Shearwater Share Discussion Threads

[dickbush] 15/12/2009 15:05

Thanks, Mattjos. Puts a bit more meat on the bones of what I was saying.

[mattjos] 15/12/2009 14:39

you would have thought they'd issued a profits warning on this performance .... the co & the BOD will be in buying more of their own shares in the market if this continues or else someone will make a bid .... current price suggests the market thinks they will at very very best best breakeven or make a small loss for the year which seems a nonsense, imo.

Celeritas .. I agree, they are begining to make a honking noise.

[dickbush] 15/12/2009 14:05

I put down the decline in the share price today to the poor market. Only astoundingly good figures would be met by a price increase in this environment, and they aren't that. Outside of the pension fund, about which they can do little or nothing, the figures are solid and the management's comments all make sense to me.

[celeritas] 15/12/2009 13:00

Was only a matter of time, sitting duck at these levels.


Scott Wilson denies takeover danger as profit dips 5.3%
15 December, 2009

By Olivia Boyd

Chief executive attempts to downplay firm's vulnerability after half-year results

Scott Wilson played down reports the firm was vulnerable to a takeover bid as it posted a 5.3% pre-tax profit dip in its half year results this morning.

Hugh Blackwood, chief executive, told Building the engineer considered itself an "acquirer rather than an acquiree" and saw strength in staying independent.

He said: "We believe we can add value by remaining independent and most of the people in the market are aware of that."

However, he refused to say whether or not the firm was in discussions with anyone about a potential takeover.

The comments came as the firm posted better-than-expected results for the six months to 1 November. Group revenue fell 8% to £159.3m, down from £173.2m last year and adjusted pre-tax profit slipped to £10.8m from £11.4m in 2008.

Adjusted operating profit increased by 4.1% to £12.5m and adjusted operating margin rose to 7.3% from 6.7% last year. The firm has maintained its order book at £280m.

The company saw significant growth overseas, with a revenue rise of 16.7% to £42.4m. Cash from abroad accounted for 34.6% of turnover and Blackwood said this could rise to 50% within five years.

The thrust overseas is being partly driven by the anticipated decline of the UK public sector, which currently accounts for around 32% of group turnover. Blackwood said: "We have been through this before and we don't think it will be the end of the world. We are looking to replace some of that revenue with international business."

Blackwood also refused to rule out further redundancies, though he said he did not expect cost-cutting on the scale seen over the last year. Around 600 staff have been axed in the past twelve months.

[dickbush] 15/12/2009 12:56

The value of the pension fund assets are up 10% on the previous year which doesn't seem too terrible. The value of the liabilities is, however, up almost 50% over the same time, almost entirely due to the reduction in corporate bond yields and the discount rate to 5.6% from 7.1%. Frankly, I take the view that this highlights the shortcomings of actuarial valuation methodology for pension funds rather than truly reflects the deficit of the SWG fund.

Even assuming it is correct, and adding it into the Enterprise Value (EV), the EV/EBITDA multiple for this financial year is 6 times. Ex that deficit, the EV/EBITDA multiple falls to less than 3 1/2 times.

My bet is that 6 or 12 months from now bond yields will have risen and equity prices will have risen, both of which should reduce the fund's deficit on an actuarial basis.

[mattjos] 15/12/2009 09:41

Indomie .. I agree. The pension fund seems ot have been too conservatiley managed this last 6 months .. you can't blame them for that as they are not equity traders! Could eaisly flip back next year if/when yields improve in market volatility.
34% of revenue coming from outside the uk & growing at 10% per annum, India infrastructure is going gang-busters under the new govt & will continue to do so for the medium term. Australia (from personal experience) is almost asking 'what recession' such is the strength od their economy & Canada too.
The UK side looks well suported in Rail & the environemt side.
If they only do half as well for rest of 09 that gives an adjusted EPS of 15 for the year & a P/E of 8 ...... + the likely FY 3% divi looks very well supported by the strong cash-flow.

to me this report looks as much like a set of interims as it does a Due Diligence report for any interested parties to go through & there will be some looking enviously at Scott Wilson's international business. IMO, they are doing a great job in diversifying their revenue & earnings streams into more attractive overseas markets whilst continuing to stand-up well in the, soon to be less so, core UK market. Half of the year de-risked and some indicators of some bunce held back for the FY report .... still a good buy i feel

[indomie] 15/12/2009 08:52

in respect of pension deficits these require long term monitoring and attention as they will fluctuate year to year....its not uncommon and certainly isnt on a scale where it is should concern shareholders....

had a read and liked the size of the margins on the business in the far east (i.e.: india) and the reduced exposure to the uk and yes the style of the new reporting is also much more transparent! revenue growth in overseas mkts is impressive as is the higher contribution from jv's....

the talk of 'bolt on' acquisitions wont get shareholders overly excited though imo...especially if some of the best opportunities have already passed....but for me that makes any takeover approach all the more interesting ;=p i dont think mgmt did enought to limit the pain of falls in the share price to shareholders so no loyalty there anymore for me....if someone comes along with an offer i will seriously consider it as i have a big exposure to SWG (far more than many of their own directors!).

[mattjos] 15/12/2009 08:35

2:1 120:125

[martin2729] 15/12/2009 08:31

anyone no how level 2 is looking?

[mattjos] 15/12/2009 08:28

marvelman.. at first read the pension defecit is a concern however .. the growth in international revenues making up for the UK & Middle East markets is v v encouraging, so too is Rail. The results feel more like a DD report - anyone interested can see all they need here. The new reporting structure is so much clearer than last year. This business looks like a cheap bolt-on for some now.

[indomie] 15/12/2009 08:05

International Regions

Scott Wilson's International Regional Operations comprise four regional businesses: Asia Pacific, Europe, India and Middle East. The first half has again shown rapid revenue growth.

Revenue increased to £42.4m representing a year-on-year growth rate of 16.7 per cent, with adjusted* operating profit growing at 6.2 per cent.

[marvelman] 15/12/2009 08:03

Bought yesterday, sold today based on that huge pension deficit that has tripled since last results.

[celeritas] 15/12/2009 07:46

slap, I'm still reading them, very long set of results with each market seperate.

I think you'll agree the headline figures make the current share price look far too low.

[indomie] 15/12/2009 07:39

Results Out..............

Looking forward, our new management structure has invigorated our business at all levels and we foresee substantial opportunities in the months ahead. Strategically, an increasing proportion of our order book pipeline will be associated with major international projects where we can use our long-standing reputation for quality and reliability in delivering highly complex projects. As a result of following this strategy we now have 34.6 per cent of our revenue sourced outside the UK (H1 2009: 30.6 per cent).

As markets recover, it is our intention to resume our strategy of seeking out value-adding acquisitions and integrating them into the business. Consequently, we remain confident that, despite more potential turbulence in the UK, we will be able to plot a successful course and make headway toward our long term aspiration to become a successful and growing integrated global enterprise.

Our internal plans assume no significant growth in our UK business this year or
next. However we see continuing growth opportunities in our international
markets. The Group already operates across all geographies and is particularly
well established both in China and India: two major growth markets. Our
diversified business model, strong order book and financial strength continue to
give us confidence that we can respond effectively to market developments and
opportunities as they arise.

[slapdash] 15/12/2009 07:38

Cel - so views on these results??

[celeritas] 14/12/2009 23:41

Mouchel related but swg operate in the same sector.

There is also speculation that Serco and Capita may be waiting in the wings to counterbid if a formal approach materialises. However, this is not a certainty and investors should not buy shares on bid hopes alone.

[indomie] 14/12/2009 17:03

All indications are that we'll see results ahead of mkt forecasts tomoz too!

[mattjos] 14/12/2009 14:12

73m shares in issue.
35.91% tied-up in notifiable fund holdings & the BOD

46.785m in free-float .... so about 1% of available shares bought so far today

[petersmith6] 14/12/2009 13:40

with whats going on wich muchel i wouldnt be supprised if SWG are on some ones radar and they buying in just incase.

[mattjos] 14/12/2009 13:25

is it 73m shares in the float? interesting to see how many get bought up this week ... that 375k represents 0.5% in one hit ..... any bid activity would likely see a position being taken first

[celeritas] 14/12/2009 11:34

Yep, that would have took some filling with the relatively low trading volume, probably been going on for a while.

[mattjos] 14/12/2009 11:23

375k shares just bought @ 119 ... people finally starting to see the value here

[mattjos] 14/12/2009 11:21

This is pretty damn big Copper & Nickel resource statemnt for Duluth Metals ... Scott Wilson once again through their Roscoe Postle operation in Canada. If you have a look at Roscoe Postle website you can see the breadth of their operation across the world, by client name & by raw material .. v. impressive.Resource report doubled the share price for Duluth