difference between sustained success and mediocrity or perpetual failure is that winning is boring. That is, winning can lull people into false complacency or overconfidence. Instead of building their confidence that they can go on to the next victory, they become arrogant and, therefore, stop trying, and that's one of the reasons that winning streaks end or that success comes to an end.

Also, I say that winning is boring because it's really hard work. It's not a matter of doing things that are flashy or dramatic. It's a matter of constant discipline and professionalism all of the time. It was interesting when I talked to some leaders of sports teams. In teams that had sustained high performance, very long winning streaks, including one team that had a record for the only undefeated season in its sport, when we asked the coach "How did you feel about that undefeated season?", he said: "The interesting thing about that season was that there was nothing interesting about it. All the players did was get up every day, practise hard, then come to work and win games". They practised all the time and they held themselves accountable for performance. Leaders have to model this.

A third lesson about the difference is that it's not the talent; it's the talent in the team. There's an obsession in organisations today with talent, with individuals. But most people who meet the threshold of talent will either play above their game or below their game, depending on the culture that surrounds them. On winning teams it's the team, not the talent. Losing teams and declining organisations often have stars but the stars are out for themselves. They're looking at their own résumés. They're trying to promote their own careers rather than promoting the team as a whole.

The fourth difference between sustained success and mediocrity is that winners think small as well as thinking big. Of course you want some big goals, but you also need a constant series of small wins in an organisation. You need many people in unexpected places developing ideas that you didn't even know were there.

The BBC needed a bit of a turnaround in the early 2000s because in the late 1990s it had been losing audience share and there were concerns about its creativity. A new chief executive set in motion a system of brainstorming meetings and other ways to empower people. Under this new environment, a relatively new trainee was given a budget to create a training film for a new orientation programme. Part of the goal in that era was to create one BBC instead of a set of fragmented divisions: radio versus television news versus sport, and so on. So his job was to create a film that would tell people about life in the organisation. He took that budget and made a film that turned out to be the pilot for The Office, the BBC's biggest hit comedy since John Cleese in Fawlty Towers. Unexpected, and a small win that turned into a big victory.

The fifth difference between winners and losers is that the secret of winning is how you handle losing. What organisations need most is resilience. Every person is subject to what I call Kanter's law. Kanter's law says that nearly everything, especially if it's new and different, can look like a failure in the middle. If we stop, then by definition it's a failure. If we have the confidence of winners and the culture of the organisation or our team behind us, we can often convert near-misses or near-disasters into opportunities for improvement, and that's what winners do.

[courant] 13/4/2007 12:59

Simon,

My impression is that GS are holding the shares pending a further sell on. If they'd bought that amount as a new owner, there would have to be a RNS. This is pure conjecture though!

Your bear points - most of them relate to the market rather than GSH the business. I'd be quite happy to hold GSH through a market downturn because I expect the business to do well regardless. It seems FM is expanding and the company is certainly innovating with new products. The business has coped with a loss of a major client before and there's no reason to expect it won't still be in a position to do so in the future. Plus the order book is big and expanding. IMHO an economic downturn in the UK will place companies under more pressure to cut costs and so employ people like GSH to do their stuff efficiently.

The only real issue is that on absolute terms, it's not a complete bargain. Relatively, yes and as a GARP kind of share, absolutely. Either way, I'm very bullish!

Courant

[simon gordon] 13/4/2007 11:17

I have altered some of the Jack Welch analysis.

If you are a 'detail junkie' I recommend emailing GSH and requesting a copy of the 'People, Customers, Business' forty six page brochure.

Courant - thanks for that info on Swiss tax. What do you think the GS holding means, has ISH sold it to GS?

The 550,000 new shares on the 18th April I presume are for employees. If so it could lead to a wave of selling as people decide to buy a new car or holiday in Portugal. It also means 17x, 07/08 = c.£5.88 share price target, cut from c.£6.00

[courant] 12/4/2007 20:48

Simon,

Switzerland has neither capital gains tax nor inheritance tax (generally - there are a couple of exceptions). So no trust needed for a tax efficient sale!

(There is however a "wealth tax" based on the value of your assets. This can be circumvented however by an arrangement whereby you're taxed on a fixed annual basis according to the rental value of your main residence. Thus, there's a certain attraction if you have a high net-worth!)

Courant

[simon gordon] 12/4/2007 19:57

An analysis of GSH with Jack Welch:

1. Lead
Managers muddle - leaders inspire. Leaders are people who inspire with clear vision of how things can be done better. "What we are looking for are leaders at every level who can energize, excite and inspire rather than enervate, depress, and control."

*Colin Tennent has a stable of thrusting managers, he is focused on Quality and Self-Improvement, and leading an organisation that has a crystal-clear vision of its future. Jamie Reynolds has just given the top speech at the BIFM conference. Colin Tennent thinks very highly of Neil Murray.

2. Manage Less
"We are constantly amazed by how much people will do when they are not told what to do by management." In the new knowledge-driven economy, people should make their own decision. Managing less is managing better. Close supervision, control and bureaucracy kill the competitive spirit of the company. "Weak managers are the killers of business; they are the job killers. You can't manage self-confidence into people."

*GSH has a flat management structure allowing people to be.

3. Articulate Your Vision
"Leaders inspire people with clear visions of how things can be done better." The best leader do not provide a step-by-step instruction manual for workers. The best leaders are those who come up with new idea, and articulate a vision that inspires others to act.

*I think the GSH vision is excellent: greensolutions is an example.

4. Simplify
Keeping things simple is one of the keys to business. "Simple messages travel faster, simpler designs reach the market faster and the elimination of clutter allows faster decision making."

*The company literature I have seen so far is to the point.

5. Get Less Formal
"You must realize now how important it is to maintain the kind of corporate informality that encourages a training class to comfortably challenge the boss's pet ideas."

*Project Talkback - monthly talkback sessions with all employess.

6. Energize Others
Genuine leadership comes from the quality of your vision and your ability to spark others to extraordinary performance. Getting employees excited about their work is the key to being a great business leader. "We now know where productivity - real and limitless productivity - comes from. It comes from challenged, empowered, excited, rewarded teams of people."

*This is definitely happening at GSH.

7 Face Reality
Face reality, then act decisively. Most mistakes that leaders make arise from not being willing to face reality and then acting on it. Facing reality often means saying and doing things that are not popular, but only by coming to grips with reality would things get better.

*Can't answer that one.

8. See Change as an Opportunity
Change is a big part of the reality in business. "Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while... Keeping an eye out for change is both exhilarating and fun."

*Smartbox, energyplus, greensolutions.

9. Get Good Ideas from Everywhere
New ideas are the lifeblood of business. "The operative assumption today is that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action - fast."

*Maxwell Segal and his associate are the GSH think-tank and ideas cross fertilise between departments. Project Talkback.

10. Follow up
Follow up on everything. Follow-up is one key measure of success for a business. Your follow-up business strategy will pave the way for your success.

*Seems pretty basic.

11. Get Rid of Bureaucracy
The way to harness the power of your people is "to turn them loose, and get the management layers off their backs, the bureaucratic shackles off their feet and the functional barriers out of their way."

*This is happening in GSH, right from the top.

12. Eliminate Boundaries
In order to make sure that people are free to reach for the impossible, you must remove anything that gets in their way. "Boundarylessness" describes an open organization free of bureaucracy and anything else that prevents the free flow of ideas, people, decisions, etc. Informality, fun and speed are the qualities found in a boundaryless organization.

*When I conversed with Maxwell Segal this was an aspect that excited him about working with GSH.

13. Put Values First
Don't focus too much on the numbers. "Numbers aren't the vision; numbers are the products." Focus more on the softer values of building a team, sharing ideas, exciting others.

*GSH are very keen on training and the corporate slogan for this is PRIDE.

14. Cultivate Leaders
Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge, and Execution; leader who share values of your company and deliver on commitments.

*Pages 32&33 of the annual report highlight that this is taken seriously.

15. Create a Learning Culture
Turn your company into a learning organization to spark free flow of communication and exchange of ideas. "The desire, and the ability, of an organization to continuously learn from any source, anywhere - and to rapidly convert this learning into action - is its ultimate competitive advantage."

*In the HQ a special room is in operation for learning. All the AF Worx and Delta workers have/will pass through that room to be inducted.

16. Involve Everyone
Business is all about capturing intellect from every person. The way to engender enthusiasm it to allow employees far more freedom and far more responsibility.

*I can see management are empowered so I presume it flows down the chain. Project Talkback.

17. Make Everybody a Team Player
Managers should learn to become team players. Middle managers have to be team members and coaches. Take steps against those managers who wouldn't learn to become team players.

*Mentoring was mentioned as being very important during my meeting with Colin Tennent and David Simons.

18. Stretch
Stretch targets energize. "We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done."

*GSH revel in stretch targets.

19. Instill Confidence
Create a truly confident workforce. Confidence is a vital ingredient of any learning organization. The prescription for winning is speed, simplicity, and self-confidence. Self-confident people are open to good ideas regardless of their source and are willing to share them. "Just as surely as speed flows from simplicity, simplicity is grounded in self-confidence."

*GSH are winning Blue Chip clients and spreading around the Globe. After Robbie they are putting Stoke on the map.

20. Have Fun
Fun must be a big element in your business strategy. No one should have a job they don't enjoy. If you don't wake up energized and excited about tackling a new set of challenges, then you might be in the wrong job.

*GSH fund social activities and encourage family inclusion.

21. Be Number 1 or Number 2
"When you're number four or five in a market, when number one sneezes, you get pneumonia. When you're number one, you control your destiny. The number fours keep merging; they have difficult times. That's not the same if you're number four, and that's your only businesses. Then you have to find strategic ways to get stronger. But GE had a lot of number ones."

*GSH are the number one 'pure play' in Hard FM.

22. Live Quality
"We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level. We want to make our quality so special, so valuable to our customers, so important to their success that our products become the only real value choice."

*If you look at the awards GSH have won or been nominated for and the respect they are accorded in the FM media, it is because Quality is all at GSH.

23. Constantly Focus on Innovation
"You have just got to constantly focus on innovation. And more competitors. You've got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap." Now the fundamentals have got to be more education. More information knowledge, faster speeds, more technology across the board.

*Greensolutions is the most recent example.

24. Live Speed
"Speed is everything. It is the indispensable ingredient of competitiveness." Speed, simplicity and self-confidence are closely intertwined. By simplifying the organization and instilling confidence, you create the foundation for an organization that incorporates speed into the fabric of the company.

*GSH are constantly improving infrastructural efficiences.

25. Behave Like a Small Company
Small companies have huge competitive advantages. They "are uncluttered, simple, informal. They thrive on passion and ridicule bureaucracy. Small companies grow on good ideas - regardless of their source. They need everyone, involve everyone, and reward or remove people based on their contribution to winning. Small companies dream big dreams and set the bar high - increments and fractions don't interest them."

*Passion is certainly alive and kicking at GSH.

[charterhouse3] 12/4/2007 19:39

Simon,
Excellent continuing flow of information. The boys on Fool seem to like your post too !!!


Cisk,
The 20k trade was timed at 10.50am when the quote was 425/430 - so a nice chunky buy.

An excellent day all round.

Catch up with you all tomorrow.

CH3

[simon gordon] 12/4/2007 17:21

Some further points:

- The car park did not contain high performance sports cars or uber luxurious executive sedans.

- The fixtures and fittings in the building are not opulent. They are clean and professional.

- In the Boardroom the pictures on the wall are Modern, Colourful and Intelligible.

- There are not many workers with Grey hair.

- Employees are balanced between male and female.

- The building is on two floors and is mainly open plan. It is 16,000 square feet.

- Recently pitched to Nationwide and Co-op.

[simon gordon] 12/4/2007 16:51

Maybe Goldman Sachs are ISH's personal wealth manager. Has GS put the shares into trust and thus a tax efficient way to sell from the Alps?

[cisk] 12/4/2007 15:09

Simon, another good post. I still cannot get over the fact that there are only 200 shareholders, presumably including management outside of ISH. Good detective work re: taking to the guy in the loo. I look forward to the agm.

Charterhouse - the 20k trade this am was at 430 (b440, o450). Surely this was a sell at this price?

Cisk

[simon gordon] 12/4/2007 15:00

Analysing GSH with Philip Fisher:

1. Excellent market potential for its products.
*Outsourcing; smartbox, energyplus, greensolutions.

2. Management commitment to the development of new products.
*Maxwell Segal: Group Technology and Innovations Director.

3. Superior research and development relative to the company's size.
*Smartbox.

4. Strong sales organization.
*Directors pitch direct.

5. Acceptable profit margins.
*5% now. 7% would be sweet.

6. Commitment to the maintenance or improvement of margins.
*Maximising infrastructural efficiences to contain costs and improve operational performance.

7. Excellent labor relations.
*Whilst in the toilet at GSH I met a Streamline engineer who was testing the water. He joined 9 months prior and was attracted by the package offered and had no plans to move on.

8. Excellent morale among managers.
*A 'stretch' culture allows ambition to be expressed. Key company phrase: 'Achieve your aspirations.'

9. Management depth.
*They all want to be the next CEO.

10. Tight cost and accounting controls.
*Looks good.

11. Competitive advantages in quality and/or cost.
*Quality is apparent with client list. Technology used to control costs.

12. Long-range approach to profits.
*Building growth in a managed way. Unlike SPI and ERG who have gone deal crazy.

13. Ability to grow with minimal equity financing.
*Balance sheet rock solid.

14. Respect for the shareholders.
*Annual report is outstanding and I was accorded respect on my visit.

15. Management integrity.
*No sign of Icarus and Hubris.

[simon gordon] 12/4/2007 14:15

Cisk,

200 in total.

I got no indication that the ISH transaction with Goldman Sachs was in process, only that the he now lived in Switzerland.

I am slightly confused by the Goldman move as KBC are the house broker and would be able to place shares in the City. I agree that ISH would not put the company on the block in such a savage way. It must be for placing the shares with hungry fundies.

----

CH3,

Good idea I will post on Fool.

Never ask a lady her age and never ask an investor the size of his holding.

[charterhouse3] 12/4/2007 13:44

Simon

Thanks for the report - greatly appreciated (you should do a precis on Fool so that those boys become aware !!)

Glad to see we are in agreement on 600p being a current fair value.

That purchase of 20,000 shares this morning seems to have done the trick.

Wasn't you was it ?

;o)

[cisk] 12/4/2007 13:36

Simon

Many thanks for the informative post. From what you say it seems you're more bullish now than before - and the guys at the helm seem safe.

Please could you clarify: there are only currently 200 shareholders - i.e. folks like us? Seems such a small number, although given the available float understandable.

Did you get any reasoning as to why ISH only used Goldman rather than placing shares with a number of institutions? I can't see that he would want the company to be taken over, or private, in the short term given his personal association with the company.

Regards to all

Cisk

PS I saw my first GSH van on the M4 a couple of days ago.. The first of many I hope.

[simon gordon] 12/4/2007 12:11

Hi CH3,

- On the question of margins I got no traction, other than that they should keep trending up.

- FY tax rate - c.30%

- Acquisitions: one or two a year. Always ready to do a transformational deal but must be perfect marriage.

- I gather GSH are going to build a new HQ across the road. It will be twice the size.

- A new Non-Exec will be appointed to replace ISH.

- AF Worx and Delta re-branded GSH.

- AIM to Main Market is not on horizon right now.

- There are currently 200 shareholders.

- Institutional interest is very strong.

- GSH receive takeover offers all the time.

The characters of the Directors I met in a nushell are:

~ Colin Tennent - deep.
~ David Simons - proactive and interactive.
~ Maxwell Segal - dynamic.

For the overall culture of the company, I will use an analogy, GSH is the Barcelona FC of Hard FM.

Glorious operating history, culture of deep flowing football, the bringing through of outstanding young talent, attracting the best players.

If GSH were a football player, I think Samuel Eto would be apt.

Lethal in front of goal, pace, power, can read play brilliantly, and is humble.

---

Analysing GSH the Warren Buffett way:

BUSINESS TENETS
~ Is the business simple and understandable? *Yes.
~ Does the business have a consistent operating history? *Yes.
~ Does the business have favourable long-term prospects? *Yes.

MANAGEMENT TENETS
~ Is management rational? *Yes.
~ Is management candid with shareholders? *Yes.
~ Does management resist the institutional imperative? *Yes.

FINANCIAL TENETS
~ Focus on return on equity, not earnings per share. *RoE, 7/06, = 80.6%
~ Calculate owner earnings. *Earnings Yield, 07/07, c.6.8%
~ Look for companies with high profit margins. *Could do better.
~ For every dollar retained, make sure the company has created at least one dollar of market value. *Delta near-on 20% return on investment.

MARKET TENETS
~ What is the value of the business? *17x, 7/08, = c.£6.00
~ Can the business be purchased at a significant discount to its value? *Yes.

[charterhouse3] 12/4/2007 12:04

Courant,

A takeover of GSH would be very attractive to predators purely due to the fact that such a large block is potentially available from Goldman-Sachs.

The Company is one of the most attractive in the facilities management sector.

However the rating is ridiculously low compared to the peer group and this has been entirely down to the illiquidity resulting from the Scarr-Hall holding.

With this problem now being addressed we will either get the long awaited re-rating (certainly 550p-600p is realistic in a reasonably short time span) or a predator approaches Goldman-Sachs with an offer that no one can refuse (surely a minimum of 750p just for the quality of the business).

A very rare, high quality, win-win situation.

;o)

[courant] 12/4/2007 11:43

My only fear is that GSH will get taken private again - such a large amount of shares on the table is bound to attract some private equity outfits, especially given the strong balance sheet and cash generation. Although, that said, they'd have to pay a substantial premium to the current price.

Courant

[charterhouse3] 12/4/2007 11:20

Simon

any other snippets of news from the meeting ?

[charterhouse3] 12/4/2007 11:05

this is more like it !!!!!

Also reassuring that it will be Goldman-Sachs handling the future placings.

Very exciting times ahead (and still extremely good value at current levels by the way !!)

CH3

[simon gordon] 12/4/2007 11:05

In meeting with Colin Tennent and David Simons yesterday, David Simons, answered the key ISH question by explaining that ISH was now a resident of Switzerland - no doubt he is living in a low tax canton.

Hey presto, GSH is now becoming an institutionally owned company.

[courant] 12/4/2007 10:43

Bingo!

I guess GS would then be looking to sell off parts of its holding in chunks now, in effect acting as a quasi-agent?

Courant