Member Info for Pharmhall

Great, I am glad that it has worked out well. A colleague of mine goes past its factory in Essex quite often and tells me it is extremely busy. While I agree on the LTIP, I do wish that the directors had more skin in the game, it keeps them focused. My in price is somewhat lower at 79p, but I still do not see need to take profits, especially given all the recent contract wins and the turnaround being seen in the LA acquisition.

Roger, back in November we communicated about defence alternatives and I mentioned Concurrent (CNC). You said you would take a look (actually I seem to recall you saying you had bought in, but could not find the post). Have you seen today's trading statement? I think this still has some way to go.

Don't expect too much! In the RNS on 19 Nov, it states that "...TGC shall identify a suitable US-based corporate finance adviser and broker for the purpose of the Potential Listing ...". The best that can be hoped for near-term is that an Advisor for the IPO has been engaged. When it comes to the IPO itself, "Registration Files" need to be logged with the SEC and a search of its database today does not show any records for "Senmet". It will take time, so we need to be patient.

Timbo237 and MyIPA, I can only apologise...I was about to send a reply to you when Peterhouse called me. From the horse's mouth...the bonus shares will only by issued if the suspension IS NOT lifted by 31st March (as you said). The email that I received from my broker was incorrect and I have informed them of that fact. This means the bonus share is not much of an incentive to encourage bidding for better volumes and/or prices. IMO most likely, if it happens, to be at 9p!

Apologies if I am behind the curve, but my broker has just sent me clarification received from Peterhouse.

The conditional share is to sweeten the deal and increase demand (my opinion). Peterhouse states: "...SUCCESSFUL PLACEES WILL BE ENTITLED TO RECEIVE 1 ADDITIONAL NEW SHARE FOR EACH SHARE SUBSCRIBED. THE ADDITIONAL SHARES (CONDITIONAL SHARES) WILL NOT REQUIRE ADDITIONAL CONSIDERATION TO BE PAID, BUT WILL ONLY BE ISSUED IF TRADING IS RESTORED BY CLOSE OF BUSINESS ON 31ST MARCH 2025...." This makes far more sense, and eliminates all the stupid banter about a "Lunn stitch-up with his mates". This auction is being run by Peterhouse according to strict rules, albeit BOD has final say, but invariably takes its Advisor's advice.

Nowhere near high enough for control. Mkt cap ca.£300m, annual net sales $200m/£160 and EBIT $100/£80m, so EV ratios far too low even at 150p.

Actually, I was reassured by the statement. While the revenue news was slightly disappointing, far more important was that cost control means EBITDA loss will be in-line and reaffirming the gross cash of €3.6m and its position regarding reaching cashflow breakeven in the coming year. 2024 is behind us and all the bad news is priced in (IMO). The shares should be discounting 2025 and 2026, and the delayed revenue plus the potential new contracts should boost 2025 making it look far better against 2024.

As for share price, I do recognise people will have different opinions based on their in-price. I only invested in past week, so it is still where I entered and I am quite happy with that. I still maintain that there is little downside (literally!) and big potential upside. Must be patient for new contract news, which do take time to conclude for small companies.

I can't remember how EXR first caught my eye, I think it was the interim results announcement in September and, being invested in Oxford Metrics (OMG), I decided to take a look and do some research. Suffice to say, I have taken a small position in the last few trading days.

EXR has a market cap of £3.0m (LSE close Friday) and its broker (Cavendish) has forecast period-end (2024) net cash of €3.7m/£3.1m, so EXR has a slightly negative enterprise value. Most of its peers trade on an EV/sales of 2.0x to 8.0x, albeit that most of these are in the US. The exception is OMG which is currently on 0.5x (also incredibly cheap). Even if EXR were to move up to an EV/sales of 1.0x 2025E and use much of its cash to generate the sales, it would have an EV of €7.0m/£5.8m, add in €0.3m/£0.2m cash (at end of 2025) and it would trade at a mkt cap of £6.0m , or double current level.

This assumes that guidance/forecasts will not change when results are announced. Given the recent contract news and an incredibly good list of strong clients, I think this is unlikely.

A little gem IMHO.

JL...I fear that your hope that MSI will improve communication with shareholders will simply not happen. I have been asking questions and pushing Shelley Ashcroft (main point of contact) for at last three years...and nothing has happened. But in some ways, I do not particularly mind, because that provides opportunities with the shares tending to drift down in the long "quiet" periods between results. At this point in time, the one thing on horizon that might change is the outcome of the strategic review...the first we heard of this taking place was in the interim results RNS, and by then, it was "nearing completion".

BTW, did you see the article on defence M&A on page 7 of today's FT? Defence companies are flush with cash and looking to add technologies and systems to their offering . Having said that, MSI more likely to see trade interest when we know what is happening, if anything, to the "other" divisions in MSI.

2024 has been a very good year; Best of luck for 2025.

Roger, you asked about alternative defence opportunities a few weeks ago. Chemring (CHG) had its FY 2024 numbers yesterday, which, although flat, were in line with market expectations. Despite that, the market took fright and marked the shares down ca.15%. It has over 70% of 2025 sales forecast already covered and much of 2026 and 2027. P/E trading on about 15x reported and 12.5x underlying 2025 EPS, which is not demanding. Only issue is timing. Do you take advantage of the price fall, or do you wait because 2025 with be 2H loaded again. Whichever, it does appear to be one to tuck away taking an 18 month view. I've just bought a load for my SIPP.

Yes, agreed. My interpretation of that statement is that the Board is considering what should be done with the non-defence businesses, leaving MSI to focus solely on defence....which would probably lead to a better rating.

It does not need the cash, so if non-core businesses are sold, they could return via a special dividend (I don't believe in share buybacks and there is insufficient liquidity in MSI for this to happen).

Despite all the media noise around the need to increase defence spending etc I think that MSI, having published 1H'25 numbers, will stutter around current levels for the next five months or so due to its usual "information void". What might change this is the comment with the interims that: "Our review of the future strategic priorities of the business is nearly complete and I expect to update shareholders about this before the end of the financial year." If, as it says, it is nearly complete, it could come sooner rather than later. Such an event could trigger a re-rating. Meantime, I'm happy to be a patient shareholder.

The RNS on 11th Dec simply repeats the "Directors buying" announcements on 4th, 6th, 9th Dec in an attempt to deflect the share sale. All of these transactions are diddly squat compared with the $250k+ salaries that they are all earning, so totally insignificant share purchases.

JL79...the report seems fairly standard to me. Admittedly it did not quite fit on the line using Investegate, but was perfectly OK on the LSE site. Also the pdf on company website is fine. Most important, the information is consistent each six months and directly comparable without "restatements".

The shortfall in sales compared with my, admittedly, high expectations was entirely due to Defence & Security (+5.2% vs +50% fcast). The declines in all the other divisions were bang in line with forecasts. Timing of revenue recognition also has an effect on the gross margin which fell 2.2pp to 66.1% (forecast was 68%). SG&A costs are rising each consecutive half year, but bigger than predicted. Market will be disappointed, but any falls towards 900p is a good long-term buying opportunity. Glad to see the management changes starting.

Sorry for delay...you made me go back and look up D&A. 2024 EBITDA was £16.96m; my forecast for 2025 is £22m. So with the share price at 970p (offered), the EV is £115m....EV/EBITDA is 5.2x (2025E) and 6.8x (2024A). Very cheap.

I sold SIPP holding at exactly 1100p after the 2024 results, but retained my much larger ISA holding. Looking to get back in before 1H, but patiently waiting for a "bad day" in the market!

John, I totally get your preference to take a more pessimistic view. As I said, and you are wholly aware, our work is total guesswork given the lack of information flow from the company. I understand your sales guestimate versus my own, but I do not understand why you think the EBIT margin will crash back to ca.10% from 13.5%. Even on your number (£60m), the increased sales should have a leverage effect as costs (particularly administrative) are unlikely to be rising at the same rate.

I have also gone back and looked at net cash/(debt). At end of fiscal 2024, MSI had £42m net cash, or 27% of current market cap, leaving an EV of only ca.£110m – cheap as chips!

On your next post, I agree with the 20x forward P/E for defence companies, but you are applying it to a half-year only. On a full year (EPS 85-950p), the share price should be well above 1500p.

Its only been announced because LO has breached the 5.0% level for a declaration. It does not necessarily mean that LO has bought all 90m shares recently; it may just have topped up from, say 4.5%, triggering the announcement. Only you thing you can read is that it has bought shares recently, which is still a positive institutional signal.

My general feeling is that 1H'25 will be good. First, for the past two years 1H has been stronger than 2H and, given that the US defence work had only just begun in 2H'24, I expect a good contribution in 1H'25. Secondly, the defence work carries better margins (as evidenced from the past two years) while SG&A costs are reasonably stable in absolute terms, so reducing as a % of sales. Consequently profits should rise faster than sales – typical leverage effect.

For what its worth, taking these points through my mini P&L, I get sales of £69-70m (+21-22%); EBIT £10.5m (+38% (leverage effect of increased sales)); EPS 51p (+42%). At least it gives us something to compare against when they are announced.

Unknowns are pension costs (-£0.2m), but have offset by conservative view on interest income on cash pile (£0.8m); and tax – MSI has an unusually high tax rate (27-29%) for a small company. I've used 26%, but as a guide each increase of 1% reduces EPS by 0.25p.

Hope this helps and that company beats my forecast !!!

I missed those two....but have other skeletons in the cupboard!! None of us are immune to being caught out. However, I do think we have an enormous advantage today compared with 20+ years' ago, with far better and faster communications and the ability to trade instantly (I have direct market access as well). Both of these give us chance to limit losses