Carclo Share Discussion Threads

[andrewbaker] 20/1/2017 15:16

Yep, stale holders and short-term profit taking right now. When that's done, which won't take long, the northwards trajectory will be back in place. Definitely one for the longer term tech investor, such as myself.

[longshanks] 20/1/2017 12:12

Agree Riv - this just doesn't have the liquidity one would expect of a main listed company and hence the MM's can play these games.

I am expecting some decent figures to come with the TU. Other investments I have with large dollar income are showing strong growth because of the Brexit effect and I expect the same with CAR.

With Trumponomics now in play for the next four years (and possibly eight), I am also anticipating a steady creep of inflation back into our lives and a return to more normal interest rates that will benefit pension schemes (but not necessarily pensioners).

It could get ugly if protectionism takes full control of the global economy, but I think sense will prevail and we will end up with something as to be yet defined - let's call it "protectionism lite" for now.

Either way I see CAR being a strong beneficiary.

[rivaldo] 20/1/2017 10:08

Looks like an MM shakeout today on a quiet Friday with small volumes after a net of only 14k sells, perhaps to get hold of some stock before the next trading statement in the next 2-3 weeks (last year's was on 4th February).

Worth remembering the Chairman's summary in the H1 results - CAR are now almost on a single-figure P/E for the coming year with an encouragingly good value PEG of 0.76:

""The Group has enjoyed a strong first half trading performance with all divisions performing well and showing solid progress over the comparative period last year.

In particular, our strategy to invest in increased capacity in our Technical Plastics division is continuing to facilitate strong growth in revenues which is resulting in good margin appreciation. The exciting acquisition of Precision Tool & Die provides further capabilities and opportunities for this division and its customer base has been enthusiastic about the combination of our businesses leading to an enhanced offering.

In LED Technologies, our Wipac luxury and supercar lighting business has continued to perform well, benefiting from good product demand and its continuing ability to win new customer programmes and it is expected to deliver significant growth into the future.

The board confirms that the Group is trading in line with its expectations for the full year and expects the Group to have a stronger second half of the financial year, benefiting additionally from the anticipated contribution from the Precision Tool & Die acquisition."

[abergele] 19/1/2017 22:10

Andrew,
Yes I agree,
just a pause for breath at the moment as a nice climb up to the top we've had of late, straight lines can crash,so a small pull back is healthy,as long as we don't fall away.. to far..

[gleach23] 12/1/2017 21:33

A good thing about CAR in recent years is that it has continued to release a Q3 trading update when most companies choose the option not to. Dates for this update have been as follows so I'd expect an update w/c 6th Feb although it could even be the week before -

4/2/16
5/2/15
22/1/14 (brought forward?)
7/2/13

[abergele] 12/1/2017 21:02

1gw,
A fine effort to reavaluate the situation,many thanks a first class effort..

[1gw] 12/1/2017 14:31

Carclo pensions deficit and dividends.

Just to revisit my analysis from post 283 in light of Boadicea's comment about Group vs Company balance sheet.

In post 283 I said
"Retained earnings at end-September were £2.8m and a 2p dividend (for example) costs about £1.5m (73m shares). So given earnings-positive underlying business I would have thought they might already be confident enough to pay a dividend if discount rates stay at this level."

The £2.8m retained earnings figure was from the consolidated balance sheet (the only one given in the interims).

If I go back to the annual report the equivalent figure at end-March 2016 was £23.5m, while on the Company balance sheet the "Profit and loss account" showed only £7.9m, a difference of £15.6m.

If I assume that company and consolidated balance sheet suffered equally in the first half of this financial year then +£2.8m retained earnings on the consolidated bs would suggest -£12.8m on the company balance sheet at end-September (i.e. the £2.8m on the consolidated bs at end-September less the £15.6m difference between balance sheets at end-March).

So my estimate of about £10m back on retained earnings due to the move in corporate bond yields, while putting the consolidated bs "retained earnings" nicely positive would still leave the company bs negative on the "P&L account" line - by about £2.8m.

Which would mean, on those estimates, they would still need a bit more in the current quarter to be able to restart dividends. It could be that earnings from the underlying business are enough to take them over the line though given they did £3.7m profit after tax on the consolidated income statement in 1H. And that's if they can't find a way to move some of the "additional" retained earnings on the consolidated bs on to the company bs.

So perhaps the situation is not quite as positive for renewed dividends as my earlier post suggested, but it still looks credible to me that they could just about be in a position to restart dividends without any further improvement in corporate bond yields from the 31st December position.

As before - errors excepted and no advice intended.

[rivaldo] 12/1/2017 12:05

GLeach, looks like you're correct - the 3k AT buy at 145p at 11.56 triggered the thread header chart to finally catch up.

EDIT - sorry, posts crossed!

[gleach23] 12/1/2017 12:03

...and there's your AT trade at 145 for your chart

[rivaldo] 12/1/2017 11:22

Now up 5p to 144p mid-price...

[abergele] 12/1/2017 11:11

Chart still incorrect again,up 3p and not reflecting in the charts here..
perhaps problems behind the scenes...but we are looking strong here all the same..

edit,
up 5p now,,onwards and upwards,value will owt..imho

[gleach23] 12/1/2017 11:01

rivaldo...i don't think it's the mid price that's charted but rather the current price shown in the monitor? if an AT trade goes through at 144 on the offer then the current price would move to 144 and that would be reflected on the chart. it's just the current price that hasn't moved and is stuck on 139

i'm not 100% on it but that's how i've always assumed it works...anyway nice to be going up

[rivaldo] 12/1/2017 10:42

The current mid-price is 142.38p, up 3.375p today following buying at 142.5p - once again the thread header chart is completely incorrect.

[wageslave] 11/1/2017 19:53

Thanks Boda.

[boadicea] 11/1/2017 18:47

Iirc, the reason for the abandonment of the declared dividend was a legal restriction on the company paying from capital as opposed to accumulated income. The 'Group' had accumulated income in the consolidated accounts but the company, which pays the dividend, did not.
An increase in the Company's distributable reserves can (from memory) arguably be accomplished by a transfer of funds to the holding company from the Group account even if the technical pension situation does not materially improve. The question rather is whether, in the present or likely future circumstances, that would be a wise move and there are arguments for either view.
On the pro payment side, there is no pressing cash situation (afaik) and there are institutional investability advantages to paying at least a nominal dividend. Against is the potential increased operational flexibility of retaining a greater cash cushion for unexpected events.

From the original RNS, we do have a clear statement of the board's intention -
"Whilst the Board is disappointed that the final dividend is now unlikely to be capable of being paid due to these legal and accounting constraints, it intends to resume the Company's progressive dividend policy once legal and accounting circumstances allow."

[tjb23] 11/1/2017 16:56

Nice to see this breaking through the 137p resistance level

[wageslave] 11/1/2017 10:17

A reinstatement of the dividend would be the catalyst for more institutional buying - and we all know what that means.

[rivaldo] 11/1/2017 09:48

Looks encouraging online. At present I can only buy a maximum 12k at 141.4p, whilst I can sell 25k at 138.13p (the share price is nicely up today to around 139p despite the totally incorrect chart in the thread header).

I too am not particularly bothered about the dividend - it's the high growth and potential in the core medical and LED divisions which excite me. Especially on a P/E of only 10.

But I do believe that, especially if yields continue to solidify before the year end, there may well be a reinstatement of the year end dividend in the 31/3 results, even if it's a smaller amount simply as a statement of intent.

[illiswilgig] 11/1/2017 09:23

catscats

'patience required methinks...'

Oh yes, I can see you are a seasoned CAR investor.

I suppose that the restarting of dividend payments could help to give the shareprice a legup but I am more concerned to see the level of debt fall and cashflow improve before the board feel pressured into paying out cash just to send a message.

As a long term investor I find dividends and steady shareprice rises to be a pleasant accompaniment on the journey - but my main reason for remaining invested in CAR is growth in the relatively short term so I'm not that concerned about the divi particularly if it conflicts with investing for growth.

I have always felt that the pension deficit was a very useful excuse and sent a more acceptable message to investors than 'sorry we need the cash right now'

Sadly (for my regular income) I'd expect a couple of years before the divi returns and that debt will be falling nicely before that point.

More patience required :-)

cheers

[rivaldo] 11/1/2017 07:23

1gw, thanks for the analysis and good to see you buying more CAR.

Good vibes this morning from CAR's VR315 partner Vectura:



"An important part of our news flow for 2017 remains VR315, our generic Advair® Diskus® programme partnered with Hikma. This programme remains under FDA regulatory review and we continue to work closely with our partner through this process. VR315 has a GDUFA goal date of 10 May 2017 and is one of only two generic Advair® Diskus® ANDAs publicly filed and accepted."

[catscats] 10/1/2017 15:06

1gw, you are right that the deficit is likely to nominally go down due to a lower discount rate, but whether that will induce the board to pay a dividend is questionnable. As you say the deficit can easily get worse again (quickly)....the board would not want to be caught twice promising divs that they then find they can't afford. But just maybe the strength of the business will give them confidence and my caution will turn out to be wrong.

[1gw] 10/1/2017 14:28

catscats, I think the "write back" as far as discount rate is concerned should be fairly automatic at the end of the year. They will get their updated discount rate by taking their usual benchmark I would think and apply it and other updated assumptions (inflation expectations, mortality assumptions) to recalculate the liability, running key assumptions past the auditors. Having done a similar exercise to update the value of the fund assets they will calculate the updated deficit and adjust the accounts accordingly. There could be some discussion in the light of what happened with the dividend this year as to whether this slavish following of corporate bond yields is really the best way of setting the discount rate given the (expected to be temporary) distortions of QE - but I think that would help not hurt the situation.

Whether a reduction in liability is sufficient to get the share price up is another question - and in itself I would tend to agree that it won't be (because we all know that in future the deficit could move the other way again). But I do think the announcement of a resumption in the dividend could have an immediate impact on the share price, particularly if it was accompanied by a statement that the board thought that the health of the business meant they would now be able to continue with a progressive dividend policy for the foreseeable future.

[catscats] 10/1/2017 13:49

have been invested here (too) long time. hoping for more positive news at some stage, and maybe that will come from resumption of dividends. But in my (limited) experience write back on pension fund liabilities are like petrol pump prices - very quick to put up and slow to reduce. So i am not relying on that to get the price up. Business now seems stable with reaasonable prospects but margins are not stellar and debt is still IMO too high, so i doubt that the market will give this more than 10x p/e. ho hum - patience required methinks...