Member Info for londoner7

Thanks Cacher. I wasn't aware of the perk. I've requested the card - I used Marston's Inn accomodation twice last year. Londoner7

"These are expected to be largely mitigated by continued operational efficiencies across the business during the remainder of the year.Taking into account further reductions in the Group's net finance charges, the Board anticipates that profit before tax for the full year will be broadly in line with expectations." So just one month after everything is apparently on target the board now expects operating profits to be below last year and at the pre-tax level only higher on a fall in interest charges.

Taking my own advice on investing in the best companies and avoiding the worst I’m out! The outlook statement from the annual report a month ago isn’t consistent with this profit warning and the CEO bails in the interval. Management is key and something smells here. Londoner7

I've been watching this company for several years – always enjoyed the product – but I've been put off by the low ROIC – 6.9% by my most recent calculation. The recent acquisition points to a higher ROIC and I notice the latest half year presentation has a focus on improving ROC. The presentation also includes good financial detail, just wish the numbers were better, but then I guess that's part of the reason for the share price being at 3 years lows. But who said investment timing is easy. This company was a good performer while paying a good dividend through the 6-7 years prior to the financial crash. Heading into what I believe will be a relatively stable economic period over the next few years with a decent 6% dividend this is my entry point for a hopeful repeat. This morning I opened with a 20% stake which I expect to fill during the likely Brexit hiccups over the next year or two. If they can maintain the trend on ROIC to a figure above 10% they should see a market rerating, but likely to be a couple of years out. Patience – I'll drink to that! Londoner7

Sadly, Wincanton's senior directors are acting much as most company senior directors and enjoying the LLT bonus gravy train. Why risk holding the shares when you’ll get a yearly allotment of £1m-£2m based on a low bar EPS performance and a beat on the index TSR. These days a few years as CEO in a top 350 company is a guarantee to significant wealth for your family and future generations. Very few of these CEOs are exceptional, but by the time this is recognised by the market the dullards will have moved on with their millions. It is for institutional shareholders and government to curtail this nonsense but in the meantime private investors need to suck it up. Perhaps one impact we can have is on investing in the best companies and not investing in indices or ETFs which also support the bad companies. Londoner7

Scotinvest – thanks for your comments. If you look back to some informed recent posts you'll see references to the likelihood of 3-4 acquisitions this year. There was small one last month, hopefully the others will be a good bit bigger. Breedon has the cash flows and the banking facilities in place for £30-£40m acquisitions. I'd prefer to see a steady stream of small to medium sized acquisitions over the coming years rather than a large one with the resultant dilutive impact on smaller shareholders - in the Hope acquisition institutional shareholders got favoured treatment with the placing. The targeted businesses are likely to be private holdings of quarries. Another poster pointed out the overlap of some of Breedon’s assets with the Tarmac business. Some M&A may come out of this activity. Londoner7

http://www.mineralproducts.org/17-release16.htm Breedon has a group of assets which in the jargon of Warren Buffet forms a strong economic moat. Demand is expanding and essentially this can only be effectively satisfied internally – prices would have to increase significantly for imports to be a factor. I’ve followed Breedon for nearly five years and the tone and content of management presentations during the results has never given me any concern. I urge any new investors here to go to Breedon's website and listen to an audio. A comment from the recent call referred to the ability of the Breedon team to enhance existing resource. While there is a framework in place to ensure the provision of local aggregate supply there will always be considerable opposition to the opening of new quarries – the NIMBY effect. So the ability to enhance existing resource, wring the neck out of supplied materials and the steady acquisition of addition resource bodes well for long term growth and growing margins. Londoner7

Wincanton caught my eye last Novemeber but the pension deficit put me off. Missed the subsequent rise but after assessing the pension issue decided to build a stake after the pull back from recent highs. With the pension issue stabilised and debt coming down it looks like we could see good operational gearing over the next couple of years. Nice to see this year's result hitting what was the broker consensus for 2017/2018. The pop in the share price over the last hour suggests the analysts like what they are hearing in this mornings presentation. The slides on on the web site but I'm looking forward to hearing the tone of the call and hopefully some Q&A on the replay due out at noon. Londoner7

Mosttyn, If you are referring to those that tendered under the mandatory extension then the funds should be with your broker today or Monday latest. Considering the timing of this update from Delek I'd guess the funds have already been tranferred. I sold in the market on the day Delek announced success but I know my broker (Barclays) took a week to pay out. Londoner7

The delisting is a dead cert. Minority shareholders are now in a similar position to their position under the mandatory extension, except the timing of the $1.95 payment is still an unknown. Again, unless you want to play the FX you can sell in the market - unless of course you want to be ejected from the room by the scruf of your neck :-) Congrats to anyone that bought in the recent 80-85p range. While the $1.95 was a likely outcome I felt the timing might be nearer 180 days out. Interesting, to see we can continue to follow the progress of Stella while the senior notese are still outstanding, albeit without any skin in the game. Let's see if they can achieve Stella ramp up before June 2019 ;-) Londoner7

Spogbat, it's only 5% so nothing dramatic, bringing us back to where we were after the results and before the 5m director sale. As I said at the time, the sale wasn't a reflection on prospects but it is a big sale to absorb compared to normal daily volumes so was bound to impact price. Recovery may also have been helped by a favourable write up in Investors Chronicle a week or so back. Good MPA numbers can only be positive after previously pointing to a slowdown due to FX and Brexit factors. Breedon often boast of self help not market help but a bit of market help can go a long way. Breedon is essentially a fixed cost business so additional revenues feed strongly through to the bottom line. Comparatives at the half way stage will be favourable, particularly in asphalt which was weak this time last year. Also, we might be seeing some positive material pricing after a relatively flat 2016 – latest gov.uk stats are mixed. The Pro Mix acquisition is positive but small scale. I'm hoping a few quarries to support the larger RMC network are on PT's list of buys. Londoner7

The market looks good http://www.mineralproducts.org/17-release13.htm

Skippy999, thanks for the AGM update. Good to have a timeline for some acquisitions. I agree that size matters. But I’d like it in the sweet spot, which is just under the point where Breedon feel the need for another dilutive placing. Londoner7

Update from Berenberg yesterday. They've tidied up their numbers - their previous sheet (posted 9th Feb) had a number of significant typos (at least that's what I took them to be) Berenberg's bottom line adjusted EPS is 4.0p, just above current consensus. This is some way below my expectations for 2017 so I looked at where we differ. The key differences between us are on EBIT margin and interest costs. EBIT margin The Hope business has an EBIT margin of 9% so this will reduce the overall margin measured against the original business. After 11.6% in 2015 and 14% at the 2016 H1 stage (pre-Hope), 5 months of Hope brought the overall margin down to 12.8% at the year end. With a full 12 months of Hope in 2017 Berenberg expect the overall margin to come back to 11.6%. Looking at the detail Berenberg's 11.6% is based on flat margins for all three parts, Hope, Southern and Northern, between 2016 and 2017 – both their sector breakdown numbers and the graphic support this conclusion. Over the last few years margin growth at the Southern business has been exceptional with margins increasing by 3.6 (%) points last year alone. Margins in the Northern business have been improving albeit at a slower rate with an improvement of 1.6 points last year in spite of the heavier reliance on the contractor side. Hope, just acquired, had a 9% margin over the 5 months. Yet Berenberg expect margins to be flat this year. I see nothing in their commentary to guide why. The MPA is predicting a flat construction market in 2017, but Breedon has shown it's ability to outperform. No more synergies from the Hope acquisition. No gains from internalisation. I don't agree, but that's what makes a market. Anticipating further momentum I expect all three segments to improve on their 2016 margins. My overall margin forecast for 2017 is 12.5% (2 points, 1 point and 0.5 point respective margin improvements), which is 0.3% down on last year (due to full 12 months from Hope) but 0.9% above Berenberg's forecast. This accounts for a difference of 0.35p EPS. Interest costs Berenberg's net interest forecast is £8.7m. Mine is £5.7m. Interestingly, if I do a simple extrapolation of H2 interest costs against acquisition dates I get £8.64m. Perhaps, Berenberg did this approximation. My calculation is based on net debt 1st Aug 2016 (post Hope acquisition) at about £185m and £159m at year end, after a further £16m spend on the Sherburn acquisition. Breedon forecast around £120m net debt by 2017 year end. 2016 H2 interest costs were £3.4m. Putting together these numbers I anticipate £5.7m net interest for 2017. This accounts for a difference of 0.17p EPS. Bottom line, my adjusted 2017 EPS estimate is 4.5-4.6p. A numbers update at Tuesday's AGM would be good, but I suspect we may have to settle for commentary. If anyone is attending I'd appreciate a summary. I'm out of country so can't attend. Missing the rock cake

My only investment in the oil sector over the last few years was in Ithaca. I liked the story and had confidence in the management. Remember the hedging strategy that was put in place ahead of the downturn in the oil price – I recall some commentators saying Ithaca were being too conservative in their hedging when the Brent price briefly rose to $110. But it was that strategy and the portfolio of assets that gave Ithaca better protection than most (all?) of its North Sea peers. As the Brent price improved and Stella became a reality I felt the outlook looked promising. For me my investment in Ithaca has been a roller coaster ride and I’ve come out pretty much where I started financially but with a tremendous amount of experience of the sector, and in particular the capital cycle. While those investors that happened upon Ithaca in early 2016 are rightly pleased with their timing there are other investors whose timing was less fortunate and understandably are feeling cheated out of their investment. Based on what I know and given the opportunity I would be investing in the Ithaca story here at 113p. But that isn’t an option. However, I will be watching the Stella flow rates other the next few months to see if my confidence was warranted. I took a decision on the 6th Feb to hold out in the belief that Delek would not succeed at their bid price. I was wrong. In the event I am exiting at a loss of 5% on the market price available on the bid date. But if you wish to remain in the North Sea oil sector you can console yourself with the knowledge that Ithaca’s peers (North Sea producers), Enquest, Premier Oil, Faroe and Cairn Energy are all at double figure losses compared to their 6th Feb price. So if your wish is to remain in the sector then holding out against Delek wasn’t a bad option. Over the last couple of months I’ve monitored the other plays in the North Sea and attempted to understand their portfolios and their financials. But the investment case essentially comes down to your view on the future direction of the oil price and whether you believe in the oil supply crunch anticipated by some and debated exhaustively on these bulletin boards. If you are bullish on oil then you need to assess the different approaches of these North Sea companies. Are you comfortable with the high debt gearing of some or the conservative equity issuance (dilution) of others? Perhaps you’d like a pick and mix. Ultimately, I’ve come to the conclusion that the oil sector is essentially a traders market. As investors we all start out as traders. Personally, I find the day to day monitoring of shares prices tedious and prefer to assess the fundamental merits of an investment. After several decades of investing I’ve also come to the conclusion that for me the fundamental approach is more rewarding and more satisfying. So on the oil sector – I’m out.

After 70% of shareholder tendered their shares Delek now control 76% of the company. The mandatory extension is now in operation and is open until the 3rd May. Under this extension you may tender your shares for C$1.95. Options 1) Tender your shares under the mandatory extension. Contact your broker and inform them of your wish to tender your shares. You may do this by telephone. Your broker may offer an online option. I would also expect your broker to write to you about the mandatory extension and to request your instruction. You will be open to FX movement until payment is made 10 days after your tender. 2) Sell in the market. You can still sell your shares as normal in the market but be aware that it will be at a discount to the offer price. The current FX conversion is 113p. Currently my broker is offering 111.7p. 3) Hold on to your shares as a minority shareholder in Ithaca. 4) Any mix of the above. I expect we’ll see bulletin board comments over the next few days arguing the position for and against taking a minority shareholder position. I have no experience in this area. However, it is my understanding from the various circulars that Delek wish to take full control of Ithaca. If all remaining shareholders tender their shares in the mandatory offer then Delek will have full 100% control. If you believe Delek wish to maintain a public listing then you should ask yourself why they have not put some limit on the tender – perhaps they don’t have that option. With a 76% holding it is likely that Delek will pass the 90% mark during the mandatory extension which would allow them to take full control of Ithaca. I have no idea what the terms of the exchange would be. Perhaps others have experience of this. If you wish to hold out as a minority shareholder I urge you to use your brain and not your heart. All the best, Londoner7

KeithR39, I believe you are right and my recent comment on this was wrong. Thinking about this again I think the reason it occured in the Savannah / Total bid was because Total had less than 20% prior to the offer Sorry for the error, Londoner7

thehickster, Ithaca is a Canadian company with a dual AIM listing. So I guess an offer in Canadian $$ was the only option. It makes the assessment of this deal and any trades tricky for us UK investors, but I guess few would be complaining if the FX had gone the other way. But I believe UK investors hold the majority of the shares so while the FX has the potential to work in Delek's favour, FX may also swing the outcome against Delek. We'll know soon enough. Londoner7

OLI12, I generally agree with your assessment, except (by my calculation) at the current exchange rate the offer is almost exactly 113p, so the investor has lost 0.5p. However, they may have chosen to avoid the potential of further FX risk over the next few days. Whether their assessment to sell or not is correct will be revealed tomorrow. Deadline is 5pm Canadian today. Delek can't be certain of the tender result until the deadline because tenders can be retracted. So I wouldn't read to much into any dealings today in the UK. There may be clues in late trading on the Canadian market. As to your question. Based on my assessment of a similar Canadian deal between Savanna and Total I believe Delek do have the option to buy in the market but any purchase would not count towards the 50% of common shares not under the control of Delek. So it would be a tricky arithmetic call to make before the offer closes. That is my understanding. Londoner7

The bid price is still subject to FX movements but Delek’s offer is currently worth 114p. If you have tendered your shares in the expectation you will receive 119p you will be disappointed but you still have the opportunity to receive that price or higher by retracting your tender. Until the bid closes on Thursday evening you can ‘retract your tender’. You can email your broker at their corporate email address quoting your account number and the Delek/Ithaca corporate bid reference (on your broker’s letter), or easier still, phone them. Ithaca’s closing pre bid price was 108p. Delek’s offer is currently at a 5% premium. Don’t leave it to the primary shareholders improve on your investment –phone your broker. Delek are reliant on small shareholders to achieve their 50% target. If they fail to achieve the target by Thursday evening I believe they will raise the bid. The more small shareholders that retract their tenders the more Delek will need to raise their bid. They will announce the result on Friday – success or a revised offer. Since the offer we have first oil from Stella and judging by the tanker movements Stella production is ahead of expectations. I believe Delek will take control of Ithaca but I want them to pay more than the 5% premium they are offering. Londoner7