The investment spin out from IAWS, One51, has returned an after-tax profit of €7.1m in 2013, its first profit after tax in seven years. 12 months earlier it had losses of €116.1m.
This remarkable turnaround, under the leadership of chief executive Alan Walsh, was achieved while reducing net debt by 54.6% to €40.3m. The €125m-valued group has the sale of assets and a special dividend from renewable energy group NTR to thank for the fall in debt.
Commenting on the results, Walsh said: “From a balance sheet perspective, both net debt and leverage ratios at year end were at lower levels than any year since 2005.”
EBITDA increased 11.8% to €20.3m, while total operating profit increased 116% to €10.8m. This was driven by strong performance in the plastics business, a division earmarked to drive future growth. Although overall turnover was down €44.3m to €301.6m, partly due to recent disposals. Turnover in the plastics division increased €9.2m to €99.2m.
ClearCircle Environmental, the metal recycling and hazardous waste business, saw its revenues fall 19% to €151.6m. Metal recycling, dependent on construction, is inherently cyclical and saw another difficult year with the outlook similar for 2014, according to Walsh. The hazardous waste business, now with a common management team in Britain and Ireland, is also seen to be a key driver of future performance.
It is well documented that half of the destruction in share value was due to NTR. One51 continues to hold 23.2% in NTR and last September, €23.6m was returned to the group.
One51 recently agreed a €75m bank facility for a four-year term to January 2018, with the option to extend a further year and provides a secure facility for the financing needs into the future.
Since the year end, the group disposed of its non-core shareholding in Augean, a hazardous waste management business for €9m.
The company recently put its landmark headquarters on Thomas Street on the market. The building, steeped in Irish agricultural history, is now surplus to the needs of Aryzta, Origin or R&H Hall. It is believed there has been strong interest, with a guide price of €3.5m. The proceeds would further reduce debt.
It is also reported that the company is in advanced negotiations with Straight PLC, a major UK recycling container manufacturer. One51 is already the largest manufacturer of wheelie bins in the UK and Ireland and, if this deal concludes, it marks the first acquisition for the group since 2009.
Irish Pride disposal
It is understood the group is near the final stages of closing a deal worth a reported €8m, for a majority cash payment, plus a small performance related top up.
Seven groups hold about 40% of the 125.2m shares in issue. It is understood Pageant Holdings, the Nick Furlong investment group, has been actively buying in recent months and now own about 12%, almost double one year ago. Other significant investors include Kerry Group and Co-op, the embattled UK Co-operative Group, Fane Valley, Lakeland, Dairygold and Glanbia Co-op.
The co-ops acquired 100% of One51 in 2005 due to their historical shareholding in IAWS. There was no cash investment for this shareholding. During 2006 and 2007, following three fundraising events, €300m was raised. These funds came from certain co-ops, high-net-worth individuals including Larry Goodman and a number of retail shareholders including farmers. The effect of the further rounds gives the co-ops a 52% ownership in One51 today.
In effect, some co-ops invested a further €77m in cash during these funding rounds, buying about 16% of the company. This equated to an additional 19.7 million shares, implying a weighted average share price of €3.90. However, as the co-ops got 36% for free, the 65,000 shares held by co-ops today has effectively cost €1.18 on average as some co-ops did not opt to buy any shares. This leaves some co-ops in the money, and others with significant losses.
It is important to understand that these shares are not traded publicly on a stock exchange, but are traded on the grey market, where stockbrokers match potential buyers with sellers. The share price has trebled over the last year to €1. If the co-op shareholding was sold today, it would represent a fall of 15% on the €77m investment – on average. Some co-ops have written down the valuation to well below €1, but it is somewhat arbitrary to mark the share to this grey market.
What is significant is the heavy trading that has been seen since the start of this year. Some 6.7 million shares have changed hands for a weighted average price of €0.76. This compares to 8.7 million shares changing hands in 2013 for a weighted average price of €0.40. In summary, this reflects postively on the company, as almost 6% of the total shares in issue have traded hands during the past four months, and at an average price double that for the previous 12 months.
However, all this makes for little comfort to those investors who nurse huge losses. Following its acquisitions binge, One51 was worth over €600m at its peak when the share price hit highs of €6. It has since written down assets by €563m – half of this being the writedown of NTR, the other half relating to goodwill write downs in metal and recycling.
The future
It is understood the group is exploring options to raise further funding, thought to be around €20m. This would put them in a position to make future acquisitions in their core business areas to accelerate growth. Whether shareholders have the appetite for further investment will be the ultimate test for Walsh and his transformed group. Having witnessed signficant value destruction, ultimately they will decide the future fate of One51 when it is put to them in a few months. Will it be a case of in for a penny in for a pound? Another question remains as to how the group plans to unlock the value of its NTR stake?
SHARING OPTIONS