The problem as ever is that we have a not particularly successful business with a huge pension fund attached;50 years ago as the George Cohen 600 Group this was a significant business.......
The snag is that although interest rate increases in the future may on paper improve the pension figures the reality is that to close the pension scheme & buy annuities to fully fund it would cost around double the cost of the funds present assets.I am basing this on a company Ensor in which I am a shareholder which is in the process of liquidating itself and returning capital to shareholders.It had a small closed to further accruals defined benefit pension fund the company had to put around £6m additional cash into a fund of roughly the same size to put into a state that it could be passed on to an insurance company.
The shareholders have no claim on the assets of the fund if on paper interest rates create a surplus in the fund until the death of the last pensioner but have a liability to any shortfall.
I have looked at this company on & off for 20 years it has always seemed cheap;but it is the pension problems that stops the shareholders gaining any benefit......
For reasons that are not disclosed Haddeo Partners optional sale to Disruptive Capital of a 23% stake in Six Hundred Group (LON:SIXH) at an undisclosed price has lapsed. This must be because DCI could not see that SIXH was in a condition to justify DCI proceeding. The effect has been to knock SIXHs price by 15%. But since the exercise price was never disclosed I doubt if this means much if indeed it means anything. I still think SIXH is worth upwards of 20p. It is just that getting there may take longer. Time to buy at 12p.
Market cap is £10m. PE is ??? only 2.5 but much of earnings is interest on the, in surplus and now closed, pension fund and the nominal value of the pension fund is £251m. If... IF... interest rates rise this must be the greatest bargain going if only as a hedge against a rise in interest rates.
Sorry Seadoc but when I try opening that link it only brings me back to this our current discussion page.
I topped up with 10,000 more of these yesterday. It's only ticking up slowly now which is disappointing.. 20p not as certain as we both thought, perhaps
I think the 20p is a given. It is the exercise price for the 48m warrants that are being issued along with the loan notes to raise the cash to but 80% of TYKMA. Looking at the terms of issue of the warrants there is no way they will not be passed at the General Meeting. After the warrants are issued Paul Dupee (through Haddeo) will be the majority shareholder and I guess we can expect ownership to cross the pond. I will definitely be selling into any strength above 20p. If I have time will do a bit more research into Haddeo, last time I looked not much came up.
Not a chartist by nature but over last few months might be a head and shoulders. I got into 600 as they made the lathes that were used in Germany to make the machinery in Korea to make the machine tools for the manufacturing in China. The fall from 2008 was the slow down in Germany, some recovery into 2011 and sold about half. I think the China situation has not yet resolved. They were closing some of the lathe business but I must review the latest results, how much of the turnover now is the laser marking compared to lathes?
Disappointing that after a progressive set of half yearly figures at the end of November that this SP has continued to tick down. But it's on low volume and AIM stocks are often somewhat random outside of news periods. Their last acquisition attempt was messy and hopefully they've learned from that in any further M&A attempt the CEO hinted at them soon possibly undertaking. Also they were a target themselves reasonably recently so why not again.
Perhaps there's a worry that they'll tap shareholders for money to fund any acquisition or perhaps their large - but healthy - legacy Pension Fund puts some off investing here.
Their core UK and US Markets should be at least decent again this year and so they might well further improve their figures. Therefore I believe that this stock could readily tick back up into the twenties and if no fund raising maybe even reach 30p this year.
But it's a small cap AIM so anything can happen and this is a high risk bet for sure.
I'm in to the extent of 50,000 shares at 17p break even. Good luck to all fellow holders!
· Group profit before tax* £1.97m (2013: £0.51m)
· Underlying earnings per share* of 1.90p (2013: 0.59p)
· Revenues of £41.71m (2013: £41.79m)
· Order intake increased by 13.7% to £42.47m (2013: £37.37m)
· Gross margin* increased by 150 basis points to 33.2% (2013: 31.7%)
· Group net operating margin* increased to 5.6% (2013: 2.3%)
· Group net indebtedness of £5.31m (2013: £5.41m), gearing 23.5% (2013: 25.0%)
Good progress, lets hope there's more to come. Looks like the management team have turned the corner.
Was yesterday's 16% rise simply as a result of the results. Which were fairly robust turning a loss into a profit.
Or was it the type of movement you expect to see when a Company is in talks for an imminent buyout.
I favour the latter and feel we may have action before the 4th December deadline.
I do hope so.
Many thanks for your comments....maybe the world is starting to turn again on Colchester lathes (a variant on the company's strap line). It seems puzzling that 850,000 shares were sold in one transaction this morning. There is a good review of the company in this week's City Confidential which feels the stock is cheap.
Revenues increased by 11.2% to £41.79m (2012: £37.57m)
Operating profit up 322% to £0.97m (2012: £0.23m)
Profit for the year of £3.94m (2012: loss £14.85m)
EPS increased to 5.25p (2012: loss of 23.30p)
Significantly stronger balance sheet with net assets of £21.7m (2012: £7.0m)
CORPORATE AND OPERATIONAL HIGHLIGHTS
New management team in place.
Strengthened operational and financial control environment
Strategic review implemented closures and disposals executed
Focus on customer service improvements
Backlog and production lead times improved
Building on strength of brands and global reach
UK pension scheme closed to future accrual and in surplus
I think the problem is that this is a business that has been in decline for 60 years(It was once a major company) with an absolutely huge pension fund attached that dwarfs the business.It has liabilities of £175m(last year),OK presently almost matched by assets-however any material change in liabilities could swamp the business as it is liable.
I agree the business by itself might have some merit if you feel it has now reached the bottom but the pension fund makes it a horror story....
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