||EPS - Basic
||Market Cap (m)
|Aerospace & Defence
Real-Time news about Aero Inventory (London Stock Exchange): 0 recent articles
|bizochio: Interesting article in observer relating to a pension fund considering suing BP for what it describes as management ineptitude which has cost them. Makes me wonder what case AI would have to answer as at the very least they are guilty of is managament ineptitude and more likely fraud. Shame we dont have a big pension fund fighting this one out.
'The pension providers are taking the company to court for the stock market losses attached to pipeline fractures that resulted in 200,000 gallons of oil being spilled and the Prudhoe Bay field being temporarily shut down. Accidents in March and August 2006 knocked billions off the BP share price, and Lothian is arguing that its funds have paid the price for management ineptitude.'
|jr hartley: I've been asking questions of the administrators as have no doubt many of you but if not I suggest we all do the same.They have a duty to investigate misleading financial reporting and misleading rns statements. We should all clearly remind them of their obligations......... My 2 points are below and are addressed to David Pike who is the only person at KPMG who has replied to me so far:
Please address your concerns to the following people:
Thanks for your reply.
Please keep me informed on your findings and intentions after investigating the following 2 points:
1) The balance sheet stock valuation figures which it seems were inflated (despite being audited) and hence presented a seriously misleading picture to investors who invested in good faith based on the accuracy of these figures and the resulting net current asset value strength v actual share price. If we can't rely on the accuracy of published audited accounts as a basis for making reasoned investment decisions, then we are essentially gambling not investing.
2) The announcement from AI. shortly prior to suspension which stated that the publication of the latest financial results would be delayed as the company were working on a move from the AIM to the main FTSE list. This statement warrants investigation to determine if problems were apparant at this stage and if this announcement was no more than a seriously misleading smokescreen. I and no doubt many others left their money invested as a result of this statement.
I look forward to your response and subsequent updates on your findings after investigation of the above 2 points.
|rat attack: Dont know if this has been posted before, but this is Investors Champion assessment:
Even by AIM's somewhat looser standards of corporate governance yesterday's
announcement of the appointment of administrators to Aero Inventory plc, coming
only 42 days after the Group announced an intention to move to the main market, is surely outrageous!
Aero Inventory reassured the market on 30th September 2009 stating that they had
'commenced preparation for a move from AIM to the main market .......and in light of these preparations, (it) would be releasing its Annual Results for the twelve months ended 30th June 2009 on 28th October 2009.' A move to the main market suggesting to everyone that all was well!
On 26th October 2009 the Group announced that in the course of preparations to a move to the main market, new systems had been introduced to reconcile and value inventory (what were the other systems like?) and that these systems raised certain issues regarding the valuation of a parcel of inventory acquired in
the 2008 financial year. The Directors believed that these would have a material impact on the 2008 audited accounts and the 2009 accounts.
As an inventory specialist it was surely safe to assume that the Group's auditors had previously rigorously assessed the systems! It was reassuring to also learn that 'whatever the outcome, the directors believe there will be
no impact on either the physical amount of inventory held or upon the Group's cash flows' and that 'the issues raised are not believed to be a result of either fraud or theft.' So it was simply a matter of management incompetence
and system failures?
As a result the Company was unable to deliver to its bank lenders the 2009 audited accounts within the time permitted in the Group's bank facility agreements and accordingly was in breach of a non-financial covenant. The shares
were suspended from trading on AIM.
On 3rd November 2009 the company issued a further statement with news that the stock valuation issue was broader than first thought involving the accounting book value of stock but also in some instances physical quantities. The
positions of Rupert Lewin (Chief Executive), Hugh Bevan (Finance Director) and Martin Dodge (Chief Operating Officer) were being reviewed! One day later on 4th November, Hugh Bevan resigned.
On 11th November 2009 came the announcement that the Group's banks were not
prepared to provide additional short term funding to enable it to continue to trade and as the Group had failed to secure other forms of short term funding administrators were appointed.
- City conned?
Edison Investment Research, a highly regarded sponsored research house, released its last research note on 19th May 2009 commenting that in its view 'long-term funding for future growth is becoming assured and concluding that 'the risk/reward balance is poorly reflected in the current share price' and that their Discounted Cash Flow implied value of up to £6.75!
We believe that Edison remained under contract to produce research for Aero Inventory up to the present which makes it all the more surprising that they haven't issued a note since 19th May 2009. Prior to this date they issued regular notes; March 2009, February 2009, October 2008, September 2008. We understand that the management of Aero Inventory were unwilling to offer comment to support Edison's research several months prior to 26th October 2009, perhaps suggesting that management were well aware of the problems for some considerable
Charles Stanley, the private client stockbroker and small cap specialist, recently issued a research note with a 'Strong Buy' recommendation and formerly had the stock as one of its top picks for 2009. Numis, anotherhighly reputable small cap specialist and joint broker to the Company also had Aero Inventory
as a 'Buy' as recently as October 2009.
- Beware the gong!
In 2008 Aero received the "Best use of Aim" award and in June 2008 rejected an approach from Bridgepoint, the private equity group, at a price believed to be around 720p a share.
- Inventory specialists?
The interim results at 31st December 2008 revealed net assets with a value of US$311m. Non current assets were principally Goodwill and current assets totalling US$883m included stock with a value of US$752m. However, this
included the stocks sold in February 2009 to Air Canada for approximately US$100m. If this transaction had been allowed for the stock value
would have been similar to that reported at the end of the previous financial year, being US$690m.
Net bank debt at 31st December 2008 was US$467.1 million (compared to US$392.2 million at 30th June 2008). On 10th February Aero also raised approximately £11.9m, before expenses, through a placing of 4,762,680 shares at a price
of 250p per share.
The final results revealed that inventory with a 'carrying value' of US$573m had been pledged as security for the Group's loan facilties. The Company had a committed US$500 million facility in place which does not expire until February 2013.
It is easy to identify that the clear risk of the business centred around the value of 'inventory' which the Group managed on behalf of some of
the world's largest airlines.
- Blue chip advisers will attract scrutiny
Prospective and actual shareholders could also be reassured by the quality of the Group's advisers and shareholder register. JP Morgan Cazenove was the Group's nomad and joint broker with Numis Securities. These advisers were formerly happy to provide their email addresses in the RNS announcements
they were absent from the more recent announcements!
Group auditors are Deloittes who were paid aggregate fees of US$800,000 in 2008. It would be interesting to discover how they performed their stock check!
Shareholders include hedge fund group Lansdowne Partners (c16%), HSBC (c5%),
Gartmore (c5%) and AXA Framlington (c3.75%).
- Going concern
We also learn that Aero Inventory only recently took out a 10 year lease on a 72,089 sq ft warehouse at a rent of £6.25/sq ft.
- Blame it on the bankers again!
Rupert Lewin, Group Chief Executive, a former corporate broker for merchant bank Robert Fleming, was paid US$1.62m in 2008 and US$1.1m in 2007. Hugh Bevan, Finance Director and another former Flemings man received US$625,000 in 2008 and US$713,000 in 2007. The Executive Directors in aggregate received US$5.3m in 2008 and US$3.6m in 2007. Group pre-tax profit was US$73m in 2008.
The focus of blame will clearly be on the Directors but the Group's auditors and nomad will surely be under scrutiny.
With Ernst &Young having been drafted in to conduct a forensic review and KPMG now appointed administrators shareholders should also be concerned that professional fees will now absorb yet more of 'their' cash|
|john219: I have just seen all this hitting the news. I know for a fact that a few years ago there was a stunning lack of data integrity in their stock management system used at the time (don't know if it is still used now - it was "Parts Central" - they were planning to move to using SAP, but don't know where they got to on that). One key problem which led to data integrity issues lay with the interfaces feeding the SM system. Data update errors were never rectified (well some were but the volume of errors was so huge there was not the time or manpower to do the fixing.) Someone at AI at the time told me if the stock market was aware of the data integrity issues it would affect the share price. Do they have the same problem today? To be fair I believe they were going to try to sort out the data integrity issues, but I don't know if they ever did.
Colin Trupp, I believe, led the development of Parts Central. He was certainly instrumental in its development.|
It beggers belief that they could turn down that offer unless as you say they were aware what due dilly would uncover.
Further beggers belief that the institutions full of professionals underlined the share price at £ 2.50
Makes me feel a bit better about being sucked in. Still up to a week ago, they did look way to cheap on published info so maybe it wasn't a well kept secret.|
|mdj8: To me,this seems like an honest error/oversight. At least Ernst and Young are researching into the problem, so at some point it will be quantified. Worst case I suppose is that the whole ACTS deal was a screw up which says max downside is $100- mill US in "lost" stock. The company is still viable even with such a scenario, so my expectation is that the share price will take a big hit, but that AI. will continue trading and hopefully with a few more contracts we will have a healthy share-price again.
The key is that I see no reason for companies not to do business with Aero in the future - this is an internal prob, it's not linked to their performance in fulfilling their contractual obligations for their clients.
The other thing is where is the stock? It could be an accounting error or that it wasn't delivered by ACTS - we dont know.
Anyway, fingers crossed.|
|jr hartley: Agree this is shambolic and I'm as worried as anyone on here who has alot of cash tied up in AI. shares. However, the main reason I invested in this share was the safety margin (IMO) provided by the difference between the tangible asset value (based on inventory being correctly valued!)and the share price. The reasoning being that if worse case scenario happened and AI. go bust then the value of the parts (if correct and realisable)when sold on would eventually cover what was outstanding to the banks and the shareholders. My hope is that worse case we will take a short term hit from an inventory revaluation and then move on providing they have demonstrated positive cashflow generation during the last year.
If we focus on what we've been told ie potential stock valuation issue, but no impact on CASHFLOW and crunch a few numbers..........
1) Assuming stock valuation is reduced by $30m.....tangible asset value based on Dec 08 accounts and $1.60/£1 and 52m shares approx is reduced from £3.10 to £2.75 per share.
2) Assuming stock valuation is reduced by $50m..... tangible asset value based on Dec 08 accounts and $1.60/£1 and 52m shares approx is reduced from £3.10 to £2.51 per share.
Considering the price at suspension was £2.64, a $50m revaluation giving a real asset value of £2.51 per share is not too bad. You might consider me insane for saying this, but providing the cashflow figures are strong when the results are eventually released, and assuming the share price plunges when trading recommences, I'll be tempted to add significantly. Alot of assumptions but just trying to look at the facts based on what we know and have been told today.|
|dibbs: Compared with many battered stocks AI has not in my opinion staged a very big recovery thus far. Most stocks have been carried upwards by the recent strength in the markets but in order to make a significant break through we really do need reasonable results to give this share price a good kick.
I'm no expert chartist but I'd think that a break through around 300p would see a steep rise, mirroring the savage fall of late September/ October 2008 which would see a share price of 400-450p before too long.
|mdj8: I think we're all in agreement here....
Aero Inventory is being used as an example of why……230;
'The market is as cheap as in 1953'
When the market turns it will be one of the most stunning bull markets any of us has experienced.
By James Bartholomew
Last Updated: 3:03PM GMT 19 Mar 2009
These are truly extraordinary times. Share prices of many smaller companies are almost unbelievably low. I was once told by an editor never to use the word "cheap" and he had good reason. You can say something looks "cheap" today and look pretty silly when it is even cheaper tomorrow. But really these times make it very difficult not to employ the "c" word.
There is no pleasing the market. On Monday, two of the companies in which I have serious stakes – worth more than 7pc of my portfolio – announced results. Aero Inventory, which manages aircraft parts for airlines, produced excellent profits – up by nearly half. How did the shares respond? They fell 17pc.
Yes, there were one or two reasons for the fall. Above the rest, the company said it had not been able to agree terms for a new contract with a major airline. That was a disappointment. But the irony is in the past six months or so, I have been told that the share price has been weak because of fear of overexpansion leading to a need for capital-raising. So, one minute the company is distrusted because it is expanding too fast, the next it is spurned for not expanding quickly enough. Damned if you do, damned if you don't.
The other company that reported on Monday is safe and exciting. Healthcare Locums, an agency for health and social workers, still slumped 6pc on Tuesday morning.
Sometimes the market seems moody. Shares can rise or fall 20pc with no apparent cause. I wonder if it can be occasionally a single, relatively modest buyer or seller who moves the market a great deal because the turnover in shares has fallen so low. Some of my shares, REA Holdings for example, can easily go through a day without a share being bought or sold. I would also guess that sometimes the buying and selling is just because some people – or funds – need cash.
In theory, this should provide an ideal hunting ground for those seeking good long-term investments. Aero Inventory is forecast by Numis Securities to make earnings per share this year of 83p. The share price earlier this week was 168p. So the share price was only a fraction over two times forecast earnings. Normally my rule of thumb is to say that anything with an earnings multiple of less than 10 is lowly rated. A good company on a multiple of five I would normally regard as extremely good value. But a multiple of two? That is astonishing.
No, gritting my teeth, I won't use the "c" word. But what can you say? It is hard to do justice to how astonishing this kind of valuation is. And it is not as though the company is in any discernible danger. Yes, it is geared but it is profitable and has banking facilities right the way through to 2013. Aero Inventory is an extreme example of the market as a whole.
On the bad side, the chart of the FTSE 100, like the chart of Aero, offers no encouragement. There has been no break in the downward trend. On the other, by any traditional measure, shares are excellent value. The redemption yield on 15-year government stock is currently 3.6pc, whereas the dividend yield on shares is 5.3pc.
Normally, it is the other way around: the dividend yield is lower than the return on government stock for the simple reason that, over time, dividends have historically risen whereas the yield on a government stock does not. True, some companies are reducing or cutting their dividends but this is at the margin. On this method of valuation, as far as I can discover, shares have not been such good value compared to government stock since about 1953.
My view is simple: shares are extremely good value, but it is impossible to know when the turn will come. When it does arrive, from this low valuation, it will be one of the most stunning bull markets any of us has experienced.|
|nirvs: buzzee - hopefully the AI. share price moves as much as TAN did from 20p...good ole Stan Weinstein comes thru once again ;>)|
Aero Inventory share price data is direct from the London Stock Exchange