The strategic process remains ongoing at Electronic Data Processing (London: EDP). While the duration of the process continues to surprise, the company is, according to the UK takeover code, legally in a formal strategic process. Given the length of time since the company last updated the market, we believe the approach from the suitor previously announced in March is serious. We continue to await the conclusion of the process, which will result in either a sale of the business or a large special dividend.
In June the company reported H1 results, which showed revenue growth for the first time in three-and-a-half years, and high-single-digit growth in adjusted operating earnings. It was noted that H2 has started well. Following the completion of the sale of surplus property during the half, net cash totaled £6.7 million, or about £6.2 million net of pension liabilities.
Against a market cap of £8.4 million, the company also owns additional property worth perhaps £1 million and a highly recurring £5 million (revenues) enterprise resource planning (ERP) software business.
This post has been excerpted from a letter to partners of Boyles Asset Management.