Member Info for Commonsense5

Mr Dan190 I don’t think we will get that much to be honest but even if 400p say, as I have said before, all big holders roll into private business and the cheque size required for them is much smaller than you would think; as you helpfully highlight.

However if it is a lower take private price the danger is a trade buyer spoils the party and trumps it. If 400p, say, is recommendable it would be very hard and embarrassing / impossible for the independent directors to reject 500p+ from a global name.

More likely is the much debated divisional spin off of beauty or nutrition or both to trade / global mega cap and 10 year ingenuity contract. A VERY big buy back to follow thus even further enhancing those shareholdings as you set out helpfully - assuming whitewash rules allow. At least with all this pain and distraction there will on this scenario be a decent benefit to the big holders in a larger % ownership. I think that will be a more palatable structure as not sure those big holders really want to write further big cheques and roll into a take private. It will then be down to the smaller holders to decide what level you want to sell, OR NOT sell ! Either way on this scenario, the price elegantly goes back probably very very quickly to 500p +. This scenario removes the danger of a take private that is trumped and where the board loses control. Why take the risk.

Mr anacot - I share your view - 10 year contracts for each for ingenuity

Mr poker - you don’t buy a bank without serious DD. This is v different

Many of the big global names know exactly what this business does - nestle and Unilever in particular who have worked with thg for a long time on the inside - they know sales £.. they won’t need much more info - it is like a small oil field to a major - they take it and make it massive !!! Very little new info required I suspect to table and approach

Dan190 - fully agree - SoftBank are key and have a major seat at the table

As you say Mr Insider - once confirmed on an RNS of what is going on and giving us essentially the ‘strategy update’ that is massively overdue then the shares will be the biggest buy ever. A much better buy at 140p with clarity than trying to pick a bottom at 115p. Crazy but true. The jump to 200p should be lightening quick.

I would expect confirmations or denials about the following; 1. managements intentions re going private or not - the Takeover Panel will have details from the lead advisers about all conversations 2. Detail of whether the company has received approaches for the whole or the big divisions … I would expect to see comments like ‘approaches at a very significant premium to the current share price’ (if that is the case) if you know the market this is obvious 3. Confirmations or not of managements intentions and update on spinning off beauty or perhaps spinning off Nutrition also. It is impossible I would have thought that the likes of Nestle, Unilever, Coca Cola and then the big beauty companies L’Oreal et al have not asked the question or made approaches - any similar names too or which there are dozens. A previous post I have made discusses what happens when those mega caps buy niche consumer businesses and they put the product through their global distribution network and multiply sales massively 2x 3x comfortably. Valuation is not normal in this instance and must be worked out on what the various mega caps could achieve by owning such businesses.

For what it is worth my hope is that there is no take private but rather that a spin off or even two spin outs to mega cap with big ingenuity contracts alongside over ten years - remember the Nestle contract £10m a year for ten years a few years ago. As shareholders we get the huge benefit of the ingenuity value and importantly management can hold their heads high for, in my view, the genius’s that they are. The irony of one of the best businesses the U.K. has ever created being down at these levels sadly makes our beloved stock market and investors look very silly! Hey ho. Sorry for waffling !!

It up 10% thg could be forced by the panel to declare any discussions going on … today

Brilliant thank you re the list of websites !!

Are we still getting an update on 10th ?

Mr Indomie - good post - Such a strategic market update is massively overdue !! It is very rare you get operational updates but no strategic updates 3.5 months especially with a 3.5 month gap !! Poor IR

As I said yesterday, we should all be very pleased when the company buys another 1m shares back down at these levels. Well done the company. I am however very surprised how the price can fall so much when it is buying what looks like 1/3rd of total volume but probably a higher % as it is only day stock excluding closing auction they buy ! Anyway great news that they continue to buy in size. I repeat goodness knows who is selling !! Machines I hope !!

I think given the free fall something should now be said .. ? ‘The board knows of no reason for the fall … The board is pleased to announce a few new contracts or something - I read on this board about Matalan but nothing ever said publicly …. Or if the board have no clue then it is simple ‘Strategic Review’ as that feels where we are and essentially what the board has probably concluded privately but made no public mention. Much as I defend the company the company now needs to help itself AND it’s shareholders and strategically keep us in touch - we had an operating ONLY update as was said many times in the analyst meeting BUT nothing else since October. Very poor IR. Mr IR you have said a few things on this board which I deem quasi price sensitive and should be said publicly, not privately on a chat board.

The lower the price the better the buy back - we need to take a medium term view on this

MR Oh - with respect mid April will be 6 months post previous update on strategic issues ! This is simply too long and appalling IR. You are too generous, with respect.

Interesting reply re board …

We had a pure ‘operationally update’ BUT we are well well overdue a ‘strategic update’ to update post I think October last year re Board and other strategic initiatives …

Poor comms

Agree mr anger shark - you will know that analysts split Rmg value between 60% Rmg value with a lower rating and GLS 40% (ish) with much more a UPS type rating. Deutsche post split between their own Royal Mail equivalent and DPD too.

Either way - crazy cheap - who sells down here apart from quant funds I have no idea !! The company’s buy back will fix the gap in the absence of normal funds / activists / predatory break up investors. The latter we don’t need. Let’s just get there with this buy back that ultimately helps everyone MUCH more. IF IF we could get that extra £200m bought back that would be 10% of the company and in two years time it might be 20% ! This is very very beneficial to us as shareholders !! 60p eps becomes 72p … and we match towards 700p, 800p, with £1bn operating profit one day !! … 1000p !!! Seriously (LTM or last twelve months it was £1.1bn!)

So I think 13.3m shares bought back so far ! I am going to guess at an average price of ??? 4.60 ? They have certainly had a few 1m days at decently sub 450p SO £61m spent so far of the £200m. Our eps gets better on every buy back obviously and the cost of the dividend saved is a great factor too. So if they have £140m ish left to spend (sorry if my guess of £4.60 is wrong - the numbers are there to be read I just am being lazy) - at 460p they have 30.4m shares (price depending) left to buy. Aware they said complete mid July BUT it would be very elegant for them and numbers if they could finish by the year end March 22 from a numbers perspective especially with the price seemingly low as it is (to my utter amazement) ! So 43 ish working days left would be 700k shares left to buy a day - TO REPEAT only if they had a timeline faster than they have previously guided.

Don’t forget - the company’s stated aim is to get back to a nil net cash balance sheet within two years with a starting point of +£600m ish net cash and then each years cash flows on top. Annual divies are £200m to give us our headline yield of 20p a share. The special was £200m and buy back £200m which I think will still leave with £100m with this years cashflow on top ? £400m call it this years cash flow ? So by the year end March 22 they will have £500m STILL net cash with 2/3rds of the final divi not paid for 9 months so it will seem like £600m. Hence my strong view they will get £200m bought back asap and then re load another £200m pretty quickly. Specials or buy backs who knows - I would have thought a mix of each ! Last bit - even when down to nil net cash we should still get the annual cash flows returned to us either through normal specials or buy backs. I think this company operating profit will become £1bn a year so maybe £700m cash flow. Value it on a cash flow yield NOT just divi yield gives 16% return !! This is why I LOVE this great company. Super super cheap. At some point this will jump 25% to begin its positive correction.

I know it doesn’t feel it yet BUT I love this buy back and I would imagine some form of buy back will carry on now with Rmg for quite a few years - fingers crossed.

I don’t believe there are any formal limits but 25% / 30% would be the max in my view - which is about what they are doing of late ! A big buy signal. What baffles me is who in their right mind would sell it here !

Quick question if anyone knows ?

It has gone a bit quiet on news re union agreement - last year it was tabled and announced in Dec and on Feb 3 the new deal was announced. Interestingly On Feb 11th the game changing trading statement was released with the famous ‘well in excess of £500m profits’ statement.

Does anyone know the timings of when we are going to hear about this?

The fact that the company are hoovering up a near 1m shares a day I find very reassuring by the way. The two points are not connected directly but give me confidence

I am daily buying alongside the company as I still think this is easily one of the best value / growth stocks on the market. £800m operating profit ish for £4.5bn mkt cap! Simply wrong ! I love the fact they are reducing the issued share capital at such a rate. It would be amazing if they can get finished by end March and announce a new round - probably another £200m I believe. That would then have shrunk the overall issued shares by a near 10% which is brilliant.

Nice read across - GLS in particular