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.
About The Author: Boyles Asset Management
Boyles Asset Management, run by Matthew Miller and Joseph Koster, launched an investment fund launched in May 2013. It is inspired by the Buffett Partnerships of the 1950s and 1960s. Boyles Asset Management believes in pay for performance. Matthew and Joseph have structured their fund so that incentive fees are dependent on strong and enduring performance for investors. The Boyles philosophy is deeply rooted in value investing and is complemented by a patient, long-term mindset and investment process. The investment mandate is broad, though Matt and Joe operate with a particular focus on the equity of small and micro-capitalization companies. They participate in markets both in the United States and in select international territories.
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