Tp Share Discussion Threads

[swerves1] 29/1/2016 12:38

Pavey Ark,"I'll be back".But no sign of you coming back to Caza then, where you were constantly ramping at the same time apparently as it was heading to bankruptcy!Sorry for o/t, but the bb there now believe you were a paid ramper whilst your people were selling out. And now it's worth virtually nothing.So members here beware of same!

[the prophet] 29/1/2016 11:42

I believe there are a number of fundamental flaws in the Edison sum of the parts report:

The details of the Edison SOP valuation is given in their April 2015 initiation note. They give EBITDA's of Aerospace and Defence (A&D) companies. The sort of companies Edison use include the likes of Rolls-Royce, QintetiQ, BAE systems etc. The market caps range from £113m to £18bn, most of the companies featured are large companies and I question whether a comparison with TPG at market cap £11m is in any way valid.

They also look at the valuation of a number of specialist engineers, which may well be closer to the mark. The smallest, Hayward Tyler, has a market cap of £72m, but, again, most of the companies featured have market caps in the £250m-£3.5bn rang, so I again question whether a comparison is valid, I think not.It is perhaps noteworthy that the two smallest specialist engineers, Avingtrans and Hayward Tyler with market caps of £100m and £72m respectively come in with EBITDA of 5.5 and 6.5.

Therefore I would suggest that Edison's 10.3 EBITDA is a very full valuation indeed, I would suggest half that would be nearer to the mark, given the examples above and that, imo, is being generous.I just can't see anyone coming in and paying 10.3 EBITDA for ACI.

Moving on to the next part of the Edison calculation, Edison value E&P as zero, probably fair enough, although I doubt if you will find anyone to take them off your hands, so possibly a minus zero.

Edison then deduct £3.9m from their valuation for 'three times central costs', although the 2014 and 2013 annual report gives central costs in each year as £2m, and that excludes exceptional costs which don't seem particularly exceptional, be it opening the Slough centre, or closing it, or the very hefty £900K it cost in advisers and fees for buying the Wellman companies.
Anyway, perhaps they are assuming the costs will be £1.3m this year, then applying what looks like a fairly arbitrary '3 times' to that figure.

The trouble with the Edison methodology is it grossly overstates the value of ACI for the reasons given above. Nobody is going to come along and pay £30m for ACI. But, if we worked on the basis that miracles can happen, then that £30m will not be fully reflected in the TPG share price as what will be left will be a bunch of central costs, a loss making/break even E&P process combined with an investor deep distrust of the current management due to their track record of shareholder value destruction. Or, put it another way, the market won't trust them to use the cash wisely.

Edison's bottom line on the SOTP valuation gives an 'implied fair value of 7.3p', which is a market cap of £30m. That looks hopelessly over optimistic,imo and for the reasons stated above, but one would think there should at least be some upside from the current £11m market cap.

[pavey ark] 29/1/2016 10:31

In a rush ,bit of a problem with the roof, but I will return to this in more detail and, as you would expect,hard facts.
Edison looked at many,many similar companies and used the EBITDA and EV to find out what the market cap should be based on ACI alone.
What they said was that if you were one of these companies with an EBITDA the same as ACI and the cash and central costs you should have a market cap of c.£30m
As a statistical exercise it looked very sound to me.

As someone once said "I'll be back"

[kiwihope] 29/1/2016 09:08

I also think the £30M valuation on ACI is too high ... and I have looked at all the Edison notes. I just don't like using EBITDA as a basis for valuation. I know it seems to be the trend for 'early-stage' companies these days but I don't agree with it. It is after-tax profits that matter as they are what are available for distribution as dividends. And it's the sum total of these after tax profits over many years that actually matter.

Now I know TPG doesn't pay tax and has lots of tax loss to roll forward, and (at the moment) has a net cash balance so doesn't pay interest. But for me to value a company at £30M I would want to see a very good likelihood in the next year or two of £2-3M AFTER TAX profits (without any brought-forward tax loss because one day these will all be used). I don't see that yet.

I obviously take note of the growth possibilities (which I have to say I don't think are as great as Pavey) and the positive progress TPG are making. But they have only just reached breakeven on an ADJUSTED EBITDA basis! We are getting way ahead of ourselves to start taliking about £30M valuations.

[spook7] 28/1/2016 23:25

Despite past disappointments the investment case remains. TPG is an innovative British technology, engineering and manufacturing company reaching breakeven with a reasonably diverse series of commercialised cash generative products. Add in the support of major institutions, a strategicaly important supplier for defence procurement and a decent book of IP with some really exciting prospects. I'm keeping my eye on the order book and growth prospects while wondering what use that cash pile can be put to. Looking forward to the next contract win too.

[ricardo125] 28/1/2016 19:33

I just don't believe you nor Edison when you suggest that TPG have added over 20 million in value to ACI in four years or whatever. It's laughable but I can understand why you are so bullish when you hold at an average of 3p.

My memory is poor so I may have misstated somethings about TPG or its past, I do not fervently follow it like I used to do. It's more of a passing interest now.

All of this is banter and speculation Pavey Ark, I won't look into it in more detail until I see the finals.

[the prophet] 28/1/2016 19:07

Now that is pathetic, PA

correct info update:

I said options were re-based to 10p. That is 100% correct.
yes, there is a performance criteria, presumably the institutions had had enough of PC's non-performance and insisted on it.Fact remains the options have been re-based from 42p to 10p
Full rns here:



Good luck with the 15p, btw. £63m market cap at that level, assuming Phil doesn't have 'one last' massive dilutive placing, must be some other metal bashing firm out there looking for a pot of gold?.....

[pavey ark] 28/1/2016 18:56

Error/information update.
I am certain that all current shareholders will know this but the rebased options require the share price to be over 15p for something like 20 consecutive trading days for the options to be worth anything.
As a holder at an average price of c.3p then 15p might just be OK.
Again most will know that the company is in a closed period leading up the final results.

[pavey ark] 28/1/2016 18:42

ricardo125, I have explained at length why ACI is worth AT LEAST £30m.
Please read my posts on this matter.
The figures you give are wrong and your grasp of the circumstances round the Wellman deal and the subsequent development of the business suggests you have put little effort into this.
If my memory serves me well you even suggested ,quite recently, that ACI was worth little more than the £10m paid for it.
Put some effort in then come back with some real reasons why you're right and I'm wrong.
Hint: TPG paid for Edison to look at this and all the FACTS AND FIGURES are there but you may have to look through more than one Edison report, then you could look at the recent developments within the business and for that you'll have to look through the company announcement, while going through the company statements for the last four years you could jot down things like order book, earnings,etc,after all this you might like to Google something like " Asian submarine build" or "Submarine arms race"
When you've done all that I would love to hear your detailed valuation of ACI and who knows, I may have got a bit ahead of myself.

[ricardo125] 28/1/2016 18:06

Pavey ark, your valuation of aci is over optimistic if you ask me. Why if the wellman defence companies were so fantastic were they sold for 10 million when it was making 2.5m to 3m a year. A p/e is just a guide to value, at the end of the day you need a buyer. Maybe we will get lucky and someone will pay what you suggest it is worth but i cant see it tripling in sale price. Your valuation is highly speculative.

[pavey ark] 28/1/2016 17:04

You couldn't make this up.
To go from saying Cartmell's share holdings is only worth a couple of months salary to this is incredible.
What is more incredible is that anyone would go to this bother.
I'm no expert in these matters but this looks like very,very strange behaviour to me.( again this is my polite version)

For the rest of us who actually hold shares here I'm sure the main thing is that the CEO has bought a considerable number of share and therefore has "skin in the game"
No matter what your salary is if you invest what looks like a sum close to your top line salary for a year then you have clearly aligned yourself with the interests of all the shareholders.

[the prophet] 28/1/2016 16:36

I'm delighted to be able to give the full history of PC's share buying, as its says more about his business acumen and judgement than I ever could!

All these are buys:

April 2010 100,000 @ 21.5p
November 2010 placing 400,000 @ 15p
December 2010 36,920 @ 15p

march 2011 50,000 @ 14.129p
April 2011 125,000 @ 18p

April 2012 476,000 @ 10.5p

June 2013 200,000 @ 11.75p
December 2013 placing 350,000 @ 10p

September 2014 158,800 @ 6.25p

That adds up to 1,896,720 shares at a rough cost of £234K. The shares are currently worth less than £50K.
Good job we pay PC £260K otherwise it might be flog Big Issue time for Phil!

One can't but help notice that the buying seems to have dried up in recent years, sub £10K in 2014 and zilcho last year. Surely its a great time to average down and 'Phil' yer boots eh, Phil? Or perhaps he has noticed the trend of his buys from 21.5p drifting down to 6.25p. They're less than half that now Phil, buy now whilst stocks last!

[supernumerary] 28/1/2016 16:19

Cartmell's shareholding was probably pretty much forced on him by the institutions who thought that if they were going to back him, he should have some skin in the game. Or, of course, it reflects his over-inflated opinion of his own abilities...

[timojelly] 28/1/2016 16:07

Sorry TP, it was a rhetorical question. Kind of new that. ie MG put him there and have a big clout, which they haven't used to date, so any booting out by us sheep ain't gonna happen. My old user name was timmbos, been here years as I've mentioned so stuck here with massive loss. However with the current share price I do have the option to hopefully recover some of it. I have no gripes about how the company is currently doing business slow as it is. Gonna take time. Directors pay tho I stand by you, a travesty bleeding a fledgling company still trying to break even.

[pavey ark] 28/1/2016 16:00

Just back in and determined not to read the repetitive posts but I did say I would point out the obvious errors ( again you will see how nice I am calling them "errors").
The majority of Cartmell's share were bought at over 10p so to take the current price and multiply through is obviously very misleading but that was probably the point.
I would suggest that Cartmell has spent close on a year's after tax salary on share purchases.
Perhaps the people who don't hold shares should go through the shares they do own and see if the CEOs in those shares can match that.
The rest is just repetitive and has to be seen as rather strange.
Just for the record ,both Cartmell's and Crawford's remit/position changed since joining the company but really I am fed up with this.

Cerrito, my interest in Corac was certainly boosted/renewed when Simon Kings joined and I consider him a major asset.
The rapidly rising order book suggests that he knows what he is doing and his CV is incredible.
I was amazed that he should choose to join such a small company but he has and is now on the board.
Given his background he must be a major boost when TPG goes after foreign contracts and he must lend considerable status to the company.
If you go please report back.

[the prophet] 28/1/2016 15:26

timojelly

to answer your question, it was widely accepted at the time that Phil Cartmell was bought in by the institutions, namely M&G.
M&G clearly had a high opinion of Phil Cartmell, as they heavily backed him in the November 2010 placing @15p, their stake post this placing was 35m+ shares (14% of the company at the time)
Post the second big placing under PC's reign, @10p, M&G again waded in and ended up with just shy of 61m shares (19.77%).
The current position is M&G own 83.5m shares representing 19.77% of the company. Presumably they backed PC with the third massive dilutive placing @ 10p.
This is the leading 'in the know' institution.



Re a lot more shares than us, well, PC own just under 1.9m shares, not a lot, circa £50K, for a guy pulling in £260K+ a year from TPG that represents a few months salary.

Re what can you do about it? Probably not a lot.It would require the institutions to club together to force changes. But it ain't their money, they've written down their investment in TPG already, so I doubt if they are too concerned.
So options are strictly limited to flog your shares and receive a pittance or hang on and hope the sheer weight of money raised will eventually work its way through to the sp
Hope that helps.
tp

[cerrito] 28/1/2016 13:55

Just seen that Simon Kings-the ex Naval Officer-is giving a 15 minute presentation at the Shares conference in Islington next Tuesday.
Not sure yet if I will be going there

[timojelly] 28/1/2016 12:41

Gravy train it is but WTF can we do about it? Who put them there in the first place? I bet they have a lot more shares than the rest of us.

[pavey ark] 28/1/2016 09:57

Kiwihope, I've just logged on and heading out but I was very pleased to see your post at the end as I scrolled down very quickly determined not to even scan the others.
I take it from your post I have missed the same old,same old from the other two so thanks for that.

Now to EBITDA, I have pointed out on numerous occasions that this is a very valid measurement for TPG at this stage as they pay no interest (I)and no tax (T) the depreciation and amortisation (D&A) has been fairy consistent at £1.3m.The accountants obviously think (know) this is what they can get away with but if TPG thought they could get away with a bigger figure they would use that.
If you want to assess how TPG is doing then look at the EBITDA.
This would not be the case if they were paying tax and had a loan of £10m or £20m at 5 or 6% or more.

More than once you have said I was being overly optimistic but you have yet to counter my "optimism" with contrary facts.
You did say you would get back to me on my assessment of the worth of ACI as a stand alone unit.
One of your previous points was that this unit made a £2.4m the year before it was bought by Corac but I pointed out that it made £1.5m the year before that and the order book was much lower than it is now.
Having read the Edison report where they have it a value of 10.2 X EBITDA and taking into account the large and growing order book, the absence of debt and the worldwide boom in submarine production do you consider my, and Edison's, valuation to be optimistic ?
There may be flaws in my reasoning but if there are then no one has brought them to light......yet!

[the prophet] 28/1/2016 09:43

kiwi
I can indeed see PA's point of view and I have stated that, I have no problem with different views , it's just a shame others can't embrace that as well.

[kiwihope] 28/1/2016 09:21

I wish you guys would only write things that you would be prepared to say to each other face-to-face. TP and Super, you are basically fed-up with Cartmell because the share price is much lower now than when he started. IMO Pavey is over-optimistic, for example continually talking about EBITDA as if this sets the share price, rather than net after tax profits. You all have valid points to make, it's just a shame you can't see the other guys point of view.

[supernumerary] 27/1/2016 23:05

Yeah, some delicate sensibilities around here. I remember when Nick had a go at me for suggesting he might have been called Fartwell at school ;¬) Important, I feel, to retain a sense of humour, however childish. It's only money after all...

[the prophet] 27/1/2016 22:41

careful sn, you'll be accused of 'obsessive ranting' and PA will be stamping his feet! (hope that's not too personal for our wilting flower!)