RE: More M&A23 May 2019 15:40
This is a great debate and I appreciate your bearish stance.
One other way of looking at the value of Aukett (related to juicing sales) is the value the market assigns to each staff member.
From a review of Waterman, RPS, WYG and DRV (none of which are Architectural business I admit but are the only 'plc' comparatives we can use), the value per staff (on average over 3 years) was as follows:
WTM - GBP 34k
WYG - GBP 23.5k
DRV - GBP 74k
RPS - GBP 93k
Aukett (over the same 3 year average) implies a value of GBP 21.5m per staff member which is understandable given the smaller business and more lumpy trading / thinner margins etc. BUT, currently at GBP 2.9m mcap the value per staff member is around GBP 8.5m, way below the sector average.
If someone acquired AUK for lets say GBP 5m, they could strip out around GBP 1.2m of Plc costs from day 1 including the listing, broker, auditor and Board etc. 2018 final results were kitchen sinked and included lots of one-off bid costs, property costs etc. The 2017 results of a GBP 325k loss could have been a GBP 875k profit as part of a larger entity without plc costs.
6-8 x GBP 875k = GBP 5-7m mcap / valuation.
I agree they have branding / positioning issues and should focus on a core offering rather than spreading themselves thinly in order to diversify. Your points are all generally valid BUT lots of people said nobody would want WYG as the balance sheet was shot to bits (GBP 10m debt) + covenant issues etc.
Irrespective of many of the salient points you raise, professional staff have a value and Aukett's valuation of GBP 2.9m is anomalous. With the Board owning 50% of the stock this business will be sold - its just a matter of when.
Sign In
Follow the stocks
