The sale of Lupus Capital’s oil services division, Gall Thomson, for £75m in cash has rightly stolen the headlines. It’s a “full price,” admit management, given industry sources once thought £60m more likely. It makes good strategic sense, too, and hands management the funds to develop the core business, making seals and other parts for doors and windows.
Setting aside £30m to pay down debt and keeping some as a buffer leaves the firm with a war chest of £30-35m. There’s “no immediate pressure to spend,” says the firm, but it already has a number of things in mind. Acquisitions in Asia and Brazil seem most likely. Now,
Lupus is left with a building products business that made an underlying operating profit of £22.4m in 2011, down 13 per cent at constant currency, but still better than broker Collins Stewart expected. The end of a US incentive scheme for replacement windows hit volumes at US unit Amesbury, knocking 16 per cent off profits to £11.3m and trimming the division’s operating margin by 130 basis points to 10.7 per cent. Still, quoting levels increased in the fourth quarter and an improvement in US housing starts has continued into 2012.
Collins Stewart expects adjusted pre-tax profit of £18.3m in 2012, giving adjusted EPS of 10.1p (2011: £12.7m and 9p).
LUPUS CAPITAL (LUP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 126p | MARKET VALUE: | £163.6m | |
| TOUCH: | 126-128p | 12-MONTH HIGH: | 152p | LOW: 83p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 20 | |
| NET ASSET VALUE | 192p* | NET DEBT: | 36% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 217 | 15.4 | 10.7 | 5.57 |
| 2008 | 267 | 10.8 | 5.01 | 2.06 |
| 2009 | 242 | -0.6 | 0.32 | nil |
| 2010** | 252 | 1.78 | 1.15 | 2.00 |
| 2011** | 230 | 1.31 | 6.23 | 3.50 |
| % change | -9 | -26 | +442 | +75 |
Ex-div: tbc Payment: tbc *Includes intangible assets of £312.8m, or 241p per share **Excludes Gall Thomson | ||||
