Swallowfield Share Discussion Threads

[cautious investor] 05/5/2011 19:09

Farmingrgp

It is illegal for a director of a public company to represent specific shareholders. Directors are obliged by law to act in the interests of ALL shareholders. Even if representation were allowed, adding one director to represent 46% of shareholders to a board of 6, that appears to be representing 54%, does not achieve balance, and certainly does not justify the appointment of an additional director to represent the 54%.

On paper Mr Boyd appears to be an excellent addition to the board. Provided he can reassure people that he is not a puppet of one or both of the largest shareholders, the board would be perverse not to select him as chairman as he appears to be much better qualified than any of the other directors (even Mr Berrebi). As you appear to be in touch with the board, do they consider him to be a puppet of PG and/or WSE?

Do WSE ignore you in the same way that they ignore Markt? Is that why you are trying to get them to comment via this website rather than going directly? Why are WSE not prepared to talk directly to someone as well connected as you?

If it is true that "vast amounts of the Chief Executive's time is being squandered on the activities of these two shareholders", then this is a damming indictment on the former chairman and NEDs - SID in particular. Part of their role should be ensuring that the CEO remains focussed on executing strategy, and they should be the ones that are/have been discussing solutions with advisers and shareholders. They should be/have been trying to insulate the CEO from such distractions. Are you certain about this information? If true, it totally undermines your statement that the former chairman was "frst class".

[farmingrgp] 05/5/2011 14:12

Markt.
I am unhappy that we have lost a frst class Chairman because the chemistry of our two largest shareholders could not understand that she had responsibilities as well as the needs of these two largest shareholders. The chairman has gone and these two shareholders want their Mr Boyd in as chairman. I have no problem with Mr Boyd going on the board to represent their interests but it MUST be a Board decision to elect the chairman. I also believe that there is a need for a representative of the other 54% of shareholders to create balance. The next big question is:- Is Mr Boyd happy to serve as a Board member in a capacity other than Chairman? Perhaps WSE who read and post on this site can confirm Mr Boyd's willingness to be merely a humble Board member if he is not elected Chairman? The other issue that I have is that vast amounts of the Chief Executive's time is being squandered on the activities of these two shareholders rather than focusing on driving the company forward.. Oh so sad.

[markt] 03/5/2011 10:52

farmingrgp
(BTW pls see my previous message )

Answering your post...
WSE only took up part of their 'entitlement' in the June/July 2010 shares issue, it was a private placing so they had no official 'entitlement', even big share issue ( 40% of the total number of new shares)....normal shareholders were not invited....but WSE managed to get some shares, their stake fell from 20% to 15%. The cost was 300-400k. Not so much.
WSE has a portfolio of main market stocks, blue chips, approx. 2M quid, so they can easily raise cash from that if they want, they also have a bank agreement to borrow against it if they want. So 300-400k is/was not a big deal.

===
"could they have been acting as a front for Mr Big"

Interesting point perhaps.
I assume that there is nothing to stop WSE selling its SWL stake to 'Mr Big' he would then have around 45% I think
and if he also obtained a stake of say 5-6% (there are a few at SWL) then he would I think have over 50%. (but would have to make an offer to buy the shares of anyone that did not want to stay a shareholder, at least the same price as max. price within last 12 months I think)
'if' had over 50% then perhaps he could choose every director !

[markt] 03/5/2011 10:38

farmingrgp
There is a message for you over on the WSE..asking if you can organise something.

[farmingrgp] 02/5/2011 22:03

Markt.
You certainly do your research. Last summer NBI did a placing which was an obvious No Brainer for WSE and they must have used up all of their spare cash. So where did they get the money a few months later to buy 235,000 SWL at approx 145 p.(approx 340,000. Rumour has it that they also offered to buy out a very big SWL shareholder which would have cost in excess of £1 million if he had accepted. Where would this money have come from or could they have been acting as a front for Mr Big?

[markt] 02/5/2011 16:02

farmingrgp
...here is some info I've dug up that might interest you ! (LFI RNS 27/7/1999)

in 1999 "Dr. Lucas, aged 31, is the founding shareholder and managing director of Loeb,
Aron & Company Limited, an investment and issuing house".

he is the independant director at LFI

(the LFI accounts intentionally hide these details imo, the accounts say that he is an "associate" of Loeb Aron, very different than being the founding shareholder imo)

So as well as getting a cut from all transactions that he introduces to LFI, his business gets the benefit of the rest of the commission/work, which he also gets a large cut of since is the founding shareholder !!
(and I assume that he gets the work and commission from any share or warrant issues by LFI to its shareholders, 3-5%)

Clearly not independant. Mr Lucas is never going to go against Mr Marshall since he pays him commission and lots of business for the company where he is the/a big shareholder.

About 60% of the shares held by LFI are in main market liquid shares, blue chip type stuff. The other shares FIF and MWB, held for years with no buys and no sells. (does Loen Arob pay any commissions/thank yous in the other direction back to anyone at LFI ?!, I'm such a cynic !, sadly due to the reality of the London stock markets. Been burnt in the past by directors at Companies such as Regent Inns, Cafe Inns, Voyager IT, Probus.......and seen the news of PIs getting burnt at various companies by UK directors on the take)

I have always been worried about the high churn, imo, of the blue chip shares held by LFI. (one year it invests in small main market shares, then into big company shares...then into European...always changing/churning...imho)
Perhaps I am cynical....but perhaps now I see some possible logic for why it would perhaps be happening.

[markt] 02/5/2011 14:20

farmingrgp
....BTW...perhaps part of the reason for the EGM at SWL....'perhaps' is the running costs of WSE and poor performance of other WSE investments

(WSE is on Plus, and does very little in terms of action, the CRE shares it has held for years (and LFI has held FIF and MWB shares for years) but the nett running cost/loss of WSE is 1/4M year, that is after including the SWL dividends received...over 10 years 1/4M = 2.5M and cap. value of WSE is only about 7.5M, the costs are significant....and too high imho for a small Plus investment company)

if WSE investments had done well...then perhaps WSE would not be so worried about SWL shareprice performance...

because the WSE/LFI running costs are significant when the investment performance is bad then there is more pressure at WSE/LFI to try to do something to get the NAV up or do something to help justify the existance of the management team. The cost is around 3% of the assetts and dividends received are around the same, so they cancel. so the WSE/LFI dividends are paid from selling assetts, so with a few years of bad NAV growth...you can see that WSE/LFI can begin to consume themselves via the dividends.
When investments do well, or the market does well !, then the 3% cost is not significant in that year, but it is over 10-20 years, it heavily affects the compound growth since it is a massive part of the compound growth.

[markt] 02/5/2011 13:58

farmingrgp
BTW....if you are looking at info about Mr D.Marshall...
perhaps you will be interested to look at the performance of Monteagle Marshall where Mr D.C.Marshall is the CEO and his 3 sons are directors or key managers.

The company has raised X millions over the years via issuing shares....(ie. nominal share capital + premium share capital)
but the retained profit after all those years is detailed as being -88k !!
From those numbers alone the company would appear to be a disaster.
(the PAT of a company is used to pay dividends and then the remainder is put into the retained profit bucket....so over some years one would expect the retained profit to build up, rather than be a negative value !).

====

Conaflex has de-listed...(managed by a Marshall)..to save the costs of being listed. I think that Monteagle Marshall perhaps offerred to buy shares of anyone wanting to sell in the de-listing process...if I remember correctly M.M. own a good % of the shares.....perhaps a similar approach to that of Mr P.G. at Chapelthorpe....I don't know exactly ...I haven't got the papers in front of me at this moment.

[markt] 02/5/2011 13:48

Farmingrgp
You asked about Mr Beale
BTW....as well as WSE/LFI accounts being restated ...requirement from the FRRP....there were also 'problems' with the account back around 2005. 'we did it this way and should have done it this way'.
And Mr Beale as the CEO of City Group which prepares the accounts....must have some of the responsibility imo.
How often it is that normal listed companies have problems with their accounts, I don't know. Some accounting rules do allow different methods to be used, and the rules change. Quite complicated I guess.
But for WSE/LFI personally I can not see any complication/diifficulty at all. Simple investment company. The NAV is easy to calculate. The profit for the year is easy to calculate (costs, income, dividends paid in, divis paid out, profit or loss on any share sales, easy imho).

(I would assume that the role of Mr Beale at FIF and Hartim where he is on the boards is mostly with respect to the financial aspects of these companies and issues such as tax, cashflow, debt etc..since he is a chartered accountant....and I would assume that he does that well).

===
Sanctuary Group
"The Board's decision to remove Mr. Taylor followed their conclusion that certain of the prior year adjustments made in the 2005 accounts should have been presented as a correction of fundamental errors and not as changes in accounting policy."

WSE/LFI presented changes to 2009 accounts as being due to changes in accounting policy, since were forced to do so by the Financial Review Reporting Panel, FRRP . Hopefully that will not be changed to be "fundamental errors" !!

[farmingrgp] 01/5/2011 17:55

Markt.
I see that the NBI website states that Marshall joined the Board in 2006, so it must have been close to IPO. What do you know about Beale who is part of the team? He sits on Board of Finsbury Foods where Marshall has been sat for donkey's years. Apparently Beale is an 'Expert' on'corporate governance' He sits on the Quoted Companies Alliance (QCA) Corporate Governance Committee. Does his performance at WSE make him an expert on Corporate Governance? Do you think the other members of that Committee should be aware of his track record?

[markt] 30/4/2011 18:40

farminggrp
Oh, and in addition to Doctors Direct where Mr David Marshall had been a director (chairman I think), going into liquidation around 2006/2007....(approx. 1/2M invested by WSE in Doctors Direct)..also had been director at Sanctuary Group
...and after Marshall left the board of Sanctuary Group in July 2003 it was later under FRRP investigation for its 2005 accounts. Did Mr Marshall see problems arriving ?

And at LFI/WSE...the FRRP forced WSE and LFI to do their accounting in a different way (which was 'strange' before, 3 values, real mkt value of investment, value after subtracting "temporary offset to value" and cost) and to re-state their 2009 accounts. (so much for chartered accountants !)
====

Sanctuary dirs. sold a good chunk of shares before the accounts problems surfaced....ah, what 'luck' ! ;-)

===

26 May 2006 Sanctuary Group
"The Board's decision to remove Mr. Taylor followed their conclusion that certain
of the prior year adjustments made in the 2005 accounts should have been
presented as a correction of fundamental errors and not as changes in accounting
policy. The Board reached this conclusion in the context of its review of the
2005 financial statements in order to respond to questions raised by The
Financial Reporting Review Panel (FRRP)".


Sanctuary Group new MD announced, after previous board was kicked out, and problems with the accounts
"This is another important step in
reorganising the Group and putting it on a sustainable footing with proper
standards of corporate governance and financial transparency"

"proper standards of corporate governance and financial transparency" !!!!!!!
(and noting that LFI/WSE internal operation is opaque in my view)

and litigation with directors of subsidiaries....etc etc !!

[markt] 30/4/2011 17:53

Farminggrp
seeing as how WSE and its Chairman are involved in the coporate actions going on at present at SWL....I would like to inform SWL shareholders of the performance of WSE and LFI under the chairmanship/leadership of Mr David Marshall with his son Lloyd Marshall as a director of the subsidiary City Group, that in fact does a lot of the leg work for LFI/WSE, any other family or friends or wives ?, who knows !)

LFI (investing company same as WSE, owns 44% of WSE, so one could "claim" that LFI controls WSE, ie. that WSE stake in SWL is controlled by LFI and NOT by WSE !).

NAV performance of LFI under the leadership of the Marshalls mentioned above.

1990- LFI NAV= 33p. total divi 0.75p
1991- LFI NAV = 21p, total divi 0.75p
1992- 20p, total divi 0.4p
1993- 37p, total divi 0.5p
1994- 34p, total divi 0.6p

2001- 54p total divi 1.2p
2002- 37p total divi 0.8p
2003- 33p total divi 0.85p
2004- 36p total divi 0.9p
2005- 44p total divi 1.0p
2006- 52p total divi 1.05p
2007- 66p total divi 1.1p
2008- 39p total divi 1.2p
2009- 21p total divi 0p.
2010- 23p total divi 0.6p (same as in 1994 !, ie. no growth)

NAV in years 2000-2011 is the same or less than it was in 1990-2000 !!
ie. no growth. Poor performance. Bad investment for shareholders.
The NAV history seems to indicate a random pattern, ie. that management is not managing, no investment skill demonstrated otherwise there would be an approx. track record showing "growth in NAV".

But the income provided to the Marshall's is approx. 1/2M pounds via salary over just 10 of these years. Any income via investing during this time, not calculated as yet.

Conclusion
The track record of Mr David Marshall at LFI is bad, see the NAV history.
So.....having Mr Marshall on the board of SWL or 'assisting' SWL would not appear to provide any benefit to SWL shareholders, if one looks only at the LFI NAV performance over the last 20 years.

[markt] 30/4/2011 17:35

farmingrgp
In case of interest to you
Mr D.C. Marshall (Chairman of LFI and non-exec chairman of WSE I think) was definitely
NOT
a director of NBI as a result of its simultaneous placing of new shares and flotation on AIM, based on the Prospectus document which names the directors as a result of the flotation, and before the flotation. The name Marshall does not appear. (the float was in 2006....and close to that time Doctors Direct PLC went into liquidation, on OFEX, and Mr D.C.Marshall was the chairman I am sure (ref. WSE accounts) (WSE kissed goodbye to its investment of 1/2M in Doctors Direct !)....so ....it would have been bad to have included D.C.M. in the prospectus, so he wasn't, imho, but then appointed after.
(At Doctors Direct....in May/June 2005....accounts issued almost 12 months late, directors resigning left right and centre....so looks like it was visible that it was dead/dying before the NBI float..so ...Marshall excluded from NBI prospectus as a result imho. (my data comes from the NBI Prospectus which I have..and companies house data))

(The dirs. after the float were named to be Hook, Harris, Gould and Connolly...and WSE with 1.5M shares, but no mention of Marshall).

[farmingrgp] 29/4/2011 17:54

Markt.
I understand that D Marshall was a Director in NBI as from day one. He also insisted that his people provide the company secretary services. I regard this as a conflict of interest.(How can the Company secretary give impartial advice with regards D Marshall?) I understand that he is listed as a 'independant director', which in my book he is not. When NBI was a minnow these things might have just abought been acceptable but with some serious shareholdes on board now there ought to be some fundamental questions being asked by the directors of NBI. AGM might be interesting.

[markt] 27/4/2011 14:48

farmingrp
...amazes me how listed companies are operated, all within the rules one assumes...
..seems to be everywhere

another example
..today's Aggreko RNS includes mention that they made a private placing valued at 170M in 1st Q...but also that they return 150M to shareholders since they have more cash than they need...it doesn't make sense
(the beneficiaries of the private placing may/will receive tax advantages...subscribing for new shares in a company, tax relief imho versus CGT....close to the year end April 5th ? (any new shares probably have made big gain, since big contract announced with Japan etc....what complete 'luck' ;-) )
...but of course, the private placing was NOT open to the normal small AGK private shareholders ! )

[markt] 27/4/2011 14:14

farminggrp
What is the situation regards the new chairman at SWL ?
I thought that the EGM was to appoint a new chairman and that the resolution was approved, ...no ?
...but the SWL RNS makes it clear that the new chairman will be appointed by the board

====

BTW
you mentioned in the past, having to make a compulsory offer for the shares
...if P.G. bought the WSE stake and 1 of the stakes of 5-6% (there are a few) then he'd have over 50% and would have to make an offer....I believe that at least at the minimum price in last 12 months ...the rules I do not know...at Chapelthorpe...the offer was declared as less than the real value...but the directors still accepted to pass it on, which I do not understand...(must be a fair offer, no ?)
(I would assume that PG would want a director on the board for X months before consider any actions, if any, to ascertain real worth
(PG has many contacts...and a director at Pittards in Yeovil...maybe they will help try to find a buyer for the excess site that SWL has)


Noting that the Chapelthorpe board said that the PG offer did not reflect the value of the shares....I understand better your comments of weeks ago of 'viking raider'. But on other hand I can understand offerring the lowest price possible that the rules allow, I would do the same, it's natural !
3% increase on market price at that time...but the shares were up over perhaps 50% in the weeks running up to that moment....

(of course, imho, the 'trick' I assume is to pounce on any low price company/shares before the market realises the value (as at Pittards) and hence before the price rises)

[praipus] 27/4/2011 10:48

Noting Peter Gyellenhammar's interest here I'm tracking his other holding in post 4 of the following thread.

[farmingrgp] 26/4/2011 18:23

Hi Markt.
If you want to get on WSE radar, make a posting on NBI website. Dave Marshall will not be pleased to have his dirty washing displayed on that website or even at the forthcoming AGM. May 26th. I believe in London...it could be interesting. Hopefully Blackrock will be there.

[markt] 26/4/2011 17:37

I know WSE directors read the ADVFN SWL message board....no reply there, so will post hear with the hope that it triggers a response.

I ask the WSE board to give the info about the WSE Share Benefit Scheme (4% of the share of WSE to be awarded at no cost, not options to buy at a price, but free, 0p) (the shares = 1/2M of assetts of WSE at the last reported NAV)

- How many shares to which directors of City Group PLC ?
- What are the performance conditions for these shares to be vested ?
- Was the AGM resolution legal, (2006 AGM) by allowing D.C.Marshall to use the votes of LFI (43.8% of WSE) to vote in favour of a share benefit scheme where his son (L.Marshall) is one of the 2 main beneficiaries )
- was the the AGM resolution legal (2006 AGM) since it did not disclose to shareholders that one of the 2 main beneficiaries would be the son of the main director at WSE. (the company act requires imo that related parties are disclosed and that votes can not be used in items relating to related parties, especially a son !)


(the Company Act or good governance rules I think require this type of information to be reported to shareholders...in many company accounts you can find the details for share options and performance conditions to be met.....but WSE keeps the information secret...is the company breaking any rules of the Company Act ?....gives the impression that "intentionally" keeping shareholders in the dark)

(I note that the performance of the LFI and WSE shares have been bad over the last 10-15 years, going sideways, LFI worse than WSE ...

many shareholders have exercised warrants at prices higher than the current market price, so they are still sitting on a loss, X years later, eg the 2006 WSE warrants exercised at 64p, market price now in 2011, 5 years later, price to sell WSE shares 37p !!).

And the director's son will perhaps receive free WSE shares !!

[markt] 26/4/2011 15:50

farmingrp
BTW
I was wrong about the % for control of a company....I had assumed that it was 50%
but reading the regulations, it says 30%, imo

(perhaps the word 'control' should be interpreted better as being 'influence' or something)

(basically, the system does not want anyone in a PLC to have too big a stake, so that a company operation can still be democratic/free)

[markt] 26/4/2011 15:43

farminggrp
if you are ever researching about Mr P.G.
you may be interested to note that the Yorkshire post newspaper website has many articles

.......since it looks like a lot of the companies that P.G. has invested in are in that region....looks like they are often companies with property assetts or other assetts (I guess so that can sell off that assett to bolster the accounts and back up the share price, so less/no risk to P.G.'s investment cost.....or pay out as a special divi)

====

You mentioned Chapelthorpe
...interesting to see that the directors wrote that the price offer from P.G. did not fully value the company shares
....interesting
...(if you control over 50% you must make an offer to buy any shares of anyone interested to sell, they can choose to keep if they wish)

[markt] 13/4/2011 18:43

...be interesting to see what plans the P.G. chairman has for SWL...

..but after a quick look at 2 or 3 companies where P.G. has a chairman at the company...it looks like his style is to
- improve profitability ...such as by reducing PLC HQ costs or other costs and not spening in any superflous or non-ideal 'extras'
- sell off any assetts that are not needed
- return any excess cash to shareholders (such as announced recently at Densitron)


(personally I think that part of his style in returning cash is to get back a good chunk of any investment cash that he made by buying the shares...hence reducing the risk for that investment cost money...and hence I guess that perhaps his investment style is based on 'return of investment' investing calculations

many people do the same but base their calcs. on dividend payments or EPS...ie. P/E rating. ie. how many years before the EPS will effectively pay back the cost of my investment
.....for a PI the cash or assetts inside a company are often not included in calculations before buying shares (when they should be)...but of course Joe Public can not get the board to take actions to return cash to shareholders or sell off any unwanted buildings/land...but P.G. can make/push those things for his investments by having the CEO or chairman work for him....in that case the assetts inside a company are much more important, since you can try to push to get them paid out, as is happening at Denistron (he paid around 13p for good part of his shares in 2002/2003, by getting 5p cash back he is perhaps happy since Densitron has had a bumpy ride since 2002....and try to get the EPS up to support the share price).