Cabot Energy Share Discussion Threads

[hermod von asgard] 11/8/2004 23:51

carbo - declining turnover, optimism for the future ?

sector - abrasives manufacture - contracting

future dependent on base material technologies and/or sophisticated and establshed channnels of distribution.

does carbo have access to technology, as it has little of its own ? - alliance with 3M - very unlikely, or saint gobain - almost as unlikely

so, channels of distribution - demise of Anglo abrasives (local sales organisation)and weak direct sales organisation would not seem to be the most solid of platforms to build a recovery.

is the move towards closing of manufacture in uk may be more to do with the comparative cost of closure vis a vis germany, than efficiency ?

should we fear that we are looking at a company moving towards relegation to division 2, no longer manufacturing and developing product, but increasingly reliant on factoring the materials of BMA, and others who themselves only factor(with some conversion)

question ? the connection and role of the vehicle of Ekamant of Sweden

H v A

[25october1969] 11/8/2004 16:09

Mike

By all means forward to him, I hope he is not in the next office to me!

Look forward to hearing his thoughts

Roy

[mdchand] 11/8/2004 15:48

Roy

Would you mind if I forwarded these ideas to a hedge fund manager I know? He has a wonderful eye for deep value plays and I would love to bounce these ideas of him to see if he can add anything to your thoughts.

In the meantime, will have a look myself at them.

cheers - Mike

[mdchand] 11/8/2004 13:59

Roy

Once again, many thanks for your candid reply. I look forward to reading your replies as and when you deem fit to post, but feel happier knowing that our interests in this company are aligned, albiet based on slightly different entry levels.

If I may, are there any other shares around that 'fit' your tightly defined criteria and might be worth a closer look?

regards - mike

[25october1969] 11/8/2004 11:09

I tend to specialise in "recovery" situations where certain criteria are fullfilled. One of the main criteria I set is a management who know the business inside out and a Board who have an interest in the shares.

I became aware of Carbo by monitoring the news releases and then phoned the Finance Director for a discussion, then a meeting.

My initial investment was not to be so large but the more I saw of the company the more impressed I was. The management and the Board have years of experience in the industry and were putting their money behind the company, Lord Hodgson was very enthusiastic when i met him as was Lars Nyquvist with whom I was very impressed for his industry knowledge and vision for the way forward.

Once I see something I like I tend to stick with it rather than aim for a diversified portfolio. Not very sensible when it goes wrong but gives greater rewards if the judgement proves to be correct.

regards

Roy

[mdchand] 11/8/2004 10:34

Roy

I (and Im sure others who follow this share closely) very much appreciate your thoughts on this share - many thanks for answering my simplistic questions.

Im curious though, a 250k stake in such a small and illiquid company is a reasonably punchy position regardless of one's wealth. Without elaborating about any other investments you may have, can I ask how you came about investing in Carbo - compared to asset classes or companies?

With kindest regards - Michael

[25october1969] 10/8/2004 23:25

Hi Michael

I am just back off holiday so I have not yet had a chance to go through the latest Accounts in any great detail so the answers are slightly off the top of my head.

a) The main reason as I understand it for the reduction in turnover was the lack of working capital. They were not allowed usual credit terms by suppliers so lacked the raw materials to meet all orders. With the cash from the equity issue this problem will disappear and I would expect turnover to increase - my main interest however is always in margins and I would hope these will be maintained or improved

b) The Board talked to me at length about how costs would be reduced and they seem to be delivering on the plans they mentioned. For example employees have been reduced from 995 to 692, cessation of bonded production in Manchester via transfer to Germany. I believe more reorganisation type savings have still to be generated

c)Easier to talk in terms of half years - they have indicated that 6 months to 31.7 not good though I think last 3 months not bad. next 6 months I would hope for improvement but remember they do not get equity cash till end August so I would aim for breakeven but still generating cash. I think the key 6 months are to 31.7.05 there can be no excuses if they do not deliver a profit with a good order book and the means to deliver to customers at good margins.

The other factor is restructuring of the abrasives industry and who knows what mergers takeovers could happen!

d) No fixed price in mind at the moment, the expectation is that I would like to think that a post tax profit of say £2m can be earned for year ended 31.1.06 applying a pe of say 10 should give market cap of £20m with (I think) 59.6m shares in issue that would give share price of 33.5p. Would not necessary see this as a selling point but would certainly have long chat with Board to see how they see company moving forward after that.

I clearly have a vested interest so my views are obviously tainted and this is a high risk share, I cannot see there being fireworks with the share price but would hope for steady progress

regards

Roy

[mdchand] 10/8/2004 15:11

Roy

Can you advise to us smaller shareholders your expectations for this company in terms of:-

a) regaining lost market share
b) stripping out excess costs
c) where you expect the business to be after 12 months
d) what your own exit price expectations are and over what period you expect them to be achieved? (I appreciate this last point may be difficult to answer!)

with kind regards - Michael

[25october1969] 10/8/2004 13:45

For those interested I particpated in the placing, taking 2.5m shares, after a number of meetings with members of the board.

I was very impressed with their vision for the company and their committment to delivering value. They seem to have on board a number of individuals who have specialised knowledge of the industry and the restructuring required to succeed - clearly I believe they will succeed.

Roy Mitchell

[kingcnut] 06/8/2004 10:37

seems that way but you never know. with all that turnover it wont take much more cutting to find a profit and market cap looks good so i will be keeping an eye on them

[davidlloyd] 05/8/2004 12:42

So hold off for the mo.....

[kingcnut] 04/8/2004 23:37

finals have just come out next set is around october i think which will be equally as bad then i will have another look

[davidlloyd] 04/8/2004 13:16

King,

When are results due? Looks quite interesting ....

DL

[kingcnut] 02/8/2004 21:58

results will knock the price down again so post results is the time to invest imho

[mdchand] 02/8/2004 14:22

lol perhaps terry ramsden has invested.......seriously though, just some bottom fishing going on me thinks, now that finances have been secured. raising equity at 10p was quite an achievement and that in itself might be underpinning its price right now.

[esrimeur] 02/8/2004 13:07

#3 on %age gainers at the mo. Surely a first?

[samuel11] 30/7/2004 23:54

Are there any left - I ask myself?

[esrimeur] 30/7/2004 21:54

I am pleased to have joined the placing.

At 35p, I may exit.

And thank you, Ian for the updates.

[ianproud] 30/7/2004 16:40

Stock Exchange announcement
Released 15:28 30 Jul 04
30 July, 2004

CARBO PLC (“the Company”)

The Company is pleased to announce the appointment of W.H. Ireland Limited as Nominated Adviser with effect from 31 July 2004.

For further information please contact:-

Lars Nyqvist, Chief Executive CARBO PLC Tel: [phone]

or
David W. Youngman, Deputy Chief Executive W.H. IRELAND LIMITED Tel: [phone]



END

[ianproud] 30/7/2004 16:36

Stock Exchange announcement

Released 16:25 30-Jul-04

Carbo PLC Raises £3.2 Million Through Equity Placing

Carbo plc, the Manchester based industrial abrasives manufacturer and distributor, has raised £3.2 million through an equity placing. This is the final phase of its fund raising and refinancing programme started in November 2003. The funds raised will be used to complete the restructuring of the Group in Germany and the UK.

Of the £3.2 million, £1.2 million of the placing was taken up by four members of the original investor syndicate, which began the rescue of Carbo two years ago, who will also convert approximately £473,000 of debt and loan interest into equity. The new shares will be issued at 10p. per share. Meetings of the Ordinary and Preference Shareholders will be held on 27 August 2004 in order to effect the issue of the new Ordinary Shares. Following the placing and debt conversion, there will be approximately 59.6 million shares in issue.

Commenting on the success of the placing, Lord Hodgson, Carbo’s Chairman, said, “As I explained in my Chairman’s statement in the annual report and accounts, the lack of working capital has severely and adversely impacted the results for the financial year ended 31 January 2004. There will be a continuing impact on the results for the six months ending 31July 2004. However, the confidence of shareholders in the company is well illustrated by the four investors who have subscribed a further £1.2 million of equity as well as converting debt into equity. Amongst the other placees is Carlo Palu, the head of a well-regarded abrasives manufacturer, who will be invited to join the Board along with Herman Fuchs, a member of the original investor syndicate.

"The completion of this placing marks an important milestone for Carbo. With the refinancing completed providing extra working capital, the company is now well positioned to move into operating profitability.”;

Carbo plc has subsidiaries across Europe in Germany, Belgium, Norway, Italy, Portugal and France. Manufacturing units are located in Germany, Italy and the UK. Carbo supplies high quality abrasive products throughout the world under various brand names including Carborundum, Carbo-Schroeder and BMA. These products are used in over 100 countries around the world in a wide variety of industries including automotive, aerospace, metal work, furniture, cutlery, valves, power tools, hand tools and tobacco production. The Group also owns Anglo Abrasives Limited, one of the largest distributors of abrasive products in the UK, with branches located throughout the country.



For further information please contact:

Stuart Dootson, Finance Director, Carbo plc, tel [phone]

Or

David Youngman, W H Ireland, tel [phone]

Or

Ian Proud, Franklin Associates, tel [phone]

[archangel gabriel] 29/7/2004 18:21

This is what Hodgson said in February:

Commenting on the completion of the refinancing agreement, Lord Hodgson,
Chairman of Carbo plc, said, "This now completes the financing programme which
the Board started last autumn. Shareholders need to be aware that the time it
has taken to finalise this has inevitably had an adverse effect on the group's
trading performance during the second half of the financial year. However, we
are now in a position to look ahead to growth, expansion and, ultimately,
profitability. This facility means that we can now complete the rationalisation
programme, and also meet our customers' requirements more quickly and
effectively."

No hint that cash for equity was a necessity also. In fact it completed the financing programme, and of course no hint that the delays in drawing down the loan were going to roll into the next year!

There are few positives to draw from these results.

[archangel gabriel] 29/7/2004 14:30

I had got the impression (from this bb) that the equity issue was really just a formality and probably a requirement of the GMC loan. Now presented as though it was part of the financial rescue package. Looks like they are flushing money away.