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.

News
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food and drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
Voices
A Siberian Tiger
voices
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried