Mbl Share Discussion Threads

[kimboy2] 29/3/2011 11:55

I am a bit more optimistic on the lease.

I don't think that much work has been done on constructing the warehouse and the last thing the owner would want to do is build it and then have MBL go bust. He would be left with a £4 to £5m warehouse and associated debt and no tennant.

I would also assume that in the contract there is an entry date by which the thing has to be built.

I suspect that Livesey could be squeezed by this. That is assuming that TA doesn't do his old mate a favour and slip him a couple of million.

I think that the entry date was supposed to be June 2011.

It perhaps says something about the quality of the management that they sign up to a 15 year £800k pa lease that starts 3 months before their major contract expires.

Doesn't sound like million pound management to me.

[deswalker] 29/3/2011 11:41

miamisteve - Noises have been made that they hope to unwind both those connections to the chap you mention at no cost. Hard to believe I agree but such sentiment has been expressed by management. Each must make up their own mind why, how and whether this might be possible ...

[miamisteve] 29/3/2011 11:30

Des - I'm pretty sure they'll get back what they paid, but it'll just be a PR exercise with the hit that Livesey (the guy we bought the shares from) dishes out for breaking the lease agreement, meaning we'll still end up out of pocket.

Part of the U-xplore deal was that MBL would get a 100k management fee. My suspicion is that that was another way for TA to get his hands on the companies money.

It must have pained him so much to have seen 2m sitting in the bank and only 40% of the interest belonging to him.

GMV I feel is still losing money. Sainburies contract is neither here nor there. Think it would be making less than 250k a year in revenue for the company, meanwhile how much was spent on the offshore warehouse.

[kimboy2] 29/3/2011 11:19

Don't worry I haven't forgotten the issues. The money has been trousered though and possibly spent.

We shall see how much we get back.

[deswalker] 29/3/2011 11:11

If they return £0.5 mill for U-Xplore then questions will be asked. My understanding from discussions is that they are hoping to get back what they paid and that U-Xplore management are at least open and quite possibly keen to do such a deal. Hard to believe perhaps but let's not forget the issues surrounding this deal ...

[kimboy2] 29/3/2011 10:54

The value wasn't on paper. It was cash. That cash, apart from the bit going to the directors, went to pay off debt and build up working capital.

AISI the downside is bust.

The upside;

a) The present net current assets at the interims were about £13m. Of this about £16m is probably stock that MRW 'owns'.

If we assume that MRW pay 50% that would leave £5m in net current assets.

b) U-Explore. They paid £2m to their mates. Let's assume they graciously give us £0.5m back.

c) Redundancy. Most of the workers are fairly recently employed so let's assume £1.5m

d) The lease. Let's assume a £1m break fee for their mates.

That would leave £3m net current assets.


A lot of ifs and the main one perhaps being MRW.


The question then is whether there is a business to salvage.

There has been talk about generating about £35m t/o based on the old business model before MRW. The margins then were better at about 18% and profit would have been about £2m.

If that could possibly transpire then we would most certainly have a result.

The market is giving you odds of 10/1 against.

[charliebrown2000] 29/3/2011 10:36

Jeffian - the value that came and went was on paper. During the time the share price went up then down, TA has pocketed real cash and, it would appear from these blog comments and reports, so has some of his family through associated trading relationships. Same for PC, as has been pointed out repeatedly, he pocketed a previously unheard of remuneration for a non-exec, higher than many execs in multi-billion pound FTSE corps. The cow has been milked. The carcass belongs to the creditors.

[jeffian] 29/3/2011 10:27

You may well be right in your analysis, CB2K, (bearing in mind that however low the share price goes, the potential downside is still 100%!) but I'm not sure about "TA and PC depart stage left with their extravagant salaries and bonuses safe in the bank and move on to adventures new." TA and his family own about 40% of the company and, at the peak, this holding was worth c.£12.5m. It's worth around £800k today. However extravagant the salary and bonus, it ain't going to compensate him for the destruction of value so I can't see him "departing stage left" without trying very hard to salvage something from the ashes.

[charliebrown2000] 29/3/2011 09:52

Encarter's half right, there in't much downside left on the sp, but there's no upside coming out of this. MBL has no value left - the Morr stock will be mostly old stuff, sold in the bargain basket at £3 a pop. MBL probably has this on the books at its full cost price (maybe higher) but its practically worthless. What's the best you can hope for with Uexplore - get your £2mill back? If you're lucky. There'll be no premium and most likely it'll go at a fire sale price. That leaves GMV, with only one real client (Sainsbury's) - they don't even operate MBL's own Bee.com site. Sainsbury's may be interested in buying the guts out of the business for its own use, in which case you'd be lucky to get as much as £1mill in its distressed state. Or it may get picked up as a bunch of parts - there's no trading value - for someone else to use. I expect that much of the cash MBL has or picks up, will be used to pay suppliers, unwind leases, etc. Nothing left for the shareholders. TA and PC depart stage left with their extravagant salaries and bonuses safe in the bank and move on to adventures new.

Whatever happened to davidosh?

[encarter] 29/3/2011 08:45

sp has settled now. If next news is bad, they don't have far to fall but if it's good these will head back to 100p imho.

[timesmoney] 28/3/2011 18:25

Sir Ian Gibson is Executive Chairman of Morrisons. Cowgil is a Non Exec.

[supernumerary] 28/3/2011 17:47

DW - 3792 - I agree completely.

[deswalker] 28/3/2011 17:09

The point was also being made when the horse was in the stable. The comparison to the Morrisons guy becomes more relevant since the contract was lost, hence it being revisited here.

[cockneyrebel] 28/3/2011 17:04

Sorry but the wage Allan was taking was clear here for the past few years. I was told that there was nobody else that had the skill or experience of the industry to do the job - Morrisons seem to hve found someone tho.

Everyone buying these shares over the past few years knew, or could easily find out what the CEO was taking out. Isn't it a bit late now to be doing comparisions?

Bolt, Horse and Door come to mind.

CR

[jeffian] 28/3/2011 16:58

Ahem! The points you make about MBL management may be perfectly valid but since many company execs have their noses in the trough these days, comparisons are not always helpful. In Bolland's case, his reported remuneration in the year he left Morrisons was so 'low'(!) because he was rewarded by M&S for the shedload of options and share-based rewards he left behind (so much so that M&S shareholders took umbrage).

[typo56] 28/3/2011 16:44

DesWalker, did you include the remuneration James Allan received from Sales Media Solutions Ltd and Media Sales Direct Ltd? I believe MBL was/is their sole customer.

[jonc] 28/3/2011 15:29

When you do that comparison Mas it is quite sickening how MUBL has been milked.

[masurenguy] 28/3/2011 15:07

RE: #3970 - excellent post DesWalker and one which very clearly illustrates how external shareholder interests have been totally subordinated to those of the Board. In addition to comparing the remuneration of the MBL and Morrisons CEO's, it is also worth comparing the remuneration of their respective Chairmen.

Last year Sir Ian Gibson, the Morrisons Chairman, was paid £300,000 while Peter Cowgill of MBL was paid £330,000 (110% of the Morrisons Chairmans remuneration).

Last year the combined remuneration of the Morrisons Chairman & CEO was £1,459,000. The combined remuneration of the MBL Chairman & CEO was £1,450,000 (99.4% of the combined Morrison figure).

Last year Morrisons sales were £16.5bn, pretax profits were £817m and their market cap is currently £7.15bn. Last year MBL sales were £195m (1.2% of Morrisons sales), pretax profits were £10m (1.2% of Morrisons pretax profits) and their market cap is currently £2.1m (0.02% of Morrisons market cap).

Does anyone think that the Chairman and CEO of MBL can justify virtually the same level of remuneration as the Chairman and CEO of Morrisons ? MBL is a public company not a privately owned business !

[deswalker] 28/3/2011 15:06

Fair enough - hands up. Perhaps a less profligate divi too. But the main thrust of my argument remains true. Agree ?

[supernumerary] 28/3/2011 15:03

DW - don't forget TA also paid himself and his family a substantial dividend. Was it appropriate to be paying dividends given the state of the company? Did it send a misleading message to the market? Of course not, lol.

[deswalker] 28/3/2011 14:18

I'll answer my own question ...

In the year to 31 Jan 2010 Marc Bolland CEO of Morrisons received a total package of £1.159 mill. In that year Pre-tax profit was £858 mill so the the CEO received 0.135% of a figure which itself is insulated against shocks.

In the year to 31 March 2010 Trevor Allan received £1.12 mill. In that year Pre-tax profit was £9.875 mill so the CEO received 11.35% of a figure which itself is very largely reliant on a contract renewal with Morrisons.

So Marc Bolland and Trevor Allan received essentially the same package in their respective 2010 financial years.

No wonder Morrisons decided they ought to try and keep some of these profits for themselves. Who wouldn't.

If only Marc Bolland had been at the helm here ...

[deswalker] 28/3/2011 13:50

Timesmoney

Whilst I disagree with Tommy's words it is difficult to disagree with the sentiment IMO. Lots of folk have lost lots of money here IMO a fair slug of which is undoubtedly down to a loss of trust in management and very understandably so.

I disagree that PC and TA are comfortable with their position in these matters, the former because of what appears to be way too much passivity in the deal-making process and the latter too much .. err .. activity !

Let's see if the U-Xplore deal and the new lease are able to to be unwound at par as the recent RNS and discussions have indicated would be their intention. If not then no doubt these issues will resurface again, along with the less than clearly disclosed supply deal already discussed on this thread.

Shareholders understand when a company loses a big contract and its shares are decimated. It comes with the territory. But they also expect management to act in the interests of all shareholders who have entrusted their money to them at all times, pure and simple. This means they also expect reasonable remuneration levels (I think we all know what "reasonable" means without having to come up with an explicit formula), and they haven't been met here.

I maintain that if an identical company had lost an identical major contract but had not got involved with U-Xplore, the new warehouse, supply arrangements with family members and the remuneration levels had been in line with other companies of a similar Market Cap then the share price of that company would be at least four times the current number and possibly quite a bit more. The further 75% drop from that level is all down to the way this specific company has been managed ovet the last two years and so shareholders are entitled to be agrieved.

Notice that nobody here is blaming Morrisons for what has happened. I've no doubt that they've played hard and perhaps even a little unfairly I don't know. Supermarkets are not known for their generosity as we know. But questions will always be asked about what might have been if Morrisons had been faced with a supplier not overtly paying seven figure packages. Just out of interest, what did the CEO of Morrisons receive last year - I bet not a huge amount more than TA. That says it all IMO.

Recent discussions have indicated that things are going to change. Let's hope so.

[timesmoney] 28/3/2011 13:06

Steady Tommy!
MBL management have been proved to have been greedy and inept and there are some serious questions to be asked, but nothing is proved and apart from this and other bb's there is little to suggest anyone is really interested. I cannot imagine that if PC has any questions that he felt uncomfortable with he would have either have had explanantions that he was satisfied with, or would have called in the authorities and resigned. There is no upside in him carrying the can for the bad guys, if there are any.
Re Encarter. I agree he sounds like and idiot, but if he is genuine we need Encarter and others like him to lose their cash so genius's like you and I can make it!

[tommyjnewton] 28/3/2011 11:07

Encarter is the idiot if he can't smell the decomposing rats.
He is trying to drag more people onto the rotting ship before it sinks.