Member Info for Toonman

The CEO has only been in post for about a year. The amount involved and the fact that it was a share issue was flagged for some time by the company. It is not something that has just been sprung out of the blue.

Not a popular shout Toff - but in the money I suspect!

167 million shares being issued at 60p each. That is more than double the number of shares currently in issue. As I said earlier this going to be good for the long term of the company and ensures it remains in business - but the short term share price?

I can offer an opinion on question 1, why they might cut the dividend:

- Stalwart “reliable” dividend payers from every sector have been cutting or chopping dividends on the back of COVID-19. Insurance, banking, oil, house builders you name it. Some of these undoubtedly have legit reasons for doing so. But my suspicion is that others have either been leant on (politically) or have jumped on a bandwagon. So any company reducing its dividend has almost got what looks like a free pass to do so in the current climate. Even though some of them have until recently been engaging in share buybacks, a tactic which any savvy investor would regard with massive cynicism. If this is a long term trend the consequences are potentially catastrophic - pension funds are just one victim that comes to mind. I do hope that whatever BT does is not too drastic.

Question 2 will be better dealt with by others on here.

Toff, thanks for that.

How do you know that institutional shareholders were dumping shares first thing and that these shares were bought by retail investors? What is your source foe that piece of information?

Toff, I am intrigued how you can you tell the identity of the buyers and sellers - is there some info out there on this? I always assumed that the company has to disclose any changes of shareholdings by institutions via RNS, but that is usually some time after the event. And other than that there is no way of telling who is buying and who is selling - am I wrong?

Possible reasons why it is not moving up, based on the company's own publicly available information:

- Fund raise of up to £100 million has been mentioned. No terms of this have been announced. The fact that it is underwritten suggests that it might involve shares being issued. Given that the market cap is currently less than £100 million perhaps there is nervousness that the number of shares required could result in massive dilution. The funds raise would be good for the company long term but it might trash the share price short term.
- The last director share purchase was 6 months ago at a price of £1.71. They have had plenty of opportunity to buy shares at these lower levels. So far they haven't.
- The last material institutional purchase was at a price of approx 35p. No others have taken place.

These are just my observations and others may well disagree.

PE currently less than 4. This is a share whose price is propelled by the dividend. If they don’t start making decent returns to shareholders (in the future) the BOD can look forward to a crap share price, crap PE - and crap remuneration.

I am really curious as to what the terms of this fund raise will be. WH Smith had a small placing that only increased the number of shares in issue by about 14%. They placed the shares at a discount of 4% to the previous recent share price.

So if COST are going to raise £100 million (more than double their Market cap) the current number of shares that are going to be issued is massive! If it is a rights issue (based on the current price then it is going to be something like three shares at 35p for every one held by the shareholders. This would nearly quadruple the number of shares in issue!

If the rights price isn't based on a discount to the current market price then no one would take it up. See Kier for a textbook example of that..

Although I am neither Nige nor TMT if you read Persimmon’s RNS of 25th March you will get a complete answer to your question.

Totally agree re lack of transparency on the rights issue. Currently the market cap of Costain is only circa £39 million, and they are looking to raise more than double that amount via the rights issue. With just over 100 million shares in issue at present, the as yet undisclosed detail of this RI is the elephant in the room.

The big difference is that the board of Centamin are rejecting the offer to merge but the Redde board are fully supportive of the merger with Northgate. They recommend acceptance. It would be quite interesting if the Redde board have misjudged the shareholders and it gets rejected!

I would think that Veritiero was kept on to provide some sort of continuity during the transition from one management team to another. Bev Dew, the CFO, would have been retained for the same reason. They knew where the bodies were buried, to put it bluntly.

I suspect that Adam Walker's departure is an acceptance that the audit process failed and last year's accounts were "misleading". Indeed bonuses were paid to board members based on numbers contained in those accounts. I would think that it would be a difficult legal process to recover those bonuses but what has happened subsequently suggests that they should not have been paid.

Appreciate your point and your experience of the industry. But to my eyes it does not look like a great business model to invest in. £42 million operating profit on £2.0 billion revenue leaves very little room for contingencies. Also I would liken it to an elephant crapping raisins.

Residential £347m revenue £25.9m operating profit - Margin = 7.5%
Property £218m revenue £34m operating profit - Margin = 15.6%
Construction £2.0 bn revenue £41.9m operating profit - Margin = 2.1%
Services £1.8bn revenue £93m operating profit - Margin = 5.2%

House building and Property are the most efficient parts of the business. Services is ok but pretty unspectacular. Construction is just horrendous. It would only take a few cost overruns, or poor estimates to kick Construction into a loss.

I would be a bit wary of what Peel Hunt and Numis say about Kier. They are jointly Kier's own corporate brokers.

lse 2000 - you should address your comments to The Sunday Times as it is they (yesterday) who suggested Centrica might be a takeover target.

Genuine question - why are they here?

I repeat a point I made some months ago. Bonuses were paid to Mursell and Dew for achieving net debt targets at the last year end. It now very much looks as though the net debt was understated. Will those bonuses be repaid? Mursell has gone now but imho the bonuses should still be clawed back as a matter of principle.

For sure. Looks like the full year's divi will give a yield of about 8.5% at current SP. Not many places around where you can invest and get that sort of return...