When I initiated coverage at 97p ('Building up for a takeover', 22 Jun 2015), Ensor's days as a listed entity looked numbered after the board put the company up for sale. I subsequently reiterated that advice at 90p ('M&A updates', 9 Dec 2015). Admittedly, shareholders have had to be patient as the divestment process has taken far longer than I had envisaged. That's mainly because the board decided a series of trade sales would maximise shareholder returns rather than seeking one buyer. But that's not to say they haven't been successful. Two disposals announced a fortnight ago generated a total cash consideration of £12.5m on completion and Ensor also retained £1.62m of cash held by those businesses. The proceeds represent a hefty premium to the £4.6m-worth of net operating assets sold. Moreover, Ensor now has net funds of £13.3m, or 44.5p a share, before payment of a final dividend of 1.55p a share in late September at a cost of £463,000 (ex-dividend: 11 August).
There are decent prospects of Ensor's two remaining businesses being sold at a premium to the book value of their assets, too: Ellard, a supplier of electric motors and controls for the automation of doors and gates; and Wood Packaging, a specialist supplier of protective covers for furniture transportation, servicing major retail groups as well as the SME markets. Both are being actively marketed and Ensor's board is in discussions with interested potential buyers, but it's not going to be a fire sale as shareholder value will not be sacrificed for the sake of an early disposal. That's worth bearing in mind because I feel there is a pricing anomaly worth exploiting here. In fact, once you adjust for the latest disposals, I reckon Ensor has a pro-forma net asset value of £19m, including net funds of £13.3m. The company has a market value of £21.8m, so in effect investors are attributing a value of £8.5m to Ellard and Wood Packaging even though both are profitable and have been growing strongly.