Sweett Grp Share Discussion Threads

[battlebus2] 14/2/2016 21:49

Thanks Norbert for taking the time to attend and report, I don't currently hold but will look to if we get that spike down.

[norbert colon] 14/2/2016 21:05

I attended Southwark Crown Court on Friday for the Sweett Group sentencing and thought it worth posting the salient points here as follows. I have also provided a link to some press coverage which largely concurs with my own notes:



Positive Points:

- Defence QC noted in dialogue with the Judge that the SFO are not in the business of putting companies out of business and the Judge noted that indeed "this is not the case here". This is a very important point and one that I am sure some have considered until now as a possibility (i.e. the company folding). A huge relief.

- Any fine / penalty will be 'affordable' and the defence QC highlighted CSG's cashflow statement to March 2016 and balance sheet / debt profile to demonstrate what was, or in fact, what was not affordable. As highlighted in the article above, a fine of GBP 2.5m was seen as potentially not affordable. From my understanding of the various 'steps' forming Section 7 of the Bribery Act, the fine could be anywhere from around GBP 1.5m to GBP 3.5m depending largely on specific factors such as the gross profit made on the contract in question, culpability category (a multiplier of which may be as low as 100% or could be as high as 300%), whether 'harm' was caused and finally 'adjustments' for things such as self reporting (to the SFO) which they did, a guilty plea, and how much they cooperated. The defence also stated that whilst the Board / Group tried to resolve the issue, the management of CSI did not assist. It was made clear by the defence that the Board of CSG had been majorly overhauled since the situation came to light and that the 3 key staff from CSI at the centre of the case were no longer employees. The MENA business had also be closed.

- The defence noted that CSG were a very well respected UK company trading since the 1920's and with hundreds of UK employees working on numerous projects such as schools, hospitals and even courts (irony....). The company had already paid a 'huge' financial cost (lawyers fees, closing MENA etc).

Negative Points:

- The prosecution (whilst very hard to hear from the public gallery) was robust in its case and went into details of the history of the case (much of which is covered in the press report) although my takeaway was that they have already admitted guilt (Dec 2015) and hence the main issue to resolve is the quantum of the fine as well as ensuring shareholders and their clients that such an event will never occur again. The prosecution referred to the recent other SFO case against Standard Bank where their fine was equal to the fee / profit they obtained x 300% x 0.66. For CSG this would equate to a fine of circa GBP 3.2m although as noted in the press coverage there was further discussion of a sum in the order of GBP 2.5m although my understanding was that this did not take into account a number of factors put forward by the defence.

- Clearly CSG are going to be fined a 7 figure sum and no doubt incur other costs. The results for 2016 and 2017 are hence going to look pretty sick.

- The prosecution noted that KPMG's audit reports (the first in 2011) was not acted upon by the Board and highlighted some serious misgivings re: their Middle East operations. Even in 2014 there were still unresolved issues. A further comprehensive report / audit was done in 2015 and my understanding is that this has been fully acted upon although shareholders should be given evidence of this.

- Potential reputational damage. I would argue that CSG have a large number of loyal and long standing UK clients which I would hope will stand by the company given that this case is purely Middle East based.

In Summary:

I went into the court expecting to hear a fine in the sum of GBP 1m to 3m so I am pleased that this indeed seems to be the likely outcome. Clearly this has cost CSG a lot of money and I am sure is an episode that they want to put very firmly behind them. Whilst their results for 2016/17 are going to take a big hit, they now have streamlined business (no APAC / MENA) and can move ahead to return to rebuild the reputation it deserves. In my mind there is no doubting the quality of this business and from an investment perspective assuming a 2-3 yr horizon I am sure there will be a significant re-rating off the back of the buoyant market in which they now operate. Short term I can see the share price remaining weak and possibly seeing a sharp spike down; for long term investors who know and understand the CSG business I would argue this will be a buying opportunity.

Final sentencing was adjourned as per the RNS on Friday - this may take place on Friday 19th February although TBC and I expect to see another RNS this week.

Any errors or omissions in the above notes are purely my own.

Good luck to all.

[jimmywilson612] 13/2/2016 00:29

Any idea of when the date will be?

[battlebus2] 12/2/2016 23:16

It's Friday they all needed to get down the pub :))

[cc2014] 12/2/2016 23:15

Just the vagueries of our British court system I would guess. Sentencing wasn't planned until Monday - probably just availabilty of staff

[vino] 12/2/2016 22:23

any thoughts on why adjournment?

poss deal being done maybe and why down 1p late on today after the announcement

all very concerning

[vino] 12/2/2016 09:46

Court case 12.2.2016 Southwark CC
Sentence hearing 15.2.

fingers crossed for good outcome whatever that is!

[arthur_lame_stocks] 11/2/2016 18:50

I've been watching these, havingmade money on them previously, and if the outcome is good I think I may also consider buying some as long as the price doesn't go up too much on the news as I think they will look cheap based on the earnnings of the continuing businesses now they are focussed on the UK.

Only worry really is whether or not the commercial property market is peaking, I also own a few shares in AUK which is on a pe of 6 but has warned that going forward they expect the UK to slow down.

[jimmywilson612] 11/2/2016 17:57

Sweett's in court tomorrow - this is my prediction:

Good outcome - Share gets battered
Bad outcome - Share gets battered more.

I'm a holder so hope I am wrong but in this market I cant see a big increase in the short term from here - after the judgement I will be adding more if its a good outcome tomorrow.

[whum] 14/1/2016 15:00

wow 7% increase

[vino] 07/1/2016 17:05

I suppose the only positive at the moment from J Colon comments is that the staff and Directors have quite a few shares between them, lets hope the fine is not too great

[norbert colon] 07/1/2016 09:55

Jimmy

You highlight the juxtaposition of a company that continues to win new work and secure extensions to existing contracts / commissions as well as trading well, yet remains under the black cloud of (primarily) the SFO investigation.

By the end of this year will CSG be bankrupted by the SFO fine and be swallowed up at a huge discount by a opportunistic and cash rich predator with all shareholders left high and dry or will the proverbial phoenix rise from the ashes...?

Crystal balls at the ready....my money is currently firmly on the latter although clearly caution is needed.

[jimmywilson612] 06/1/2016 15:08

Sweett Group, the provider of professional services for the construction and management of building and infrastructure projects, has secured a two-year Extension of Term on Network Rail's Project Support Services Agreement.

The framework, which supports works worth approximately £2.5bn, will now run until 2017. Sweett Group will continue to provide commercial services throughout the national schemes life cycle. This will include cost management, cost planning and estimating, as well as post contract management and dispute resolution services, for all of Network Rail's regions across the UK.

Originally appointed to the framework in 2012, we have been involved in numerous schemes across the UK with staff deployed in London, Manchester, Swindon and Glasgow.

Gerard Fitzpatrick, Head of Rail for Sweett Group commented: 'We are delighted with this two-year extension. This is testament to our relationship with Network Rail, and the quality and technical competence of our staff who service this framework. We currently have over fifty professional staff working on Network Rail projects, and we expect this to grow significantly over the next 18 months. This extension supports our continuous growth in the rail and wider infrastructure market.

[jimmywilson612] 06/1/2016 15:08

Sweett Group, the provider of professional services for the construction and management of building and infrastructure projects, has been appointed by Health Services Executive (HSE) to provide quantity surveying services on a residential care facility in Drogheda.

The project will include the redevelopment of the existing HSE campus at St. Mary's Boyneview to provide 100 HIQA compliant beds. The outline plan anticipates demolishing one of the existing residential care centres, refurbishing an existing centre and the phased construction of two new facilities, to accommodate the new 100-bed brief. In addition, there will be new residential courtyards, landscaped gardens and associated campus site infrastructure works, which will incorporate links and lifts between all three buildings.

The entire project totals approximately 6,000m². The works will be phased, due to cashflow constraints and the requirement to maintain the existing centre 'live'. Once complete, the residential care facility will provide a range of healthcare services including respite, transition, palliative and long-term care, together with support for people with dementia.

Colin Smyth, Project Lead at Sweett Group, said: 'We are delighted to be appointed on this noteworthy project, which will make a significant difference to the health needs of the people of Louth and the wider community. Sweett Group has a strong track record in the health and residential sectors, and we have once again provided HSE with a professional team who have extensive experience of delivering complex multi-phased healthcare construction projects in both acute and non-acute settings.'

The project was secured from the National HSE Framework, which is for non-acute healthcare projects ranging in value from €5-20m.

[jimmywilson612] 06/1/2016 15:07

Any holders still here?

Some good news stories coming out here:

"Sweett Group, the provider of professional services for the construction and management of building and infrastructure projects, is providing employer's agent services for Bouygues Development, who are delivering the £70m Addlestone Town Centre regeneration development.

The development comprises 10 blocks across a 2.6ha site including a 101-bedroom Premier Inn hotel, a Little Waitrose foodstore, a six-screen cinema, 5,574m² of additional retail, cafes and restaurants, 213 new homes (including a mix of affordable, private rented and private sale units) and a multi-storey car park with over 300 parking spaces.

Director of Project Management, Andrew McSmythurs said 'We are delighted to have this opportunity to extend our working relationship with Bouygues Development and to play an important role in creating a new destination for shopping and leisure in the heart of Addlestone'.

Eoin Conroy, Head of Region for Bouygues Development said 'Revitalising Addlestone Town Centre with this significant mixed-use scheme is an exciting project for us at Bouygues Development. We are pleased to have Sweett Group as part of our supply chain to deliver this regeneration, which will contribute positively to the community in Addlestone'.

[jimmywilson612] 17/12/2015 15:42

Hopefully the rise indicates someone knows something we dont know yet! Here's hoping - seems like news leaks easily here if my memory serves me right.

[whum] 15/12/2015 18:57

in all these so called bribery cases no account is taken of the
corrupt environment in which these companies have to operate.
it is the modus operandi in the vast majority of jurisdictions.
if the companies did n't comply no business would be conducted

[diku] 03/12/2015 00:02

A lot of these boards members are the typical "Yes Sir" types...another company in similar business MMC is also going down...

[diku] 02/12/2015 23:40

Yes but who appoints the advisers?...its the insiders and they do have a choice...

[my retirement fund] 02/12/2015 23:21

Indeed I have calculated that if anyone is taking them to the cleaners its their advisors rather than the SFO.

[cc2014] 02/12/2015 22:48

Paying a fine of £1.1m would be less than they are spending annually on advisers on this topic.

[norbert colon] 02/12/2015 22:05

One of the 'tests' of any such prosecution, as I understand it, relates to "public interest" and its not in the public interest to send an otherwise well respected company with a very long trading history to the wall with the loss of 1800 jobs.

[spooky] 02/12/2015 21:40

At this stage they don't have the money to pay any fine but logic suggests that the fine won't be big enough to put them out of business.

[my retirement fund] 02/12/2015 21:01

That is in an entirely different league JimmWilson612.

Standard Bank has revenue of US$ 16.6 Billion and Net income US$ 1.6 Billion (2010) from wikipedia.

Contrast that with Sweet tiny revenue and income.

Infact you can do a proportional calculation, by my reckoning that the case the fine would be:

Standard bank rev 1.6BN Fine 32M (1.3% of revenue)

Sweet rev 88M Fine (1.3% of revenue) = 1.1M

However fines in the financial sector are normally deemed to be more severe as its a sector so open to fraud that penalties need to be kept as harsh as possible.

I doubt some rogues in an Arab office dealing with a load of crooked Arab cheating scum can be viewed in the same context.