Swallowfield Share Discussion Threads

[countryman5] 23/3/2013 09:05

Hi Baner / Peter.
We are still awaiting your thoughts on the dismissal of the CEO of Pittards following their recent profits warning. In your posting here (454) you stated that 'It is the Board of Directors who appoint or dismiss the CEO'. That is as it should be, but what was the reality with the removal of the SWL CEO? Did PG and WS threaten the Board with a futher EGM to remove the CEO if they did not do their dirty work voluntarily? The RNS of February 26th. gave the game away. It stated 'Following discussions with major shareholders it has been mutually agreed that Ian Mackinnon will step down as Chief Executive'
Question for Baner / Peter. Do you have the slightest knowlege who those 'Major shareholders were'? Could they possibly have been PG and WS?

[markt] 20/3/2013 14:58

btw
at another company where PG is large shareholder, Coral, CRU I think, the PG selected MD has done a good job and made big improvements....to the accounts, turnover, profitability, future prospects, and worker job security etc etc

Joe Grimmond I think

and C21 has also done well (where PG is I think a large shareholder)
(while various cos. where PG is invested have not seen the share price perform so far, but improving turnover and profitability takes time, not easy....)

from his contacts and existing directors that PG uses, maybe he has a suitable MD available, or maybe even the SWL chairman (who is a PG man/representative I believe) since he already has knowledge inside the bod & company

[markt] 19/3/2013 12:37

Just looked at performance over last 13 years under the MD who has resigned.

Turnover up from 40M to 50M, which is probably -ve if take into account inflation, to equal inflation it needs to be around 60M I think, just to be the same.

Divis of around 54p since 2000 !!
and steady increase in divi size over last 13 years to around 6p in last few years (attracting some yield investors)

and overseas sales have grown well recently, a success; perhaps partly/largely due to the addition of some new dirs. such as the French chap....and the strategy to spend money on overseas sales presence.....but the strategy was perhaps pushed on the board from the 2 big shareholders. coupled with director changes, rather than being self produced from the old bod.

Nett debt, similar. (which looks bad imo since profits from last 5-10 years should have reduced debt to zero or +ve cash imo)
Profitability. If take the trend of the last 5 years it is/was clearly upwards
but recent profit warning has stopped that trend.
And large amount of capex over last 3 years.

So, bit of a mixed bag really. While noting it is a tough sector. The small increase in turnover is a large -ve factor imo, infers imo that the business has not gone anywhere....(spent a lot on new machinery....and a factor overseas...and inflation adds up..and over 13 years the turnover doesnt appear to have grown...)

While the large increase in divi was a good perf. I guess.
That nett debt is 5M, while real turnover has fallen, a large -ve perf. indicator imo.
The Chinese and Czech ventures/strategy dont seem to have produced much, not from what I can see.
Personally, I think that a new MD is a +ve move. After 13 years I dont think the improvement in co. perf. or development of strategy was big enough to justify to keep going with more of the same, while noting that not easy in a tough sector.
----

One problem of course for one of the 2 big shareholders is its high running cost relative to its income ......meaning that the divi from SWL gets more than consumed by running costs....hence pushing them to "require" capital growth in the share price ....otherwise their shareholders will see a falling NAV and not be happy, hence pushing that bod to push SWL bod to make changes.
(they could reduce running costs by reducing benefits/payments to the Marshalls...but of course they would not want to do that !)

[countryman5] 19/3/2013 07:32

Hi Peter
You sound like a fun sort of guy.You forgot to give us your thoughts on Pittards and whether the CEO should have been fired following the recent profits warning. Pittards, like Swallowfield, issued a recent profits warning due to circumstances beyond the company's control.

[countryman5] 18/3/2013 19:12

Hi Baner.
How is the weather in Sweden?
Do you think that Pittards should have removed its CEO after the recent profits warning?

[baner] 17/3/2013 10:58

countryman5

i believe you need to do your homework again: for a "concert party" to be established there need to be an intention to take (majority) control of the board, established. where do you see that happening in SWL ? are you suggesting mr Hagen and the other NED´s are running the errands of PG or WS respectively?

there has in the past been some rather ridiculous efforts to make the Take Over Panel confirm a "concert party" being in place - orchestrated by one of the larger shareholders, who seems keen to thereby arrange for an exit of his sour investment in SWL shares, and very much involving McKinnon who has of course been keen to "paralyse" his major shareholders, in order to protect his underperforming fiefdom. a very stupid and irresponsible move by both these "gentlemen" that caused the company significant costs and damages.

further, it is the board of directors - none being a PG or WS man/woman who appoint or dismiss the CEO - this is rather fundamental.

McKinnon has been in charge of the company for many years now and his performance has not been good. have you not considered the possibility that his ousting relate to the fact that the company has recently presented appalling results - a performance in very stark contrast with the "Objectives" that McKinnon has presented his shareholders in recent years?

is it not quite logical and sound that when a CEO fail to deliver - and in fact bring "his" company into a loss making situation, the board take action to replace such a non-performer? that is in fact a board´s duty!

you say that the "company has a good management team......" - so results obviously do not count in your world? it would be interesting to know what benchmarks you measure the skills of management then!?

[markt] 14/3/2013 19:49

BTW
interesting imo to see that there are some buyers, so close after the profit warning....so some people think there is value to be had....

and that Inv. Chron. seem to follow it so closely...

(interesting the large change in news from the company....6-12 months ago the news was of higher profitability in the future...and then 'whoops, profit is actually a loss'
be interesting to see what the next company news reveals...)
----

An interesting contrast imo with SWL is MOS, where the current turnover per worker is around 1M pounds......the wonders of the technology sector, no factory, no raw material costs....
around 50 workers and turnover of just over 50M.
whereas SWL has I think around 1k workers producing yearly sales of around 50M

[countryman5] 08/3/2013 20:07

Comment in Investors Chronicle.'They're at it again! Two years ago we reported how 'ageing viking raider Peter Gyllenhammar and fairly youthful South African magnate David Marshall' had put forward a resolution to evict chairperson Shena Winning. Now controlling a combined stake of 46 per cent, the duo have now dismissed Swallowfield's chief executive, Ian Mackinnon after 13 years as an employee.
This concert party of the two largest shareholders do the hiring and firing, meaning that the Chairman and other NEDs are irrelevant. These shareholders live abroad and probably know very little about how contract filling works. Until one of them reduces their holding and breaks the concert party the share price is going to stay below the 140p that David marshall paid for his last purchase. It was this last purchase that gave the two largest shareholders their control. The company has a good management team who are constantly looking over their shoulders to see where the bullets are coming from. There are some interesting irons in the fire but this is not an easy business. They are certainly growing their global footprint and gradually moving away from low margin work.
At some stage these two shareholders have got to face up to the fact that private investors are not going to buy into this one if their votes are irrelevant.

[topvest] 01/3/2013 19:51

markt - totally agree with your comments. They have lost nearly 50% of their top 2 customers revenue in the same 6m period, and try to spin that it is reducing the risk profile. They weren't able to diversify the customer base before, but now expect to do it immediately which is just rubbish. Glad I sold nearly all of mine, but will watch to see if they steady the ship. I do think they should have cut the dividend totally really on these results as they can't afford it!

[nehpets81] 01/3/2013 16:12

I am so pleased to be out of this share. I suspect the share price is holding up so well because of the holding by the two largest shareholders...

[markt] 01/3/2013 14:40

Does it say that ?

...there is a risk imo that H2 may not be too pretty as well....if so, the debt level perhaps goes up again and perhaps becomes worrying....

not pretty

one thing that is quite dissapointing imo is this perf. after the large investment in last 3 years in new production equipment ...which should have reduced production costs...and hence increased the margins and/or increased competitivity and hence sales.....whereas the opposite has happened...but noting that it is a competitive sector, with low margins, the competition will also have been investing in reducing their production costs...

perhaps puts into question the strategy of entities in UK, Czech republic and China. ...or maybe it was/is a good strategy and results would have been worse without it...

"our top 2 customers accounted for 47% of revenue. This year, the same 2 customers account for 24% of revenue .....will continue to improve our risk profile" he he !...spin city (too much, taking the mickey)
maybe the company should reduce its turnover from big customers even more !...and reduce its customer risk profile even more !!

---
I see that with bad co. perf. in one 6 month period at SWL and the MD gets the boot as a result, pushed by "WSE" and P. Gyllenhammer .....whereas at LFI/WSE bad co. perf. over decades and no one gets the boot. Ironic no !?

[investopia] 28/2/2013 18:22

Bit that concerns me is that they expect more customers to walk. Why??

[markt] 28/2/2013 18:11

you also saw thru the spin.....yes, looks like the 2 biggest customers have really cut their orders.....
but that may not be a fault of SWL

UK sales from 25M to 17M in 1 year, ouch !....a big fall

I guess they were told to pay the divi !.....looks like the 2 biggest shareholders are now directing decisions...and after such poor results, thats no surprise

the increase in debt wont have gone down well with the 2 biggest shareholders...
have to be careful with the debt....if cap. value halves then it will be the same as the debt.....and wont make it any easier to get the bank to increase the debt, if needed

[topvest] 28/2/2013 09:02

These results are truly awful. I am surprised that they have held the dividend. I suspect there will probably be no final dividend. Still amazed the share price has held up so well as this shocking state of affairs was well flagged. Looks like something permanent has happened on the sales with the top 2 customers and this will take time to replace.

[markt] 21/2/2013 14:28

Countryman
what's your view on the share price ?
...and prospects for SWL
is there some good news/reason that is holding up the share price ?! (maybe the NAV ?)

[topvest] 10/2/2013 17:24

I think it looks quite grim short term. No idea why the share price has stayed up. Will be interesting to see the interim results and outlook at that stage.

[markt] 10/2/2013 16:42

Topvest
what's your view on SWL now ?

last news wasnt too good, but the share price has managed to hold up quite well, news had hardly any effect...

[topvest] 08/1/2013 19:16

Very risky to buy after the first profit warning here in my view. I sold most of mine, and watching to see how bad the interims will be. Amazed the share price has got back to where it was, given the size of the warning and withdrawn profit guidance for this year!

[markt] 08/1/2013 16:05

very illiquid at the moment by the looks of it...4k shares bt. and prices moves up...

4k shares buy is almost sizeable for SWL...someone is keen...
the MM surely taking the mickey....103p if you want to sell....but he sold 4k shares at 120p ....that spread is nuts imo

and maybe someone tomorrow will sell 4k shares...and only be given 90p !, crazy world....

one day there will exist electronic MMs imo...I hope so
---

interesting imo that the 100p price has found support 4 times over a longish period....

[countryman5] 08/1/2013 08:47

Somebody paid 120. There is a dynamic team working here, highly regarded within the industry. Some disappointing first half figures which have been flagged up but lots of potential to follow.

[markt] 27/11/2012 18:27

Topvest
past accounts I think mentioned increase in profitability.....perhaps there is some margin increase in the pipeline...perhaps that is helping the share price ?
or maybe someone expects good news from division in Asia....China must need/want a lot of cosmetics !

or maybe as you perhaps hint, WSE will buy shares....perhaps to then force DM on to the bod....