Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
I agree something is going on in the background, and my guess is that that there is a fundamental difference in strategy and hence the fairly sudden departure. I'm going to suggest that there has been an unsolicited bid the CFO wanted to accept, but was rebuffed by the board/other executives his position is then untenable. In the same way that ASOS didn't announce BOO aren't either. I think the price action is strange.....(and this is on a fairly volatile share anyway).
The issue that historically BOO has been a growth company so the P/E was high, growth stops therefore share price re-rates, risk free rate of return has also dropped so again share price re-rates. This is before we get to the sector issues of over stocking during Covid, and massive increase in raw material costs and transport. Therefore the company share price has been absolutely hammered and understandable so.
BOO is currently being dragged down by the mess at ASOS, BOO isn't engaging with the market because it doesn't need to. The founders (still want control) so no takeover is going to happen at this price and the founders won't sell, no MBO because Carol Kane is one of the founders and the management get all the rewards without the risk anyway.
It doesn't appear that that they need funding, though the market clearly doesn't believe that statement because that is what ASOS said repeatedly and then did. You don't spend £15million on REV B if you think you have a funding problem and currently has FCF (albeit because a drop in stock days).
BOO has issues and they are clearly doing/not doing things that would help the relationship with the city, but fair value at the moment is probably around 55p given all that is going on - but there isn't an unreasonable expectation that if the ASOS update is bad tomorrow (despite their repeated guidance but PI's don't trust them) because then you can buy cheaper tomorrow so there isn't going to be much support until that update......
Currently still worth less than the book value that is held in the accounts which has been reduced again due to the right of use assets on the leisure estate.
I actually think broadly the executive team are doing a solid job, but there is little visibility on profits per segment and how many more write downs there will be on the leisure estate. Or are they being overly pessimistic on the outlook which leads to an add back of the write-downs, which just leads to an increase in share price volatility (NB: If I've read it correctly the value of the pubs is being held at a lower value than that of the freehold valuation) which is magnifying the current downside.
The original £50 million comes from the previous share award scheme, and you can debate the if that was the right value at the time but given the targets at the time and the value creation that would have come for shareholders it's broadly passes.
The issue is that that award is 8.5% of current value of company (according to the share price).....before it would have been a tenth of that....
It also rules out a management buyout, as he gets the reward for free without risk to his capital.
The issue of the re-alignment is the size of the awards and the hurdles to achieve 95p is too low for the reset, and a possible £50Million for John Lytlle at 395p is too large for a price that has already been achieved albeit briefly.
This skews the share price benefit in the favour of management when they aren't actually putting any cash at risk..... They could of course buy in at these levels.....but they don't need to be because they get it for free.