The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
A lovely tale to wake up to today. Great post rationalisation by main shareholders who treat the business as a private kingdom where they can act as they like. The very idea that consultancy payments were acceptable is a joke. But to keep potential investors from knowing is .... more than an error! I still maintain that HMRC should challenge the use of consultancy payments for a paid employee who should be acting in the company's best interest at all times. As for Mr Ridgewell - time to do the honourable thing and leave with your dodgy friends.
Not sure why PT going would hurt if they have a solid replacement. PT's record here is not good. Research his previous 'success' at Hill Station and see if there is really a success pattern If he paid himself as a consultant without good reason (after all he is an employee) one could argue that this understated the directors emoluments in the accounts. I will leave it to those better qualified than I to determine his suitability in any role. If he took cash through his consultancy for doing his full time job - HMRC may wonder why!
The tax man should be talking to him. It's his day job !!!
£2m is to maintain working capital. Why get into a situation where they lack working capital? £7m is to increase capacity at Renshaw to increase capacity by 50%. Why is this required? Because they have seen a whole 15% growth during the traditional quiet spell over only a few weeks at the start of this financial year? So roughly sales are back to the levels they were at two years ago? Factor out price increases and is there any real volume growth at all? The last board report indicated that 'specialists prefer a one stop shop' and prefer buying directly. So revenue growth does not equate to volume growth. Just additional margin - which is great but does not justify investing in additional capacity. But let's BORROW £7m and grow capacity just in case!! If Rainbow Dust is now fully integrated and it is now selling Renshaw products directly as stated in last years chairmans statement, how is this benefiting the business? £8m is required for Hayden's! A perennial loss maker for the group! This sum is to help reconfigure the site, allow blast freezing and tomake 'yum yums' Sounds like real value for money!! Even if this is to facilitate the merging of all bakery operations into one site, then it is a hell of a cash requirement after the acquisition costs for Chantilly. ISO2 nutrition was acquired and considered niche with 'opportunities for providing added value'? How is that working out? This is a business that has been acquisitional but has not worked hard enough to control costs and integrate those businesses it has acquired. The business is keen to throw out any snippet of good news via any means to stimulate interest and belief that it has share growth potential. Why can't it just concentrate on making good on it's investment and acquisitions to date? Maybe it cannot and so this is the latest spin to keep doubters happy? Unfortunately the share value is the real measure of success and sadly that sucks and has done for a long time. Wrapping everything into a 3 pillar starategy makes sense from a marketing perspective , but it also probably means that going forward it will result in Operational performance being wrapped into the same categories - a nice way to hide underlying trends. I hope this years results will report on each business unit as it has done in the past, but I won't be shocked if it does not.
Wow they sang about selling Napier and having cash and now ...they need more cash. Share price has been in the doldrums for ages and the board accepts this? These shares trade in small numbers because the bulk are owned by just few large investors. The same investors are pumping money in hoping to repair the share decline. Now they want to invest to manufacture goods that are not that innovative and any large bakery could produce them and compete against existing business. Acquisitions haven't done it. This is more smoke and mirrors. As for sales growth, don't just assume this is volume growth. Price increases will be a factor. Good company but big on spending cash and not delivering share value. Never a good sign.
I think this a terrible buy at present. After boasting about winning all kinds of business through supermarkets in recent times and spending cash on a facility to receive bulk sugar - now 'sugar' is not such a great prospect! Everyone knew that the market was changing and prices would reduce. As for the 'profitable' part of the business - RGF is disliked in the industry and their prices are too high. Customers are sensitive to this fact but RGF do not listen. There seems to be a belief that the high selling prices can continue but the reality is that customers are fed up with the position taken by RGF. You cannot go on about 'raw material sugar prices dropping' so this is bad for Napier, yet offer products that mostly contain sugar - and tell people 'prices are remaining high'. Seriously Bad leadership IMO
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