Norman Hay Share Discussion Threads

[ed 123] 06/2/2013 17:30

Thanks, Orb1t. :-)

We're not told the conditions of the acquisition by HNN. Sifco are also silent on the detail. This is one of the advantages of running a delisted company; keeping sensitive information away from customers and competitors.

I can't see them relisting. They've not long escaped from the formalities of a stock market listing.

[0rb1t] 06/2/2013 17:04

The acquisition seems very good. Increasing their product offering in their niche market and also expanding their cross-selling opportunities.

I didn't think HNN would be that active after unlisting. Maybe they will relist again if they need funds to continue expanding.

[0rb1t] 13/1/2013 12:04

Not a generous offer. That is under a PE of 7 for the YE2011. For the year just finished it will probably be even lower.

[royaloak] 13/1/2013 10:31

Received a tender offer of 80p yesterday from the employee benefit trust. Current dividend 3.5%, so not a generous offer, I will not be accepting.

[davidosh] 10/1/2013 12:35

I will certainly be keeping my shares. The dividend is adequate to keep me warm.

[127tolmers] 02/11/2012 19:34

Just found this thread is still active after delisting.

For 12 months mid 2007 - mid 2008 the share price averaged about 120p with a peak of 150p.

The business/finance fundamentals now are not materialy different from then. The major change is delisting and I would assign a 50% discount if totally illiquid or a 25% discount in their current halfway format. I voted against delisting on this basis.

So for me a "fair" price today is about 90p with a proviso that profits don't fall causing liquidity to dry up. I am pleased that a reasonable exit is being offerred but will hang for 150p. The divis are still good.

Family companies are always vulnerable to family splits, retirements and takeovers. I still think this is long term hold until a major event.

To see a BritDAQ quote takes a lot of form filling which I gave up on. However their emails chasing my form completion suggest they have also a market buyer at 80p.

I am surprised that the accounts cannot be accessed via their website. Luckily I keep my hard copies and see that note 26 shows that 976150 unapproved share options are exercisable before 2019 on achievement of a 150p share price or change of control. So there is an incentive for the directors to get the price up to 150p.

[ed 123] 02/11/2012 14:42

The Company's Employee Benefit Trust is offering 80p per share to buy holdings from private shareholders, without any costs.

This is a much better arrangement than the old Jenkins one (63p plus high costs).

Notwithstanding all that, I'll be keeping mine.

[glassboy] 13/10/2012 14:30

Thanks Wilmdav - I did belatedly receive my letter a few days afterwards.

Let's see whether there's enough trading to establish a price. Though quietly holding the shares without any visible price has been pleasantly relaxing...

Gb

[wilmdav] 13/10/2012 14:09

Glassboy,

J P Jenkins replaced by BritDAQ from 1st Oct.

www.britdaq.com

"Shareholders seeking to use the share matching facility will need to upagrade to Gold Mmembership which is free of charge"

[glassboy] 28/9/2012 14:49

Now gone from the LMMX "matched markets" site (formerly JP Jenkins).
So perhaps alternative arrangements will soon follow.
Gb

[davidosh] 26/9/2012 08:31

Just a reminder that I am prepared to buy stock at 70p if anyone is looking to sell.

[glassboy] 25/9/2012 15:47

Interim dividend of 2.8p declared, up 0.2p.
Gb

[ed 123] 02/7/2012 11:03

Wilmdav.

Thanks for that.

Nick Odgen is saying (with a little bit of rounding) what I said. He is saying that the sale of the whole 75% of Tam International by Norman Hay generated a total payment of 4 x £1.7m. I am saying the payment (net of the borrowing) was £1.55m + 3 x £1.7m. The difference doesn't matter to me.

The next material event should be an acquisition.

This looks a well run business.

I may let them buy my shares in a couple of years for 200p each. We'll see how it goes.

Thanks again. :-)

[wilmdav] 02/7/2012 10:16

Ed123

I have now heard again from FD Nick Ogden. The situation is better than I reported.

The stated multiple of the original 2006 investment (£1.7m) was 4 times not 3. I put the error down to my scrambled brain struggling to retain as much as possible of the information coming my way. He says this includes repayment of the debt mentioned by you, so that and what is left of the investment needs to be deducted to calculate the profit.

My impression that they now hold virtually no debt was correct. They did take out a term loan a number of years ago but this will be repaid in the next 3-4 months.

With regard to resolutions 5 and 6, these are standard and dictated by the Articles. The confusion that arose at the meeting was in relation to the "script", which didn't mirror the accounts. The resolutions as they read in the accounts should stand.

The above is good enough for me but if you wish to discuss further I am sure he would be happy to take your call.

[wilmdav] 02/7/2012 08:21

Ed123

I am going to seek clarification but think it likely that you are more or less correct about the sum received for the second tranche of Tam. It was mentioned that the approximate 3 times original cost did not take into account some debt that would affect the figure somewhat.

3800

I should make clear that management did not respond to the 70p suggestion from one shareholder. The feeler put out by Peter Hay when initiating the discussion went along the lines of him wondering whether firm holders (e.g. those present) would wish the price to be much above what anyone could currently obtain. The purpose would be to mop up some of the very small holders to reduce the cost of administration. It was not said but I suppose they could put a limit on the number of shares held by an individual that would qualify for such an offer.

[davidosh] 01/7/2012 18:52

Indeed I am a buyer and if anyone here is keen to sell I can arrange a deal through my broker to yours at 70p as soon as you wish.

[3800] 01/7/2012 14:56

As for the fair price for the shares, the last trade which J P Jenkins did on 18 4 12 was at 57p. So its little wonder the management thought 70p was generous. I have tried to buy more myself in the past but unless you use a full service broker or open an account with J.P.Jenkins yourself it doen't appear to be easy. I don't know who the lucky buyer was at 57p but do recall in previous posts Davidosh being keen to increase his holding.
3800

[ed 123] 01/7/2012 12:14

Wilmdav.

Many thanks for your excellent write-up of the agm.

Regarding the second payment for Tam, it must have been 3 x £1.7m for the remaining 40%, since £5.1m was the agreed minimum payment for that portion of Tam.

That was good business for a company as small as HNN, buying 75% of Tam in December 2006 for £1.7m and selling it 5 years later (when trading at around break even) for £1.55m (net of debt) + £5.1m = £6.65m.

Bringing forward the date for the execution of the option meant HNN possibly accepting a reduced payment (due to the profit formula), but gaining a couple of years of discount factor. Also, it gives HNN the cash at a time when investment capital is at a premium and good deals can be struck by buyers with cash.

HNN has a history of buying complimenatary businesses and I'm expecting them to use the money well.

Regarding JP Jenkins, they were awarding themselves a big margin for undertaking what is essentially an administrative job. So, I'm pleased that Peter Hay spoke of taking it in house.

Finally, on the subject of a fair price to small shareholders, I'd say that 110p was nearer the mark. The shares traded around 90p ahead of the delisting announcement. Since then, there have been improved financial results, report of strong current trading, and the receipt of the cash for Tam.

Thanks once again, Wilmdav. :-)

[gengulphus] 30/6/2012 12:43

Wilmdav,

My thanks as well! And I don't think I'll be accepting any offer to be "mopped up" at 70p - I think I'd prefer to do such "mopping up" myself!

Gengulphus

[davidosh] 30/6/2012 10:09

Thanks Wilmdav that was excellent and proof that in a good well run company delisting can be a good option and not something investors should fear.

[3800] 30/6/2012 09:16

Thanks for taking the time to attend the AGM and writing it up here Wilmdav its much appreciated by those who have full time jobs and who are not able to attend. Interesting observation about J.P Jenkins , I wounder how much they get paid? As for 70p a share I think I would like to buy some more at that price too. 3800

[wilmdav] 29/6/2012 22:05

Ed123

There were about 30 persons present, including directors and family shareholders (who together own 55% of shares). Most if not all the PIs chipped in with intelligent comments. One was particularly talkative and at first I thought he was going to be a nuisance. He spoke fast and not very distinctly, which combined with my deafness meant that I did not pick up much of what he said. However, Peter Hay took him seriously and I don't think he was just being polite. Another PI was very articulate and I wondered whether he was you but didn't get the chance to ask.

There was ample time before and after the meeting to chat with directors and a couple of subsidiary managers. In fact all my questions were addressed informally before the meeting. I asked Peter Hay if the possibility of a sale of the Coventry freehold property might re-emerge. He said not in the medium term. The site has been developed quite a lot. They were messed about so much by Coventry Planning department that the previous potential buyers, Unite, pulled out.

I asked about Tam during another conversation with FD Nick Ogden and Director of International Business Development, Lee Shelton. My suspicion was that Tam had not made an overall profit during the 5 years of HNN's part-ownership. Certainly it lost money in 2011, although the Chairman's statement implies a return to profitability in the second half and thereafter. However a decent profit was made on HNN's original sale of 40% of their stake to Norbet . Part of the transaction was provision of a call option by which Norbet could buy the remainder of HNN's stake in Tam during a 2-year period from 31 May 2014. The consideration was to be 6 times profit for the year immediately preceding the sale. The Finnish company evidently found more synergies in the business than did HNN because, as you spotted, the option was pre-empted by a deal earlier this month.

I asked if they could reveal numbers and was told that the figure was approximately 3 times what they originally paid (£1.7m). It did not occur to me until afterwards that it was unclear whether this was 3 times the cost of their original stake in Tam or the proportional cost of the balance of the stake after 40% had been sold to Norbet. During the meeting it emerged that HNN now has £10m in the bank. This too needs clarifying in case there is any off-seetting debt. At 31/12/11 they had £2.55m net funds, consisting of £6.7m cash and £4.0m debt.

It was also clear that there is no intention to return cash to shareholders. They are currently looking at two potential acquisitions, one in Germany (two directors approaching retirement) and one in Ohio, USA.

My third pre-meeting question was to Nick Ogden and related to Resolutions 5 and 6, which frankly I did not understand. These relate to allotment of shares and equity securities. He said they were pretty much standard. However there was some discussion of these during the meeting because the possibility was raised that they might not comply with some recently introduced new law. The wording had been cleared by their solicitors but an assurance was given that the matter would be looked into and "you will be informed of the outcome". Sorry I can't be clearer about this. Maybe someone here can throw a little light.

Business is booming, especially in Ultraseal and Engineering. 41% of HNN's business is in automotive, which is a growing sector globally. 20% is in aerospace, the majority of which is Engineering business.

Peter Hay expressed dissatisfaction with the arrangement with J P Jenkins. They are going to provide an in-house matched share dealing service. It was also said that they were considering making an offer to small shareholders to mop up some of the comparatively insignificant holdings. He put a feeler out as to the kind of figure that would be considered as 'fair'. The articulate PI, referred to above, did suggest a figure of 70p and argued persuasively for it on the grounds of related dividend yield.

Perhaps the most important impression I took away was one of maximum trust in the integrity and capabilities of directors and the managers present. Peter Hay is a brilliant Chairman. The meeting was instructive and conducted in an open, relaxed and friendly atmosphere. This was unquestionably the most enjoyable AGM I have ever attended.

[ed 123] 29/6/2012 13:04

Unfortunately, I couldn't make it. I'd be very interested in reading your comments, Wilmdav.

Earlier this month I saw that Normet acquired the remaining 60% of Tam International. I recall that the price was to be subject to a performance formula. Did Peter Hay how much HNN received? Was the possibility of a special dividend or partial return of capital discussed? Any comments on post-Tam strategy?

Look forward to reading about the agm. Thanks. :-)

[wilmdav] 29/6/2012 09:34

I have some very positive things to say about yesterday's AGM but am tied up until late this evening. Was anyone else from this board present?