Member Info for Dartron

LDG own 9% - number of Finsbury shares held indirectly by the Company was 11,763,979, representing 9.0% of Finsbury's issued share capital, for a consideration of £9.3m.

https://www.lse.co.uk/rns/FIF/recommended-acquisition-of-finsbury-food-group-qkxhw2obvcnu06r.html

23.6 per cent. to the Closing Price of 89.0p on 19 September 2023;

Not sure why no RNS here, may be needs to be approved first.

Neil777, your post is wrong on many levels. They are not desperate for cash. They have not clearly stated a raise is needed. I do not think it is possible for this to go in to administration, given the shareholder structure and the fact that assets are greater than debt (just check the balance sheet). You really do not know what you are talking about. Yes poor results, loss of share price, but this is a business with many large owners, the two largest hold 20% each, of which most has been bought at 50p per share or over. Why would they sell at 3p? It may be AIM, and that may be your experience, but we are dealing with a bricks and mortar company here with a factory and other property worth £15M owned outright. Why would they sell for 6M mcap? Im sure they will find funding, as the proposition is very strong. That funding does not have to be placing - in fact, I think the largest holders would not want one that let others in at this ridiculous price - They have enough shares to take majority control if they wanted (certainly between the 3 largest). I would have thought a bond or CLN would be more appropriate here. They can even use the £15M property they own to borrow off. Maybe there is a token raise to let the BOD in, but I don't foresee 50% dilution here to raise 3M that is just nonsense, given the aspects I have explained to you. In 2 years time, this could be generating £20M free cash flow - Safestyles own forecast, not mine.

I will not argue that things have gone wrong, or that the market for windows is very poor. But I do understand the capital structure of the business very well. This is still worth at least the assets - debt as a SOTP valuation, which is still over £10M. Bought more today, and was expecting this (albeit not quite so soon). Finally, its like they picked the worst period to report a TU over, given the hot September etc. It has turned cold toady, which is what they wanted a few weeks ago. I think the same demand is there, it will be more condensed. They would be wise to see how the next few weeks pan out, in terms of sales. If they pick up, then they need less cash. Its possible that nothing much happens now until Nov/ Dec.

The trading update backs up the reason why this business has such a low valuation. I would expect the trading to be at its lowest point, as the autumn has barely begun. Sounds like company are doing what they can including wage cuts. I think what happens next depends on the next few weeks of trading, whether it picks up or not. I think strengthening balance sheet can be achieved in many ways, such as more borrowing. Lets see. The opportunity here currently is buying on the lows, and holding this into a recovery, which has not really changed.

Hey LV, no worries. I had to restrain myself from buying more. I too like all of those reasons you mention. See TXP sold off again. I probably already made more money on HSS and SFE.

I had not seen that note before, dont know if it is a new idea, but it is very handy. The whole sector is so cheap - for a good reason, but if you have the patience you can lock in some real bargains.

Found this on the net, no connection to me, though I followed him on Twitter after I discovered this.

Another write up of why this will 6 bag.

https://valuefocusinvesting.substack.com/p/safestyle-uk-plc?utm_source=profile&utm_medium=reader2

Finally we could also look at the II ownership here:

Alantra Asset Management 31,911,957 22.98%

Soros Fund Management 26,647,733 19.19%

Janus Henderson 14,918,402 10.74%

Hargreaves Lansdown Asset Management 5,802,504 3.47%

UBS Securities 5,737,797 4.13%

FIL Investment International 5,040,054 3.63%

Invesco Advisers, Inc 4,465,000 3.22%

Between the top 3 they hold over 50%. I have to calculate what their average price must be. None of them appear to have sold. I have found two sellers so far, which appears to be profit taking from the 2021 placing by Investco and Ci toroonto (no longer listed above). So even though the company has had a few issues of late, none of the large II's have sold a single share. Soros and Atlanta have continued to buy, last purchase in 2022.

So were up to date now, 2023, weakening consumer confidence, increasing interest rates, house prices starting to decline. Clearly there is no bull case currently for Safestyle. Add to that the recent trading update forecasting a loss of about 5M for H1 2023, I can understand the sell off. However we now must be well under the bricks and mortar valuation here. The directors also claim that they can navigate to the end of the FY on their current cash. This for presents an opportunity, where I am prepared to park some money here for at 18 months, as I think there is a very good chance that when things pick up again, this business should easily be worth several multiples of todays price.

It would be interesting to know what the valuation of the properties are - in their own right, and as a window factory, remember these are owned outright by safestyle.

Here is a video of the factory:

https://www.youtube.com/watch?v=GLIHJIxogyg&ab_channel=safestylewindows

The 22 FY got off to a bad start however, SFE were victims of a cyber attack. They estimate the cost of this at £4M for the year. It caused operational issues by the sounds of it, and forced them to upgrade IT. They also invested significantly (probably spending some of the placing cash).

The business initiated a £5m strategic investment programme (versus 2021) that includes TV advertising, new business development, the Safestyle Academy (for new fitters) and a range of actions to improve our customer experience and reduce our cost of quality.

In late 2022, Rob Neale, who has been Safestyle's Chief Financial Officer (CFO) for almost 5 years, has been appointed as CEO.

In 2022, the business record another £4 loss before tax, but the borrowings was not increased still standing at 4.1M. Clearly the cyber attack has affected profitability.

2018, was also the year that they recorded their first loss, due to "significant business disruption caused by an aggressive new market entrant". See above about Mr Misra. At this point they took on a £7M finance facility. This was drawn to £4M at the end of the year.

In 2019 the market for windows softened, this did not help SFE who were clearly on the back foot by this time. Having to pay of Mr Misra (yes really). They incurred a fine from the HSE (for a worker accident), plus restructuring costs saw them report another small loss before tax. The debt was still £4M.

2020 we had Covid, with lock downs etc, this was a serious problem for the business. Another 4M loss, but the debt remained the same 4M. I guess government money helped here, but they also raised £8M via a placing at 17 pence. The share count increased to 117M shares. The placing proved to be the turning point, and sales recovered strongly as we all came out of lock down.

Incidentally, the placing was actually at a slight premium to the recent lows of 15p.

From the placing the share price increased by 288% to a 66 pence peak in May 2021. The 2021 results were good with £6M profit before tax, and 16M in cash. Bear In mind that we were still coming out of Covid at that time.

Safestyle has had a few bumps along the way, including the original founder who had left the business on IPO, competing against them. This has since been settled. Mr Misra the founder seems an interesting character, while I do not think it is likely, it is possible that he could attempt to re-buy safe style? He walked away with about 60M from the IPO I think.

In 2018, Rob Neale was to succeed as CFO. Rob was previously Head of Leisure Travel Finance at Jet2.com. Rob Neil is now the current CEO. I think this is a positive that he has been with the business for a significant time, and has a financial background, having gained executive positions by his own merit.

Safestyle has traditionally been a good solid cash generative business. When it was floated on the market in 2013 the group purchased free holds for head office and manufacturing location, at £4M, from IPO funds. In the first few years, this business was highly cash generative, and as well as paying dividends, they invested money back in to building a factory.

"We have committed up to £7.25m for this project, with expenditure commencing in Q2 2016 and the facilities operational by Q3 2017." This was achieved and meant that SFE could competitively manufacture their own window units. (They buy in uPVC profile, and manufacture the frames to customer spec). The factory also included a glass furnace. The balance sheet entry PPE mainly for the factory when completed was just shy of 15M in 2017. This figure has been depreciated down year on year, so the entry for the fully functioning factory and head office is currently £10.8M (2021).

This is a large part of my reasoning that the share price is under valued. The Factory alone must be worth more than the current mcap?

I have been looking at SFE for a over a week now, and while I would be the first to agree that the current trading outlook and FY is going to be difficult, I also think this is great recovery play, and I personally feel that despite the current challenges, the stock is under valued. What I really liked was that 5 individuals have all bought stock. Given how tight the end of year cash was going to be, I felt this mitigated the likelihood of an immediate cash raise (though nothing is certain). Purchases are not overly large, but I do not think that between them, they would not have bought around £75k of stock, if they were going to do a raise at a lower price, which they would also need to participate in.

It is also worth considering that this is quite an illiquid stock, and it may have been difficult to purchase more stock at a reasonable price. I also think it was possible that they had competition from shorts closing, and certainly a few traders who turned up on the drop. This could explain the CFO and CEO buys being on the low side (CFO paid 12p!). It also goes without saying, that SFE have a long road ahead of them, and there will likely be other chances to buy in here.

Recent director buys:

31st July (NED purchases)

Lovell - 190,000 @ 10.8

Goldsmith - 140,000 @ 10.8

Porter - 100,00 @ 10.8

1st Aug

Rob Neil (CEO) - 200,000 @ 11.61

7th Aug

Phil Joiner (CFO) - 117,000 @ 12.88

Current holdings

CEO Rob Neil - 0.57%

CFO Phil Joiner - 0.14%

Well Done LV. I will share my research later, I am also still buying.

Yes I will also look at Speedy, but the collapse here seems more interesting. If the dividend was maintained here, at 0.54p then the yield is about 4.5% at 12 pence a share. However, last year they did almost 3p EPS.

Speedy also seems to have issues, with EPS last year of 0.5p. That would put them on a very PE. Which is what this site shows for both. I prefer the PE of 4 for HSS. Looks like Speedy are trying to diversify as well, but only scanned. More home work. Thanks Ragn!

I messed up with DWF. There was a piece in city AM where Jefferis broker was saying they would need a raise, so I sold out at quite a loss, just before the offer. Something wasn't right, in hindsight manipulation to collect shares I think.

Good to be in the sensible club!

Ha ha, just answered on you another thread!

This is poised to break out, I really like this stock from the company, and the chart. (look at weekly chart for a couple of years). Yesterday Keystone law gapped up on open with its results, and plans for a special dividend. I ummed and arred about another law firm, when they were £4.00. £4.70 yesterday.

Hopefully Knights does the same thing, and breaks out of the long term down trend, back up to 2 or 3 pound.

Thankyou Bangrak. Very little action this morning on my L2 screen for HSS. SFE making new lows on £200 prints. Fun and games.

I will take a good look here over the weekend, but what is the angle with the 30% private equity? That could be interesting.

Saw on the other site, someone said, where are all the shares coming from. Good question.

That IG interview was really good. I think he askes a lot more questions than other channels do. Both interviews touch on different things so worth watching both.