The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Today's announcement seems to confirm my thought that the compensation payment was significantly less than £10m It was a framework agreement and not a cancelled order. I suspect the get out clauses for the customer may have meant that they were not contractually bound to much if anything. Carclo were paid for the work they did but had also incurred expense in putting the production capacity in place to be able to fulfil it. They say they've "reallocated to enhance projects with existing strategic partners." I'm hoping that this will improve the margins on those contracts by newer more efficient equipment and also leave spare capacity for new business. I got the impression that the 'leading global OEM ' was an existing Carclo customer before the 'Framework Agreement' but on rereading December 2020 announcement I can't see that mentioned. Am I reading into things something that wasn't there or was there some other mention? If they were previously a customer of Carclo for other products I wonder if they remain so?
" 36k and 24k." is I think a huge vote of confidence. We are almost certainly not talking about multi millionaires here, it could easily be a very significant investment for them. In addition to 'William Black/Armstrong Investments Limited'
Schroders have increased their holding to 13% They are no fools!
I think 'Tooling' will refer to the making of the special moulds for the anticipated new products and is unlikely to be of use to other customers this is why Carclo will have been paid up front for them. There will also have been investment in production machines, extra space and possibly even extra employees but given the recruitment problems I suspect they won't have to lay off many if any there shouldn't be too much of a hit. They should be in a good position if they can win other new business to utilise the extra capacity. There may be a short term cash flow impact as they've probably ordered more raw plastic than they will need in the short/medium term but unless prices drop that would be an advantage longer term. Realistically I think Carclo won't end up much/if any better off than if the 'framework agreement' had never happened, it is the longer term profits that will be missed. The customer is going to be taking a much bigger hit.
I think. "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." fails on at least two points. If as you say it is not a closed fund I would expect standard payments by Carclo into the fund which would be included in the wages bill as well as the top-ups? Also what about investment income and capital appreciation? I appreciate the capital value may be down.
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.
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?
Yes very good news. I particularly liked under Strategy: "In the short-term, the focus remains to grow organically in each of its existing markets, but in the medium to long-term this may be supplemented by accretive and synergistic acquisitions."
I've not come across 'accretive' before. Accretive: Characterized by gradual growth or increase.
I'm looking forward to an announcement shortly after 31 July 2022 about the agreement with the banks and Pension Trustees.
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"
As I understand it the whole idea of the Share consolidation was that the share price would stay about the same when the special dividend was made, if so it singularly failed or did I misunderstand it?
I know "the Group is not permitted to make a dividend payment to shareholders up to the period ending in July 2023." Thinking long term what was the last dividend and what was the profit and balance sheet like at the time? I'd like to have something to look forward to even if it is more than a year away.
The presentation is Next Wednesday 24th @ 12:30
A lot of the questions I'd like to ask are forward facing which I believe they can't answer!
I'm really surprised the share price hasn't rocketed today, I'd have expected 15-20% rise without the pension news and another increase of similar on the pension news.
As I type it is reported as: Share Price: 42.10 Bid: 42.70 Ask: 45.40
How can you have Share Price that is less than the Bid?
I also note that the spread is currently 6% it does seem to yo-yo from about 5% to 15+%
Another oddity someone seems this morning to have bought 13,077 @ 45.25 then sold them all 17 minutes later @ 42.55
Any explanation?
I doubt Carclo are making Lateral flow tests, LFTs are mass market , not high precision and I suspect low margin. If they were making them or kits for PCR I think they would have stated this a long time ago.