Mega brings her ESG experience, just when the tide is turning on this nonsense. Just my opinion but ESG and DEI are now being attacked increasingly, but I guess for now they have to play the game, given BlackRock investment.
In meeting today, the opening shot from Baines was rather a panicked plea that his plan was all about focus and growth. I do wonder whether perhaps his pitch to institutional investors did not go completely smoothly.
They may have supported a dividend break, but I cannot believe they are happy with his snails pace execution.
It will be interesting to see what happens in the next couple of days and whether there are signs of IIs backing this as a recovery share.
I just have a nervousness about their operational capability as it becomes clearer that that there were more issues than we realised in the ongoing business as well as the updated fermentation business. And for sure timescales to get this up and running and selling the capacity have been vastly underestimated.
We could really do with quarterly updates this year.
I agree with comments so far that results are disappointing and I had also seen this coming given the previous briefings.
The only positive spin I can put on this is that Baines is being ultra conservative and has instructed his CFO to build a reserve that can be released at a time of their choosing.
I think Baines took a blow to his ego due to the company's poor management and the insistence by major shareholders that he should assume an exec role to restore the company to health.
That would explain the ultra cautious forecasts, as his reputation is on the line.
Let's hope that behind the scenes things are better than they appear.
Very interesting AGM yesterday. I have to say not your typical AGM, more like family gathering. A lot of investors who have been involved for some years.
News of the new Pershing US which is going to be listed via ipo in the US. This necessary because legislation prevents PSH operating in the US.
PSH will however benefit from this as the US company will gift PSH monies that will offset the management fees. The objective is to effectively reduce PSH management fees to zero.
There will also be a new fund to allow investors to participate in asymmetric bets on macro situations. This is currently done by PSH partly as a hedging instrument and has been very lucrative.
The new SPARC is now considering investment proposals and there will be news down the line. This vehicle would allow up to 100% control of any company they wished to invest in. That's quite unique.
Just seen Singer Capital note and the 12 month target price of 34p. Hardly inspiring.
I kind of agree with you that there shouldn't be a liquidity issue, but like SB I think the update was totally lacking in substance.
Anyone who noted the statement from the exec chair last year would have seen this uninspiring, ultra cautious approach coming.
It's almost like he was dragged back to the coal face against his will and is now has only one thing on his mind, that is to save his reputation.
He has forgotten about shareholder value in the short term.
As the price of the share is rising steadily, I thought I would get a company perspective.
The information I got was that the Lime transaction that was announced weeks ago was in discussion last year.
This is when I was complaining bitterly to the company about shareholder value.
The transaction seems to have been positive with regards to inflow of investment from UK, Europe and encouragingly from the US.
Thi as appears to be prompted by the scale now achieved by SRC and a business that now has a a more balanced portfolio of products.
This overrides the concerns over the increased debt, which private investors have commented on.
They significant integration work to complete over 2 years or so and IT systems figure largely in this. They are confident that this will go smoothly.
So it seems to have the thumbs up from the institutions based on a solid business now with sufficient scale.
They believe the share price has a way to go, I hope they are right.
I am still down here but not so much now as I added at coca 44p.
The update on the enzyme fermentation capacity is expected circa mid November. That was the commitment on the last shareholder presentation.
They need to hit this target to restore credibility.
They need 6.7 million to pay the dividend, so they need to be confident that cash inflows is strong.
I asked Max if he would include shareholder returns in the next major update which will be FY. He has agreed to do that. Better discussed openly than ignoring the obvious distress this is causing private investors.
Macro economic turbulence is impacting the UK markets and AIM in particular.
There have been enormous outflows in uk equity managers in the UK (£7bn since Jan 23 ). This means most do not have sufficient assets in their funds to buy more stock.
This is going to get more volatile leading up to the US election next year.
Seems to me that private and institutional Investors see risks in equities that is hampering long term investment.
The AIM market in particular has taken a hammering, not surprisingly as generally those companies come with significant risk. This is for sure a drag on SRC.
I can't see anything changing until after the US election and even that may not be a positive outcome.
It's the worst climate I can remember for investing for many years.
Preserving capital is always high on my agenda, but more so than ever now.
I noticed the shout out to Elon on possibly bringing X back to the market via Pershing SPARC.
I think Bill Ackman and Elon are on friendly terms.
Like you say, a lot going on, but apparently little interest.
Just replied to your mail. Letting you know incase it is in the spam folder.
My thoughts on the call.
Baines looked very uncomfortable in the call. It seems pressure has been put on him to assume the CEO position, until the company has executed it's strategy. That could be 2- 3 years.
There was admission that the enzyme expansion program did not go well. It has cost the company extra capex and project costs. I think it is over budget by circa 7m on a 9m forecast.
Baines didn't agree with the observation that this was not a highly complex project. On reflection I can understand why, as for a small company like EKF, this is probably complex relative to what they have done before.
A strange comment was made "perhaps we should have had another PM". Well not really imo, a PM with experience would have been better.
It seems the delay is down to planning to commission the new equipment and bring on stream each independently.
It is now discovered that all new equipment has to be commissioned and brought on stream together. That's a project planning error.
Also it seems the target market is now pharma focus and not pharma plus food etc. Again in a program like this, you would expect all this to be in the project charter and signed off. Not sure whether this was a recent change or not clearly defined up front.
I hope to hey got the message over the concerns over project execution. It appears we will know in about 6 weeks.
They have gone extremely pessimistic on the forecasts, clearly because of the delays they had to declare. That's just about acceptable for 2023, but 2024 is far to cautious.
Cash looks ok, but really depends on them hitting targets, cutting costs and what planned dividends they award.
The FD is a former colleague of Baines from a previous company, both live in the Cardiff area, where EKF have their HQ.
Good to see the usual suspects in the discussion and the newcomers with the identical consensus, almost as if they had cribbed the post.
Only just read the announcements today.
On the CFO, I am glad we finally have someone on board, but less than enthusiastic about the appointee. I could say more but I wont.
As for the progress on the enzyme business, the current situation, with another delay was entirely predictable based on the previous updates. It spells out a company that don't have any capability to manage programs.
To quote from the update:
"The process of validation and verification had not been sufficiently factored into current timescales for installed equipment to become fully operational"
That indicates a clear failure in managing this program of work, to commission new equipment and develop processes that underpin the winning of new enzyme sales.
Whilst Baines stays on as exec Chair, he is not going to solve this.
Managing change is not easy, although this expansion of the enzyme business is low on the complexity scale. It just appears that they just don't have the capability.
Unless they fix this, they will continue to incur time and costs penalties.
I am still invested, but hanging on by a thread.
I contacted Max, yesterday following up on the share price discussion we had back in March.
I got a lengthy reply, which I don't want to share on here, but happy to share by email.
He has offered a telephone call to discuss, so maybe a small number of us could organise a Telco with him to discuss our key concerns.
Big.
Yes unfortunately with Black Rock as a large investor there may well be some games being played.
I thought it came across as an embarrassed and incoherent response from the bod at the meeting, which adds weight to your point.
The question on company valuation was just skimmed over in the investor call. In fact the comments were pretty pathetic in their lack of anything concrete. ( no pun intended)
Looks like another mail to the company required.
Several KPIs highlighting comparison with Breedon.
They were all positive for SRC.
It's an open question on why the market apparently are discounting this.
Let's see what they say on the call currently in progress.
Ash worth Lord each many our sentiments.
They have to face investors on a call in September and it could be a feisty one.
I see the same warning signals. Instead of Q4 revenue from life sciences we are now warmed up for 2024.
The reason being both dependant on contracts and capacity being in place contrary to previous guidance.
And the departure of the key person who going to deliver this didn't warrant an RNS.
As for governance clearly news has leaked (not for the first time) that this was coming.
I like the idea that heads should roll, but ironically we don't have many left on the bod.