Update on Investment: TheWorks.co.uk plc
Kelso notes TheWorks shareholders rejected dividend proposal; advocates for share buyback instead.
- Kelso stake in TheWorks 4.6%
- TheWorks market capitalisation £23.9m
- TheWorks net cash £10.2m
- TheWorks expected FY24 EBITDA £10.0m
- TheWorks EV/EBITDA multiple c.1.4x
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The Board of Kelso notes the results yesterday of the TheWorks' AGM resolutions. In particular, we draw attention to Resolution 2, which was not passed, having been voted against by c.65% of shareholders, which proposed paying a final dividend.
Kelso holds 2.9 million shares, representing 4.6% of the issued shares. We are supportive of management and voted for all resolutions with the exception of Resolution 2. We believe, given the low valuation of TheWorks of c.1.4x EV/EBITDA1 (excluding IFRS 16 lease liabilities) that the company's cash is better used by buying back its shares for cancellation. Kelso looks forward to engaging with the management of TheWorks on this matter.
We strongly believe that the intrinsic value of TheWorks is significantly higher than the current value. We also believe that its position in the UK high street with a dozen own brands at the value end of arts and craft products, stationery, games and books all in the creative and learning arena is a good defensive part of the market.
1Calculated as current market capitalisation (£23.9m) less net cash (£10.2m), divided by expected FY24 EBITDA (£10.0m). Figures taken from TheWorks' announcement on 30 August 2023.
Cleaned text: letterheads, contacts and legal notices removed. View the original announcement ↗ · Company filings. Not investment advice.