· Net revenue of £10.0 million (2016: £9.7million)
· Profit from before taxation attributable to shareholders of £1.2 million (2016: £60k)
· Basic Earnings per Share before non-recurring costs of 4.8p (2016: 0.3p)
· Net cash at year end of £2.7 million (2016: £0.4 million) and all bank borrowings now repaid
· Dividend resumed with proposed payment of 1.5p per share (2016: nil)
Puts this on a PER of c9 and a yield of c4% with no debt. Railtrack contract still in force and other new business one. Loss-making Indian business disposed of.
This has a future I think. If not on its own then as part of another complementary business. I have nibbled a few but having trouble having my orders filled. Not a basket case. People love physical shopping - footfall high and predictable = opportunity for brands & launches. I just hope they can exit Europe (where required) economically as can be expensive in places like France.
There have been many bullets to dodge in the last 12 months by holding SAL. Unfortunately I caught most of them losing about 50% of my stake. I sold out at about 39p so I have missed the current cannon ball. I will not be back.
For reasons of my own I am an investor here but if I were just a straight forward investor I would either bail or ask some serious questions about what's going on.
For instance, the independent research note published by Equity developments on 26th March 2016 gave FY earnings for 2016 as £15.0m and FY earnings for 2017 as £15.7m, come the most recent trading update on 1st July 2016 from the same company showed a reduction to £11.0m and £11.5m respectively!
I have noted that the forecast is based on ASSUMING contracts approaching expiry were not going to be renewed, this seems a pretty big assumption or have they already been notified that they were not getting renewed?
They also state that the lower forecasts are the result of a one-off hit from S&P+, well which is it? Loss of contracts or the hit from S&P+? I can't see this share increasing in the short to medium term, meanwhile I'll just sit on my losses and hope for some good news.
I hope we are right here. I topped up today. As you say the business is prone to sudden shifts, but I am hoping the increasing spread of clients, and some longer contracts will smooth out progress. (oh dear, I have just used 'hope' twice! Never a good sign!)
LAKE still crops up on my value screening, and looks very nice too. But I have three reservations about it. First, I think there is another warning due. They come in threesallegedly, and I cannot get over the earlier disingenuous comments by the management. That should push it down into the 20s again. Secondly they depend heavily upon local government contracts, and this sector is highly constricted in terms of spending and margin. Finally they have grown by acquisition, and I get the impression this has not always been done too discriminatingly. I know from personal experience that contrators on public works often cut corners and treat the jobs with scant respect (the Scottish schools' PPI fiasco is a good recent example). Something like this can be absorbed easily by the likes of GFRD, but LAKE could be bitten and bitten hard if it should occur to them. All that said I may well go for LAKE yet, if it hits a new low.
Have you looked at QP. at all? It seems interesting to me. The recent drop was a result of delays not cancellations, and Mark Slater recently acquired a fair chunk. In the 60s it seems almost a bargain. PER is 10 and results earlier this month showed excelllent increases in EPS and revenue, even if the debt nearly trebled! I think Mark Slater pumped a lot of dosh into APH, and that seems to have come good, so he has a good record in this area. Patience will be the key though.
The sp has dropped over 10% in the last two trading days on low volume and no news. I had a look on this bb yesterday to see if there was any adverse news and was surprised to see a rinse and repeat episode today. In the absence of news, I suggest that investors are fed up waiting for positive advances and contract wins for SAL.
I listened to Paul Scott's interview with the CEO. The only adverse comment was about winning and retaining business. One main problem mentioned occurred when a current contractor had a change of management. The new managers decided to take SAL's service back in house, expecting to make savings. The service offered by SAL may be a hard sell and a hard hold too. I will stick with it for now although well under water. Like you say, some new contracts would stop the slide and maybe provide some welcome uplift.
Just for info, I have just bought a few LAKE shares today.
Still sliding! Able to buy at 54 today, and the slip has come off the back of limited volumes. We now have:
PER = 11
Possible yield = c4%
Forecast EPS = 5.2 rising to 6
Price to book = 1
I hope we are simply seeing boredom here and not a leak. Next update not due until September.
I had hoped to see this in the 90s, and think with a couple of decent contracts that could still happen. Even if we just continue to toe the line, I can still see this hitting 75, so nearly 50% could be had here by the patient.
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