Mj Hudson Share Discussion Threads

[simon gordon] 12/8/2022 13:29

MJH's biggest issue could be the seriously unprofessional corporate governance, especially when they are selling ESG.

[c3479z] 12/8/2022 13:21

if the chairman is so worried about staff retention and motivation then the holders of options that vest at 45p are likely demotivated and disaffected presently particularly if they are aware that senior management will do all right in the so-called LTIP by acquiring shares at next to nothing.

[alun rm] 12/8/2022 12:19

I've sold my position. Rewarding yourself massively as the share price falls leaves a bad taste.

[dr biotech] 12/8/2022 12:00

Thanks. Will sell out soon. May be worth asking the brokers if their valuations include these ridiculous options. But because they’re not independent they won’t rock the boat.

[simon gordon] 12/8/2022 10:54

Another question is, where was the CFO in all this? Why was he not informing the market that these options were pending? There was no mention of them in the Cenkos and Progressive notes. Because of his history of working in the public markets (CEO Hastings Insurance, £750m t/o) I took him to be a serious actor.

[davidosh] 12/8/2022 10:36

Geoff Miller says...

Since taking over as Chair it has been my intention to engage with a broad range of shareholders once the fund raise was completed and to listen to concerns around remuneration and corporate governance.

(So that means he knew there were issues but he, or the board, thought 'lets get the money in first and worry about the moans afterwards'. Zero attempt or consideration to get the ship in order to make the company investible before yesterday and probably only paying lip service now....or so it appears !)

The share price is sending a message.

[simon gordon] 12/8/2022 10:07

E = extravagant

S = self sabotaging

G = greed

[simon gordon] 12/8/2022 09:53

Reply from the Chairman to my email:

"I understand your reaction and that there are concerns that have been expressed in a number of corners of the market. Remuneration is something about which we have had conversations with a wide range of shareholders, new and old, that participated in the fund raise, and it was as a result of those conversations that the management offered to defer part of the LTIP vesting for 12 months.

Since taking over as Chair it has been my intention to engage with a broad range of shareholders once the fund raise was completed and to listen to concerns around remuneration and corporate governance. Answers for both are never easy in a business that is entrepreneurially driven and people-based. That is not to say that we shouldn’t endeavour to seek alignment of all stakeholders’ interests as much as possible.

Very happy to have a broader conversation, if you feel it would be helpful."

-----

Explains the depressed share price. Not one broker note qualified their estimates with the dilution. Reading the digital version of the Admission document I didn't spot the magnitude of it, should have got a hard copy, doh!! No sign of it in the annual report. I did not imagine a company could self sabotage themselves with such extravagant options.

They are not stupid, I am stupid.

[simon gordon] 12/8/2022 07:47

Two other things to think about.

1. No LTIPs; would the placing have been more like 40p+ for a dynamic growth stock?

2. They sell ESG consulting and software. They don't eat their own medicine in Governance.

I wouldn't be surprised if they have to cancel these LTIPs or massively scale them back. They are damaging their own brand!!

[simon gordon] 11/8/2022 16:50

Sorry, my brain is spaced out today and my musings below are off base. £10m of the £13m is dependent on share price targets. Pardon me!!

"There are so many options that it's hard to keep track of them.

£7m worth in December 2022.
£13m worth in December 2023

Then there are the employee options which are all under water with a crystallisation price of 45p. Not sure how many millions of them there are, can't be bothered to look.

Could be heading to a share count in 2024 of c.280m, depending on the share price. c.280m is based off 30p LTIP conversion price."

[horndean eagle] 11/8/2022 15:53

Just noticed chairman is Geoff Miller. He oversaw a monumental screw up at GLIF years ago. So many dodgy deals. Shareholders ended up nearly losing the lot. Not surprised by lack of judgement

[simon gordon] 11/8/2022 15:37

Dr B,

Will do!

------

There are so many options that it's hard to keep track of them.

£7m worth in December 2022.
£13m worth in December 2023

Then there are the employee options which are all under water with a crystallisation price of 45p. Not sure how many millions of them there are, can't be bothered to look.

Could be heading to a share count in 2024 of c.280m, depending on the share price. c.280m is based off 30p LTIP conversion price.

Why are they forking a dividend when the biggest chunk is going to the Hudson family and debt is going up not down. Is this company run as a personal fiefdom?

What's a fair price for a company with £17m net debt and c.280m shares that is still not cash flow positive in 2024. Cause at 30p you are potentially paying c.£101m for MJH today.

There's just not tremendous upside unless they hyper-perform relative to the downside potential if they hit problems with their leveraged balance sheet.

They deserve to get ripped in the media!!

[davidosh] 11/8/2022 15:20

The corporate governance seems very poor five execs and just two non execs plus the chair.....worse still they are ALL blue suited males...



Who are the institutional holders that are allowing this to happen?

[dr biotech] 11/8/2022 14:25

Can imagine how happy the primary bid brigade will be, sitting on a significant loss already and locked in.

Let’s us know if you get a reply please about the LTIP. I may bail

[wjccghcc] 11/8/2022 13:56

Yeah. I only had a few left but those have gone now. I’d rather invest where management appreciate their shareholders.

[horndean eagle] 11/8/2022 11:39

LTIP is awful and why they found it so hard to raise what they wanted. They made the concession about deferring part of it but clearly they were not going to make it more palatable by markedly reducing their entitlement. I think that was enough to put a whole load of investors off and why they struggled so hard to get this over the line. It also explains complete lack of enthusiasm today for what in theory should be a good growth story.

[wjccghcc] 11/8/2022 10:23

Simon, that's the TSR part (£10mm).

The EBITDA part is another £10mm and that's being reached by the acquisitions which shareholders are paying for with these discounted placings.

[simon gordon] 11/8/2022 09:46

They don't understand the public markets. I think they will have to go private. They've lost the small cap pi world with that LTIP news.

This was Cenkos said on the Irish ManCo:

The cash requirement also reflects outperformance of MJH’s Irish Super ManCo business (acquired September 2021), where MJH originally forecast it would have AUM of c€17bn by FY22E; in fact, the business grew AUM to €70bn. The consequence of this is that the required regulatory capital that MJH is required to set aside has increased from the £3.9m originally expected by FY22E, to £10.0m (ie £6.1m higher).

[simon gordon] 11/8/2022 09:42

W,

The TSR is set at 71p, probably not going to be hit by December 2023.

Cenkos:

Total Shareholder Return (TSR) hurdle, which would start paying out if a price of 71p or above were hit at the end of the period, and pay out a maximum of £10m if the share price reached over 120p

[wjccghcc] 11/8/2022 08:56

And another £10mm if for Total Shareholder Return which they've pushed out another year.

[wjccghcc] 11/8/2022 08:55

GHF highlighting Perpetual Value's post on twitter that the LTIP gives management £10mm or 33mm shares (19.5% of the company preplacing) for just growing EBITDA above 7.5% CAGR which they've done by acquisition.

Horrific!

[se81] 11/8/2022 07:55

They've basically raised the retail offer shortfall via the placing. Once again to think a retail offer was going to do anything but flop in the current mkt conditions suggests to me they're being badly advised.

I'm mainly miffed because I'm an existing shareholder.....having now raised the majority of the earn out payable, posted the max reg capital and with (I believe) many organic growth opportunities via cross selling/scaling, this could well represent an attractive entry point

Would be good to hear what Matthew has to say via some well known retail investor platform ;)