Alan Walsh, hazardous waste, IAWS, metals recycling, NTR plc, One Fifty One plc, One51, Pageant Holdings, Philip Lynch, plastics, Straight plc, Sum-of-the-Parts Analysis
A One Fifty One plc investment write-up has long been outstanding from me now, as certain readers have reminded me! It’s high time now I rectify this – especially since I’ve already highlighted One51 & its CEO, Alan Walsh, play an integral role in the unfolding NTR plc story. Of course, One51’s also another classic example of Celtic Tiger hubris & near-collapse – but its future definitely looks far more promising…
Let’s rewind: In 2005, members of the Irish Agricultural Wholesale Society Ltd. approved the creation of One51. In bygone years, it would probably have remained just a sub. of the Society, conservatively managing its investment properties & portfolio. But the Celtic Tiger demanded something more ambitious, so it became a stand-alone company: a) When Society members became direct shareholders in One51, via a Feb-2007 share exchange, and b) grey market trading commenced in One51’s shares at the end of Oct-2007.
[NB: Irish grey market shares are unlisted – akin to unlisted UK shares (which trade via matched bargain), or US OTC/Pink Sheet stocks (but without the benefit necessarily of market-makers). One51 now has a quarter billion dollar market cap, and its standards of reporting, corporate governance & investor relations equal any of its listed peers, but it’s still a grey market share…so be aware of the usual investor health warnings. But if you’re still interested, you can discuss and/or trade One51 with these brokers.]
This independence was something of an illusion though, as One51’s board and management was populated mostly with continuing (& former) directors and management of the Society & IAWS Group plc. [IAWS Group was a listed sub. of the Society, which has now become Aryzta (YZA:ID) & Origin Enterprises (OGN:ID)]. The company’s shareholder base also overlapped with those of the private & public IAWS entities. But those were heady times – brokers & punters weren’t too worried about potential grey market illiquidity, or governance issues. All they really cared for was the mesmerising strategic vision painted by Philip Lynch, One51’s CEO. [Who was still CEO of the Society, and a former CEO & Chairman of IAWS Group]. Unlike everybody else at the time, Lynch wasn’t actually focused on property investment & development…instead, his real ambition was to become a genuine mover & shaker in the Irish (& even the UK) corporate world.
Unfortunately, looking back, his vision doesn’t look so compelling (or even that strategic). During 2006-08, operating & financial acquisitions were occurring at the frantic pace of almost one a month – and well over EUR 500 million (gross) was actually spent during this period. As a result, the balance sheet almost quadrupled within a two year period (peaking at EUR 900 million+ by end-2007), funded by an easy combo. of bank debt & fresh equity. [Plus EUR 168 million of Convertible Loan Note (CLN) issuance, most of which was quickly converted to equity also.]
Buoyant business & investment confidence, optimistic growth expectations, and the intoxicating availability of cheap funding, all conspired to jack up prices paid (& goodwill recorded) at the time. And management’s lack of financial discipline was clearly evident in the minimal (low single-digit) net profits & return on equity recorded in 2006-07. But judging by One51’s opening share price, investors didn’t much care – they were too focused on their prospective gains, and the touted ‘integration and synergies’ to be extracted from the company’s sprawling portfolio.