Sivota Share Discussion Threads

[edmundshaw] 03/3/2014 17:42

Maybe I am being too cynical. I have no idea what the depreciation or amortization covers and am not a great fan of the EBITDA measure in isolation. (Things that wear out need to be replaced, why exclude depreciation?)

Granted, though, that you don't usually get much more detail in this kind of deal. But as Realise says, "With the support of St Ives Group, we can continue to grow both in the UK and internationally by being part of a larger group whilst still retaining our own identity and culture as an independently managed specialist agency", I get the impression of a bolt-on company rather than an extension to the service offering - I guess I am more concerned with the overall strategy with numerous bolt-on acquisitions having to be managed - more often than not, that kind of acquisitiveness by a company ends up earnings dilutive in the longer term, though of course there are exceptions, and of course SIV has to move to prosper, as standing still is not an option.

I am still a shareholder here, but a smaller one. The risk is getting higher, the rewards are getting smaller... just my opinion.

[leeson31] 03/3/2014 17:32

i agree David.. i think its a fair deal for SIV shareholders...

[davidosh] 03/3/2014 17:31

edmundshaw....there are two years listed with financial results for each. Please explain how you see NO growth ??

In the financial year ended 30 September 2012, Realise generated EBITDA* of £1.7 million on revenue of £9.7 million; gross assets were £6.4 million.

Unaudited accounts for Realise for the financial year ended 30 September 2013 show EBITDA* of £2.7 million (*before items of a one-off nature).


Looks good growth to me and certainly worth £21.7m (Note ..assets of £6.4m also to be considered but we are clearly not told sufficient to fully assess those.)

[edmundshaw] 03/3/2014 17:21

I read carefully enough I think; in my opinion, if there was no growth built into the acquisition, a fair PER (AFTER tax) might be about 10 (though I would prefer to look at enterprise value normally, that is comparable in this case). Assuming a tax rate around 20% they are paying a PER ratio of around 15 for no growth. At unspecified (are we supposed to be happy with unspecified?) greater earnings the ratio will be up to 28, and there damn well ought to be some growth to justify that. If no growth (which includes decline) is 15, I don't expect 28 will be £5m...

There are enough unknowns to make that look pretty expensive in my experience. Unless there are some hidden gems in the acquisition (talent or IP that is particularly valuable to SIV, for example). Otherwise, it feels like cash is burning a hole in the old pocket, and lets pay to reinvent the business and hope it works out. It didn't work out in many cases in the past (Marconi, Yell etc) so I think we are allowed to be concerned.

Of course £2.7m will be better if it happens, and the ratios look a bit better then. But after 20 years in business are they really suddenly expanding at over 50% a year or is it a one off? What is the 5 year average? Questions, no answers...

[davidosh] 03/3/2014 17:08

Come on guys read a bit more carefully please...

In the financial year ended 30 September 2012, Realise generated EBITDA* of £1.7 million on revenue of £9.7 million; gross assets were £6.4 million. Unaudited accounts for Realise for the financial year ended 30 September 2013 show EBITDA* of £2.7 million (*before items of a one-off nature).

St Ives has agreed to acquire Realise, on a cash and debt free basis, for £21.7million, to be satisfied by approximately £18.4 million in cash and approximately 1.7 million St Ives shares. Further consideration of up to £18.3 million may be payable (to be satisfied 85% in cash and 15% in shares) dependent on incremental financial performance for the years ending 30
September 2014, and 2015.


That means they are paying £21.7m for £2.7m Ebitda

Any further payments will have conditions attached and may mean EBITDA has to hit £5m or any figure you want to insert as it is not stated.
You cannot therefore state that they are paying the full earnout until it is achieved and may then sound a cheap deal !!

[edmundshaw] 03/3/2014 15:39

40m for 2.7m profit is better than building society interest. If they expect to grow that profit it might worl out - but agree it is not cheap - implies the business will not fall in value over time (a bit like cash without inflation). But inflation rates in business value are usually far higher than inflation rates on cash... Impossible to know if it is a good move, but as it looks expensive it is a bit worrying.

[richtea1701] 03/3/2014 14:27

Maybe - not cheap for sure but company reckons earnings enhancing this year, is dependent on their financial performance and like the focus on digital marketing. Time will tell.

[waveneygnome] 03/3/2014 13:41

Please prove me wrong, but I have a feeling they paid way too much........£40m investment for £2.7m profit.

[edmundshaw] 03/3/2014 08:09

Not cheap though

[davr0s] 25/2/2014 16:46

So what happened there at the close. About half the daily volume in UT well over the days trading range. Sign of things to come - hope so as this has done too much in recent months

[richtea1701] 04/2/2014 11:10

Great share - looking solid with Greencore and Vec. Good, honest, well -managed outfits.

[bookbroker] 04/2/2014 11:05

How's that Amaze performing, still a holder in HGV., hoping to see a decent amount of deferred performance payment?

[gswredland] 04/2/2014 11:02

looking good in falling markets

[redips2] 04/2/2014 10:02

still in and still a happy bunny .

[gswredland] 31/1/2014 18:07

Breaking out nicely which is good to see in a tanking market

[davr0s] 21/1/2014 11:16

Slowly climbing back up now but volume not great so not sure yet if this will stick. Still happy to hold though

[richtea1701] 02/1/2014 09:47

It's a strong buy for me

[scottishfield] 02/1/2014 09:45

45000 buy, that should steady the ship

[lord gnome] 02/1/2014 09:27

Taking another hit today. Looking at that chart, I'd say that the uptrend has come to a shuddering halt - hopefully just temporary.

[richtea1701] 13/12/2013 10:48

looking good again

[west coast trading] 12/12/2013 10:52

Fund selling. Read JIL thread where they've had a spike down.

[richtea1701] 12/12/2013 10:22

Got a few more at 166.

[ceaserxzy] 12/12/2013 10:03

A very good recent IMS in November and several heavy recent buys by three directors at about 180 p. A growth share at a pe less than 10. Good opportunity to top up when the market is a little nervous of external factors like qe tapering.

[scottishfield] 12/12/2013 09:46

buys coming in, share price going up.