Member Info for londoner7

"Selected vehicles include sleeper cabs equipped with fridges and microwaves, enabling drivers to spend several days on the road" I wonder how far they plan to transport Ready-Mix?

After an upbeat outlook statement in the final report AC bailed (�2m) last June, a couple of weeks before the warning in the AGM statement. The market got the message.

This headline in this morning's Times caught my eye. 160,606 new homes were registered in 2017, short of the government's target of 300,000. Wow - quite a miss! But looking below the headline, 6% rise overall with some regions falling, but 9 out of the 12 regions showing a rise. Leading the way was the East Midlands +19%, bang in the heart of Breedon's Southern business. Londoner7

http://www.daviscofferlyons.co.uk/news/detail/no-christmas-cracker-for-restaurant-and-pub-groups/1339#.WmdCTTfLgl0

They mentioned the weather. Snow and Ice in December!

"Not fully au-fait with the background (newly acquired shareholding) but although the issue of MARS shares to buy CW would, on its own, have diluted the MARS yield, there must now be a profits contribution from CW." At the time of the placing, when the institutions added at 137p, MARS said this, "The Acquisitions are expected to deliver a combined ROIC in excess of 15% in the first full year and to be EPS neutral in the first full year and accretive thereafter." In the previous year CW generated �5m EBIT. In addition MARS expect to make synergies of �4m pa to 2019, the bulk this year. In my experience brokers forecasts tend to follow trends up and down but rarely lead. The MARS update on Tues could be a good indicator of current trend. Londoner7

Hi PinPong1, In hindsight (a wonderful insight to have) ;-) the stategy looks sound. They have slashed their 'simple' funerals business to attack the low price competition and maintain market share, while, for the moment, holding the price on the quality business to see how the market reacts. Meanwhile their crematorium business (34% of operating profits) is going from strength to strength with two more due to open this year and the main competition is from local authority run business' which see them as a cash cow to supplement their other spending. I note that they lost around 3-4% market share in the last year. Lots of interesting numbers (pricing) to consider. They have my attention. I've no doubt the management will make this work. Their focus is on rebasing the SP, which they've done with this announcement, then establishing a long term growth trajectory so they can reward themselves via the long term (3 year) bonus structure. Best, Londoner7

" I know to buy CW we issued shares but we bought a asset are you saying the market thinks we over paid or it was a bad buy?." Not at all. I don't understand why you should think I believe either case. I'm simply clarifying the point that the market/ brokers forecast that the level of extra profit generated this year at the EPS level will be negated by the additional shares issued. That's the conclusion based on current broker forecasts. Whether MARS do better or worse remains to be seen. Personally, I'm optimistic that LFL comparisons with last summer, which it seems was impacted by bad weather, will work out in the sector's favour this year, barring a repeat of the bad weather.

"resulting in roughly flat YOY EPS" Just to qualify this - flat EPS after 5% increase in profits due to higher weighted number of shares in issue following share placement for CW acquisition.

thirdman, what drop? After better than expected results last Nov the SP rose over the following two weeks peaking at 121p. Knock off 4.9p for the dividend and it�s been wobbling within a few pennies since then. I'm not aware of any news, good or bad, but I am expecting a news update on Tuesday when MARS will announce a LFL update for the first 16 weeks of the current year and there may be a trade update for Dec before then. At the results MARS stated LFL growth in the first seven weeks. MAB reported 2.2% LFL so I guess that puts down a marker until the trade update. In the absence of any marked change in MARS business I wouldn't expect any significant change in SP beyond general market movements. This is what I believe are the expectations for MARS LFL growth inline with the trade, UK consumer under pressure Reduced margins this year due to increased but controlled costs Profit growth of around 5% due to overall increase in revenues and Charles Well synergies, negating reduced margins, resulting in roughly flat YOY EPS. Any changes in these expectations, for better or worse, are likely to move the SP. In addition I believe market sentiment towards the sector is at a low and may improve from here � that's my essential rational for investing here. I'm not expecting fireworks here but I've sparklers in other parts of my portfolio. Doesn�t everyone? Londoner7

Perhaps I shouldn't do numbers late at night. In the cold light of day "4% of Breedon's annual revenues" looks high, and is misleading, so I pulled out my calculator. 50% of �55m JV revenues over two years = �14m pa, or 2.1% of expected revenue for 2017 (�665m). But that is history, the bulk of the asphalt has been laid and paid for. The balance, assuming there is more asphalt to be laid before the project completes mid 2018 will account for a fraction of 1% of Breedon's 2018 revenues. Sorry for a misleading late night comment, but falling back on the poster get out clause - DYOR ;-) Londoner7

Dyche, thanks for your insight. I've come to recognise you as someone very much more familiar with the industry than I am. I'm more a numbers and spreadsheet guy. Possibly the biggest tick in my buy column is for the management. One gets a strong sense of their experience from the results web casts, which always boosts to my confidence in them. Although, their handling of the xmas bonus discussed last month might drop them a grade. Londoner7

strictlybricks, thanks for the clarification. I'd question your end of june number of 480p, if book value = net asset value. If not what? Simply taking the net asset value I come up with 694p against current capitalisation (I'm assuming - beacuse I haven't looked - there hasn't been any change in share issue). But backing up a little, book value isn't a metric I use. Taking one extreme, if I put �100 in the bank, the book value is �100 and the price to book value is 1.0, but the return is a pittance. You follow builders, listing house builders, so I guess that's your area of expertise. The last house builder I owned (outside of a trade) was Try which was taken over by GFDR. I already had a construction company in my portfolio (Morgan Sin) so sold GFDR. Today, GFRD is still essentially a construction company rather than a house builder. By my read pure house building accounts for about 33% of revenues. So I'd question applying a metric which might be valid in looking for an exit from the builders to a construction company. I say exit, because I view UK house builders as the benificiaries of current government subsidies which could end any time, or perhaps not. Construction doesn't require the same level of capital so different metrics apply. I don't invest in any business reliant on large one off contracts so would never have been in CLLN and it may be that a closer look at GFRD puts me off investing here. Yesterday's nibble has cost me dear - currently down �27. Any more and I won't be able to cry into my beer tonight. ;-) Best, Londoner7

spindok, it seems other investors agree with you. I notice that other suppliers are quantifying their exposure to CLLN and creating nervousness in the sector, To qualify my numbers I should clarify (for any nervous readers here) that much of the JV work has been completed and paid for. There may be recent outstanding work requiring payment and future work to completion but isn't it for Galiford and Balfour to cover that future work. Taking advantage of this mormings dip I stepped in for 20K shares @ 78.22p. Time will tell. Londoner7

TheMoss, I agree, but I'd swap the will be for a could be. I think an important point here is that last May the projest still had other a year to run. Now the pain may be behind GFRD within 6 months and essentially costs are now known, Londoner7

Doh, if you'd waited another 10 mins you might have got your chunk at 1,185p. I nibbled at 1,198p and I'm still crying into my beer! ;-)

"Why does the collapse of C cause extra cost for GFRD?" Because it is in the contract, as both GFRD and Balfour have recognised in today's RNS updates.

strictlybricks, thanks for your response but I don't understand "PBV around 2.3 or BVPS", please expand. Okay I might have BVPS - book value per share? I prefer ROIC than book value but appreciate clarification. Best, Londoner7

"�55m of revenues" thats JV revenues

spindok, revenues affected equate to about 4% of Breedon's annual revenues. If the market wishes to get excited about the 'impact' of CLLN on Breedon I'm not sure that Breedon management should respond. Rather I'd prefer to see well informed shareholders having the opportunity to take advantage of a market's mispricing - accurate or not. I suspect there will be an impact from the project's delay - �55m of revenues over 2.5 years rather than the anticipated 2 years- but is it material? I don't know the detail of the contract. I guess it will get a mention in the final results QA. I'm expecting a good announcement 7th March and suspect the organic capex spent in the last 6 months is not recognised by the market. But then that's why I love investing in these misunderstood companies. Till I'm proved wrong ;-) Best, Londoner7