Leeds Share Discussion Threads

[roomey] 02/2/2007 16:57

Anybody else concerned that we no longer have any independent directors, and that the board is made up of PG,JC (holders of around 40% of shares) and EW who is an employee of PG they basically have full control of ldsg, whos there to look after the interests of the other 60% of shareholders.Also why has it never been disclosed/mentioned before regards the 5 acres at least not in the 4 years Ive owned shares very strange.
A couple of articles of interest:-
www.leedstoday.net/viewarticle.aspx?sectionid=56&ArticleID=793630 (para 5)

and www.boraswafveri.se ( Johan Claesson major shareholder and director)

[morwood] 02/2/2007 12:14

Des,

Agreed, whatever way you look at the £130k, its still a Kitchen sink job. I think we will need to stay put on these for a while longer before the value is outed.

Arthur, would be great if you can confirm

[arthur_lame_stocks] 02/2/2007 11:31

I think I can see what you´re doing but I think they were talking about 130k pbt not 130k less net profit. If I get a reply from the company with regard to my earlier questions perhaps i´ll ask them to clarify that one too, I suppose it´s a bit ambiguous.

[deswalker] 02/2/2007 10:44

One final post on the results regarding margins.

Hemmers PAT excluding the 32k one off tax = 471. The results say that it is "profits" that has been affected by the 130k stock write-off which I take to mean this figure. So, adding this back gives a PAT of 601 and grossing up by the same regular tax rate paid by Hemmers (241/712 = 33.85%) implies an effective PBT of 601/(1 - 0.3385) = 908 (Tax Paid = 307 and PAT = 601 as required).

Adding back the 204 interest charge gives an OP for Hemmers of 1112 (better than the 916 + 130 = 1046 that we have been assuming Arthur).

Adding back the Admin and Distribution Costs (1984 + 874) gives a Gross Profit of 3970. On a Turnover of 16320 this gives a Gross Margin of 24.3%. Much better than one might be lead to believe based on the Headline numbers (3774/16320 = 23.1%) and not quite such a crunch from the 25.7% achieved the year before.

I maintain that they've done a kitchen sink job with the exceptionals and talked the numbers down to allow further buybacks (and hopefully not something horrible) on the cheap.

Comments welcome.

Des

[cg1953] 02/2/2007 05:29

arthur.
'reputations in the city' !!! ?
they havent got one !!!! other than spivs.
clearly they are now not going to sell hemmers and liquidate ldsg, so watch our for some cozy incestuous deal.

[deswalker] 01/2/2007 17:49

Thks Arthur.

I'm guessing any possible progress on the land would be so far off as to be worthless at this stage. I'm not surprised the Council don't want to designate it as Green Belt as I think there is a general move away from doing this across the country so that it allows Councils to never say never as regards building.

Interesting email. Just hope these two (plus Ewen Wigley who apparently, according to a post above, is JC's employee) remember there are other shareholders here.

However I'm more comfortable than others about the situation. Having signalled that they intend to buy back shares up to NAV, I can't see how they could justify a bid under this (when they're not supposed to be acting in concert). The alternative is some sort of dodgy incestuous purchase of another of their business interests. This would then require an EGM and if it was seen that they pushed it through dishonorably then their reputations in the City would be damaged. Can't see it myself. I still believe their interests are alligned with ours for the time being.

Des

[arthur_lame_stocks] 01/2/2007 17:38

I wonder if that 113,000 is the company buying in stock. I´ll hazard a guess not they usually buy in nice round numbers, that looks a bit like somebody has bought 25k of stock.

Perhaps the company will clean out the market at the end of the week, I think they´re able to buy now the close period is over, the authority should last until the next AGM.

[arthur_lame_stocks] 01/2/2007 17:31

Actually Des according to the councils UDP the land is currently designated as a "protected area of search". As I understand it this means the land is not to be developed as part of the current local plan but is not green belt either and is available for long term development.



It starts on page 82 or at policy N34, whichever you prefer. It´s a big pdf file so make sure you´re using broadband.

I believe our site is Haw Lane which is 2.27 hectares.

So if the residents fail to have the land designated as green belt or as a village green it may be developed at an indeterminate time in the future.

[deswalker] 01/2/2007 17:16

Thanks. I understand the situation now. Sounds like there would be uproar if it has been used for generations as public space and then they were to build on it. Not holding my breath on this one. Des

[mikeroberts48] 01/2/2007 16:37

I think these links will explain.Local opposition to use of land other than as village green designation

[deswalker] 01/2/2007 15:11

Arthur,

Re Goodwill.

I work on EBITA/EV quite often. Not so keen on ignoring Depreciation sometimes but quite happy to ignore Goodwill (ARG is a good example of the difference IMO).

Note 9 of the 2005 AR explains the position pretty well. It says:

Intangible fixed assets comprise the goodwill arising on the acquisition of Hemmers-Itex Textil Import Export GmbH in December 1999, which is being amortised in equal monthly amounts over 15 years.

They are amortising about 93k per year for 15 years (1395k in total).

Now I don't know whether "Hemmers-Itex Textil Import Export GmbH" is the whole of Hemmers or a subsidiary of the whole Hemmers. If it is the latter then the amortisation should be accounted for in the Hemmers Operating Profit figure (and not have anything to do with the Central PBT). If it is the former then it should be accounted for in Central costs.

Either way it don't matter as it's swings and roundabouts. But it is non-cash in a way that Depreciation sort of isn't so it's sensible to add it back IMO.

Could you please explain this business with the land. What are they hoping to do and what is the current situation. Many thanks.

Des

[deswalker] 01/2/2007 13:17

Arthur,

That's my understanding. I'm guessing that this 130k is a one-off but have seen someone questioning this with you on TMF. Similarly I'm hoping the two tax charges (32k & 75k) are exceptional. I'm rather more confident about these.

Regarding Hemmers ....

There's no getting away from the fact that H206 Turnover is (exactly) flat cf H205 and that Gross Margins have been hit (although the 130k exceptional improves H2 margins back to 22.7%. still not great). Distribution & Admin are well under control but Hemmers Interest is higher for some reason. Tax looks fairly normal excluding the one off 32k hit. Net debt is lower and hopefully it will stay that way and filter through into lower Interest charges.

Regarding Central ...

GBP rate rises plus reducing Central costs obviously means that this is improving.

Lets see if the new initiatives at Hemmers start to filter through this year.

Do you agree with my figures ?

Des

[the diviner] 01/2/2007 13:14

Looking at what we have today from the latest report the raw figures are;

P/E = 16
Yield = 0%
Gearing = -27.5%
PTBV = 0.76

The figures regarding Hemmers are cloudy. (I hope that some form of cut price management buyout is not planned for this last remaining trading asset).

There is still value in LDSG but I do not like the grand plan of buying something or the lack of a dividend.

They still plan to keep our cash available to buy something with. (IMHO they should give the spare cash to us and we should be able to buy what we want with our money).

Furthermore, they have chosen not to pay a dividend out of the spare cash or put in place a mechanism that quickly returns the cash to us. (I do not mind their buying shares in the open market, as long as it is below NAV, as that is IMHO a good idea but it does not change the cash situation quickly). I would prefer some sort of mechanism whereby our cash is returned to us by capital purchase of shares from ALL shareholders/a share consolidation with a cash payment per share. (eg. a 2:1 share consolidation with 50% of all issued shares being cancelled and 28p per cancelled share being paid out would leave us with half the shares and the cash). Hemmers would sink or swim and we could decide to hold or sell the remaining shares.

[arthur_lame_stocks] 01/2/2007 12:47

Des

So adding back the 130k stock writedown would give a pre exceptional operating profit of 1046k at Hemmers. That must be their best ever full year result.

I´m trying to find out more about the land at Yeadon, I have a feeling it might prove to be a red herring though.

[arthur_lame_stocks] 01/2/2007 12:07

Des

85k is exactly the amount charged to leasing before it was disposed of so that probably explains it. Thay haven´t included leasing´s interest in the full year profit and loss.

[arthur_lame_stocks] 01/2/2007 12:04

lqs

It´s due to the loss on foreign currency translation and the share buybacks. The shares are held in treasury, not actually cancelled and can be reissued, but they do not appear as an asset on the balance sheet, but the purchase reduces the cash on the balance sheet and hence assets overall. These two things cost the company about 160k in the second half.

[deswalker] 01/2/2007 12:01

Arthur,

Good question. The P&L shows net interest received of -8k whereas my calculations (which I think are right) shows net interest received of 281k - 204k = 77k. Clearly this is a difference of 85k. There will have been some interest payable for Bibby in the period but 85k in a month sounds a lot. At 6.5% this would imply a principle of 85 * 12 / .65 = £ 15.7 mill which ain't a mile from the debt in Bibby's is it ?

I'll look into the Goodwill issue later.

Des

[arthur_lame_stocks] 01/2/2007 11:51

Thanks Des.

Why is it that in the breakdown of central costs they show interest income of 281k but in the bottom of the p&l they show just 207k? where does this extra 74k go?

Also a point that hasn´t been mentioned is the goodwill charge of 96k. I don´t know whether this is charged against Hemmers or the central costs. Either way it should probably be added back in to any calculations of the underlying value.

[deswalker] 01/2/2007 11:47

lqs,

H2 certainly wasn't strong and I apologise for giving that impression. But, as the kitchen sink job above shows, three hopefully one-off charges (two at Hemmers and one at Central) have given the impression that it is actually worse than reality. Assuming they are one-offs ofcourse.

Interim NAV's are always a bit flakey IMO due to timing issues surrounding interest and tax payments etc but I take your point.

Des

[lqs] 01/2/2007 11:40

Im a bit confused as to why NAV has decreased from the interim stage if Des is right about the second half being strong

[deswalker] 01/2/2007 11:38

This is my full breakdown.

First Hemmers.

Hemmers Turnover = 16320
Hemmers Cost of Sales = -12546
So Hemmers Gross Profit = 3774
Hemmers Distribution Costs = -874
Hemmers Admin Expenses = -1984
So Hemmers Operating Profit = 916
Hemmers Interest = -204
So Hemmers PBT = 712
Hemmers Regular Tax = -241
Hemmers One-off Tax = -32
So Hemmers PAT = 439

Hemmers stock write-down to profits = -130
So Hemmers PAT ignoring one-off write-down = 569

Next Central.

Central Costs = -271
Central Interest = 281
So Central PBT = 10
Central Regular Tax = -4
Central One-off Tax = -75
So Central PAT = -69

Totals.

Total PBT = 712 + 10 = 722
Total PAT = 439 - 69 = 370
Total PAT adjusted for (hopefully) one-offs = 439 + 6 + 130 + 32 + 75 = 682

Total EPS adjusted for (hopefully) one-offs = 0.682 * 10 / 34.758 = 1.96p

Total PE adjusted for (hopefully) one-offs = 23 / 1.96 = 11.73

Trading clearly softened in H2 but the numbers have also been hit by three hopefully one-off charges (130k stock adjustment, 32k German Tax following audit & 75k deferred UK Tax no longer available (presumably after selling Bibby)).

Still it's clearly too cheap up to NAV IMO.

Des

[arthur_lame_stocks] 01/2/2007 11:19

I´m really confused by the interest charge actually.

At the half way stage Hemmers was charged 101k and leasing 85k. A total of 186k.
The full year charge was just 215k as shown in the accounts.

Interest receivable in the first half was 129k and a toal of 207k for the full year. So 78k for the second half. What am I missing?