Cabot Energy Share Discussion Threads

[harrogate] 26/1/2005 15:11

Used to hold this stock 5 years ago - It was a dog and it cost me a lot

Have to say having looked at it again following the above note they do seem to be making progress - I would like to look at the pension issues mentioned more closely - We all know they can be a bigger issue than any one thinks - Need to see the accounts

[jpmegias] 26/1/2005 14:40

Buy Carbo at 9.5p*
Suggests Conrad Windham of LemmingInvestor.com
Being a shareholder in Carbo (CAB: AIM) has not been a fun experience, nor has it been a profitable one. Since 2000 turnover has fallen year-on-year from 76.3 million pounds to 52.5 million pounds. Since 2000 pre-tax losses have grown from 0.47 million pounds to 6.89 million pounds. Since 2000 the number of employees has fallen from 1,158 to 686. Since 2000 Carbo has been one of the real dogs of the market, and has been valued as such. But now is exactly the time to consider buying shares in the company. However, widows and orphans would do best to steer clear for the time being.

The Business

"Pioneers in abrasive engineering", is how Carbo describes itself. The Group operates different brands that market separate abrasives equipment to meet the individual requirements of manufacturers. Carbo's products are used in over 100 countries in several different industries such as aerospace, power tools, hand tools, furniture, automotive and tobacco production. In addition the Group owns Anglo Abrasives Ltd, which is one of the leading distributors of abrasive products within the UK. The Group's brands include the following:


Dilumit Kirċher - Located in Düsseldorf, Germany, Dilumit are producers of high-quality grinding wheels. Dilumit's product range is aimed towards - although not exclusively - the metal working industry.
C.F. Schröder - Schröder supplies abrasive products in such applications as metal, glass, flooring, and wood to 29 different countries. The claim to fame for C.F. Schröder Abrasives is having discovered silicon carbide, the first synthetic abrasive product in the world.
BMA - Italian based BMA manufactures abrasive papers specialized for use with accessories, wood and auto applications. BMA stocks both jumbo rolls and flat goods in all available grades and types for calibration, sanding and finishing of raw and varnished surfaces.

DGS - DGS are described as being "specialists in vitrified bond grinding wheels and segments for precision applications". DGS products are distributed in sixteen countries.

Getting Carbo Group Back On Track

One of the key reasons for Carbo's decline in recent years has been due to a shortage of working capital, which prevented it from filling orders due to either a lack of stock or credit facilities. No bank would lend to the Group due to the dire situation. The shortage of working capital prevented the purchase of sufficient raw materials for production to be organised efficiently.

However, since the start of 2004 prospects have begun to look much brighter for the Group. In February 2004, 3.2 million pounds worth of convertible loan notes were converted into equity, which will result in an annual saving of around 220,000 pounds. Also in February an agreement was reached after several months of negotiation with GMAC Commercial Finance to provide funding of up to 9.5 million pounds, secured on the Group's fixed assets. A significant part of the tangible asset base is property; the German sites - apart from Stuttgart - are all freehold or long leasehold. In September 2004 the leasehold on the site at Stevenage, which had been unused for the past two years, was terminated through the consideration of 1.8 million shares in Carbo, and a one off cash payment of 70,000 pounds. The termination of the Stevenage lease will save the group 100,000 pounds per year in rental costs. At 31st July 2004 the balance sheet showed fixed assets of 17.061 million pounds.

Rationalisation has also been occurring in Germany, where 75 employees have been made redundant; also 33 employees in the UK have been made redundant. The estimated costs of the redundancies in Germany and the UK are estimated at 1 million pounds. At Trafford Park, Manchester the entire operation has been closed with relocation of activities to Düsseldorf. The company has moved to new smaller premises, which comprise an Anglo Abrasives distribution depot and a small plc office. The closure of the Trafford Park depot will result in savings of 600,000 pounds per year.

The final phase of the Group restructuring took place in August 2004 when the company raised 3.7 million pounds through issuing 32 million new shares, and the conversion of debt-to-equity. The refinancing ensured that over 1 million pounds could be invested in the German subsidiary, as well as providing further working capital.

Financial Insight

Interim accounts at 31st July 2004 showed long-term creditors of 19.748 million pounds. However, 16.1 million pounds of the long-term creditors is the provision for the German pension fund. The pension fund is self-funded, and is effectively a long term liability with no need for "repayment". Annual funding costs to the pension fund ensure a hit to the P&L each year; however the overall deficit should not be a concern. The accounts to 31st January 2004 showed a 500,000 pounds increased provision for the UK pension fund under FRS 17, this is unlikely to be a one off, but I do not anticipate this being a cause for concern.

Improvement In Orders

The restructuring and rationalisation has resulted in a strong improvement for the business. On 1st September 2004, CEO Lars Nyqvist reported that Carbo is "starting to see significant improvement in incoming orders. The order book is growing by the month, currently up by ?3 million on this time last year." On 27th October 2004, in the company's interims, this was reiterated, "We have a good order book. the remaining four months of the financial year will show what can be achieved."

Forecasts

It is difficult to forecast accurately the loss that Carbo will make for the year ending 31st January 2005, since the figures will be confused by the various exceptional costs and the time the management has devoted to ensuring the company survived. Turnover should be expected to be around 50 million pounds.
For the year ending 31st January 2006 I forecast turnover to rise to between 60-65 million pounds with a profit of 1.5 million pounds, which would equate to EPS of 2.44. If my forecasts are remotely accurate Carbo is currently trading on a 2006 PE of 3.9.
It is possible that the Group could make 2.5 million pounds to the year ending 31st January 2007, which would equate to 4p/share of earnings. Carbo is in the Engineering & Machinery sector, which has a sector average PE ratio of 13.2. If my figures are accurate shares in Carbo could be trading at between 20p - 30p within twelve months.

The Roy Mitchell Factor

What gives this tip extra credence is the near 8% holding of Roy Mitchell. Mitchell is a shrewd Scottish accountant who has worked in the City for the London-based hedge fund Man Group and is best known for spotting the potential of Indigo Vision. Mitchell emerged with a disclosable holding in December 2003 when Indigo shares were trading at 34p, today they trade at 103p.
Says Mitchell "My conclusion was that Carbo had been a dog, in the 'would-not-touch-with-a-bargepole' category, but I was intrigued by new management coming in and the existing shareholders being prepared to put money in." Mitchell adds that "I see Carbo as a classic recovery situation. For years the management would not bite the bullet and consequently paid the price. Now they have the money injected - from old and new investors, plus they have a relatively new management led by Lars Nyqvist, who has already turned round one abrasive company. Then there are the new directors who have extensive industry experience and all put money into the placing." Mitchell concludes by adding that he is "confident of at least a 100% upside from these levels!"

Conclusion

Carbo is still a high risk share; it is not completely out of the woods yet. For several years now this renowned abrasives company has been a dog, and continues to be viewed as such by the market. However, within the coming months we should see evidence that the turnaround is well underway, and the company is moving into profit. Furthermore it is highly encouraging to see Roy Mitchell holding 8% of the equity. I believe that there is strong upside from this level but would caution investors not to rush to buy. Investors should be aware that there is not a huge free float right now and should be aware of paying over the odds.

*Conrad holds shares in Carbo.

Key Data:

Share price: 9.5p
Stockmarket: AIM
EPIC: CAB
Market Cap: 5.84 million pounds

[timely] 26/11/2004 17:29

interested to see the test buys of £40 going through - does this mean something is going on?

[hermod von asgard] 25/11/2004 22:33

I guess the post on 23 Octobre is from Roy M

I have questions, but maybe it is good to talk direct

My email is [e-mail]

[25october1969] 23/11/2004 09:22

Probably meeting with the company quite soon, if anyone has any questions I am happy to ask them, clearly only questions that can be answered as they will not be giving me confidential info

[sugarbeast] 28/10/2004 10:29

ianproud

would you mind deleting your post please ?

we can all see it on the newswire,and it doesn't c&p very well.

[ianproud] 27/10/2004 17:35

CARBO PLC

Interim Results for the six months ended 31 July 2004

Chairman’s Statement

Dear Shareholder

I write to present the results for the six months ended on 31 July 2004. As I anticipated in my Chairman’s Statement that accompanied the annual report for the year ended 31 January 2004, these results are not good.

The continuing shortage of working capital has had twin adverse effects on our profitability. Firstly, it has not permitted the Group to fulfil its order book (the order backlog has increased from £7 million to £8 million over the six months). Second, it has required short production runs that cause unnecessary down time and waste, which inevitably eat into profit margins.

Having said that there have been several positive achievements – notably the creation of a new organisational structure for the Group and a complete re-organisation of the Coated product range. The reduction in the number of Coated products will substantially increase operational efficiency both in our manufacturing and conversion operations. All this has been achieved with virtually no loss in sales.

Equity Refinancing
Subsequent to the year-end, we completed the raising of £3.2 million of new equity which together with the conversion of certain shareholder loans, increased the equity base of the company by £3.7 million. The new funds were received in mid September and were immediately put to work. This opens the way to improved productivity and profitability in the remainder of this financial year.

Furthermore, the new cash has enabled us to move to the next and, hopefully, final stage of restructuring the group. All manufacturing in the UK will cease, as a result of which sadly it is likely that there will be 33 redundancies; the company will vacate its Trafford Park premises and move to new smaller premises comprising an Anglo distribution depot and a small plc office; 25 further redundancies will take place in Germany and an additional 10 in Italy. One off costs covering all these will be reflected in the year end results at which stage it will be possible to comment more fully on the implications for the Group in the future.

People

It has been another painful period for Carbo employees. We regret the circumstances that have forced these unpleasant actions upon us, thank all those affected for their past contribution to the group and wish them well in the future.

On a brighter note, following the completion of the placing, we have been pleased to welcome Carlo Palù, Herman Fuchs and Andrea Manganelli to the Board. All three are substantial shareholders in the group and all three have detailed knowledge of the abrasives industry. I am sure the Group will benefit from their counsel.

Once again, I put on record the Board’s thanks to all staff for their continuing hard work and devotion in difficult conditions.

Conclusion

Carbo stands now at a crossroads. We have a good order book, we have adequate funding and we have a determined management team. The remaining four months of the financial year will show what can be achieved.


The Lord Hodgson of Astley Abbotts

Chairman





CARBO PLC

Interim Results for the six months ended 31 July 2004

Consolidated Profit and Loss Account





Unaudited
Unaudited




6 months
6 months
Year



ended

31 July
ended

31 July
Ended

31 January



2004
2003
2004


Notes
£'000’s
£'000’s
£’000’s







Turnover



24,110
29,429
52,601

Costs and overheads



26,163
30,870
59,490

Operating loss



(2,053)
(1,441)
(6,889)

Interest payable and similar charges



670
547
1,026

Loss on ordinary activities before taxation



(2,723)
(1,988)
(7,915)

Taxation charge on loss from ordinary activities



61
163
92

Loss on ordinary activities after taxation



(2,784)
(2,151)
(8,007)

Dividends appropriated


2
14
14
28



Loss for the period / financial year



(2,798)


(2,165)


(8,035)




Loss per share (pence)











Basic and diluted loss per ordinary share
3
(13.1p)
(27.4p)
(101.5p)








Statement of Total Recognised Gains and Losses





Unaudited

6 months
Unaudited

6 months


Year



ended

31 July
ended

31 July
Ended

31 January



2004
2003
2004


Notes
£'000’s
£'000’s
£’000’s


Loss for the period / financial year

(2,798)
(2,165)
(8,035)


Preference dividend appropriation

14
14
28


Exchange translation differences

(42)
475
436


Total recognised gains and losses relating to the period / financial year



(2,826)


(1,676)


(7,571)









CARBO PLC

Interim Results for the six months ended 31 July 2004

Consolidated Balance Sheet





Unaudited

6 months
Unaudited

6 months


Year



ended

31 July
ended

31 July
Ended

31 January



2004
2003
2004


Notes
£'000’s
£'000’s
£’000’s

Fixed assets






Intangible assets

-
141
-


Tangible assets

17,026
19,001
18,033


Investments

35
31
36




17,061
19,173
18,069


Current assets






Stocks

6,860
10,915
8,177


Debtors

9,487
10,013
9,342


Cash at bank and in hand

205
770
207




16,552
21,698
17,726









Creditors: Amounts falling due within one year



(19,748)
(18,888)
(19,958)


Net current (liabilities)/assets



(3,196)
2,810
(2,232)


Total assets less current liabilities



13,865
21,983
15,837


Creditors: Amounts falling due after one year

Convertible debt

Other creditors


5


-

(3,096)


(3,185)

(2,243)


(3,185)

(1,984)


Provision for liabilities and charges

(16,107)
(16,357)
(16,365)




Net (liabilities) / assets



(5,338)


198


(5,697)









Capital and reserves






Called up share capital
5
21,634
20,135
20,135


Share premium account
5
1,976
290
290


Profit and loss account

(28,948)
(20,227)
(26,122)




Shareholders' (deficit) / funds



(5,338)


198


(5,697)






Reconciliation of movements in shareholders funds





Unaudited

6 months
Unaudited

6 months


Year



ended

31 July
ended

31 July
Ended

31 January



2004
2003
2004


Notes
£'000’s
£'000’s
£’000’s


Loss attributable to shareholders

(2,784)
(2,151)
(8,007)


Exchange differences

(42)
475
436


Conversion of loans to equity
5
3,185
-
-


Net addition / (reduction) in shareholders’ funds

359
(1,676)
(7,571)


Opening shareholders (deficit) / funds

(5,697)
1,874
1,874


Closing shareholders' (deficit) / funds

(5,338)
198
(5,697)




CARBO PLC

Interim Results for the six months ended 31 July 2004



Consolidated Cash Flow Statement





Unaudited

6 months
Unaudited

6 months


Year



ended

31 July
ended

31 July
Ended

31 January



2004
2003
2004


Notes
£'000’s
£'000’s
£’000’s








Net cash (outflow)/inflow from operating activities



(529)
497
2,678


Returns on investments and servicing of finance






Interest received

7
-
14


Interest paid

(676)
(416)
(1,040)




(669)
(416)
(1,026)




Corporation tax (paid) / received





(9)


46


(26)


Capital expenditure






Purchase of tangible fixed assets

(78)
(240)
(837)


Sale of tangible fixed assets and investment properties

-
-
428




(78)
(240)
(409)
















Cash (outflow) / inflow before financing

(1,285)
(113)
1,217









Financing






Loan repayment

(98)
(277)
(468)


Loans advanced

2,242
524
446


Cash inflow / (outflow) from financing

2,144
247
(22)









Increase in cash in the period / financial year

859
134
1,195












CARBO PLC

Interim Results for the six months ended 31 July 2004



Notes to the interim statement



1 Going Concern



Since 31 January 2004, the financial structure of the Carbo group has changed substantially. In February 2004, £3.2 million of Convertible Loan Notes 31 December 2007 were converted into equity, saving annual interest of approximately £220,000. In the same month the Group successfully concluded an agreement with GMAC Commercial Finance to provide working capital funding and term loans secured on fixed assets. In August 2004 the Group completed an equity share placing raising £3.2 million gross (£3.05 million net) at 10p per share. At the same time, certain shareholder loans, totalling £470,000 were converted to equity – also at 10p per share.



Into the second half of the year, the capital raised in August will be used to reduce further the Group’s operating cost base in all three of its principal locations (UK, Germany and Italy) and ease working capital constraints. As these measures take effect, the Board believes that this will result in an improvement in the results of the whole Group. The Board has prepared detailed forecasts for the Group including a profit and loss account, balance sheet and cash flow projections. Having considered the above, the board believes that it is appropriate to continue to apply the going concern concept in the preparation of this Interim Statement.



2 Dividends





6 months ended

31 July
6 months ended

31 July
Year ended

31 January



2004
2003
2004



£'000’s
£'000’s
£’000’s







Preference shares - appropriated



14
14
28


The dividend payable on the cumulative preference shares has been charged to the profit and loss account but cannot be paid until the Company has sufficient distributable reserves.

3 Loss per ordinary share

The calculation of the basic and diluted loss per ordinary share is based on the weighted average number of ordinary shares in issue of 21,411,676 and the loss after taxation and preference dividend for the period ended 31 July 2004 of £2,798,000. The corresponding loss per share calculations are based on a weighted average number of ordinary share in issue of 7,913,990.

4 Basis of preparation of Interim Statement

These 2004 interim accounts have been prepared on the basis of the accounting policies set out on pages 16 to 19 of the annual report and accounts for the year ended 31 January 2004 and have not been audited or reviewed by the company’s independent auditors. They do not constitute full accounts for the purposes of Section 240 of the Companies Act 1985. The comparative figures relating to the year ended 31 January 2004 have been extracted from the full accounts which have been delivered to the registrar and on which the auditors’ opinion was not qualified but was modified as to a fundamental uncertainty in relation to going concern. The auditors’ report did not contain a statement under Section 237(2) and (3) of the Companies Act 1985.

5 Conversion of debt to equity

On 19 February 2004, the holders of the Convertible Loan Note 31 December 2007, agreed to convert debt of £3,185,000 into equity at the rate of 21.25p of debt for each 10p ordinary Carbo PLC share. This conversion has been recognised in the Interim Financial Statements and has increased the Ordinary Share Capital by £1.5 million and Share Premium by £1.7 million.


6 Post period end events

Since the end of the half year, a number of important events have occurred. Although none of these have been reflected in the results for this period, these events will have a significant impact on the results for the second half of the year. These events along with the current estimate of their financial impact, may be summarised as follows:


UK redundancies – immediately following the successful completion of the equity placing in August 2004, the Board began the process of closing all the remaining UK based manufacturing operations. This is likely to result in 33 employees being made redundant at an estimated cost of £280,000; which will be reflected in the results for the year ended 31 January 2005.


UK site closure – as a result of the decision to close all UK based manufacturing, leaving only the Anglo Abrasives distribution business in the UK, the Board has taken the decision to vacate the Trafford Park site. The Trafford Park site was sold and leased back during summer 2002 for a minimum period of 12 years which in August 2004 had some 10 years left to run. The Group has agreed the termination of this lease at a cost of £600,000 payable over 4 years. Given that the property rental and associated local land taxes at Trafford Park cost approximately £300,000 per annum, the Board believes the exit from Trafford Park is the right commercial move for the Group. Any provision arising from this will be reflected in the year end results.


UK vacant property exit –in August 2004, the Board also took the opportunity to negotiate an exit from a property that the Group had rented on a long lease in Stevenage. This property, which was surplus to Group requirements, was costing approximately £100,000 per annum. The Board successfully negotiated a surrender for £250,000 paid partly in shares (£180,000 issued at 10p) with the balance paid in cash. This transaction too will be reflected in the year-end results.

German redundancies – as in the case of UK manufacturing operations, once the equity placing had been successfully completed, the Group began consultations to reduce the administrative and sales overhead costs in Germany. This has resulted in approximately 25 positions being identified as no longer required and consultations have begun with the German employee representatives to eliminate these roles. At this stage these negotiations have not been completed and therefore a precise estimate of the cost is not possible. The actual redundancy costs will be disclosed and recognised in full in the year-end financial statements.


Italian redundancies –the Board has critically examined the operations of the Italian business to improve its future results. This review has resulted in a plan to slim down the conversion operation in Milan with the loss of approximately 10 positions. Again, as in Germany, these reductions are still being negotiated with the Italian employee representatives and as such it is difficult to give a precise estimate of the actual costs. However, these costs also will be disclosed and recognised in full in the year-end financial statements.


The statutory accounts have been despatched to shareholders today.

Enquiries:

Lars Nyqvist

Chief Executive Carbo plc Tel: [phone]



David Youngman

Deputy Chief Executive W.H. Ireland Ltd. Tel: [phone]







Registered Office:

Lakeside

Trafford Park Road

Trafford Park

Manchester

M17 1HP



27 October 2004

[hermod von asgard] 12/10/2004 23:06

Pleased that the BB has come to life again
As a smaller investor, I perhaps have an exaggerated concern for the numbers.

Can anyone tell me how the destruction of the profitable UK operation - both manufacturing and distribution, with cost savings which make little impact on the annual loss, and no announcement as to savings in Germany where losses are apparently greatest, is a recipe for the return to profit.

The management expectation appears to be that all ills will be resolved from turnover - it seems to me that a huge and immediate rise is the straw that is being clung to.

The directors now appear to comprise previously competitor individuals - I wonder how they look at Carbo's sizeable turnover - opportunity ?

[25october1969] 12/10/2004 16:34

Hi Dell

I was trying to find the announcement you mention as I recall seeing it previously but cannot find it now.

I think the point to bear in mind is that the company came as close as is possible to going bankrupt and it is the management who have kept it afloat. They were the ones who lent over £3m with the right to convert at 21.25p and then actually went ahead and did convert at 21.25p at a time when the share price was falling.

If they had done a rights issue at 14p no one would have taken it up and I think and this is only my opinion, not fact, they went the placing route to save on costs. That did not stop me phoning up and talking my way into the placing, an option that was open to any shareholder. I do not know what the reaction would have been for those only wishing to invest small amounts but if you don't ask you don't get.

I remain hopeful that cheerier times are ahead and I am sure that if any shareholder has concerns the management will be willing to address them via email or phone call or at the Agm.

[dell314] 12/10/2004 08:43

25th October - Obviously, you've met the management and I haven't but I find it hard to trust people who have lied to the market.

The early announcements about a rights at 14p and allowing all shareholders to participate destroyed their credibility IMO...

Rgds
dell

[mdchand] 11/10/2004 19:47

gutsy call - good luck with that.

[25october1969] 08/10/2004 22:59

Hi

Took profits elsewhere and looked for a home for the proceeds CAB, to me, looked the best home of all the companies I looked at

[mdchand] 08/10/2004 20:50

25october1969 - I noticed your latest share purchase and was wondering whether you could share with those on us still inhabiting the Carbo bulletin why you decided to top up your holding? Would I be correct in assuming its a greater degree of personal confidence and visibility in the long term prospects of the company?

[maxinvestor] 06/9/2004 10:21

Ian

You would be more than welcome to post on the REF thread from time to time.

Regards

Max

[ianproud] 06/9/2004 09:56

RNS
3 Sept 2004
Carbo plc (“the Company”)

Notification of Interest

Carbo plc was advised on 2 September 2004 that following a sale of part of its shareholding Silverslaggen AB, a company wholly owned by Peter Gyllenhammer, no longer has a notifiable interest in the ordinary share capital of the Company.

[niceandlegal] 03/9/2004 16:48

How much longer before this company is de-listed? or can't this be done? the closure always seemed inevitable, it's a sad day for U.K. manufacturing PLC, but who cares (Tony's just back from Tuscany so he doesn't) as long as there is a game to play on the price of these shares!, but don't worry I quite like our temperate climate, I have an umbrella, wellies (sorry Wellington Boots) and a thick skin and will probably be the last one left to switch the light out!, I will not however be moving to Dusseldorf (Maredo steak bars are very good in the Aldstadt and downtown), I think Antibes or Le Rayol...

[ianproud] 03/9/2004 14:18

RNS
Company Carbo PLC
TIDM CAB
Headline Termination of Lease
Released 10:55 03-Sep-04
Number 5861C

3 September 2004

Carbo Exits Its Stevenage Site

Carbo plc, the Manchester based industrial abrasives manufacturer and distributor, is pleased to confirm that it has completed the agreement with the landlord of its Stevenage site to terminate the lease. The lease had been taken by the company’s previous management in 1999 and the site has been unused for the last two years.

The new Board, as part of its cost cutting programme, negotiated the termination of the lease in consideration of 1,800,000 Carbo plc 10 pence ordinary shares in addition to a one off cash settlement of £70,000. As stated in the Company’s Stock Exchange announcement of 1 September 2004, the site has no relevance to current operations and the rental savings will be £100,000 p.a.

Carbo plc has subsidiaries across Europe in Germany, Belgium, Norway, Italy, Portugal and France. Its current 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.


For further information contact:

Lars Nyqvist, Chief Executive, Carbo PLC, tel: [phone]
or
Ian Proud, Franklin Associates, tel [phone]

END

[mdchand] 03/9/2004 10:45

25october1969 - I did forward these to him, and believe he is reveiwing them this w/e.

Speaking personally, I noticed Mcfarlane, but it didnt want to touch it until a base had formed (which the recent results may have done) and a clear upward trend had been established. The figures do look very compelling, but Ive been in similar situation before with value shares and generally find that the majority of any rise is contained over a few days. As you suggested in your thread in Macf - without constant newsflow, I can see the market getting bored and selling it off again. Perhaps, the market will review it once they get more certainty over the resumption of dividends.

ps I know this contradicts my position in Carbo - but I think the potential for Carbo to rise substatially over the next 12-18 months make it a more compelling holding.

Finally, have a look at TPA if you have any spare monies floating about - interims coming up next few days that may trigger a rerating of the shares, coupled with (hopefully) some big contract wins.

[ianproud] 01/9/2004 12:25

Company Carbo PLC
TIDM CAB
Headline Rationalisation Programme
Released 10:07 01-Sep-04
Number 4812C

1 September 2004

RNS announcement

Carbo Rationalises Its UK Operations

Following shareholder approval for the successful equity placing completed on 27 August, the Board of Carbo plc, the Manchester based industrial abrasives manufacturer and distributor, announces further steps in its recovery plan for the company. These steps will lead to substantial savings in UK overheads.

First it intends to close the Company’s Trafford Park site in Manchester as part of its Group wide rationalisation programme. The site contains Carbo’s UK manufacturing facility, the Manchester branch of Anglo Abrasives and the corporate head office. The closure of the site will lead to annual savings of £600,000. The Group currently employs 80 people in the UK and up to 32 employees are likely to be affected by these proposed changes. The company has issued a notice under Section 188 (4) of the Trades Union and Labour Relations Act 1992 and has entered into consultation with the employees of Carborundum Abrasives UK (CAUK), the Coated Abrasives conversion unit, and CSW Abrasives UK (CSW) – the “Rubber” and “Razor” wheel manufacturing unit regarding the possible closure of the CAUK conversion unit, the sale or closure of the “Rubber” business, and the transfer of “Razor” production to the Group’s Düsseldorf Bonded Abrasives plant.

Secondly the company has in principal reached an agreement to terminate a long term lease on the company’s Stevenage site, which is part of the old Group’s operations and has no relevance to current operations. This will save £100,000 pa in rent.

Thirdly the razor production operation will be moved to Düsseldorf without incurring extra overheads and resulting in enhanced gross margins.

Fourthly the company will take a small, modern unit in Manchester for its Anglo Abrasives depot and its corporate head office.

Commenting on the rationalisation of the company’s UK operations, Lars Nyqvist, the Chief Executive, said, “Last year in our interim statement the Chairman said that more work was required to drive down operating costs and improve manufacturing efficiency. Our shareholders are now looking for results and I hope they will appreciate that the proposed reduction in the annual UK overhead by £700,000 is a positive start.

“At Trafford Park we have the majority of our 80 UK employees on a seven acre site and in Germany there is spare manufacturing capacity. So it makes commercial sense to close down one large underused facility and move production to Düsseldorf. Regrettably some 32 of our employees are likely to be affected, but without this rationalisation Carbo would continue to make losses which ultimately could affect all of its 600 employees.

“Not only are we cutting costs but we are also starting to see significant improvement in incoming orders. The order book is growing by the month, currently up by €3 million on this time last year, and we now have the means to follow up on this positive trend and generate more sales.”

Carbo plc has subsidiaries across Europe in Germany, Belgium, Norway, Italy, Portugal and France. Its current 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.

For further information contact:

Lars Nyqvist, Chief Executive, Carbo PLC, tel: [phone]

or

Ian Proud, Franklin Associates, tel [phone]

[25october1969] 01/9/2004 10:48

Ian a bit late with the news flow this morning, very positve statement and welcome cost savings to be achieved

Off topic for mdchand - re post 161 did you ever hear back on the review of the two I suggested Macf up 22.5% this morning on very positive interim statement!

[ianproud] 27/8/2004 16:44

Company Carbo PLC
TIDM CAB
Headline Result of EGM
Released 16:35 27-Aug-04
Number 4051C

Carbo PLC

Shareholders in Carbo PLC, the Manchester based industrial abrasives manufacturer and distributor, have today passed all the resolutions submitted at an EGM and two general meetings, one for ordinary shareholders and the other for preference shareholders. The resolutions relate to the recent successful equity placing and debt conversion which raised £3,700,000.

The resolutions passed increased the authorised share capital, disapplied pre-emption rights and amended the company’s Articles of Association as regards borrowing limits.


For further information contact:
Lars Nyqvist, Chief Executive, Carbo PLC, Tel No 0161 872 2381
or
Ian Proud Franklin Associates, Tel No 0207 836 2336

END

[hermod von asgard] 18/8/2004 21:56

Roy

Yes, I am a holder

I do not want to answer questions concerning individuals as I did not think that my post raised any ethical questions, however I think you may find other common factors.

Regarding the future outlook for any european manufacturer, if one looks at Government Stats there appears to be a decline in volumes and value manufactured, and an increase in extra-EU imports.

In my opinion, after restructuring, the key task for Carbo will be to re-establish effective selling and distribution, and the directors believe they should concentrate on the manufacture of high value/ profitable lines.

I have some strong opinions about key factors in the future success of this abrasives company, and several of those questions I raised before. Because my opinions are strong, I feel I must be more careful in expressing them.

As you indicated in your post, I may have a tendency to appear negative. This is not a position I hold, but really the result of asking questions.

Yes, I do have an interest (not a participation) in this industry and want it to succeed for itself, and you and me.

Regards

Hermod

[25october1969] 12/8/2004 10:11

Hi HvA you sound as if you know what you are talking about, perhaps you could add if you are a holder, your post was a little negative and clearly this is not a stock that you can short.

I always welcome the counter arguement as it always provides food for thought, I do not have industry experience but will answer your points as best I can

It is correct that turnover has declined - for 4 years in a row I believe,I do not see this as a concern, this company has been a dog now for years, dripping money everywhere, I find it surprising that turnover of £52.6m was achieved when management has had to devote so much time to the survival of the company. Management are confident that with the extra working capital and the PR exercise they will undertake with customers and ex customers that turnover will be maintained or increased.

I think the more important figure in the Accounts is the cash generation, how many other companies with a market cap of (22.9m x say 10p) = £2.29m generated cash of £2.7m from operations and a net increase in cash of £1.2m?

I am not aware of any significant contraction in the abrasives industry but I do not know the industry as well as you- your source please.

I think your further points can be answered by looking at the people who are attracted to Carbo. I met with Jean-Louis Moatti, he has vast industry experience and has put his hand in his pocket to support the company. Note he is also a shareholder and director of Ekamant. You will also see in the circular letter a comment on a new investor "Amongst the other placees is Carlo Palu, the head of a well-regarded abrasives manufacturer, who will be invited to join the Board.

The common factor connecting both these gentlemen is that they are very successful, Carlo Palu especially is not going to want to lose face by putting money into a company that could go burst.

This of course could lead to conspiracy claims - why are gentlemen who may be competitors investing in Carbo, a takeover on the cheap, false transfer pricing. But we have a white knight, or white Lord in Lord Hodgson, why would he continue to invest if he thought something fishy was going on. They are all men of honour, and I believe the common objective is to make Carbo a success.

These gentlemen have many industry connections, they have access to the technology that is required.

Why do you think they have a weak direct sales organisation? - your source please

I would not be surprised at an industry link up.

As Carbo now manage on functional rather than geographic lines, it makes sense to manufacture in one place where possible. Costs of closure are part of the effiency scenario though I do not think this was a driving factor

Your fears are unfounded, the company have made it quite clear that they only intend to cease manufacture of low value commodity products - concentration will be on higher value added and higher margin products.

I would say your fear of relegation to division 2 is the opposite of my aspirations for the company. At the moment I see them close to the bottom of the lowest division but they have been active in the transfer market, got a new kit and ready to start the climb to the premiership

regards

Roy