Smc Share Discussion Threads

[topinfo] 26/5/2007 23:59

Looks like it could go to 30p short term until management sort this crock out.!!!

[hvs] 26/5/2007 21:33

Its going down.

[loverat] 26/5/2007 19:38

Yet another warning. Down it goes.

[slowtrain11] 26/5/2007 15:56

More for Posterity and lessons Learned than told you so....but worth reviewing methinks. For thise unaware SMC jusped from 50p to circa 80p on 11 April...


slowtrain11 - 30 Mar'07 - 07:18 - 5205 of 6955 edit


A lot of emotive posting yesterday. Understandably so;

My reading is the following;

1. Re Mr McColl's resposes to peoples phone calls yesterday
i) It is his job to sound upbeat
ii) It is clear from the announcement yesterday and the last minuteness of it the management have no longer a clue what is going on in the business and it is the external accountants driving agendas, literally


2. 1.ii) above could be expensive for the company, very expensive. To have large accountancy firms trawl over your books and records in detail does not come cheaply. Has this been factored into results forecasts?
Will the accountants factor into their findings further restructuring which, of course, will involve themselves?

3. A list of yesterdays top 5 trades show little sign of significant institutional selling yesterday. This could be a good sign if they are standing by the company. However if they did not have time to react, or are still weighing up their options, their actions may cause further pressure on the share price

4. Recent director's buys re-iterates that the directors don't know what the true state of affairs is in my view. This was an action to be seen to be doing the right thing, and without proper review of the business' worth.

5. As others stated yesterday this might be a profitable company in the long run. But if say you run out of cash or in this case you start to run out of credability with your stakeholders - investors, customers, etc it is difficult to recover from this downward momentum.

6. Mr McColls passion is not the same as clear, straight thinking, logic. The former are the characteristics of an entrepreneur, the latter of a stateman and CEO of an established PLC.

7. What really caught my eye about the statement yesterday was the fact that after all thats gone on, and the very best of financial professional advisors working with SMC, they still cannot say what date they are going to announce their '06 results. The words "on of before"... were both damning and quite bizzare to my mind..

Slowtrain


slowtrain11 - 10 Apr'07 - 09:10 - 5569 of 6955 edit


Does anybody here know of the simple concept of Caveat Emptor (not sure of the spelling of the second word).

It exists as a priciple of law - it means basically that it is up to each individual to protect themselves in any Commercial transaction in as much as it is up to the law to do so.

If you draw a line through a 12 month graph of this stock where the new FD was appointed and look at what the share price has done since you must surely see that it is not the demoted COO's actions that have caused this share price to fall.

And if you want to keep relying blindly on an FD for reassurances that everything is going to be Ok for a PLC, in particular for SMC with their recent undependable track record, well good luck to you. You will need plenty of it!!

Slowtrain






NJP - 10 Apr'07 - 09:28 - 5570 of 6955


A strange post, slowtrain.

I presume your comment about the correlation between the share price graph and the FD is made 'tongue in cheek'. If not, then I fear for your investments.

The problems, we understand from Numis' comments, appear to relate to the pre 2006 businesses. Now I make assumptions here, but I suspect (a) accounting standards were lax and (b) McColl wanted a strong share price to facilitate his buying spree. Not hard to see where this might lead.

Boardman is a young FD and no doubt new to the industry. He was only appointed in March and probably didn't have time to get his feet under the table before a series of acquisitions and the interim accounts. He also had to build his finance function.

I'm not surprised - with hindsight - that there have been problems, and I'm not surprised that the WIP issue wasn't grappled with until H2.

As to the two profit warnings, it does appear at first sight to be incompetence. I suspect, though, that the error might have been one of attempting to communicate the news without considering that a full cleansing of the stables would be the better approach. No doubt, the board was split on the issue.

All in all, I see the FD as tainted by the mess rather than the instigator. A more experienced FD might have navigated these troubled waters somewhat better, though.

Masurenguy - 10 Apr'07 - 09:41 - 5571 of 6955


People on this thread should chill out !

1. BBJL - the results will come when they are ready to release them ! Incidentally, if I were you, I would be far more circumspect about comments being made on individual directors of SMC, which are bordering on libel as far as I can see.

2. TT2 - wait for the results and stop clutching at straws like house broker forecasts, director share purchases, prior directorspeak etc etc. I understand that you are sitting on large losses and that you are anxious but you will get ulcers on top of everything else if you carry on like this. The next share price development will be consequent on the results. They will be what they will be. Nobody here can predict, influence or change them. Just be patient and wait - they will be published shortly.

3a. Slowtrain - Caveat Emptor or 'buyer beware' puts the emphasis on the buyers to take the necessary precautions to protect their own positions by ascertaing as much information as is possible prior to buying something (usually property in this legal context). However there is also a responsibility, under common law, for the vendor not to conceal or misrepresent information. If and when the latter is alleged to have happened, it is more usual for the vendor to be penalised by the law, if convicted, than the buyer to be compensated (usually they would have to take action against the vendor on their own account to obtain this) so the principle of 'caveat emptor' still remains valid in all situations. Not sure what relevance this has in the context of SMC - are you implying that something more ominous could have happened here ?

3b. They're not going to wait 6 months to release results - these will appear imminently, probably within the next 5 working days !

Masurenguy - 10 Apr'07 - 09:42 - 5572 of 6955


Good post NJP !



slowtrain11 - 11 Apr'07 - 08:13 - 5669 of 6955 edit


In terms of diving in here;

1. Turnover does not equal profit

2. Contracts won does not equal profit

3. Forecasts are just those

Personally for me credability needs to be re-established, a company that cannot predict when they issue their results (see 2 weeks ago) now wishes to be believed on 12 month forecasts.

In particular there are unrcognised issues about bedding 10-15 new company behaviours (not just accounting policies) under one PLC logo. And I can forsee a lot of fighting about how the revised WIP workings and calculations will effect the aquisitions' earnouts and hence morale over the next week to two weeks.

Otherwise read the statements carefully, form your own judgements, and take both the statements of the execs and your eggs this morning with a pinch of salt!!

Slowtrain

pre - 11 Apr'07 - 08:16 - 5670 of 6955


Should head back to £1 now.....very good update this am...

turbotrader2 - 11 Apr'07 - 08:17 - 5671 of 6955


WATCH FOR THE DIRECTOR BUYING

Masurenguy - 11 Apr'07 - 08:18 - 5672 of 6955


Well I'm very pleased for the longer term holders that the actual results were not as bad as they might have been and that there is a solid platform upon which to move forward. We should see a sharp rise today followed by a bit of a drop back as short term traders and speculators take profits.





VOLVO - 11 Apr'07 - 08:22 - 5679 of 6955


Its one way money.The forecasts this year are 50m turnover and 8m pbt.If what they said today is true you will see 100pc from here.

[matrix6] 26/5/2007 15:26

siwel100,

Your very lucky indeed, i was going to report you to the Police.

[matrix6] 26/5/2007 15:22

good edit, well done.

[siwel100] 26/5/2007 15:22

Matrix.....?....if applied to a third party then you are probably correct but it kills me to be so politically correct that you cant use colloqual english. I did ammend though, it is now a more elegant phrase :)

[matrix6] 26/5/2007 15:21

I have a mate called Rex who is 16 and he will bust you for a comment like that!

[matrix6] 26/5/2007 15:18

siwel100,

refrain from the words "kill you" it might lead you in prison.

[siwel100] 26/5/2007 15:14

matrix....If its as bad as it looks then the damage has already been done and it wouldnt be possible for them to trade out of it.
If you aquire on the wrong basis then both debt and payouts will fatally flaw your business model and there is nothing you can do about it.
It depends on what they say next but with their track record its probably a dustbin stock on sentiment anyway, but it may be a lot worse.

[matrix6] 26/5/2007 15:01

siwel100,

I will take your comments into account, although i feel this company are destroying themselves and short it to 0.2 p

I aint no mug and maybe the ceo aint either! LOL!

[matrix6] 26/5/2007 14:52

Gary, short vodafone i've got the top this time LOL!

[matrix6] 26/5/2007 14:49

And look whats happened? the share price come tanking down! maybe the Ceo of SMC should get a job at blue index? they love twits.

[matrix6] 26/5/2007 14:43

You just can't expand that fast. your putting the cart before the horse, the accounts said it all IMO.

[matrix6] 26/5/2007 14:38

siwel100,

I believe and a few months ago that the CEO was putting the cart before the horse.

He aint that bright his he?

[dave7] 26/5/2007 14:36

Siwel100,Masurenguy and some of the others would make quite good directors methinks!Many thanks for your insightful comments,although there is never anything here that makes me feel better about this company!

[siwel100] 26/5/2007 14:32

At a guess, most of the confusion amongst the management is the manner by which income has been booked. A project would on average take a minimum 2/3 years from the initial outline plane through planning permission, the awarding of the contract to the builder and then actual construction starting and finally being completed. At any point through to the contractor starting work the project could be shelved with only a % of architects fees paid. You have 2 accounting issues running, one is the treatment of staged income the other is the weighting of risk on cancellation of project. You do have a third lesser risk on disputes which reduces final payments.
Considering they aquired small practises which probably ran on simple money in/ money out finances, the consolidation into a group where staged inome, cancellation risks, disputes etc has no doubt caused numerous headaches for the FD. In effect he would have to individually evaluate each of about 300 running projects and asign forward income. I doubt the individual management teams were much use as they would not have been used to the far stricter financial disciplines now required.
As a group the company is actually a good solid and boring prospect but it may well be fundamentally undermined (possibly terminally) by some key factors:

If they cant estimate forward income then they may have been buying practises on a forward income of p/e 50 rather than p/e 6 (an extreme illustration but you get the idea)

The payouts may be based on totally unrealistic low targets if they have estimated the forward p/e's drastically wrong.It also depends how the payouts are contractually structured, value of contracts booked, annual income, annual net profit etc.

If financing was based upon an incorrect income flow they they may well have a fatal flaw and face serious covenant issues.

The fact that they still cant get a grip on income and the RNS yesterday was panicked, does suggest there are one or more of the problems lurking. To rush out an RNS before the board even reads or discusses a report does suggest the headline summary is somewhat extreme in its negativity.

[matrix6] 26/5/2007 14:30

Steve Dattles aint no mug either ;-), he will wait for a walking possesion order by the bailiffs before he signs it for £20 a month ;-)

I must smile! i'm thinking of a certain poster on LGB who likes abba.

[masurenguy] 26/5/2007 14:27

meadow - AiW is an Accountant named Colin who posts on TMF. His posts are usually very thorough and he has the ability to cut through the chaff and get to the core of the real issues involved. Where he gets clout to fix these meetings I do not know.

I started monitoring SMC after the price drop on the first profits warning. However I also thought there could be more to come and held back until the 2nd price drop after the results were delayed. I then took a speculative SB position at 59p and then subsequently moved my stop up to 74p as the price started to recover. I was stopped out at a small profit yesterday so fortunately I did not incur any losses here.

I sympathise with those people who have lost money here particularly after yesterdays 3rd warning, since although the risks were apparent to anyone who looked closely, the management commentary at the time that the results were published only 6 weeks ago was clearly reassuring. In this context Walker was centre stage and his credibility has now been compromised as a result.

One also has to question the credibility of the FD too. Whilst to large degree he inherited most of the current mess, he has been in place for 14 months and should have got a strong handle on the financial reporting procedures and reconciliations within all of the acquisitions by now. I remarked on this thread, not long after the first profits warning, that the FD seemed to be both young and limited in experience and that both he and the company might benefit by having a much more experienced financial NXD to support and guide him, who had not previously been the former FD of the group. I would have thought that the potential problems that could have arisen from this were fairly self evident but Sir Rodney obviously did not consider this to be an issue that warranted further review.

What now ? Well the credibility of the current board seems to me to be a major issue. The financial condition of the business remains uncertain and the contingent liabilities have still not been defined. There is an AGM scheduled next month where shareholders will have the opportunity to air their feelings about what has already happened and what the real priorities should be going forward !