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Breakout on ,it has looked ripe for that this afternoon, i guess investers will speculate about a takeover.
This will bounce massively
With a pinch of salt... Broker Shore Capital: 'We expect net debt to remain within the 2.75x covenant threshold. The company delivered £15.6m in H1 and would only need to deliver EBITDA roughly in line with H1 in the second half to be within the limit if net debt remains close to £87m (we expect some reduction in net debt).'
The dividend has cost £16/£17m each of the last two years, albeit using debt, so they could just cut the dividend completely if needed. I'd prefer them to do that.
Unless I'm mistaken, the maximum interest they will pay on the majority of their debt is 4% and likely to be 2.85% or 3.5%.
SHAME
The £10m was to help fund Billi, prudent and lucky with timing. If only they'd raised £20m. Oh well. But little excuse for the early July over-optimism. Hopefully some mega apologies today at the Capital Markets Day. It will take a few months and a genuinely positive trading statement to get over the hangover. No point getting angry.
Well, now would be the time for a takeover bid by a rival or company looking to take the IP.
As such, could see a takeover bid in the £300m range for 130 a share, and with the current price, the BoD could be forced into taking it.
Alternatively a big fund could buy up a massive chunk of the company now, and then start looking for a takeover, and once again aiming for the £300m region to make massive profit ££££
either way, the current price all the way to the 70's is a golden gift, and the current pains of the company are macro inflictions.
I think the fatal issue is that management have destroyed the balance sheet. The debt will now be very hard to control as interests rates stay higher for longer. I think the Management have gambled on things going back to normal and are now getting a good spanking by Mr Market. Poor form and i’m sadly now a disappointed ex holder
Yep, SFOR, QUIZ and SFE all smashed down this week and trading higher than the lows. Expect this to be back in the 60/70s next week imo
GLA
The market is way overreacting to any news, if good news is being met with limited enthusiasm.
The drop this morning is way overdone, and considering the size of assets the company, then a takeover bid in the £300m region would be conservative.
When it comes to acquisitions, 3 things matter: price, value and timing... and Strix have got it wrong on all counts. Textbook example of what not to do and how to destroy value... and let's not forget they raised £10m in a placing to 'fund' the Billi acquisition a year ago.
Acquisitions and capex is not "wasted" money. Investment is a good thing. If you expect macro headwinds all the time you might as well just stay in cash.
How big will the price drop be? 70s?
This from 7.30am didn't age very well!!
55s now
Tough update from Strix (LON:KETL) today as profitability has declined on all measures.
- customers ordering frequently but in lower volumes
- dividend reduced to focus on reduction of debt
- The £6m reduction in Kettle Controls EBITDA offset the £5.2m contribution of Billi.
There is a CMD to accommpany results and this includes several new strategic objectives, with a plan to the end of FY26. The goals are:
- an uplift in revenues between FY22 and FY26 of 93% to £206m
- gross profit to £80m, equating to an unchanged margin of 38.8%.
Full note here: https://www.equitydevelopment.co.uk/research/recovery-slow-new-strategy-in-place
Me too nearly doubled my holding as I was nearly on a free ride so happy to add and wait. Still not happy with the board. Lets see what they have to say this afternoon.
Topped up for 55p 8.50am
Again not waiting for bottom and buying into rise .
low of 51p by 9.15am
Not many posts here 50 since since last look 6 months ago.
Bad Rns this morning down 40% by 9am
Worked out when I took same action 30th November last , selling it back 26 January , thank God I took them off the table.
Lucky as retrace top was just days after 6th February .
To have said in July which is after the end of the period reported today that 'we are pleased to report an improved trading performance…’ was an absolute scandal in my opinion.
Everything about trading was down except for gross revenue which was only up because of the acquisition. Moreover, what’s to be gained from this kind of chicanery when we were all going to know the truth a couple of months later anyway!? Disastrous management.
A horrible 67% reduction in the dividend... and that's because net debt, at 2.66 times EBITDA, is dangerously close to breaching the bank covenant of 2.75 times.
All because of management's poor capital allocation decisions - acquiring Billi in the stupid belief that the era of free money would continue forever. Amateurs!
Jumped out of here a while ago, I said then something was seriously wrong .
Massive market share, & cheap production costs..big debts???
Anyone spotted this?
"Total committed debt facilities at 30 June 2023 amounted to £115.5m (excluding loan arrangement fees which are included in borrowings), giving a liquidity pool of £21.4m. Net debt equated to 2.66 times trailing twelve months' EBITDA as at 30 June 2023, which complies with our debt covenant threshold of 2.75 times."
Given how close they were to a technical breach at 30/06, it's absolutely nuts to still pay a dividend that will utilise £2m of cash. The market is quite rightfully taking them to the cleaners.
This still looks expensive when you compare against the likes of SPEC. The sheer level of financial mismanagement via capital misallocation is off the scale. No small cap should be paying dividends from debt, it's quite simple. They've always had debt, even in 2019 they had £40m, it's just grown and grown as they wasted operating cashflow on new acquisitions, CAPEX and dividend payments. They apparently thought that the gravy train of cheap debt was going to last forever - well they've had a rude awakening and now need a 5 year turnaround plan to get back on track. They should have started that today by cancelling the dividend in full.
A lot of companies were optimistic around June but the outlook has really declined since then, Germany in particular is looking very shaky, China stimulus never came and the UK, well is the UK
Could have done without that but will top up again - longer term hold but I am confident this will recover.
I would have been happy for no Final div and why pay one this time, debt reduction should be the number one priority.
I believe the purchase of the billy was made under highly favorable terms
Yes Billi was, but was it the right time? But as I said hindsight is always 100% correct.