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I am somewhat confused by when Carclo will be announcing their results as I thought it was June 6th but having contacted them an announcement of the date is due soon .
As for what they will announce, the negative will be serious issues with supply , production, lockdown in china etc which I feel is already priced in . But the big big positive news as I have just announced in my company’s results is the impact on profits the pension deficit will have . We have had a huge swing from £2.2 million profits to £6.2million, £3 million of which was down to the change in the pension deficit and that deficit was tiny compared to Carclo.
So what we might see is a dramatic change to the financial health of the company which might point to a small chance of a dividend next year which would be great .
Yes, exactly Beza.
Pardon my ignorance here but are you guys saying that the increase in the bond yield will accelerate or potentially accelerate the reduction in the pension deficit, or enable the Carclo to commit less money into the scheme. Thanks in advance.
Even so Wigwammer the deficit at the uear end should be well lower. Fill Yr update April: " In addition, the Group balance sheet has strengthened considerably throughout the course of the year, in part driven by a reduction in the IAS 19 pension deficit."
Plus we should get a further update in the coming results.
Jmo
That’s true, Chris. It’s going to look very out of date when it arrives, with the AA corporate bond yield moving from well under 2% to well north of 3.5% now.
I expect the bond yield increase is too late for the 'triennial actuarial valuation' which was due March 2021. Details of which seem very delayed. The November 2021 Half Year Results says "No initial data has yet been released on the triennial actuarial valuation of March 2021"
The elimination of the deficit would also free up circa 2million for a dividend . (The amount we pay annually less tax plus deficit interest saving)1.5p would leave some for further investment. Pie in the sky at the moment I suppose but we are moving in the right direction. Imo.
A material near term kicker for the share price could be another material reduction in the IAS 19 pension deficit. This was £33.5m at the end of September 2021 with the AA corporate bond yield at 1.8%. With the yield rising to 3.1% at end March 2022 (the FY reporting date) and 3.7% now, we should expect the deficit to close in a fair bit. The correlation with the change in the actuarial deficit is likely to be high, thus additionally potentially reducing future cash outflows relating to it. Of course, there are a lot of complicating factors that go into calculating the deficit so we will have to wait and see, but it should be moving in the right direction. By way of valuing the effect - a £10m reduction in the IAS19 deficit equates to 13p on the shares. An elimination of it equates to 44p on the shares.. ATB. IMO
You only have to look at Franks Doorenboschs bio on Carclo's website to see why he is the person for this job.
Wigwammer (on lse) has stated supply issues are indemic. The company said in their interim report they were taking action in this regard having invested an additional 3million on raw materials to ensure a supply at that time. But its not only supply chain issues he is appointed for. He is looking at ways we can improve our operations and make the company more efficient so that we an take on the extra business the company believes is there for the taking.
It's funny that folks tend to highlight what they think as negative and miss the underlying fact staring them in the face, Carclo is a real turnaround growth story. That fact will be reflected in the share price at some point for sure. Jmo
Not sure when next results or trading update is.
We have previously been given a "heads up" RNS stating the date of publication.
Trading view states results due 7 Jun 22.
Could I ask why you think the results are due on Monday? I haven't seen anything announced, and last year they were announced at the end of the month.
So with the 2 bank holidays due today is the last opportunity to buy before the results on Monday .
I am betting on a good performance especially with a substantial drop in the pension deficit.
Current trading has been flagged as difficult so no surprises there but for a company with an £18 million valuation the profits will be solid. I’m excited about all the new contracts !!!
Or it might just prove that in the short term the stock market is a voting machine, and Carclo isn’t the story of the day. I have been buying at these lower levels, and happy to hold for medium and longer term gains. ATB
Nick Saunders has bought at prices from 14p up to 52p. Most recent was January at 33p. Just proves that inside knowledge sometimes counts for little. Its all a bit of a CAR crash just now. Some news might help!
The CEO also bought at 14p.
Small volumes. Sure could do with some good news. I don't think the directors who bought at 51.80p last year will be too happy at present price
Seems like something is brewing and somebody knows of news pending.
"could" lol
tp 12p for oversold bounce
Medical plastic demand is expected to increase 8% year on year for some time which explains the purchase of new machinery. The prospects for the cable side look quite good given that a lot of planes are sitting in Russia. Possible bids? At this lowly price (and with a weakening £) there is a remote possibility and the longer the sp remains low increases the likelihood..
It may be a complete shot in the dark of mine.......but several times over my 40 years of stock market investing, a share I held with solid prospects, that seemed to go no where....and actually went down in value for no obvious reason, suddenly received a takeover offer!!! This could be a prime time to sell this company. I'm not ramping, but it is just a thought.
While I have always felt the pension deficit was of no interest a lot of people have harped on about the £50 million shortfall.
With the dramatic change in corporate bond yields this deficit could potentially wiped be out.
This as pointed out in the trading update will have a dramatic impact on the financial position of the business .
The future looks very positive.
There's no question that Carclo have started borrowing as it's stated early in the recent trading update, "We have continued to invest in capital equipment to support long-term growth, largely financed by an increase in net debt." which in itself is a pretty impressive turnaround, a few years ago, they wouldn't have been able to borrow a bag of beans.
Bear in mind that the bank facilities are subject to four covenants tested on a quarterly basis:
Underlying interest cover, net debt to underlying EBITDA, core subsidiary underlying EBITA and core subsidiary revenue.
So they wouldn't have been able to increase borrowings without adequately satisfying these requirements.
Therefore whilst the claim, IC have stated "Higher costs stunt manufacturing growth" that's certainly not the case here, (considering all the positive statements in the recent TU), in fact it's just the opposite and given that the borrowing has been to invest in capital equipment (i.e. more machines, more revenue, more profit etc.) as opposed to e.g. cashflow then, looking forward, I see nothing but positives for Carclo.
It's also very possible in the short term that the share price could take off, just as it did between Feb and May last year when investors start to realise the potential of Carclo going forward and if Frankseluk2 (Fri 17:31) is right about the delayed after hours trades/mopping up the sells, it's very feasible that some already have.
In the TU, the BoD made the statements:
"Going forward the business will continue to execute on the growth strategies developed for each of these divisions, with further significant investment in capability and capacity planned for FY 2023".
"As well as additional employer contributions made towards reducing the pension deficit, a range of other scheme initiatives have been introduced aimed at enhancing members' benefits whilst reducing the deficit, and these are expected to continue to contribute positively in the coming years". ------- (Furthermore the triennial valuation of the pension scheme at 31 March 2021 should be finalised by about June 2022 - hopefully just in time for the FY2022 Annual Report - which may further reduce the pension deficit.
"Despite the challenging backdrop, the division has been awarded significant new tooling contracts (which are a leading indicator of future growth) by an existing large customer and consequently it is anticipated that new production lines will be installed in CTP businesses around the globe in line with our long-term strategy. This will in turn lead to continuing long term revenue growth".
Given the above positive statements/situation, the way the share price has behaved recently is totally bizarre and as WarrenBJunior says (Sat 12:11) all you can do is take advantage by topping up.
GLA
ITs a lot to do with the markets in general selling off, I for one held until the TU, to see if anything would help the share price, but no. Loads of good companies selling off, no point in watching capital decline, this could stay low for a while. The only ones I have kept holding are the ones doing buy backs and dividends. Investors chronical last week "Higher costs stunt manufacturing growth". Higher expenses are leading manufacturers to rein in spending plans. Looks like Carclo has already started borrowing.