Hayward Tyl Share Discussion Threads

[pavey ark] 23/4/2017 18:02

Cheers AE
I agree with those who have said that the situation with the cash flow could have been handled better but then it's always easy to be critical when you are not making the decisions and there are lots of moving part here.
Most of the critical posters were ex HAYT shareholders who, having sold, criticised the company either to justify their sale or to talk the price down.
Now we have AVG shareholders dishing the dirt in the hope that their company can bag a bargain.
Interesting that these AVG shareholders post here yet the AVG BB is very quiet !!
Anyway the biggest mistake made was when people , no matter what their original reservations were , failed to appreciate that the share price had fallen much further than these reservations justified......that was the time to buy.
The market always over reacts .....up and down.

grahamwales, only a quick scan of your post/link, did PB do the original work ?
Even if PB didn't do the original installation I agree that this looks the type of thing they would be in the frame for.

[alter ego] 23/4/2017 17:35

Keep posting Pavey Ark. it's refreshing to read such well reasoned and factual analysis compared to the supericial and perhaps self serving denigration of HAYT

[pavey ark] 23/4/2017 14:54

RR,
"You presume too much and spout an awfull lot."

I think you mean assume but I do like to back up what I'm saying with facts and figures,sorry if that annoys you.

If you have been focusing on orders you have perhaps missed the point that not all orders merit an announcement and income is generated from other sources.

Your post (1561)stated :- "Also orders appear to be in place to sustain turnover in for H1 but who knows what will happen in H2 ?"

This suggests to me that you don't really have a handle on the order situation and how it works with a company like HAYT.

This was also the reason I reacted to your post(s).

[grahamwales] 22/4/2017 17:41

The agreement includes the installation and long-term servicing of a gas turbine, the servicing of a generator and a steam turbine, as well as the modernization of the existing instrumentation and control systems.

[grahamwales] 22/4/2017 17:37

Possible PB order to come.

hxxp://www.powerengineeringint.com/articles/2017/03/siemens-to-modernize-combined-cycle-power-plant-in-the-uk.html

[rogerrail] 22/4/2017 16:43

Pavey, You presume too much and spout an awfull lot. FYI my focus has been more on orders and less on debt just look back at my last dozen posts, which is why I still see a potential hole in PB order book. Tell me something I dont know and provide some clarity on that.

[grahamwales] 22/4/2017 13:53

They are only 4 weeks into the new financial year so plenty of time to pick up even more orders to be included this year.

[pavey ark] 22/4/2017 11:08

RR obviously you have an agenda that does not include anything like an informed, reasonable and reasoned view of the current situation at HAYT especially your view of the order book and projected revenue.
I would have thought that people in your position would simply stick with the debt situation but you seem to have branched out on your own, good for you!!

I shouldn't really give out the following information as it's all there in the recent update and every HAYT shareholder should have gone over it repeatedly, in great detail and with a calculator but we all know that doesn't always happen.

1. The order momentum is very strong £25.4m in H1 to £42.9m in H2 (68.9% increase)
2. The company is claiming a very large pipeline on £500m of orders (we will see !)
3. The T/O last year was £63m and even though the bulk of new order were in H2 (late H2) the order book increased by almost 40% to £50m from £36m

The bulk of the new order were clearly weighted to this current year yet the income lat year was £63m and order book increased by £14m.(Given the lead lime on these orders I would suggest that very little of the £42m H2 orders are in the £63m revenue....just obtained very expert (but free) advice on this.)
The only way the above can be achieved is if the company has a substantial income from their repair and maintenance contracts.

As you rightly pointed out some of the current order book is for 2018 and even beyond but equally that would suggest that some of the opening order book last year (£36m)was for this year.
I have calculated that the maintenance contracts were worth c. £10m to HAYT last year but some sight guesswork and my figure is conservative.

Even I'm getting dizzy here but I think I can sum it up in one sentence.

To suggest ANYTHING other than the fact that the £50m order book offers fantastic forward visibility and security to HAYT is nonsense.

Time to go back to the debt !!

PS: one general point is that the new Centre of Excellence facility has reduced lead time but more importantly has afforded such control that management can spot any gap and the sales team can go out, offer a lower priced deal for an immediate order ,slot it in, and everyone's a winner.
I expect this to happen in and around the substantial order book.

[rogerrail] 21/4/2017 18:36

PaveyYou missed the point. I agree orders look healthy going into H1 and probably into H2 as long as the orders continue to roll in anywhere near the rate they have been. But dont forget some of the £50m order book is for 2018 and beyond, and the fly in the ointment could be the PB order book. Not much has been announced there and even a short period of low activity could lead to further heavy losses. Have to say ELB sounded pretty optimstic on the recent BRM call so maybe my concern is misplaced. One thing I do know for sure is that AVG will run the business far better that the current encumbents.

[pavey ark] 21/4/2017 16:41

RR I'm in a rush but you have totally misinterpreted HAYT if you think that an order book of £50m merely supports H1 revenue.
There are no guarantees in this life but an order book of £50m ( over £40m in the last six months) will take most of the surprises out of the picture.
I have previously shown that the order book is heavily suplimented by recurring maintenance and support revenue and are you honestly suggesting that new orders of over £65m in the last year will suddenly dry up.
Nice try.

[grahamwales] 21/4/2017 15:23

HAYT could have made profits if 1. they hadn't invested heavily in Luton and 2. not bought PB. However they are forward thinking and have done the right thing to secure the future of the company. If the bid fails then I can see a counter bid for AVG possibly with the help of RBS.

[rogerrail] 21/4/2017 14:41

PA

I think you have totally misinterpreted AVG. They run businesses for the long term. They have made significant investment into their Chatteris site to supply nuclear industry and also in establishing a presence in China, and previous businesses Sigma and Jentec were also properly supported. I for one would rather see the AVG board at the helm than ELB.

Also orders appear to be in place to sustain turnover in for H1 but who knows what will happen in H2 ? Hopefully if you believe ELB there is a steady pipeline of work to go for and all being well that will transpire , but there is no guarantee PB for example wont incur further heavy losses.

In terms of cost savings, the focus to cope with the lumpy nature of orders has to be to run a lean business . That could mean more use of subcontract both on the staff and make side. AVG went to the extreme with one business Maloney when the price of oil slumped to exit manufacturing altogether and use subcontract, not saying that's possible for either HAYT or PB but indicates that the management are capable of taking effective action and strategic business decisions quickly.

[nearlythere] 21/4/2017 12:17

Pavey Ark

Imo a reasonable summary of the current situation, the only outstanding issue IMV is RBS which i will expect to be resolved within next 2 weeks or so.

They took their eye of the ball with Peter Brotherhood but this sometimes happens. Given the current order book they have no reason to accept a low offer as they seem to have already overcome the difficulties.

time will tell
I have a small holding @ 38p

[grahamwales] 21/4/2017 11:52

When he talks about taking costs out would that entail merging Peter Brotherhood offices with Haward Tylers? Or if they were to merge with AVG there would be additional office cost reductions.

[pavey ark] 21/4/2017 09:56

grahamwales, a merger is possible and in my mind more likely than AVG being able to come up with the cash required to buy HAYT outright.
Bit of a mismatch though as HAYT appears to have a long term view where AVG is a more a boost to sell operation.
Mergers usually work best where there are obvious synergies and the ability to take out duplicated costs.
Although both companies are engineers I don't see much in the way of overlap.
I expect that AVG gave some indicative price (for an outright buy)at the start of negotiations but the HAYT statement suggested that this was low.

The AVG pitch is obviously based on them taking out costs so it is only natural that the HAYT management should state that THEY can take out costs.

With all that has gone on recently and with the record order book I would be surprised (shocked) if the management were not now looking at maximising the opportunities afforded to them with their substantial investment in their Luton plant.

Even the most biased former HAYT shareholder (and the evangelical AVG holders)can see that the root cause of HAYT's temporary ills was the poor H1 performance.

The reasons given for this performance were given and seemed perfectly reasonable to me:

1.Peter Brotherhood (bought to fill a gap in their product range) came neglected and without a flow of orders
2. The new facility at Luton was to be staffed and commissioned but not producing at a high enough level.
In short the costs and overheads were not covered.

In H2 things settled down and a H1 £5m loss (EBITDA)was turned round to a H2 £5m profit (EBITDA)

For me the most telling part of the recent update was the fact that the order book going into H1 this year was £50m and this was almost 40% up on the same period last year.
There is little or no chance of a repeat of last year's H1 losses and my prediction of £80m t/o and £8m EBITDA looks pretty safe.

Obviously still the cash to sort out but again if my figures are even close to correct a long term funding arrangement can be put in place or a fund raising rights issue for £6m-£8m which with the cash generated this year would put them in a very strong position.

Anyway we will soon see what AVG intend to do.

Interesting times.

[cockerhoop] 21/4/2017 08:31

Yes, you have AVG who are cash rich and have good management who specialize in turnaround situations and you have HAYT that have good products, some debt and poor management. Seems a decent fit to me.

Interesting that ELB talks (in the BRR media clip) about taking costs out of the business to improve margin, it's unclear whether it's PB or HAYT that he's talking about but sounds like the company isn't yet as profitable as he'd like post the investment - i'll be interested in H2 margins when the FY figures released.

[grahamwales] 20/4/2017 20:17

Any thoughts on a possible merger? Would it be a benefit to both companies bearing in mind they are both small companies at the moment.

[shanklin] 20/4/2017 17:54

So, with the operational side of the business going so extremely well, any ideas please on why RBS are not being a bit more forthcoming in terms of helping HAYT manage its debt on a longer term basis?

[pavey ark] 20/4/2017 16:07

varies, I must agree as 55p gives an enterprise value of c. £52m
If anyone thinks/believes that a T/O of £80m is on the cards and an EBITDA of more than £8m then this is the cheapest listed engineering or defence contractor in the UK.
With the company as profitable as this and their past record of converting EBITDA to cash then the debt will fall this year.
The company are not happy with an debt/EBITDA ratio of >2, so they must be aiming to reduce debt by at least £6m this year.

[pavey ark] 20/4/2017 16:00

Anyone suggesting that RBS is under the impression that their money is "keeping the lights on" at HAYT is likely to be wrong about every other aspect of the company ....Oh!!... wait a minute!!... they have been.

Lignum, yes the spend in Q4 should be turned into cash in H1 so the eye catching debt is not really the full story.
I agree that a rights issue would probably help but I suspect that it was a chicken and egg situation as the share price fell because of the uncertainty and was the compounded by management being unwilling to issue shares at the then reduced price.

I have never subscribed to the wholesale dilution theories and 15m issued at 45p would please me but I think that we may have moved beyond that and management may be prepared to tough it out.
The AVG bid simply complicates the whole process but that should become clearer next week.

The "ghost at the feast" refers to the ghost of Duncan, murdered by Macbeth.
Macbeth can see the ghost at the feast and it rather puts him off his dinner.
As Macbeth descends into madness the ghost plagues him.
All a bit drastic and I'm looking for a less troubled solution to HAYT's debt issue.

[varies] 20/4/2017 12:56

A terrible spread : 50-57p.
Even so, I have bought a few more shares at 55.5p.
Given the more certain outlook, I cannot believe that the RBS short-term debt will not be resolved soon (perhaps as part of a new package) and regard 55p as a fair price even without a bid from AVG.

[cockerhoop] 20/4/2017 11:09

Nearlythere,

At least 2 further RNS's due before the end of the month. AVG has until 28th 'to put up or shut up' and HAYT need to resolve RBS issue - it's possible that as the revenue growth levels off the working capital drain witnessed in H2 could unwind.

[shanklin] 20/4/2017 10:53

On the cash front, is today's announcement any different to those of the last several months? Presumably RBS are not delighted about the current situation but are not making it impractical for HAYT to go on behaving as a going concern.

[nearlythere] 20/4/2017 10:31

Given the tone of the statement, I expect some news soon on banking facilities , hopefully not another months extension but a longer term agreement. In general IMO even if the take over fails the company is making good progress