The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
bakky now that’s a tough one ,
hard to say : if i had gone on the board the issue we are about to have a big row about now may have surfaced in late 2018 and the shootout would have ensued then .
i would probably have had to step down from the board at that time , so may be a moot point .
i guess my industry knowledge esp of all the potential for fakery may have stopped any further wrongdoing . i can assure you i would not have allowed the 3 matters that happened in 2019 to have gone through on my watch , although in deference to the non execs it can be very hard to find out what no good execs can be up to , especially if they are determined to cover their tracks
in fairness to the company , i am not sure the lawyers have confirmed to the MMX lawyers they are instructed yet . i did however notify both the Chairman and CEO that i had instructed the legal team that wrote to them on my behalf to instigate proceedings .
drk
yes , lawyers have been instructed and the company was notified of such
morning chaps,
i appreciate all of the comments , i sincerely do and the effort the likes of some such as SB have made analyzing SP movements etc.
and yes “ normally “ a potential litigant would be advised not to comment but i’m a bit quirky with a big mouth ( and thankfully a big wallet ) , so don’t tend to follow normal paths sometimes . Ultimately any case will turn on the “ facts “ , whether they are discussed and aired in public beforehand or not . as a few have commented when time to show the full hand either be vindicated and win or get your ass kicked and pick up everyone’s legal bills .
again i think in the back and forth of the last few days the bigger picture may have been ignored .
IF , as alleged , much of the China performance , be it premium or “ regular “ registrations are / were ultimately “ fake “ then the deception has been ongoing . i think i posted a couple of days ago that registrations have gone up by more than a million names in 2 years yet the contribution from them hasn’t moved a cent . ask yourself , how can that be ?
if TF and the company want to get out from under past misdeeds its a tricky line to have to navigate without in effect admitting what went in before . doing so will involve a degree of “ leveling up “ . i volunteered to find a low cost pragmatic solution to that conundrum and indeed to contribute towards the solution , but sadly it appears bunker mentality has ruled the day .
not sure whether court filings are public in the UK ? they are in the US , so all the dirty washing and claims and counterclaims get aired in public anyways , so what’s the difference ? i was always advised to “ tell them what your going to tell them, tell them it , and the tell them what you told them “ to make sure you are clearly understood . that’s what i am doing here .
there have been many casualties along the way for the last 3 years of managements lies and cover ups and failure to disclose , no doubt nearly all of the posters here have suffered . my actions nor the performance of the ICM business has contributed to that , quite the opposite . it is just a pity that the failure of the original MMX business , which was supposed to contribute at least 50% of the ongoing profits plus post acquisition savings and organic growth , has produced in truth less than zero nett contribution, leaving us in a position whereby the overall group is delivering LESS profits than the standalone ICM business . no wonder the market cap has dwindled down to basically the stand alone value of the ICM business . that’s the truth and the pity here . if mmx was as made out to US and to YOU then by now , MMx would be humming along making $10-12 MM EBITDA with a clean balance sheet and having a market cap / value north of probably $150MM . 2-3 x what it is today . that’s the “loss “ we have all suffered
Bolivian,, you really are missing the point I am making....
it clearly was at the time of the ICM deal as was made in the accounts to 30June 2018 just 12 days after the ICM deal closed and they warranted there were no such surprises. Dont you think if we had known both were on the cards we may have waited on the deal at least until those provisions were made and we could asses the impact on the SP before going ahead.... Duh.....
Davand , Then why not say that to us... Disher and Farrow looking into this and we will report back? the silver lining in the cloud here is that , by confirming the overstatement of 2017 numbers and possibly the existence of hundreds of thousands of "fake' no cost .VIP registrations, it allows the company to draw a line under it and move on. It does however leave the thorny issue of how to make good those affected by the deception (none the least ICM vendors)...by admitting it, a clean slate is obtained but there is a price to pay....
BB, incorrect, I had no idea it was coming. That said , if it was purely a balance sheet matter , not related to previously recorded "fake" sales and that it allowed the company to get out from under an onerous losss making contract , then I was all for it. What I did object to was the non disclosure of it during the due diligence process and the potential negative hit to the SP for our 225 Million freshly minted shares of such a seismic write down. The could have let us know it was coming and , for sure should have NOT given warranties 12 days prior that there was nothing material affecting the companies balance sheet that had NOT been disclosed. Forewarned is forearmed , rather than keeping us in the dark and then leaving us to scramble
Huckter,
yes I realize that any such claim outs me at odds with the company and other investors, so I dont expect any support from them/you.
just to walk you through , juts one part of the "beef".
The original transaction with MMX was envisioned as an all share deal. Due diligence ensued on both sides. ICM were nervous?uncomfortable on several matters , in particular the $3.4 M of premium names sales in China announced in Q4 2017 and booked as sales and profit for the year. By mid 2018 these deals hadn't been paid. We flagged them and said we would prefer to wait until October 2018 to consummate any proposed deal, as we were in no hurry and the provenance of those deals should be clear by then. MMX decided to sweeten the deal to get it closed earlier by offering $10M of the consideration in cash and also by giving us warranties that everything was above board on those deals and that the money was fully collectible (amongst other things). We took that deal. Low and behold just 12 days after those warranties were given and the deal closed, $2.1 million of the $3.4 was written down as "doubtful" and in the fullness of time the whole $3.4 was written off as uncollectible. furthermore at the same time, other provisions of $12M were taken, none of which had been disclosed as even being considered. You can imagine how we felt duped. fast forward 2 years and the same management are caught red handed mischaracterizing 3 seperate transactions as sales and profits in order to present reasonable(ish) year end 2019 numbers and are subsequently dismissed as a result of that fraud. My approach to the company was for clarification (amongst other things) as to who knew what and when in 2017/2018 about the status of the china debt and whether therefore the warranties we were given were , indeed, fraudulent. A reasonable ask in my book. if nothing to hide then open the books and correspondence to prove it and obviate any unpleasantness. if everyone opens their eyes, the truth is there to see.
silver ,
as usual you have hit the nail on the head .
as you say strong historic suspicions/belief of wrong doing dating back to 2017 /2018 . i sort of think of it like the Madoff case ... difficult to get to the nub of it while they still control access to the infamous 17th floor . however , later , when wrongdoing is proven in other matters and the Madoffs no longer in charge , time to go look at the 17th floor repository .
bakky
is hard when the company’s lawyers tell you the company has nothing to say , calls / texts to Board members go unanswered and the CEO is instructed not to communicate with you , believe me. i am never one to not try to engage in “ without prejudice “ dialog , just hit a brick wall here and no demands made at this stage , just request for clarifying information , explanation or dialog itself .
bakky ,
my guess is they thought they would be able to daw a line under it just for 2019 by restating but in truth imho 2017 and 2018 will need restating .
yes bolivian and bloviating , i couldn’t resist not having my reading glasses on on this iphone :
and not sure if was your question but yes , i haven’t seen the full damage report on the current state of play but with the ICM profit engine and 28 other Tlds singing properly then it should be possible to get a $120/150 valuation , perhaps more and apply usd/ forex rate and divide by however many shares in issue and double figures could be possible
Bolivian ,
you are clearly bloviating and also clearly don’t have any of the facts . multiple chinese parties involved not one company and isn’t really about them , it’s Mmx own actions at fault .
and also incorrect in assuming i approached TF . no he is not a member of the BOD .
TF not in my pocket :
never has been and never will be
a straight shooter and a good man .
bakky ,
i’m told civil fraud and criminal fraud are very different matters .
bolivian ,
i will take the bait on “ almost impossible to prove”.
i can’t for the life of me see an innocent explanation of why a public company can give cast iron warranties on 18 June 2018 that there had been no material change in the circumstances of the business since it’s december 31st published accounts and that all debts were still collectible etx etx , usually boiler plate warranties when entering into a sale and purchase agreement by both sides or no facts that the other side should know and then just 12 days later , provisions made totaling some $14.1 million on a variety of non disclosed issues including $2.1 Million provision for doubtful debt you just warranted .... hmmmm
Honestly can’t say ...
apparently there is math for it which is quite complex but is being looked at now : as mentioned before i am usually a back of a fag packet kind of chap but apparently it doesn’t work that way , so honestly have NO IDEA . honestly not trying to be disingenuous here . not my style
i dunno YHAL ,
i prefer a more open approach and everything out in the table . MMX it appears prefers minimal disclosures .
damned if i come here and discuss openly my grievances and potential avenues for addressing them , damned if i don’t and the first eberyone hears is via a RNS ... “ that SJL was a deal horse who never gave any inkling of what he was thinking “
i guess u can’t keep everyone happy
silver ,
i hear you and the companies response was a disappointment. either a) still unaware of the real problem b) in denial c ) feel they are ons good footing or d) calling my bluff .
i guess time will tell whether any of those was the right call . i told them i was more than happy to have my ass kicked in court if allegations unproven
Bakky ,
didn’t even get that far , just outlined that willing to be more than reasonable and pragmatic and that as part of settlement would be willing to help get the SP back into double digits , even though there may be a few more shares in issue :-)
Bolivian ,
u think ? happy to make my case and let the man in the white wig decide , been there and done that and yes took years and millions but prevailed . and the nett nett was worth it , plus the ego was restored :-)
BTW these american law firms love working on contingency taking 1/3 of the “ win “