Member Info for ggplyr

At 50ks worth of good siezed i dont think its going to move the needle.

I've never understood how this company can be so trusting, they have no idea how much royalties they will get, there is no open book accounting with it's customers, they get whatever reality they are given with little way to prove it's correct.

Shame you can't block certain users from your feed

I'm not sure the return on cash metric is stressed as such in the case of Greggs- i think they mentioned the 25 percent in responce to an investor question. It's their floor for a new store investment appraisal, as the store matures they say it tends towards 30 percent. (Obviously not for the ones the close/relocate).

They do stress return on capital employed though, it's always reported as a kpi in the accounts, and they state they run the business primarily on this measure (this was in an presentation when asked about gross margin I think, but could be wrong).

That said, I agree with everything you say about the IFRS16 impact on capital employed. It was afterall brought in to provide comparability across lease Vs owned assets.

If Gregg's wasn't leveraged through leases it would be a much poorer business for an investor, so it comes down to how much risk comes with this leverage. I doubt this will be tested like it was during COVID though.

As a side note, I find the lack of provision for dilapidations odd though, 2k plus leased stores, I'd assume each needing 5k minimum spent to return to original condition, but the provision is nothing like that in the accounts.

Operating margin is low yes, so there are possibly risks here if they miss the mark and the investment doesn't pay off.

Is that likely though?

They believe there is plenty of scope for new stores, and if they don't expect a 25 percent return on cash investment for a new store, they won't open it. They are pretty good at store closures and relocations rather than flogging head horses.

The gross margin is exceptional, so franchise locations should do well as there are aren't the same level of associated operating costs.

The 10 percent profit share is obviously flexible, providing an additional buffer in down turns.

So far, it's a pretty decent business, with a stated focus on ROCE which is around the 20 percent mark, seems pretty solid.

I'd be interested to see the payback period for this one. Seems pretty expensive for that level of revenue. They are also stating what the revenue used to be, implying they know its a high multiple but also implying they can get back to it.

Everything they buy now is to "counter balance" the contribution from Vaping, but vaping has huge gross profit margins and has been capex light, so decent operating margins too. typhoo tea, clearly drinks and now this cleaning brand aren't anywhere near these sort of margins. It would feel safer to me if they focused on return on capital employed a little more, rather than the "earnings accretive" badge which can be value destroying if that accretive earnings is on a large capital base.

What was the bullet?

I’d be far more concerned about rising receivables than payables. Payables reflect obligations already accounted for in the P&L and tied to a predictable cash outflow—there’s no ambiguity there. Receivables, on the other hand, represent expected inflows that may or may not materialize, introducing uncertainty and potential drag. That said, in this case, neither trend raises concern. The fundamentals remain intact.

Hi Finley

The only new development is the share buyback. The reference to a “strong balance sheet” has been consistent across prior disclosures and isn’t additive.

The market reaction may reflect relief that capital isn’t being deployed toward acquisitions or expansion initiatives with uncertain returns. Alternatively, it could be interpreting the buyback as a signal of undervaluation or management confidence.

That said, the buyback size isn’t large enough to materially impact earnings per share or float reduction. If fundamentals remain unchanged, the move appears tactical rather than strategic.

I hold a position in Bytes, but I tend to avoid echo-chamber reactions where every announcement is treated as unequivocally positive. I prefer to assess developments on their own merit rather than celebrate a one-day move without context.

I've digressed somewhat from my original intended question, fundamentally, I don't see why the announcement of buy backs has triggered the bump in share price, logically I can only summise the feeling is the market didn't like it's capital allocation approach and it's large cash balance, now it does.

Perhaps the shorts factor in here, if they are willing to buy back now, albeit as you rightly point out, a modest 3 percent of market cap, they may be willing to do more in the future which will impact the individual shares price.

But I don't really understand the Short side of things, I'm more of a long term investor so never bother to learn much about them beyond the basics.

Dartron, appreciate the breakdown. You make a solid case for buybacks in a depressed market like London, and I agree that returning excess cash can be shareholder-friendly if the fundamentals support it. But I’d challenge a few assumptions:

- Buybacks aren’t inherently value-accretive. Yes, they reduce dilution and boost EPS mechanically—but that’s not the same as long-term value creation. If growth stalls or capital allocation lacks discipline, it’s just optics.

- Day-one rerating isn’t proof of success. The jump could be short covering, relief that the £25m isn’t funding a questionable acquisition, or just momentum. It doesn’t validate the buyback—it reflects what the market wasn’t expecting.

- Two brokers doesn’t mean two buyers. Numis and Peel Hunt executing simultaneously is operationally interesting, but it’s still one buyer: the company. It might create short-term liquidity pressure, but it’s not additive demand.

- Capital allocation policy matters—but timing is key. If management truly believes the shares are undervalued, great. But why now? What changed in their view versus the market’s yesterday? That’s the real signal I’m watching.

I’m not anti-buyback. I just think they’re often used to mask weak organic growth or hit short-term KPIs. If this one proves otherwise, I’ll tip my hat—but I’d rather see evidence over time than celebrate a bounce on day one.

@Finley — Sure, you can point to examples where buybacks coincided with rising share prices, but that’s selective proof. Picking a few stocks or an industry where buybacks “worked” is like saying the lottery is a great investment because someone wins every few weeks. It ignores the broader pattern of buybacks destroying value in many cases.

@rax — I’m one of those who argue buybacks are often driven by poorly designed bonus KPIs. They’re an easy lever to pull, but rarely aligned with long-term shareholder interests.

That said, I agree: if management genuinely believes the share price is undervalued, buybacks can be a smart move. But the logic doesn’t fully hold. If the company thinks its shares are cheap, why didn’t the market agree yesterday? A buyback announcement alone shouldn’t suddenly shift market perception—unless the market was worried the £25m would be spent on something worse.

So I’m back to thinking the buyback is less about conviction and more about avoiding a poor capital allocation elsewhere.

They announced it at the half year.

What's changed since yesterday? I never understand why share prices pop following a buy back announcement, has this simply added more liquidity to the share? Or the market worried they were going to find some value destroying acquisition for 25mill so this is a far better outcome?

Buy backs don't change the fundamentals of a company.

Greggs boasts an impressive ROCE over the years, albeit its been on a downward trajectory. The CFO has stated Greggs should be a 20% ROCE business and, senior managements bonus and share options, are aligned to this. Their Return on Equity (PAT/Equity) is 25%. They only open a new site if they expect it to offer a cash return on investment over 25%.

With its 50% dividend payout target that means they retain 12.5% of profit to invest, at an expected 25% return. It should be a compounding machine for as long as they see new locations, which they claim their are plenty. They are building the infrastructure to serve 3,500 greggs locations. Unless something has fundamentally changed, this should be a compounding machine at a very low price.

I don't think so. There is no animal testing done by bioventix, they use sheep to produce the antibodies, but the testing is done on human blood samples as far as I can tell.

Looks like a fair bit of volume today

I agree its not one for day trading.

That said, I dont know how you go from a spread of 4% for this share to 10%.

Back down again, we can sleep easy

Its priced to be a growth company, its not growing this year which brings doubts into future years. the drop reflects this risk, but we will probably see some swings today