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I think if I were the board of Churchill China I would be feeling somewhat uncomfortable given the financial forecasting debacle & lack of controls all occurred under Cunningham's aegis
The big holders imv will have insisted they have a head (if not more ) on the plate in return for their support. There isn't time to faff around
1. Bundred has to go in the New Year (or announce he is leaving) because his credibility is shot to pieces & be repaled by a chairman with proper international plc experience
2. Johnson has at most 6 months to show he has the skills to turn the ship around; if he doesn't he should be replaced or moved internally
I can tell you with some confidence that Bundred & Johnson both possess that engineers' certainty that they are right despite time and time coming up short. Bundred has batted away countless questions about operations in past 22 months, and Johnson clearly had no idea what was happening. And for good measure they both have a huge aversion to folks down south, their advisers, and shareholders.
"The finance team in particular should have been pushing to raise larger amounts at much higher share prices to cater for any eventuality."
I suspect they raised what was offered to them.... I am sure they pushed on price etc...but ...they inevitably got what is offered... 40p was a good price considering what has happened to AIM the past year
I am not so sure investors want to give out cash to cover what the company is suggesting might be their future c*ck-ups ..you don't exactly suggest that in your presentation
" The timing of reassuring trading updates followed in very short order by a fundraise at 10p has done possibly the most damage to credibility and integrity"
I think when you re-look at it....the fund raise was inevitable anyway...to get the loan ( i suspect)... and to progress further with the working capital for the expansion plans...which if the loan comes through promptly ...would be needed straight away.....the loan has been worked on in the background and only recently advised it at late stages...maybe they need the fund raise to secure a better payment rate on the loan... reduce its cost
They will no doubt have consulted with investors etc ..and the 10p fund raise price was offered to them....you have to take what they offer, not what you want....
The production hiccups have been costly .... but with the R&D expenditure and cost of sales/admin etc there was always going to be a need for more fund raising ...IMO
The rush to buy shares from the market today, is suggesting that some now believe that once this is done and over the line and the loan is in and the point hiccups get resolved.....there is a good chance things the team can really move forwards
I did think Bundred was good in terms of inviting the NEDs to present themselves and whilst he does give the impression you can ask anything...he can push certain questions off as not really important...when to the person asking, they clearly ..are important
I haven't posted since the last update and the financing. It's all tremendously disappointing of course.
The current management have done an incredible job in taking SCE from nowhere to where they are today, given the barriers to entry and the absolutely massive contract and order pipeline.
But they've failed in getting a commercial operation up to speed quickly from scratch. Which is a difficult task in any circumstances, especially during and following a pandemic, but not one which was insurmountable with depth and quality in the management team.
The finance team in particular should have been pushing to raise larger amounts at much higher share prices to cater for any eventuality. There must have been plenty of opportunities to do so (although no doubt there would have been grumbles from many here at the dilution!).
IMO the likes of DB and KJ have likely built up such tight relationships with the top 12 or whatever OEMs - with more OEMs apparently in the pipeline - and have such intimate knowledge of the product and the manufacturing process, which is vital, that they should stay. In what capacity I don't know. The new CFO and other appointments using the new funds should support a smoother production scale-up from here.
I'll probably top up in the placing on the view that the upside here remains a multibagger given the pre-money £26m m/cap.
For me, it's perhaps less about Johnson and Bundred's ability and experience to lead SCE (take it as a given that they haven't done so) and more about the tone-deafness and apparent lack of appreciation about how crucially important their credibility is. Without getting personal, in past Q&As, I have always found Johnson to be very measured and an excellent communicator, whereas Bundred tends to brush some very sensible shareholder questions aside with almost irritation. The timing of reassuring trading updates followed in very short order by a fundraise at 10p has done possibly the most damage to credibility and integrity. I realise it's a fairly standard convention of announcements but even beginning with '...is PLEASED to announce' gives further impression of tone-deafness. I'd personally be in favour of Bundred stepping aside once the ship is steadied a little, hopefully next Spring/Summer, but I suspect there is too much arrogance there. Cunningham making an odd-looking lateral move was the warning sign, I guess.
To a certain extent it depends what advisors he has (internally and externally) ..and who he turns to help manage his role
They seemed to realise too late that they needed new help brought in ...
The next 3-6 months now that there is some new blood will test how well he "manages" the operation and uses
I would be more inclined to support Johnson and change the Chairman
But is he the RIGHT MAN to lead the company from scale up through to the sunny uplands of ever growing sales? Very different skill sets needed to run a growing international business than what he has to do to date.
I don't think that's the issue.....no doubt he does work hard, but he still ended us up in an almighty mess, and its not as Friday was the first time its happened....
* i think Johnson works hard
LV1991
Yes..I accept issues happen when trying to scale up... but without a COO in place they laid themselves open to missing key issues that then bit them hard in the ass..... over ambitious sales figures on top.... and fighting problems rather than foreseeing them
They certainly need the new CFO and COO ...
The burning of cash to get things sorted meant they "probably" couldn't get the loan without having the fund raise
i think works hard but was probably involved in too many things and it became inevitable something would break
Next 3-6 months are key ...if done right...and the learning curve becomes an experienced curve.....then a recovering share price will follow
Worth reminding listeners that 2 out for the three characters wholly responsible for this shambles still have their jobs (Bundred & Johnson) whilst the third (Cunningham) slipped out the door before it shut firmly on his CFO prospects elsewhere. Great that Maddoxks & Easton have come on board but only highlights the previous shambolic state of affairs that led to Friday’s mess.
Like a lot of investors here, the equity raise prospectus fails to answer the most critical question about management. Why would anyone trust Bundred and Johnson with yet more cash given their hopeless track record? And why should the architects remain as Chair & CEO given that they have had something like 70-100m of support over the company’s history and the result is we’re back close to the level of the EIS subscription? On and they have also burned thro the last cash we raised at 40p
!
We had some thin lines about more training and upskilling factory floor managers, but that doesn’t answer the management question. The lack of humility shown by both Bundred and Johnson is staggering - just look at Johnson’s comments around the problems. Absolutely no mea culpa, no apologies, no taking of responsibility. Until the Board and management issue is settled there is no point in investing if the same actors hold the powerful positions in the company. Until change at top is initiated O am sitting on sidelines
I get what you are saying Pokerchips, but when they can't forecast 3 months ahead, have run out of cash and then get the begging bowl out, I can't figure out what the hell the future might look like / and as they can't forecast 3 months ahead, I have no confidence in the current Board and therefore won't invest anything further. I don't think the current capital raise is enough and I think they have been told they won't get any more till they prove they are not as incompetent as they have come across in the last 3 to 6 months
LV1991
You despair for no reason...they are never going to publish such numbers in detail ..and nor would anyone else....as what happens between now and then are somewhat unpredictable .....to be held accountable for ..now.....so
( besides it is commercially sensitive information in its detail, at this stage )...
It is for you to get your Excel sheet out and do it yourself...create your own estimations....what do you think the analysts do ?
..even analysts dont get totally spoon fed..even they have to do some number crunching based on estimates ....
What mumbo jumbo candy floss is this ??!! "Overall, the outlook for 2024 to 2027 continues to remain very positive reflecting contracts in series production and recent new business announcements, with capacity being installed to fulfil these awards." Why not just provide the revenue numbers and EBITDA based upon the production plans and working capital raise. I really despair of this lot and won't be investing another penny.
What a bunch of incompetent Directors! £250m turnover by 2030, what a load of candy floss, all anyone and they should be caring about is 2024 to 2026 revenue and EBITDA. Do these clowns have a clue or are they making it up as they go along?
Still too many question marks outstanding for me to consider investing, even after the placing. Until they can demonstrate they have a handle on the issues at hand and won't require further capital raises, I will hold off. I have seen too many of these companies burning through cash without a handle on operational management or cashflow
Ah! My old friend the proposed placing! pull up a chair pal and I'll pour you out a whisky!
" And Cleminson?"
well 5 out of 6 was the threshold, to pass !
And Cleminson?
Even with some small contributions from the BOD ....but...the Institutions probably only agreed to chip in, if indeed each of the BOD threw a minimum in the pot..
The Board isnt buying ...no Cleminson and a pathetic contribution from Johnson the architect of this disaster
"100M shares is a 40% dilution for existing holders. "
Dilution is just the % ownership of the company....and maybe better to own a smaller % of something that could well be bigger, in 2 years time. Most PI % is tiny anyway...
Placing affect on the share price has already happened....too late to avoid that