Mbl Share Discussion Threads

[marben100] 26/8/2011 13:42

I have to say that, as a regular attender, criticism of davidosh's Mello events is well out of order. He puts a huge amount of effort into arranging them (and other meetings between investors and company managements) - for no direct personal reward.

Most of those attending are knowledgeable and, generally, searching questions are posed to presenting companies. I frequently hear comment from management that the questioning is more rigorous than they are used to from professional analysts.

Very rarely do I invest in companies that present. Most of them have too many question marks for my liking (or are not sufficiently attractive investments). It is up to individual investors to judge what might constitute a good investment.

In the specific case of MBL, I was only prepared to invest in what appeared to be a growing business, with a sound balance sheet and low market valuation, on the strength of Peter Cowgill's chairmanship and the knowledge that he has a reputation to protect. I am sure he very much regrets taking on the role he did - but at least he has had the good grace not to simply walk away.

I am highly dissatisfied with this morning's announcement and am writing to PC to demand a more robust approach to recovering shareholder value.


The more investing experience I gain (and I've been investing since the early 1980s), the more importance I place on a competent and trustworthy management. How can you form a proper view on that without meeting them? In that regard, the events davidosh arranges are invaluable. There is no investor with any length of experience who doesn't get some of his/her investing decisions wrong. Anyone who claims otherwise is a liar. I got this one wrong but certainly don't blame anyone else for my mistake. I think I've learnt a few lessons, though, to add to my armoury of knowledge.

One of the key ones BTW is that when principals of small businesses, with a significant shareholding themselves, suddenly decide to pay themselves huge bonuses (rather than letting profits accrue to the business and hence to all shareholders), it's time to get out. MUBL isn't the first business where I've seen that pattern of behaviour the year before a collapse.

Mark

[microscope] 26/8/2011 13:23

Unreal.

I'll leave this thread to the self-confessed expert(s) who were talking of too cheap buyouts in three figures not so long ago. Wake Up!

[davidosh] 26/8/2011 12:55

jeffian....I could not agree more. It was not 9am but certainly an early start last year. Ideally an 11am start so that those travelling in the morning can attend would be best and I think anyone corresponding or speaking with the directors should make that point for this year.

[jeffian] 26/8/2011 12:49

I didn't attend last year's AGM because 9am on a Monday in Leyland was simply not reasonable or practical and I felt that I had elicited enough information from the preceding informal shareholder meetings. If MBL have any meaningful intention of engaging with shareholders, they should at least set the time of the meeting to allow us to travel, regardless of where it's held.

[davidosh] 26/8/2011 12:37

microscope....You said 'Sensible words from Des, which in my view Davidosh you would only ignore most unwisely, as 'informal' meetings thus far imho only served the purposes of Directors, and I think are likely to do so again.
People only need to recall some of the glowing write ups of Mello and other meetings with MUBL Directors in Fool and here to recall the results of these meetings.

then followed with...

'I entirely agree with Des, and while Mello and informal meetings have been highly successful with many companies, and I don't in any way knock Mello, surely it's high time to accept 'informal' has thoroughly failed in this instance.'


I am merely stating that this has nothing to do with Mello events so why raise them as the issue. Your assertion that an AGM is formal and will be more appropriate was only challenged by me because it did not do anything last year due in the main to lack of attendance.

Investors seem to like presentations and meetings in London and generally do not attend AGMs even if they are in London. End of story.

I attend 50 Agms at least each year and arrange about 30 investor events a year so I think I can be considered fairly expert on this subject.

[rbcrbc] 26/8/2011 12:19

Well somebody is obviously keen having bought 100k at 14p.

Maybe they looked at the 1.5m profit vs the 1.8m Mkt Cap and forget that the year to 31 March 2011 included a full year of the morrisons contract !

[microscope] 26/8/2011 12:15

Clearly lessons have not been learnt imho. Sadly I got the response I rather anticipated.
Why ask? For, as to my personal attendance at various functions, that is a distraction and irrelevancy to this situation (though I have been to many company AGMs and consider myself capable of reading a Mello write-up, even though I do not go to Mello, and judging its worthiness from subsequent events.).

I entirely agree with Des, and while Mello and informal meetings have been highly successful with many companies, and I don't in any way knock Mello, surely it's high time to accept 'informal' has thoroughly failed in this instance.

Still, good luck with the approach you seem determined to try yet again. You may not get answers at an AGM, but if that is the case, you sure as hell won't get them in informal chats.

[davidosh] 26/8/2011 12:08

Des....Why should the Agm suffer !? Serious investors will attend for sure.

It would certainly be interesting to know who was consulted about the 15 year lease deal for example as we all know who was behind it ? A 15yr lease was potentially worth more than the value of the company at the point where it was signed. We still do not know why it was never registered at the Land Registry but we have just paid £1.2m to someone to get out of the deal !!

[jeffian] 26/8/2011 12:01

The other thing, Des, is that the AGM isn't guaranteed to produce open discussion if they feel they are likely to compromise themselves, and the presence of advisers etc. would probably hinder rather than help, whereas PC has always seemed very willing to talk openly at informal shareholder meetings (if a little fuzzy on the detail, as it turned out!). I have been to several AGM's (one of them with davidosh) where companies have engineered situations where they simply refused to answer questions other than strictly on the accounts and formal business of the meeting. They could do this, for example, by putting themselves into a close period by saying they are in (undefined) takeover talks or they could refuse to discuss the Morrisons contract on the grounds of commercial confidentiality whilst those discussions are ongoing. When things are going well, companies are more than happy to chat for hours to shareholders; when it goes sour, most advisers suggest saying as little as possible!

[deswalker] 26/8/2011 11:53

David ... I noted your use of the word "hopefully" in relation to TA. Like you I hope he has the bottle to turn up, but as usual we get nothing clear and definite.

Hopefully your meeting will yield fruit. The more irate investors the better IMO. My only concern is that it will deter quite a few of those who would otherwise make the pilgrimage up to Preston and that consequently the AGM will be much watered down as a result.

Personally I feel serious questions need to directed towards ALL the individual board members (incl our elusive FD) whilst all the other Directors are there. I also feel that some questions need asking of the roles played by the various advisers and company lawyers whilst everyone is in the room. For instance I'd like to know whether the lawyers were (or believe they should have been) consulted in these apparent "connected-party" transactions. Good governance ought to dictate that their opinion should have been sought. Perhaps likewise the NOMAD.

Like I said, I only wish you well with the meeting as I'm on the same side as everyone else. But I do hope that the AGM will not suffer as a result. If it does then I believe it will have been a mistake.

ATB,

Des

[davidosh] 26/8/2011 11:35

Des....Absolutely no reason we cannot have both. I am sure there will be more than four at this years AGM and I intend to be at both BUT a London event is likely to have thirty people attend ad I can get the institutional holders there too. The interesting point is whether TA will attend a London meeting or leave PC and LC to do all the dirty work.

[jeffian] 26/8/2011 11:21

Yes, sorry david (#4173), I'd 'skimmed' your previous post!

[davidosh] 26/8/2011 11:13

jeffian....just to be clear I said there were two options and it was the latter one that I expect to happen. I am therefore in agreement with you.

[davidosh] 26/8/2011 10:39

microscope....two questions

1. How many AGMs have you attended ?

2. Why do you raise the question about Mello events ? You have never attended any to my knowledge and MUBL have never presented at one either !

The Mello events have never been a problem and only serve to enhance investor knowledge and perceptions of management and company potential. The vast majority of Mello companies have performed in accordance with expectation and considerably outperformed the market.

You cannot directly compare MUBL with LNG but both have clearly been disasters in the last year for shareholders.

[jeffian] 26/8/2011 10:26

Whether it's in an informal meeting or an AGM, the one thing I wish the Directors would do is give a full, open and transparent explanation of what has gone on here. I've attended a few of the informal shareholder meetings and, despite PC's 'approachable' style, have found them to be extremely cagey when quizzed on the detail of key issues. On a quick read of the Annual Report, this continues in the same vein and begs as many questions as it answers. In particular, I would like them to explain in considerable detail just what the Morrisons contract said. Over a period of about 18 months we have moved via the supposedly sacrosanct channel of the RNS from having a secure 3-year contract with Morrisons, to an early break which wasn't previously disclosed, to an even earlier non-contractual break "by mutual agreement" but with assurances that "Morrisons has confirmed to the Company that it will assume responsibility for the stock held by MBL on its behalf during the remaining period of the existing contracts" to the current point where there have been massive write-downs and the Morrisons settlement is STILL unresolved. They need to be open and honest with us; what were the terms of the Morrisons contract and why has it been so difficult to manage a situation which must have been covered by terms within that contract? The other stuff - the £2m investment in Uxplore, the commitment to a new warehouse lease, the expenditure on GMV - is just bad management, though the personal relationships behind the deals look bad.

Someone above says they ought to stabilise the business and bring in new NED's going forward, but I have to say it's hard to see that this company has a future as a public company in terms of size and prospects going forward. We don't yet know what 'post-Morrisons' MBL will look like, but it is clearly very significantly smaller and if they sell off the peripheral Digital stuff, they're left with a small wholesaler/distributor in a declining market which is 40%-odd owned by its management. What would be the point of keeping the hassle and expense of plc compliance? TA has to take it private, surely?

[rbcrbc] 26/8/2011 10:04

To me, it seems that the banks didnt want anymore to do with MUBL.

Exactly, it was the banks decision and so you have to look at it purely from the point of view of the bank, and in particular trhe division of the bank that deals with companies the size of MBL with the morrisons contract which might well be unwillimg (or unable by its rules) to finance a much smaller operation.

If they had allowed the credit line to continue until September when purchases would have been high there could have been an unnecessary risk for the bank with a certainty of no future business at that level.

[fft] 26/8/2011 09:55

RCBRC,

but without the credit line, MUBL had to, according to the results, stop doing all business with Morrisons immediately as they couldnt buy any stock on credit - it became purely a cash business which was not good enough to fund the Morrisons business. The banks could have still made money from winding down the credit line in a controlled manner over that 6 month period, while letting MUBL still do business and avoid the legal dispute over the stock position which i am sure only occured because MUBL were not able to fulfill the contract due credit lines being cut.

To me, it seems that the banks didnt want anymore to do with MUBL. After the business has stabilized (hopefully), would you go back to the banks that cut the credit line like that ?

Especially, if this has led to the 2 outstanding issues which unfortunately, no guidance was provided as to big the amounts in dispute are. Is it low survivable million or so, or high big enough to close the company ? The fact that the auditors have let the directors say MUBL is a going concern hopefulyl indicates the former. But who knows...

[microscope] 26/8/2011 09:42

Sensible words from Des, which in my view Davidosh you would only ignore most unwisely, as 'informal' meetings thus far imho only served the purposes of Directors, and I think are likely to do so again.
People only need to recall some of the glowing write ups of Mello and other meetings with MUBL Directors in Fool and here to recall the results of these meetings.

If there's one thing to be learnt from the LNG fiasco it is surely, from now on, keep it formal.

As for U-Xplore, exactly what I speculated from the day that deal happened, I think I used the phrases about money burning a hole in people's pockets and something about pigs and pokes.

[rbcrbc] 26/8/2011 09:35

On the credit lines issue, my guess is that on 14th March all the Christmas rush bills would have been settled and the credit lines in use almost zero, so from the banks point of view why issue credit for 6 months for a dying part of the business.

[rbcrbc] 26/8/2011 09:31

So they want to sell the digital businesses, but that is the future. What will be left ??? The distribution business to WH Smith and a few small retailers or is there anything else ?

[fft] 26/8/2011 09:08

Regarding the Morrisons contract, i was surprised to read in the results that all credit lines from the bank were pulled immediately the 6 month notice period was exercised by Morrisons (strange we didnt know about this notice period - but thats another story).

I would have thought the bank would have been better served by keeping the lines open - possibly diminishing over time - until the contract had been completed. Stock could have been wound down more succesfully, enhancing cash flow and potential legal issues over MUBL not fulfilling parts of the contract - which they couldnt do without the credit lines would not have arisen.

Yes, the bank would have had to spend more time keeping an eye on things, but the credit line could have been changed to be for the use of Morrisons only, and declining, so should have been ok for them.

I can only think that they were not happy the way the business was being run, and/or the use to which money was being put to (warehouse/bonuses etc) for them to cut it stone dead.

Anyone with more experience in these matters have any comments ?

[kimboy2] 26/8/2011 09:06

It would be interesting to know how much of TA's mate's warehouse was actually constructed.

I think the bottom line is that we have backed a management team that have proven themselves to be grossly incompetent, including Cowgill.

Having shown themselves as such is there any reason why we should expect them to be competent in the future ?

IMV they should sell the lot and send a cheque for whatever is left to the shareholders.

[davidosh] 26/8/2011 08:58

Des...I can see where you are coming from but it never works out that way.

The Agm will be announced and no doubt held again at the HQ in Leyland.

Last year despite the bid possibility and concerns over the UxPlore deal etc etc there were only four of us at the AGM and one of those was my 13 year old son. We really need to keep the pressure on and get some answers especially after some of the issues from the last conference call have not been satisfactorily resolved yet.

A meeting in London is the best way forward IMO and the AGM could be months away. The institutions normarily meet directors straight after results announcements why should we not get our chance ??

[fft] 26/8/2011 08:58

I am not sure how a 300k chairman can be completely non-exec or independent.