Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I thought the company was massively over valued at IPO but thought £2.00 was fair value so entered at that point. I was wrong. Still think it is under valued but needs the balance sheet issues sorted.
Sitting on a big loss are you? Clearly if you think resorting insults helps you case, it doesn’t. How have your forecasts of share price movements gone?
I can give you any number of reasons why deals are done. Ego and becoming a larger business often get in the way of rational analysis. We were required to do post acquisitions reviews and of the 15, 5 hit or exceeded expectations, 6 just about justified what we paid over a 3 year time horizon and 4 destroyed value. I am expecting a big non-cash write down and would not be surprised to see it announced in September. That actually may be good for the share price.
The answer is that I do not think they have made an acquisition that justifies the price paid and I think a lot in the market agree with me. As a CFO for over 20 years I have completed over 25 acquisitions of which 15+ were in PLCs. I know how difficult it is to get right and how difficult to accept you got it wrong and I think they got most wrong.
I am just telling you how it is. Have a look at the value of intangibles, read up on impairment review and give me a good reason why they can justify them to a suspicious auditor. I thought at the time they were over-paying and am now convinced they did.
Over a long period of time, research has consistently shown that most acquisitions do not add value. Suspect they may have merely supported this. The intangible assets relating to this in the balance sheet look increasingly difficult to justify. At some point expect a big write down. Not saying this justifies to current price but never assume money spent on acquisitions is well spent.
I fear that on the 15th they may be forced to say something about the carrying value of the intangible assets relating to the acquisitions. They may well be asked to carry out (or have already done) an impairment test and it is difficult to see how they could avoid a sizeable write-down. Whilst not a cash issue, it would reduce the asset base which can have other ramifications. This may of course be already built into the current share price.
Judging by the number of posters who claim to have “doubled down” at various points from £2.50, there must be individuals nursing huge losses. At IPO I thought fair value was £2.00 and bought when it hit that, and only a couple of thousand shares. Have been caught out once before buying more when it looked as if the bottom had been hit. Unfortunately, the bottom for the once huge Marconi was zero so never again. Hanging on in hope more than expectation.
Roharps even if cash is unaffected a balance sheet adjustment can have huge implications and one of the biggest issues will be the supplier base. If I was the CFO of a supplier, these announcements would have been sufficient for me to withdraw credit facilities and insist on cash in advance. Why would you take the risk of being an unsecured creditor in an administration?
I would like to agree. I went into this share at a horribly high price because of what I saw from my daughters age group. From what I see now, I would not go in even at the current price, indeed at any price. The only reason I still hold is in the expectation that something may arise that I can not foresee and that the falls when they have arisen have been so steep that I have hoped for some sort of bounce that had not really happened.
High staff turnover. Vacancies do not imply growth but equally not cost cutting as easiest savings are not to replace leavers. My big concern remains what I witness from my daughters and their friends, just huge amount of orders with most being returned.
Accept your point but mine was that despite what you say these boards still had huge amounts of posts saying they were oversold, due for a massive rerating and could not go under. Anyone who suggested otherwise was rubbished. You can still see some of what have proved to be ridiculous comments on some of those businesses boards.
CJ39, that comment is so very true, these boards were full of posters claiming Carillion, Debenhams, Thomas Cook, NMC, Infosys, Intu and many others were oversold and going to bounce back strongly. Individuals should always do their own research and make their own informed decisions, not rely on what are just opinions.
If this is as bad as it looks, then the CEO will carry the can and I would be surprised if he survives regardless of his shareholdings. There will be some pretty heavy conversations going on with the major institutional investors.
CFO only appointed in May this year and may be the reason this has emerged if she asked the auditors to look in detail at certain aspects. If that is the case more likely that CEO will go but suspect there will be demands for far more heads to roll including NEDs.