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??? Well of course the fund/assets will be used to pay the pensioners each year. What else do you think it is there for? The assets will fall each year due to the pension payout, and the corresponding liability will also fall.
There are several concerns re the pension liabilities of Carclo.
1 LDIs have been used by some pension funds but which pose existential risks for them at the moment. In some cases pension funds have run leveraged exposure to interest rates. There could be massive losses if they close out these outsize risks by Friday as recommended by the Bank of England governor - or even more if they do not.
2 Carclo still run defined benefit pension schemes when most private sector companies switched them to defined contribution funds decades ago. These funds pose risks to companies like Carclo.
3 Carclo refers to some pension liabilities which are inflation adjusted. This means that pension liabilities could be up by 10 percent in the last year just because of these adjustments.
4 The Carclo pension fund paid out £9 million in pensions in a year when Carclo only made £3 million top-ups to the fund. The fund would therefore be £6 million short even if the pension fund had not lost money due to LDI risks or declining investment values - or if the fund liabilities had not increased due to UK inflation.
AIUI the question is has Carclo's pension trustees used LDI's to hedge their position? (LDI is best described as a fancy name for a structured set of derivatives exposed to the price of gilts.). If yes it will adversely affect the pension deficit. We may have to wait until the next triennial review to find out and may not even then, the Trustees have no obligation to make details of their investment strategy public.
Steelwatch, if you go on ADVFN there is loads of pension type debate taking place and some of the guys seem to be from an accountancy background - far more ‘in the know’ than myself!
Does anyone have a view if these Gov proposals will place an additional obligation on Carclo's future pension reduction payments?
https://www.telegraph.co.uk/business/2022/10/09/pension-crackdown-risks-sparking-wave-bankruptcies/
A surprise for sure. I felt comfortable with Nick at the helm.
Having said that good luck to him in whatever he does beyond Carclo.
It certainly looks like Frank was brought in with this in mind. He has been out and about meeting customers and staff for the past months. I doubt he would have taken over if he felt it was a poison chalice. And it's great that the transition is orderly and that Nick will be around for a while. Jmo
Sorry Chrisjse.
"Carclo Technical Plastics India General Manager Premchand Pandurangan collects award from FKCCI and Karnataka State Govt officials at ceremony in Bangalore, Sept 2022."
There is also photo of managers collecting the award.
frankseluk2: Only you can view that link as it is on your computer.
content://com.android.chrome.FileProvider/images/screenshot/16647401228292035464050.jpg
The last time the price was this low was in Jan 2021. You have to be sanguine though given all the strife at the moment. However, if the company can raise their prices in response to inflation then I it may not be so much of a problem. They are very much in a better position than in Jan/22.
Worry about £ interest rates could be offset by overseas earnings (8 out of the 11 factory locations are abroad).
I am actively buying again at these prices (to add to my very overweight holding). The sp may nudge down a bit further but the bad times won't last forever and we all need medical plastics in some form or another. Patient to wait til 2023 and a bit beyond.
tp 5p imv
Zoo Digitals update.
Yes, the company is totally different but we have a story to tell also...jmo
Certainly a serial investor.
Does anybody know if Carclo is in a ‘closed period’? Or, are the board able to purchase shares?
A lot of companies are issuing profits warnings. Does this share price activity suggest Carclo will follow suit?
Very frustrating share I’ve found. Book value ps today vs 2018 and other previous years compares favourably imo. Various metrics compare well to previous years - cash etc, working capital, net profit vs market cap it’s quite frustrating. I find some of these simple comparisons tell a story. This should be at least 40 -50p and seeing improvements yoy I’m my view. However, feels like sentiment isn’t there, also agree on covid traders but deterioration taken greater hit than I anticipated when test excitement evaporated. Hope you are right and this team is successful and is able to land that message effectively.
I think 68p was hit because Carclo came to be seen as a covid play, with punters buying into the dream that abundant tests and injectables would be needed. When that froth dissipated, so did the short term punters. But any investor who believes now the current fundamentals justify a 68p+ valuation - and that the obstacle is simply lack of communication - should be buying the stock in droves IMO. If that sort of premium can be justified then very often the market will find a way of realising it, even if current management cannot. My own belief is that this management team will get there, and I’m happy trusting my investment with them.
It’s about perspective, you may tell the story from the 4p angle and you’ll land on Wigwammer’s viewpoint. I agree, for that aspect of the story the have management navigated successfully. For me, however, the next chapter is about evolving the story, communicating regularly, creating momentum and garnering positive and robust sentiment amongst the shareholders and market. It’s this part of the story that has fallen short of in my view, and evidenced by today’s share price action and the persistent decline over the last year, that of the market too.
To my mind, the board should be developing the story, focusing more keenly on the wording in RNS’, and keeping the market more closely and more regularly informed with how the business is developing.
Communications are so important, and should have kicked on since 68p. There was a real opportunity to drive that positive momentum and it was missed - the story is key, what does the market perceive - the output of that perception is the share price.
I too hope that the future is a glowing one, and to get there the board need to communicate more effectively, so that value is more accurately represented by the sp and market cap.
I trust very few shareholders can be happy with the price action over the last 12 months, yes business has stabilised; that’s old news, what’s next. More Director buys on the way down would have been a material demonstration of confidence imo. But as always I could be wrong, fantastic communicates and regular directors buys may have done nothing.
I agree wholeheartedly with your post Wigwammer. All the same i have many times felt like Cherryhiller. The wording and balance of updates could be improved.
Regarding directors purchases, there are times when a vote of confidence is required, in Carclos case I don’t think its required they have already done their bit. So, I hope there is not RNS in the morning unless it's other than a board member. Jmo
With respect cherryhiller, I couldn’t disagree more. I think the new management team have done a great job growing the business out of the ashes of the wipac problems, solidifying the financial position with both the banks and trustees, and communicating the story to shareholders. The 68p price you refer to is rather selective. Carclo was also trading at 4p in recent years when the market gave it little chance of surviving. Not only has it strongly recovered from those levels but I suspect the future for holders will be a glowing one, in large part thanks to management action. ATB
The decline in the share price here from the May ‘21 high of 68p has been extremely disappointing. The sparseness of communications combined, along with a focus on negatives / headwinds rather than positive tone with a spin on how the business will and is overcoming challenges has provided no support to the share price and significantly eroded shareholder value.
It would have been confidence boosting to see some meaningful director purchases to help arrest decline, give the market confidence and reassure the market that the directors are confident in the business.
Shareholder communications are in drastic need to a new strategic approach, its simply not good enough to communicate twice a year, and the AGM was dull and lifeless, seemed like Nick and team couldn’t wait to get it over with.
Really disappointed with the action here.
I’ve had Carclo on watchlist since selling out last year. Tried a couple of trades around 30, first time had a quick rise to 45 so took profit. Second time still holding the baby.
Started building a proper position by my standards (watch out Goldmans and Schroders!)today.
I can see of course an issue with rising costs but with the mcap back at a mystifying and paltry 15 million these fundamentals strike me as excellent value.
They weren’t exactly token buys by the bod at x3 up from here..
Thought I’d end up buying on an up day at 21/22 so either just got a fantastic bargain or there’s a knife falling my way.
Think it’s a bargain because this sort of mcap previously was pricing this to fail. I don’t see that happening soon given recent “long term opp” comments and the sounder footing the business is now on.
GLA - not expecting massively positive trading statement but as long as trading hasn’t turned disastrous think this is well oversold
Yes very good news. I do notice no exclusion of dividend (unlike the previous Company, Bank & Pension Trustee agreement). Though from the comments in the recent 'investormeet' meeting, the board sounds like it is cautious and in no rush to restart dividend payments. I'm an optimist and hoping for the year after next?
Great to see certainty here now going forward. The ongoing pension contributions are a necessary pain, but the business is now secure and can plan for the "significant long-term opportunities available to the Group" noted today and which could be transformational given the amount of investment already and being made.
As noted elsewhere, the incremental payments kick in above an £18m adjusted EBITDA target in 2024 and 2025. 2022 adjusted EBITDA was £13.1m (£10.8m 2021) and that resulted in an underlying eps of 3.1p - putting the stock on around 6.3x PE - if they can get to anything like £18m EBITDA then the EPS will be significantly higher......
Https://uk.advfn.com/stock-market/london/carclo-CAR/share-news/Carclo-plc-Tripartite-Financing-Agreement-Secured/88982541
Says on website mid Oct.
It would have been nice to have a trading statement at or before the AGM.
Tomorrow I guess!!!
Schroders comes to the rescue again....