Ann: Full Year Statutory Accounts, page-3

not an altogether unexpected reaction from the investment community but as a somewhere who sees this company as a very long term investment opportunity, I was happy, and was again impressed by the new MD.

I think the market didn’t like the customer power at play.

- Rebates up from 8 to 10%.
- Terms for customers being extended
- home branding impacting some lines (4mil impact)
- customers de-stocking (5mil impact apparently)
- the new deals sound like they are beneficial to customers in the short term (at the expense of GUD) with benefit to gud in the medium to longer term.
- new filter competition (bmc?), preventing price rises for RYco.
- gross margin pressure due to fx
- lower cash conversion due to investments in nwc

but having said all that there were certainly some positives:
- i think clearly their financing terms will be unibail-esque as I’m sure banks will be throwing money at them with rates where they are.
- They feel that home branding has reached a floor
- cash conversion guidance sounds very conservative
- Davey growing with volume, and price increases to come. High demand for some products.
- plenty of acquisition opportunities
- tailwinds from an extra 5 months of AAG this year.

And then the all important valuation...

With ebit growth forecast the company has a prospective ev/ebit of about 11 which seems excellent for a cash generative company that when all manner is going against them they still manage to report earnings growth. Net debt:ebitda is low and we can obviously expect bolt-ons in the near term.

To me the result seemed resilient and I’m a happy shareholder. If the market wants to have a short term hissy fit, then I’ll be waiting.