Member Info for ShireLad01

I'm quite happy with this option rather than div. Destroying a good chunk of shares, and if you believe in the business, better for long term holders. they will still have a significant amount of cash due to big stock run down and billi of course. 43p decent premium to where it's been floating. To me it signals confidence, undervalued and they know it, clever play for medium term. If things looked bleak they wouldn't be parting with this cash. Hang on in there! GLA

I hope not when at this level, I am convinced that there is actually jam tomorrow 😂

Must be attractive looking proposition, if anyone sniffing about.

I'm predicting this is part of a wider controlled reset by the board, few clues (I think!) but here's my take :

The acquisition and disposal of the billi has been transformational for strix, but it's left a legacy that they have been navigating (painfully) through and now out of.

No doubt the acquisition placed strain on the financials, even at the bargain it was secured for. Interest rates went up, a bit market share was definitely nabbed, materials continually rising, and covenants/liquidity measures would have become a real ball and chain.

What happens in the those circumstances? A careful dance of ebitda and cash generative measures at key points managing the bank, and the market and sometimes they may conflict. Major stock build done (ebitda and leverage tactic), increased promo activity likely, potentially holding off pricing increases to ensure no further market share loss. Effectively over a barrel.

Strix are streets ahead in all respects to competition. Yes 'otter' I think the next viable alternative may have nabbed some share, but their margins are paper thin from accounts I have seen. In the face of material cost increases they aren't holding onto that. Chinese copyists? Just keeping the weeds down it's not going to be profitable area and distinctly different to the more mature markets.

So why my optimism

New ceo = let's clear the decks

Promo activity = who knows what scale this has got to. Very hard to step off this carousel once it's going. Far easier with a shed load of money in bank and no covenant measures. Rns said board opted to not do it in q4, sensible commercial decision. Could it be significant enough to mess with the perceived demand, possibly?

Add to that the move of the year end, clever, q1 they point out is typically slow anyway.

Rns talked about price increases too. Me thinks boot will soon be on the other foot and working their way out of a undesirable commercial cycle pinned on a December y/e.

Reset market expectations, cease sub optimal commercial practices, release that y/e pressure point.

The controls stock burn down is going to be massively cash accretive. No interest payments, my goodness I can't wait to see where cash is at.

Projections in the ED release, if you go right to end, exclude a number of key positive things, not least the next gen stuff. Again evidence of board managing expectations well here, resetting that baseline but not neglecting to mention nor overlaying some key things. If they were in major damage limitation mode wouldn't we see some of this stuff fleshed out, and more upbeat narrative?

Share buyback impact, at this level now, stepped up pace massively, destroying shares at a phenomenal rate, again a beneficial outcome of the situation when it picks up.

What do with all this cash? Well getting next gen on the delivery path would be amazing. Will it be smaller, cheaper, more functional, better margin, enable this premium brand to compete with knock off

https://www.***************************/strix-group-a-positive-end-to-the-year-signals-stronger-prospects-equity-development/4121185250

a little more in this i think around actual net debt level - under £70m which is great news and on target per h1 release. there was of course the equity raise which will be a big chunk of this but this, but nd was sitting at £84m in fy23 at £87m in 22. 24's interest charge will no doubt be substantial but the equity raise and rapid nd improvement should be noticeable on '25 bottom line and obviously making progress in wrapping up whatever finance was required for billi acquisition quite swiftly. i think this is a great buy.