Investment: No Pain, No Gain: Our Man's Portfolio - GW&B engineers win race to buy little 'uns

THE pounds 75m AGREED takeover bid for engineer Cirqual should have produced a gleeful reaction at Crossley House, Halifax, home of an obscure AIM-traded company, Gartland Whalley & Barker. But it did not create immediate joy for shareholders, with the price hanging around 105p against a 12-month high of 154.5p and a best-ever 178.5p.

Yet the Cirqual strike represents further evidence that GW&B could be on a winning run. The group is not quite Yorkshire's answer to Kohlberg Kravis Roberts, the US buyout specialist. But there are similarities. The Halifax-based corporate nursery was started a decade ago by Tony Gartland, who developed the FKI engineering group, and engineering chums. Lord King of Wartnaby, the former British Airways chief who headed the Babcock International engineering group, is a founder-director.

GW&B is a financial dealmaker with a strong base in low-tech manufacturing. Clearly, the small-cap share revival which took that index to 1999 highs, is generating increased momentum in GW&B's world. Mr Gartland could claim to have anticipated the rally for long-neglected little 'uns. In his recent interim statement he said: "We believe the weakness in the small company quoted sector to be a temporary, mainly cyclical phenomenon and expect a recovery in sentiment."

The bid for Cirqual provides another illustration of the increased interest in the tiddlers and the consequent growing level of corporate activity. GW&B has 28 per cent of Cirqual which makes components for aerospace, automotive and electronic industries. With shareholders claiming nearly 60 per cent of the engineer's capital supporting the offer - from metalbasher L Gardner - it is a done deal. The bid, in cash and shares, prices Cirqual at around 250p; the shares are 246p against a 337p high. Cirqual, once wholly owned by GW&B, was floated two years ago at around 140p. The GW&B Halifax nursery joined AIM in 1996 when it indulged in a classic reverse takeover of a shell company, Select Industries.

GW&B has two other quoted associates, Aquarius, a baths-to-lampshades business (54 per cent owned) and Quantica a training and recruitment group (44 per cent). Aquarius (124.5p) is capitalised at pounds 28.5m and Quantica (49p) at pounds 20m. There are three unquoted groupings, including a US maker of precision components. GW&B aims to bring its companies to the market. It specialises in developing groups by providing financial and management support and producing bolt-on deals. For example, its last acquisition was a small office furniture-maker which went into Ofquest, its office interiors group.

The recovery in small-cap shares should encourage GW&B to seek flotations for its interests. With the market undercard in the doldrums for so long, share listings have not been attractive. But a float is a far more appealing cash-raising exercise for the Gartland team than selling to venture capitalists or trade buyers.

At GW&B's share price it is selling on 8.9 times prospective earnings and offers a likely dividend yield of 5.4 per cent. Gearing was 21 per cent and net assets around 71p a share. Improved prospects suggest the shares are due for a re-rating.

GW&B, a narrow market with directors and friends accounting for 85.7 per cent of the capital, suffers from profits confusion. Its interim results displayed a modest fall or a near wipeout, depending on interpretation. On what is called a total return basis, where the value of investments is taken at present prices, the depressed state of small company shares at GW&B's April cut-off mark showed profits had collapsed to pounds 20,000. But on a more conventional accounting system there was an pounds 8.2m profit (down from pounds 11.9m).

For this year a conventional profit of pounds 18.7m (pounds 24.2m) is the likely outcome. The total return figure is difficult to calculate, thanks to the small-cap revival and the Cirqual deal. It could hit pounds 10.8m, says Simon Flather at research group BrokerLink.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before