We started with Mello Monday and from that evolved Mello Central and now we have 'Mello Morning After' which will actually be held at the Mello Central venue of FinnCaps HQ near Liverpool St and the first one is next Tuesday 17th January. It is named the morning after purely because the evening before is our regular third Monday Mello event down in Beckenham. Everybody is welcome at both events.The format for the new morning event will be as follows..09.30-10.00 Arrival (coffee and biscuits provided) 10.00-11.00 Silverdell (SID) presentation followed by Q&A 11.00-12.30 French Connection (FCCN) presentation and Q&AWe shall use the same facilities that we do for the very well attended Mello Central event but we only expect to need the front half of the lecture room so I will be hoping to accommodate around thirty investors.The appearance of French Connection is by popular demand as you will remember this poll ? http://boards.fool.co.uk/poll-mello-central-meets-x-factor--...It was pretty conclusive or at least as far as those four options are concerned and French Connection came out ahead with 56% of respondents wanting to see them at Mello. So my task was fairly clear.That was over fifty fools and although I tried very hard to get FCCN to the December Mello Central event (and they did actually accept the invitation) unfortunately an overseas business trip got in the way but both Neil Williams the CEO and Roy Naismith the FD said they would do everything possible to meet up with us in January as their year ends on the 31st and their closed period would make communication difficult after that. They could not do our January Mello Monday evening but the Mello morning after would be perfect. So here we are.The format will be much the same as our four company Mello Central except there will be much more time for the presentations and Q&A so it should be perfect for those of you who like the in depth sessions we have at the Mello Monday events.First to present will be Silverdell (SID) Current share price 11p I know very little about Silverdell although it appears to be a company which has done extremely well over the past year or so from a chequered background under previous management. It started as a cash shell and four subsidiaries were bought in pretty quick succession. All were successful individually but suffered from a complete lack of integration at the PLC level. A rescue rights issue at 5p looks to have started the turnaround back in 2008 when the current management were drafted in. The core original business is in asbestos remediation and consulting where they enjoy a market leading position (and are the only listed operator in the sector). There are significant regulatory barriers to entry and also resilience to the economic cycle (as asbestos management is not a discretionary spend!) The remaining market for asbestos just in the UK is around £17bn, expected to play out over the next 30-40 years. Forecasts suggest that by 2050, there will still be around 20% of all the asbestos currently in UK buildings remaining and needing to be removed not even considering the wider global opportunity. I am told, and no doubt the Silverdell team will explain, that the real growth driver for this business is the shift in focus from pure asbestos to a broader specialist environmental support services group, providing a wide range of services (from scaffolding to specialist paints and coatings etc) to highly hazardous, tightly regulated sectors such as nuclear and oil and gas. Now that is a market which totals over £5bn a year, so clearly far larger opportunities to play for...and they have regularly been included on (and won) tenders against the likes of Interserve, Cape, Mitie, Hurtel etc. This RNS in November regarding a framework contract win with Magnox gives a good indication of just how significant their current opportunities can be http://www.investegate.co.uk/Article.aspx?id=201111081245197...That is a 10-year, £300m+ contract with 6 contractors on the framework, so working the averages that could mean Silverdell getting around £5m of work per year and possibly more. The last full year results released a few weeks later on 30th November show they are already doing very well and certainly in a growth phase...http://www.investegate.co.uk/Article.aspx?id=201111300700210...Here are the highlights...· Order book up 73% to £107m at 31 October 2011 (31 October 2010: £62m)· Magnox 10 year framework won in October 2011· National Grid 3 year framework won· Gross profit margin up 1.5 ppts at 27.4% (2010: 25.9%)· EBITDA* up 5% at £4.1m (2010: £3.9m)· Adjusted pre-tax profit** up 15% at £3.0m (2010: £2.6m)· Statutory profit before tax of £2.5m (2010: £1.8m)· Adjusted EPS** up 56% at 1.4p (2010: 0.9p)· Fully diluted EPS up 100% at 1.0p (2010: 0.5p)· Gearing slightly lower at 22% (2010: 23%)· A H Allen and RDS successfully acquired and integrating on trackSo...Silverdell posted revenues of £59.7m for the full year to September 2011 and pre-tax profit of £3.0m (up 15%). They have also committed to paying a dividend for the first time in 2012 which is usually a good sign. Victoria at FinnCap certainly likes them and it has been one of her top tips for 2012 apparently so we need to give them a close inspection...Silverdell that is, and we must ask who her other ones are?Then next up will be French Connection (FCCN) current share price 36pThat is about 50% lower in share price than when I suggested them as a candidate for the poll in November so they really do need looking at closely and researching ready to ask some serious questions as the market cap is now fully covered by the cash on the balance sheet not to mention all those clothes in the shops and warehouses ! So where are the problems and what do investors fear at FCCN ?Well you could start here....http://www.investegate.co.uk/Article.aspx?id=201109190700184...Those were the interim results last September with highlights as follows...· Revenue up 7% to £102.8 million (2010: £96.5 million*)· Profit before tax of £0.7 million (2010: £0.2 million*) · Closing net cash of £30.9 million (2010: £30.2 million)· Interim dividend increased 20% to 0.6 pence per share (2010: 0.5 pence per share) The general tone and outlook from Stephen Marks, Chairman and Chief Executive of French Connection was promising and quietly confident.. "I am happy to report that, in tough retail trading conditions, we achieved growth in like-for-like retail sales and a substantial increase in both wholesale and licensing income. We are reporting a profit after tax in the first half of the financial year for the first time since 2008 and we are firmly back on a growth path. "With the business on a stronger footing, we are in a good position to expand operations internationally. We see great opportunities to grow revenues from both franchising and licensing. "The global appeal of our brand is evident in our continued growth overseas, and over the next three years we are looking forward to opening as many as 25 more stores in China under our Joint Venture as well as additional store openings by our franchisees in Russia, India and Turkey."The balance sheet remains very strong with £30.9 million of cash and no debt. The 20% increase in interim dividend reflects the Group's profitability and cash generation and the Board's confidence in the future. "We do not anticipate any easing in the retail environment during the second half of the year. However we have a proven ability to produce high quality and desirable ranges and with good increases in wholesale forward orders to support this, we remain confident in achieving our expectations for the full year."However by November trading seem to have taken a material turn for the worse and the very mild Winter weather conditions will not have helped as customers will not have needed to buy those higher margin essentials like Winter coats and woolies usually big sellers in colder snap conditions. Here is the November IMS...http://www.investegate.co.uk/Article.aspx?id=201111170700182...Revenue in our UK retail stores was good during the early part of the third quarter, but then slowed considerably following the end of the sale period. The UK fashion shopper continues to act very cautiously and, in addition, the unseasonably warm weather has had a negative impact on sales of our winter ranges. As a result, like-for-like retail revenue in our UK/Europe retail business is disappointing, having fallen by 9.5% year on year over the last three months. Despite this we have maintained our full-price stance throughout the Autumn/Winter season. Based on our experience in the summer sale earlier in the year, we expect that revenue in December and January will be stronger than last year, although it is unlikely that the shortfall so far will be fully recovered. The UK/Europe wholesale business continues to perform well, with revenue 6% ahead of the prior year in the period. Wholesale forward orders for the Summer 2012 ranges in UK/Europe remain well ahead of last year and this will boost revenue towards the end of the financial year. This also provides confidence in our new ranges and supports our trading expectations for the new season.Hopefully we can get some idea of which way the trends are leading for their Spring season and a long range weather forecast ! Retailers are very much out of fashion in the market and FCCN has had a turbulent last year as a whole ranging from highs of £1.30 all the way down to the current 36p. A little positive news again backed by that cash and we could see the share price back up close to £1 again.The amended broker forecasts for the current year after that IMS seem to come in at just below £6m ptp and 5p eps with a 1.7p dividend which suggests a p/e around 7 and a nice yield of about 5% which if delivered looks a good point to invest. Fashion and weather can change so buy when out of favour and sell when all the rage would be the trade here and many seem to have managed that through 2011 ! I think FCCN is currently very oversold unless they have more bad news to come and they usually have final results out pretty quickly in mid March. My view is that they have not had a trading update after Christmas so the odds are that they are in line with the new forecasts. Anything can happen but meeting the management should help to decide if you like the look of the Spring catalogue as they say in the fashion world !!If you would like to join us for the Mello morning then head for FinnCap at about 9.30am and their HQ is at 60 New Broad Street which is just 100 yards from Liverpool St station in London so very accessible. I would be grateful if you could email me to say you are coming along as it helps with planning the seating and the refreshments not to mention printing those excellent binders with the company presentations.You can email me by replying to this post and ticking the email reply to author option. Do not forget to do the same if you are coming to the Mello Monday event which is the evening before and will include an update from Software Radio Technology and a surprise guest. The dinner will be from 6.30pm on Monday 16th January but I am sure you already had that one listed in your lovely new desk diaries.See you for the evening or morning after...you are very welcome at both.David
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