Mello November 2016 Paul Scott Avesco (AVS) Presentation

Should say, of course, before we go further, it's not in the bag yet. I mean, it looks like it's not a preliminary taker of broach; it is a formal sort of legal document that came out, and in my experience, these nearly always actually go to fruition when you get that extent of sort of legal work having already been done. But it's not guaranteed, so there's still a possibility if something is discovered at a late stage, the bidder can still pull out. So just really for some general, I don't want to be too triumphalist about this in case it falls through. Show of hands, I thought more out of interest or just curiosity: did you hold ESCO shares when the bid was announced, just so we can get a rough idea? Okay, looks to be about a quarter of the people in the room, so well done all of you. Second question: have you sold? I'm going to put my hand half up. I actually sold about two-thirds of mine today because the price has got so close now to 650. I got 63.94 for mine, and I took, well, you know, I'll let someone else have the last one and three-quarter percent just to be sure the money's in the bag. Obviously, there's an opportunity cost as well to having that money; I can now do something with that and hopefully know whose it is before I otherwise would have been paid out. Final question: was ESCO a major shareholding for you? I'm going to sort of put, haha, is it top three? Top three? Nobody? Gosh, no, it wasn't for me either. And that's one of the key things I want to draw out of this talk: I think sometimes we don't see the woods for the trees in terms of maybe concentrating our money in ideas that really actually at the time looked obviously underpriced. So this talk isn't insight; this is all drawn from stuff I actually put in my blog over the last two years. There have been other bloggers who spotted it — Michael Mouse's blog, he's been very bullish on this stock for much longer than me, so I'm not claiming ownership of this success; plenty of people spotted the share. So what I've done here is crammed as many important points onto the last three slides as I could fit in without making it illegible, and I'll publish all these slides online, so don't worry too much about having to sort of draw everything down. There was, in my view, a sweet spot around late 2014 to early 2015 when this was a complete no-brainer, when the information in the public domain made it just crushingly obvious, if you read through the RNS properly, that this stock was dirt cheap. I won't go through all the RNS, but the good news really started to flow in early 2013 at the scale where the dividends were reintroduced after a sort of two-year hiatus after the financial crisis. If you look, I'll show you the progression of dividends in a moment. Then in January 2014, it's only a tiny blip on the chart now, but that was actually the special dividend payout relating to the Disney compensation win, which was a huge amount of money at the time. It was a special dividend of 10p a share, roughly. Now at this point in December 2014, that's when we got the really first sort of pivotal trading update because the company had engaged in a fairly major restructuring. There are lots of different parts of the business, a lot of which were quite significantly loss-making, and that was diluting away the profitable parts of the business that were being disguised. So if you look at the overall results up to that point, they were pretty awful — loss-making or even break-even, didn't look very exciting. But as I'll come on to later, no business is really the sum of the parts; you can actually shut down loss-making parts of most businesses very cheaply and easily, which can then unearth tremendous value in the profitable bits, and that's one of the key things I look for. So these are quotes from the RNS: ahead of expectations, Q4 extremely busy, particularly strong Creative Technologies USA. Now this is a theme that comes out through all the outlook statements over about the next two years. In every outlook statement and every trading update, they say how strong trading is in Creative Technologies USA. It gave figures: revenues up 18%, profits soaring. So again, all the information was there. Then shortly after that, in March 2015, we had another positive trading update: comfortably ahead of directors' previous expectations, so their expectations were raised only two months earlier. So again, I think when you start getting a bunching together of upbeat market expectations performance, that's a very bullish signal. Right now, this really started to motor. Strong interims, it was starting to become clear that the restructuring had worked. Also big director buys — we could debate director buys as a topic for hours, but in my view, generally, I think all too often these days it's used as a PR stunt. So if they're smallish buys, I ignore them; I would regard those maybe as even a negative thing. But when you see really chunky director buys, rule of thumb: if it's into six figures in terms of pounds sterling, I think that's not a PR stunt; that's somebody knowing good things are in the pipeline. So all these factors are coming together. We then got this really quite long period where I think a lot of people over that period of time just got bored and sold out, and that's again one of the dangers with this type of stock. The market is not rational with smaller caps very often. And then here you had a disposal of the freehold property, which was Fountain Studios where X Factor is filmed. Several friends, including David, flagged this to me. It was a three-acre site, and I think David and others got onto Google Earth, did a bit of general digging with their property knowledge, and these guys discovered that an adjacent site had sold for about six million pounds an acre. Well, this probably was in ESCO's books at cost about six million pounds, so there was basically 10 million pounds of free money sitting there if you did a bit of googling and found out that property was worth a lot more than book value. So that again is something David's done for many, many years very successfully; it just all helps the odds more in your favor as an investor. I just said, what's the time scale? Oh sorry, it starts at January 2014, so it's three years basically. So when the first big step up was, how long again? Well, it was hovering around sort of £1.20 around that area. The first big step up, I suppose, was really April 2015 when it went from about £1.21, that's when it sort of really started to break out upwards. And then I put at the bottom just the market cap roughly tying in at six-month intervals, and you can see that at this sort of level, the market cap was only £21.9 million. Well, they've got £16 million from surplus freehold there, and actually Fountain Studios was losing money, so it didn't harm the business in any way getting rid of the freehold; it had actually improved profits as well. So again, just free money sitting there for people who did the digging. The only glitch in terms of the investment thesis that I found was this one here: some interim statement came out and they said the phrase 'slightly disappointing' is what the actual chairman used in the RNS, but they gave reasons for it which didn't sound particularly worrying, apart from I think they mentioned possible pricing pressure, which did slightly unsettle me at the time. I look back at my blog post there, and I basically said, you know, I'm a little bit confused by these results; I have to do a bit more digging. But as has previously been the case with ESCO, they had a really, really bullish outlook statement, so I decided to hold. Even though for a company where the chairman says this company has always happened, you know, I think you've got to draw a distinction between companies that are permanently bullish on everything and companies like this one where actually if something is a bit wrong, they're honest about it, and then you don't necessarily have to panic sell.

You've emphasized that point because with the freehold in there, the other factor in deciding that an investment like that is worthwhile is that you trust the management. Yes, I'm establishing trust, and I couldn't agree more. And having the underpinnings with some freeholds in there as well, you've got the balance sheet strength to catch it if it does fall. So yeah, good point. So yeah, very positive outlook statements again. This was just before the Rio Olympics, so they were saying we expect to do extremely well at the Rio Olympics. Sure enough, going back to the theme of the chairs, is there any explanation why nothing yet with the share price? One at 60, 30? Good point. I mean, good planning. When does the time? That means they're on you before like you or I don't want any. I blurted out if you look, whatever reason why we should have done about a third of it. Yeah, I mean, this goes back to the fact that the market is not rational in small companies. You've hardly got any analysts, no sell-side, your knives are something up. Good. Yes, so I mean, you did have a temporary spike up, you can see that, then people just sold into it. Don't know why they pay that cash out. No, they kept clearing nearly all the net debt. Yes, so they had some like £19 million of debt, reducing it down to £3 million. Of course, it's an equipment hire business, so it's got a lot of fixed assets that depreciate quite rapidly because they have short two- or three-year life, and then they fund that with asset financing. Well, it's not; after selling the freehold, there's now negligible debt. Selling any all become tell right, very very nice situation. Very decent money. How cheap it was by comparison to other minor companies which had lots of debt. Yes, life supposed to do you zero debt, so yes, you could catch after all. They could dramatically increase the share price usually just by taking a little bit of debt; it just gives everything in our favor as investors. And still here we're only up to that £45 million market cap. You know, I beg, WeatherTech a mosque was so high in fact he was on geared when it was possibly that might have helped. I mean, these are all factors that are going in our favor. But as you can see from the takeout price, which is that green line at the top, this company was just fundamentally underpriced relative to what these guys are actually meant to be. Because the forward PE was about 10. Yes, yeah, just being you never got above about 10 over that period. Anyway, so that's covered most of the recent history of it. This I think was the period when the most obvious share price anomaly was December 2014, January 2015. So I just thought I'd give you some stats on that. At that point in time, you had this trading update telling you it's ahead of expectations, Q4 extremely busy, particularly strong in America. The forward PE by this point was 6.1, dividends rising, the yield is now 5.4%. So again, very obvious value. This wasn't something you had to really dig for. But there was that because of the net debt figure at the time. Oh well, I mean, the earnings figure will be after the interest costs, and they're just rotating the debt as they buy and sell the equipment, so it depends how you look at it, doesn't it? Then you had shortly after that, just a month later, another even more positive outlook statement again emphasizing CT USA. So you've got within this a business that is absolutely going bananas, but it's obscured by the other parts of the business. Just to get this, it's too small to read, but it's basically the screenshot of the Stockopedia page on dividends, just showing them coming starting again at 1p, 2.3p, 4p, 5p, 6p, 7p in each subsequent year. Again, I wouldn't say that was a massive factor for me, but it's just knowing that the management are pretty conservative; it's just yet another thing that you could maybe put on a checklist. And so each one like this just adds additional sort of comfort. Now let's look at Richard Murray, who is the founder of the business and the chairman. He founded the business in 1984, so this thing's been around a long time. You can see from his sort of craggy features there, he's getting on a bit, but I'm looking at it in business terms. I knew that what a rough love each other don't is, you know, successful entrepreneur. He's created value from this business in other ways previously as well. I just got the feeling when I looked at this company over a period of time, he seemed a sort of entrepreneur you want to back. And at that age, he's probably not going to want to continue this forever, which means he's going to want to maximize the sale value, which maximizes shareholder value. So doing a bit of googling, he's also chairman of Charlton Athletic, involved in that for about 35 years, and of course 27% shareholding in ESCO. So he's very much a controlling executive chairman, so you know he will steer the path. So you've got to make sure you're comfortable with the individual. I mean, David and Lordly absolutely love these founder- or family-owned businesses, and I do too. I think they just have a much, much better long-term perspective on everything usually, and providing they have a track record of treating outside shareholders decently — paying reasonable dividends to everyone, not overpaying themselves too much — although there was an issue with ESCO. A couple of friends of mine and a couple of fund managers I spoke to said that they're overpaying themselves the directors, and so they wouldn't go near it with a bargepole. Now I think that can be a mistake. I think none of us like directors who pay themselves massive salaries, but I think sometimes I'm coming around to the view that if everything else is okay about the business and its performance, I'm prepared to cut them a bit of slack on their salary, because I think if you're not careful, you can cut off your nose to spite your face. Now I discovered last night only that he's just unfortunately been diagnosed with stomach cancer. So obviously I know he can't hear this, but if he does hear this online, I just want to wish him all the best to get well soon. But I think also that can perhaps change people's perspectives on life-work balance and what they want to do with their retirement, and so on. So also the disposals, which I didn't really touch on the last slide, but the disposals that they've done of the various — not just the freehold but a couple of other loss-making parts of the business — to me started to point towards this thing being cleaned up for a trade sale. You can maximize the value by getting rid of the bits that are losing money or have erratic performance, and it all started to point to me towards a probable trade sale of the business, which again is not hindsight stuff; I put it in my blog several times. Obviously very pleased it's happened this quickly. Just to touch on the fact that again, as an individual, he has created value significantly before. There was a demerger of something from ESCO in the 1990s, and I think there were a couple of other episodes where he'd done stuff that was good for shareholders, which all gives me confidence that we're backing the right individual. Now pricing anomaly: so these are more just sort of other sundry points. I think I've already touched on the 6.1 PE in early 2015. You do have to take into account the good year/bad year cycle that they used to have, so it was alternate years depending on some sporting events, although again, buried in the narrative within the restructuring was that they had eradicated that seasonality by sort of just general upturns in the profitable businesses. Good and growing dividend yield, we've covered. Freehold for free, we've covered that. The other metric: always cheap on price to net tangible asset value. Now normally the average for hire companies is about 2, some go as high as 4 times. This one was on 1 or even below 1. So again, it's just more and more evidence that the thing was just fundamentally mispriced. Now Stockopedia picked up on this. Again, I'm not here to promote Stockopedia, and obviously declaring interest: I am paid a modest sum to produce the small-cap value reports. So the stock ranking system, I'm getting increasingly impressed with actually, because it does seem to have a good track record of picking up cheap improving companies, and it picked up on this one from only 2015 and remained bullish on it right to date. So I think the stock rank system is demonstrating very good results. So looking there over several years as well. So now looking at the jewel in the crown: CT USA. That picture there, you probably can't see it, but it's actually the Hoover Dam with the full screen. They turn this louver down into a giant projection screen, which we could maybe not at Hoover Dam here but something in between that and the tablecloth. But it's really spectacular, and I think when you see something game-changing like that, it's certainly something I've never seen before, you do sit up and notice. So high in improving profitability, which I'll show you the figures on a subsequent slide. Lots of other group companies were obscuring the value. Another company that's very similar status is OMG; I don't know if any of you have looked at that, but it had a very heavily loss-making bit which dissipated a lot of the profits. They've done a similar thing: they've just decided to close down a loss-making bit, and the rest of the shares I think at least doubled on that decision over a period of time. So it's a nice investing theme, this one. I think companies with divisions that have wildly different performance. So the Facebook and Twitter feeds for companies generally, I think, are worth following. Richard Stratton's very good on this area, and other analysts I know are. So people who are sort of tech-savvy can often pick up very interesting facts and figures, and you certainly could with CT USA. He's got his own Facebook account, and it was showing contract wins, impressive stuff with big-name clients. You mean because it's not a rampant IR company which would publicize every little thing? Yeah, yeah, 30 days old, they did their exact to these on these new wings. A lot of them are only on a company-specific newsroom, yes, and they may not be individually significant enough to warrant an RNS, but put together, you then get several months later an outperforming RNS. So I think it all sort of adds weight of evidence, doesn't it? Now what's this one? Some other parts are no. So what I mean by that is, I've taken the four — or the three rather — divisions within ESCO here and shown what the company calls trading profits, which is a pre-exceptional operating profit I think, and I was showing over the last three years' accounts. What you can see is that CT, which is not just the American business — there's a European division to that which was problematic — but CT, if that was listed on its own, has gone from a 0.5 million profit to a 4.1 million, to a 9.1 million profit. Now you imagine if that division was listed separately and given a full PR financial PR treatment, it would probably be valued on a market cap of 150-200 million or something. It is buried within this group where the bottom line shows a much gentler progression from actual losses to it looks as if profits flatline, just sort of plateau at six or seven million. Well, actually that's disguising this pretty stellar performance coming through from CT. Again, I'm repeating the same point over and over, but if you drill down to the individual divisions, you can often find — now the market as a whole will tend to value the company on the multiple of this figure here, the aggregate. But actually, what we should be doing in my view, if there's going to be some catalyst to change the group structure like a bid, we should be valuing these things at nil, just ignore them, they confuse the picture, and actually look at what a proper rating for the growth part of the business would be. And you can often, as we did in this case, get a pretty stellar return. So other factors to note: these are just continued sort of bullet points. Repeatedly beating forecasts. I think companies like that are more likely to be undervalued because quite often the brokers will lag behind and the forecast won't reflect very strong performance. Very quiet bulletin board is always a good sign in my view, because it means that the stampeding hordes of rampers haven't found it yet. And that was certainly the case here. We've touched on that already. Very high stock rank. I do think this stock rank is not a cure-all by any means, but it's got a good track record of picking up cheap improving companies, so it's worth looking at. Now, ESCO also did share buybacks. Generally, I'm not a fan of those because they seem to be used to mask the dilution from management share options very often, and also for shares at a massive premium to net tangible asset value. But where you get something trading below net tangible asset value, I'm very happy for them to use surplus cash to do buybacks. And if you look at the number of shares in issue over the last six years, it actually fell quite significantly from 25 million to 19.2 million. Again, not something you see very often. Sterling weakness obviously has boosted the value of this company because actually more than 100% of its earnings are in US dollars, so that's been a very significant factor lately. Another potential point on that is basically if Trump cuts the corporate tax rate from 35% to 15%, that could have been potentially one of the things that sealed the deal. Yeah, I agree. I mean, I think David flagged that. There seemed to be an increasing deal flow from American companies buying up UK companies with dollar earnings, so I think this is a really, really good area to focus on for investing at the moment. Definitely. What else has gone on here? Oh yeah, trend of US companies buying up UK companies. Trump also proposing to let companies repatriate cash at a low tax rate, which would leave them with more cash. Yes, okay. Last point here was spot obvious trend. So this is the Peter Lynch theory that he focused on a lot in his book: just looking around you, watching what's going on around you. The giant screens that ESCO specializes in hiring out, you just see them everywhere now, don't you? Look at the number of festivals going on in Britain now. Every pop concert seems to have a giant screen. They're just becoming much, much more widely used in Britain and globally. So I think again, I don't necessarily need to have numbers on that; I just think it's good to be generally investing in a theme that we all know is great growth. Knock, knock contraction? That's quite problematic because that tends to make me worry, because lots of companies can start piling into the latest fad. Ten years ago, that was a hot sector, and the demands going to increase, but it was an absolute disaster because it's a fly camera. Fair point, fair point. But again, I'd rather it's still better than a sector that is in decline, like newspapers. And we're looking at the theme of takeovers, and theoretically we're thinking maybe one year, two years ahead of the market, so in fact we want something that is going to be relevant because then somebody will want it. Are you also going to be in it long enough? Hopefully. If you're looking to worry about the downside a little bit, I'm not saying any of these are individually black and white; I'm just saying they're factors that I think are generally interesting. Now again, not a chartist, but I think shares that are making new 12-month highs do tell you that something good is going on. It could be just a purely speculative bubble if it's a blue sky stock, but if it's a fairly boring sort of profitable dividend-paying stock, I actually think reaching new 12-month highs is quite an interesting metric to look at. Value investors is not really what we want to be doing, but I think equally if you look at new 12-month lows, you just end up buying absolutely rubbish companies where everything's going wrong. So yeah, again, restructuring is just a great investing theme. I mean, a lot of companies, for example Flybe, seem to be constantly restructuring and they never quite make it, so that's something we have to be a bit careful about. But I do like situations where you can see a fairly obvious and simple way to restructure and boost profits, like closing down a loss-making subsidiary. So that's a nice theme to concentrate on. Again, a broker forecasting too pessimistically for improving, growing smaller companies: what I find they often do is they say, okay, I made a forecast, turnover up 15%, so profit up 15%, and they forget the operational gearing. Also, where a company has had problems, the brokers are usually very reluctant to forecast aggressive improvements. So I think you can — I would never take the broker forecast as gospel; I look at them as a starting point. And with ESCO, I wrote in several of my blogs over the last two years: look, the forecasts are way too low. And then shortly afterwards, you get a trading update telling you yet we're going to thrash the forecasts. Companies that have said three or four times we're going to thrash the forecasts, those are companies that tend to do it again and again. I think don't you tend to find as well that basically the management always tends to be cautious? Yes, so if they're in a growth company, they'll kind of be really cautious and then there will be this big surprise. And I think it links back to the ownership structure as well. Remember, this is an owner-managed business effectively; it's really a private company that happened to have a listing. They just have a different mindset from a hired CEO who owns 0.5% of a company and just wants to get the share price up, cash in the share options, and bugger off. This rich guy has been there since the start, who is restructuring problems they'd created previously. Yes, and a Donald Trump thing that yet now successfully. Yeah, yeah. Off the radar companies I like. Every now and again, we've got what is it, a thousand shares or named, and the several hundred more fully listed companies, so we've got probably 1,500 to 1,700 small caps to look at below £100 million. You get very little interest from the City because they can't buy them in any size that's worth having. So within that, I always find that if you dig enough and you put in the hard work reading all the RNS, researching all these things, you do find some terrific bargains every now and again. Off the radar companies, particularly it's noteworthy how few RNS are put out. Last night I was going to look through sort of four years of the various RNS, and it was only one page on Investegate. It was incredible, so few. Well, hardly any holding announcements, the shareholder base is just completely static for this company. There's no financial PR. So if you look at the RNS, at the bottom it gives the contact details: you'll just have the management and fin cap, no PR company. Again, that's good because it means there's no one out there ramping the shares, which means it's likely to be undervalued. And obviously the downside of all this is the liquidity: these things are really tricky to buy. I had to spend two or three months just nibbling at this share, which is very inefficient in terms of broker commission, and it's frustrating as well. You want to buy the share, you know it's cheap, so just having to wait and buy a thousand shares, 1,500 if you can get them, is a real pain and it puts a lot of people off. But in a way, I think you could flip around and say that's maybe a positive because it means a lot of people will not bother buying the shares. So going back to Stockopedia, I thought I'd go back and look at three-month intervals what the stock rank was. For those of you not familiar with it, it's a rating between 0 and 100 based on all these algorithms centering on value, price, forecast momentum, and quality. So it measures things like return on capital employed, return on equity, operating margin, and it puts them into an overall rank. It ranks every share in the market, and it's now proven; it's been running since 2012. It doesn't guarantee success in any one share, but it has proven over 4 years now that each decile significantly outperforms the ones below it. So the shares that should be going up and doing well as a basket of about 20 of them do outperform quite significantly. So anything that scores over 80 is really worth looking at. In this case, the Stockopedia computers really did pick up on it just at the right time when the broker upgrades were first starting to happen. The value metrics are extremely low, and look at the stock rank at an extremely high all the way through. So kudos to the Stockopedia computers; I think they did a good job. So right, final thoughts: did we own enough? So back to the winners. I'm increasingly coming around to the view that the big money in investing is really made from concentrating your money into very oversized positions when you're onto an absolute surefire winner. Now obviously everyone's going to throw their arms up in horror and say that's totally against what everyone says about diversification, and I don't think it's something you should do if your percentage hit rate is not brilliant. But if you're generally improving and getting to a point where you're getting most stock picks right, then I really do think concentrating the money into the winners is the right strategy for experienced investors. But again, depends on age and income and lots of other factors. But ESCO had good downside protection because it was a very asset-heavy business. Exactly, yeah. Well, as if you were if you own it, it would be very risky to put all your money into some stocks over the year, 30, 40, 50% of your portfolio. Yeah, you look fantastic of a note because nothing can go wrong. Yeah, now I totally agree. So I mean, I think probably this is more for value type shares. I mean, you hear some disaster stories, a guy who lost £125 million or something on Quinn, I think, wasn't there? So I mean, treat that remark with caution. That's just my personal opinion for where I am in my investing journey. Best share ideas may already be in our portfolio. I mean, I cover five or six hundred stocks in the morning reports, and I find myself just flitting about constantly reading up on lots of different companies, and very often I don't see what's under my nose, which was certainly the case with ESCO. I mean, it was my eighth biggest holding out of a portfolio of about forty, and I'm really scratching my head to wonder why it wasn't in the top three, because as you can see from the blog posts, I've been absolutely raving about it. That was passed in front of ya. I tell you another thing though: I do everything in either ISAs or SIPPs, so the whole thing's tax-exempt, and I gee, it was closing deals only, so for several years, unfortunately most of my money's in IG, I couldn't buy a few there, so I had to cram them into a spread bet account. Generally speaking, if you do use spread bets, IG are the best by far for the small caps; I find they're totally flexible, they let you take a position on anything. Anchoring to the share price is a big mistake. Yeah, so this is really when the share started to move again. Looking back at some of my blog posts from 2014, I think it was, I was humming and hawing about top slicing when it had gone from £1.30 to £2, sort of anchored to that £1.30. Then some good news comes out, it zooms up to £2, and you think oh yeah, quids in. But of course, then you had that long period where it just went sideways, but actually the value as we now know was substantially higher, and I think a lot of people unfortunately sold out of this one through boredom. I can say something on that: what I tend to do is, even if it's a relatively small percentage of the portfolio, unless it becomes horrendously big where it sort of risks everything falling down, I kind of try to let the market just decide what are the good companies. So effectively, yeah, I've had stuff recently where it can double and I'll just leave it, and originally it might have been about 3%, it's now 6%, and I've owned that stock. No, I opened up, sliced it, took profit. But if I'd had 8% in that and it was now 16%, yeah, that worries me. So I kind of almost try to run the ones which are going up, and the ones which don't do anything or back, I don't top up. All right, I mean, everybody's got their own strategy. But to pick up on one point you made, certainly I think there is an issue where if you put up, I tend to concentrate a lot into my best ideas to begin with, and if it then, like with Boohoo, I had a ridiculous amount in that, and then when the Brexit thing came along, I just panicked and sold about half of them or two-thirds of them, a terrible mistake. But yeah, if it gets too high a percentage of your portfolio, it is a problem, isn't it? So okay, most expensive words in investing: this is the last point. Everyone always says, oh, it's different this time. Well, I beg to differ. I think from all the most common ones lately on lots of different stocks, I think the most expensive words in investing are 'I've missed the boat'. Because loads of people I know have said that about Boohoo, about this one, about lots of other brilliant stocks that have done terrifically well. They've missed the initial 50% or 80% move, and they just say I'm not going to buy into it now. Whereas actually, after that first big move, providing it's based on really significant news flow and the fundamentals of the company totally changed for the better, I think we should embrace the fact that we're paying more for something that's improving and is on the way to great things. So that concludes my little presentation.

And any of you got any questions before maybe comments? What was the exit fee? Would you have bought it on that perspective?

Good question. I think the current forecasts are around 27 to 30p EPS, but that I think is prior to upgrades from the impact of the dollar earnings. So I think we add on maybe 10 or 15%, that probably would have been about 35p EPS. So yeah, it's late teens, isn't it? The exit multiple. Would I have bought at that? No.

That kind of leads on to a question I've got. This multiple was a bit of a surprise for me. Do you think that was because of the large shareholders, how much they held, and the fact that anything performing so well, I thought well if we have this every year, we might get a double-digit PE?

Yeah, definitely. I mean, you could see from the slide on the CT figures going from that breakeven to 4.1 million to 9.1 million with dollar earnings and anything else, it's probably going to be 12-13 million from CT. £124 million takeout, it's not an excessive multiple for the best bit of the business. Yeah, try to cut out the CEO salary. Yeah, but I mean, directors owned a third of the company, so they're going to decide whether the deal happens or not, which is one of the great things about these family-controlled companies, providing they're fair. Maybe this more than one bidder, and they just could be quick. It is a bit of a done deal. I mean, the document says that the 50-57-59% rule, you know, undertakings are still there, even in the event of a higher competing bid. So it looks to me like they've negotiated a deal where they've just said, right, you know, pay top whack for it and it's guaranteed to happen. That's my research. So if someone else comes in with a higher offer, they still won't sell to the higher offer? Well, supposedly. But I mean, is it a conventional bidder? A scheme of arrangement? Yeah, it looks like a done deal reading the RNS. It's so detailed and so full of legal stuff, you know, it's presented as this is going to happen.