Member Info for Monkf6

I wonder if the institution that appeared to be selling is finally complete?

Of the 7 major shareholders listed in the annual report,

1. Mr Vallejo built up to 23m shares last year.

2. Octopus are the longest serving and reduced by 2m to hold 19.6m.

3. Van Lanschot Kempen added 1.5m shares to total 13.7m.

4. Jupiter added 2m shares to total 12.6m.

5. Hargreaves hold 8.5m so have remained mostly the same.

6. Fidelity bought over 7m in March 2025, a new position.

7. Blackwell appear with 7m.

FT online identifies Handelsbanken Fonder with 3m shares as of 30 April 2025, a new position.

40% of the float in just these 8. I would be surprised to learn of any of the 8 selling as most have added to their position in recent months or have been willing to ride out the storm.

I expect that too Dibbs, it is just when.

The term loan has £10.6m remaining and will be repaid in 5 months. The CEO said in the Equity Development recording that £14m has been spent annually paying for Billi and the £14m will be available again in FY26. Ergo more cash to invest, pay off debt to save on interest, dividends, or a future share buy-back. The dividend announced in the results puts the annual yield at 4%. If adjusted PAT improves, one would expect the interim or FY25 final year dividend to be higher. That we shall have to wait and see.

You make good points headder, often ones I have not considered, and why I cherish a chat forum that discusses the business and its workings. The very valid challenge on salary enhancement led me to re-read the annual reports.

It is a good point on the float and institutions too.

Whilst I am taking a turn as management's lackey today, the CEO sold 1.1m shares at 325p in 2021. He bought again 3 times (2022, 2023 and 2024) at a total cost of £145k by my reckoning. One concedes this is not close to the sums pocketed in 2021, but he still owns close to 3m shares today. That is more than I see most CEOs owning of the company they lead.

Always a good shout to raise the risk of mercenary management increasing their salaries with every acquisition. Witnessed this trick many a time. I found a 16% increase in 2021. Otherwise it appears the CEO's salary has been flat or +3-4% annually.

I have visited those dark places myself headder and returned unscathed. The 5 year forecast was to double revenue to £199m with gross profit to £67m by the end of FY25. They are at £146m and £55m by FY24. It goes without saying Strix will fail to hit their original target on time. In a surreal twist of events I offer a defence of management; 1. kettle control revenue has not recovered to pre covid levels, 2. rising interest rates prevented the company from making a further acquisition, 3. there is one year still to go. Though I do think management overconfidence at the time has hurt trust and rising interest rates should have been foreseeable. I wonder if that was why the CFO was retired.

'Strix relocated parts of its manufacturing capabilities, primarily the press production lines, from its Ramsey factory to its China facility, with the core technology of blades production, a key part of the Group's heritage, remaining on the Isle of Man. This allows for more cost effective and efficient transportation of raw materials'.

Is it just the US tariffs / China sentiment you have concerns with here divad? US tariffs will be on OEM kettles made in China whether part of the kettle control is manufactured in Ramsey or Zengchen.

Results mostly as expected and removed a lot of uncertainty. The stand out was surely debt reduction, an incredible job there. Note 20(d) says it all. Less debt, lower interest rates, less interest to pay, pay off more debt, rinse and repeat, as free cash flow increases. Hats off to management. On the up now.

I concur on Billi headder. The debt and annual interest to serve the debt is holding the business back. It questions whether Billi was a sound investment considering the millions extra in annual finance costs as interest rates rose. Aussie Dollar has continued to weaken against sterling too and the debt is in sterling. In all, this Billi purchase has cost shareholders millions more than the sticker price.

Large buys by management are indeed comforting. I think it prudent not to buy just before year end. The perception of releasing a profit warning a month before year end, buying in the month, then updating the market may appear suspiciously convenient if the share price had dropped and then rallied. It shall be interesting to watch for any management purchases at the end of next week.

The date for year end results was announced on 30 January so the closed period would begin 31 December. I concede management could have bought in December sub 60 pence after the profit warning. I shall offer the benefit of doubt during one of the busiest times of the year.

Though I do not wish to see Mr Bartlett make any other acquisitions until he has achieved anything close to his prior projections on operating profit.

Yes, it would be fair to assume insiders cannot buy before the results are announced and year end was 31 Dec '24. The CEO does seem to have bought a couple of times since he sold shares near the top in '21. I too would like to see management purchases at these prices.

Estimating the potential immediate impact of new tariffs on Chinese manufactured goods over a coffee in the wee hours.

More than 90% of all kettles made in China. Many OEMs could stop manufacturing for the US market until further notice.

£70m revenue for controls. Circa 70% regulated. A little help from Grok to calculate US share of revenue may be around 12.5% based on estimated electric kettles sold last year. Ergo possibly £6-7m in revenue if no kettles are produced for the US this year. One might assume a 25% net profit margin due to controls for regulated markets holding a higher margin than the group overall and all other costs are sunk. A possible £1.5m hit to net profit in 2025. Doth share thee thoughts.

With regards to aforementioned risks;

+ Lower cost kettle control launched in August to compete in China and less or unregulated markets (India is 2nd largest tea consumption country per capita) and one to go after. I expect this control to do well and is important to maintain or grow market share.

+ Increased popularity in pods and hot taps is a pull away from the humble kettle. Quooker and Qettle are popular home hot taps in the UK. Billi is focused on offices but moving in to the home market. I would like to see good, better, best range.

+ The trend to takeout coffee baffles me. Maybe the new, smaller series Z kettle controls will allow OEMs to create stylish (i.e. not plastic) on-the-go flasks like a Wacaco Nanopresso.

+ Inflation can be argued for kettle sales to fall or for kettle sales to remain robust, being an essential purchase. Aqua Optima/LAICA water filters may benefit from overpriced Brita filters, which use the same technology.

+ Home working could make offices less likely to invest in office hot taps. Conversely, the behemoths will refurbish offices to be more appealing to the sensitive generation.

+ The £9m interest payments will reduce with the debt. There is no risk to the solvency of the business but I consider it a risk as it will stymie investment opportunities like a share buy-back.

I concur Pedro. The trading update stating £18-19m PBT was issued post year end. Highly profitable and highly cash generative.

- Competition from cheaper controls result in OEMs switching suppliers.

- Alternatives to kettles as consumers gravitate towards pods or hot taps.

- No brand loyalty in products.

- The trend to takeout coffee.

- Inflation continues to reduce discretionary spending.

- Work from home culture persists in large businesses in regulated markets.

- £9m interest cost on the debt.

I invite wiser folk to shine a light on risks I do not see.

Management have now revealed their incompetence in accelerating the cash burn to £2m since the last results. Where did that go when they did so well in FY24?

Bidco outline the immediate cost savings they will make to turn this cash flow positive. It is a shame other big fish have not circled, yet.

Barriers to entry are now high as the few existing portals have first mover advantage with the NHS app.

I anticipated Oracle Corp. or a US company with an existing portal in the US to buy INHC. The Board could have pursued a merger with any other NHS portal. NET is one of those NHS portals with £20-30m cash, last I checked.

Lombard automatically withdraw their support if any other offer is received above just 11p. Another top five investor withdraws support with an offer above 12.5p.

Out of the country for two weeks and blinked so missed this drama from last week.

Not surprised to see a takeover, though selling a saas business for less than 1x sales is ridiculous. INHC intellectual property is worth worth more than this.

They paid £13m for the zesty portal a few years ago with £1m in sales. The attend anywhere video was bought for £25m.

Clearly their valuation metrics to buy a business are inconsistent when applied to sell themselves.

What would you choose if you were the Board?

Priority for cash in my opinion, whilst remaining under 2x net debt to EBITDA;

1. Share buy-back below £150m market cap.

2. Reduce debt, which they are doing quarterly, and will positively impact refinancing.

3. Dividend. I seldom invest in non-dividend paying businesses.

I suspect the Board will want to keep their commitment to reinstate the dividend. This is honourable and it may create a floor under the share price. Nonetheless, it is surely not the best use of cash for long-term shareholders. A near £5m dividend will be a one time benefit whereas the Board could buy-back close to 5% of the company to have a lasting effect.

I would, actually, like to see the Board commit to a number greater than £5m for the purposes of a buy-back. The best return on capital is to buy its own shares at this price.

My calculations for FY24 are as follows;

£18-19m PBT

Tax £2.4m

= £16m PAT

30% of PAT dividend policy = £4.8m

230m shares outstanding

= 2p/share

= 5% dividend