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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 146461  
Subject: SID Date: 02/07/2013 08:05
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Doesn't look good;

http://www.investegate.co.uk/silverdell-plc--sid-/rns/suspen...
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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141879 of 146461
Subject: Re: SID Date: 02/07/2013 08:33
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Has to be the long rumoured equity raising surely. Maybe they were planning to launch it this morning but something went wrong getting it done it time and it leaked somewhere?

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Author: Spannercadet Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141880 of 146461
Subject: Re: SID Date: 02/07/2013 08:40
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was there not a denial of a fundraising at the the agm ?

this stinks.

sc

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141881 of 146461
Subject: Re: SID Date: 02/07/2013 08:46
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Maybe the recent contracts which they won (and which would require working capital investment up front) have meant that, whilst at the AGM they were fine, they now need more capital? Am guessing....just that if that RNS is right and the suspension is because of something to do with their 'financial position' then in all probability it has to be an equity raising

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141882 of 146461
Subject: Re: SID Date: 02/07/2013 08:47
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Has to be the long rumoured equity raising surely

Possibly but then I would have thought the suspension statement would have said something along those lines. The 'clarification' word suggests something more serious.

The interims were less than a month ago and said;

The Group's result has been encouraging through a difficult first half and the performance of our overseas operations, coupled with the strength of the UK order book and current margin run-rates gives the Board confidence in the achievability of its forecasts for the full year results.

It would seem to me that something unexpected has happened rather than a planned placing. If I were to guess I would say it is either a contract cock up or an accounting cock up.

No doubt people will say that there was evidence in the shape of the graph or share sales or whatever. I am personally surprised and it is perhaps one of those bolts from the blue that remind us of the benefits of diversification of holdings.

I suspect that there may be a rescue placing at a derisory price.

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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141883 of 146461
Subject: Re: SID Date: 02/07/2013 08:53
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The usual suspects for "suspension pending clarification of the Group's financial position" are:

* Covenant breach
* Withdrawal of bank facilities
* Discovery of accounting irregularities
* Discovery of fraud
* Bad debt
* Major project gone wrong

They would not use that phrase if it was a planned fundraising for expansion.

This is a real shock. I hold a good slug of these. The management seemed straight and down to earth when I met them at Mello. We'll see if they were hiding a UXB under the floorboards.

I expect some of the persistent selling was 'informed'.

MrC

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141884 of 146461
Subject: Re: SID Date: 02/07/2013 09:07
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Real shock....and not just to us - one of the NEDs bought 150k of these in early June remember! Regarding teh selling, its odd that there haven't been any RNS' - in theory therefore no major (>3%) shareholder has gone through a full percentage point holding.

Whilst the interims weren't audited, they contain the going concern principle:

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the Going Concern basis in preparing the interim financial statements.

I wonder whether its something to do with that and that they got their working capital forecasts wrong. Share price is going to tank either way and hopefully the first thing SID will do once this is clarified is to fire the CFO

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Author: Carmensfella Big red star, 1000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141887 of 146461
Subject: Re: SID Date: 02/07/2013 09:25
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I was absolutely stunned and shocked when I read the announcement this morning. A large group of us met with the directors post interim results only three weeks ago and there were 18 of us present. There was no indication of any financial distress but we were all very keen to know what had been causing the share price weakness especially as mixed messages had been hitting the market about the possibility of a fundraising being needed to increase capacity to take on large projects and 'supercharge' growth.

However checking on individual parts of the business looking for clues this morning I find this...

http://www.winding-up-petition.co.uk/kitsons-environmental-e...

Kitsons Environmental Europe Limited has had a winding up petition advertised against it today.....13th June 2013


We must have all been asleep to not have an alert get through somewhere to our large group of investors. That said there has been persistent selling for many weeks now and maybe a number of company insiders were aware of this problem at Kitsons and the rumour of a fundraising has been a coincidental smokescreen !?

I have no idea personally but I am getting as much information as I can before challenging the advisors and the management as one still hopes something can be salvaged here but Kitsons was a major part of the business before the EDS acquisition. No wonder the vendor of EDS was keen to get out before his lock in expired if he was getting any indication whatsoever of the potential Kitson problems.

There have been new contracts, positive updates , increased order books and even director buying but the company and its advisers did not feel a winding up petition against its major division was worth an RNS on 13th June ? The company bankers HSBC were no doubt of a different opinion and I suspect are the ones to be calling the shots now as the debt facilities are with them. That is my best guess until we hear anything further but I will be seeking a conference call with management at the very least.

Not a good start to the day as Silverdell presented at our February Mello along with Gervais Williams who is also a very significant holder of the company and will not be at all happy either. This bolt from the blue reminds me to continue my investment strategy of having a very very wide portfolio of holdings so my holding in Silverdell was only just over 1% but it still hurts to see this slow car crash that the company have taken us into without seat belts or air bags ! This is definitely one for investigation as some parties were selling with the company not being as clear with communication as it now appears they should have been !

David

Twitter@carmensfella

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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141888 of 146461
Subject: Re: SID Date: 02/07/2013 09:29
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Hold a fair few of these myself.

They've really botched their PR over the last few months!

To be fair, was impressed with Nutley at the Mello, less so Johnson.

Not much to be done now unfortunately. I had wondered about the persistent declines the last couple of months - seems the old adage of news following price being proved correct again.

If somebody was selling on non-public info I'd hope for an IT investigation, but fear that will never happen.

Bit puzzled by the non-exec purchases in June.

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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141889 of 146461
Subject: Re: SID Date: 02/07/2013 09:41
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A post by barkinglad on iii on 12-6-13:
1. The downgrading of Kitsons Rating by B & B following a winding up partition by G.P.M. Group on the 10.05.13
2. A warning of winding up action issued by HMRC in April
3. Suppliers claiming that they have not been paid for services/goods supplied late 2012.
4. The resignation of a number of senior directors.


http://www.iii.co.uk/investment/detail?code=cotn:SID.L&d...


Also, probably not connected but:
Site supervisor David Galloway will receive £76,200 from his former employers Kitsons Environmental Europe Ltd...Kitsons had alleged that Mr Galloway had been falsifying information on a timesheet for financial gain.

Operations manager Ralph Livingston had given evidence at the tribunal which the panel said was “simply not credible” and included a “bewildering sequence of events which impacted on credibility”.


http://www.thecourier.co.uk/news/local/dundee/dundee-man-awa...

@MrContrarian

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Author: TrafficCop One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141891 of 146461
Subject: Re: SID Date: 02/07/2013 09:58
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Well this reinforces the points I just made in a post on the subject of "AIM shares in ISAs" of the risks of AIM shares, which several people noted in the consultation responses.

Roger Lawson, ShareSoc

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Author: investorschamp One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141893 of 146461
Subject: Re: SID Date: 02/07/2013 10:19
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Absolutely scandalous!

The broker/nomad must have been aware of the issue and should have surely pushed for an announcement well before now.
Also not sure what the FD was doing allowing this to get out of control

There are clear issues surrounding the accounting treatment of work in progress and early booking of revenue which is evident in the cash flow and came to the fore when I pushed management about things recently.

I fear that what is apparently a small creditor issue could result in a multitude of sins being uncovered!

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141894 of 146461
Subject: Re: SID Date: 02/07/2013 10:30
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Kitsons Environmental Europe Limited has had a winding up petition advertised against it today.....13th June 2013

In the year to 30/9/12 Kitsons Environmental Europe Limited had turnover of £27.3m and made a PBT of £1.3m.

They also had debtors of £11.9m of which £3.45m was from group companies.

They had creditors of £5.6m of which PAYE was £876k and VAT was £409k.

The VAT of £409k doesn't suggest to me a particular problem on a turnover of £27.3m.

The social security costs for the year was £1.486m which would suggest to me at £876 still owing at year end they were in arrears. A total of £1.5m was owed to HMRC at year end payable within 12 months.

Cash at year end was £601k.

There is no mention of how much bank facility the subsidiary had but on a standalone basis I would have thought it was undercapitalised.

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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141895 of 146461
Subject: Re: SID Date: 02/07/2013 11:07
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Is there any indication as to when the position will be clarified?
Agreed it sounds ominous - but the speculation is worse!

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Author: dendyver Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141896 of 146461
Subject: Re: SID Date: 02/07/2013 11:32
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Tom Winnifrith has an angle on it

http://www.shareprophets.com/views/887/scoop-silverdell-shar...

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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141897 of 146461
Subject: Re: SID Date: 02/07/2013 11:38
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Tom Winnifrith says A Trade creditor pursued Kitsons for an amount (I cannot established how much) and in the end took it to court to get a winding up order. It secured that yesterday and so the company’s bankers (HSBC) has put Kitson’s into administration (not Silverdell PLC). The company is now sitting down with HSBC to see where the group stands.

The bottom line is that it is not a foregone conclusion that Silverdell is toast.


http://www.google.com/gwt/n?u=http://www.shareprophets.com/v...

I have been phoning the High Court all morning to find whether the order was granted. Why don't they just stick it on their website?

No listed company would allow a significant profitable subsidiary to be wound up unless:
* It wanted it to be liquidated
* The parent did not have cash to keep it solvent
* Insane stubbornness in the subsidiary in refusing to deal properly with a creditor dispute

MrC

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Author: scoodooby One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141898 of 146461
Subject: Re: SID Date: 02/07/2013 12:11
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Another company with a huge rise in trade receivables from the previous period on the half year report.

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Author: BrianGeee One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141899 of 146461
Subject: Re: SID Date: 02/07/2013 12:38
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Mr C, I think the case was adjourned, but I'm not 100% sure.

What seems to have happened was the petition was issued some time ago. The company could have settled at that stage or thereafter. They were apparently given opportunities to settle, and also did not need to let the petition be advertised to other creditors. They were offered the opportunity to have the petition withdrawn, but didn't take it.

So the hearing went ahead. Apparently at the beginning of the hearing, the company requested that it was adjourned for one week, as HSBC was planning to wind-up "the group" within the week. Seems astonishing, but that's what I heard.

The petitioner was paid his £60k, so I guess there was no reason to object to an adjournment.

I'd like to get hold of the transcript, but haven't yet.
Brian.

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Author: loglorry Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141901 of 146461
Subject: Re: SID Date: 02/07/2013 12:58
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I don't follow SID much but I'm shocked but not that surprised by recent events. One thing I've found useful is to setup Google alerts on related phrases for a company. I suspect if a Google alerts had been set up on the subsidiary company names it may have flagged up some of the problems. I hope it works out ok for holders though.

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Author: ClubNosey Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141902 of 146461
Subject: Re: SID Date: 02/07/2013 13:18
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Kitsons Environmental Europe Limited has had a winding up petition advertised against it today.....13th June 2013

The judgement was made against Kitsons on the 19th June. It was for a total of £28,330. Looking at their last accounts, there was no debt so I there must be more than this. If anyone wants a copy of their accounts then feel free to contact me directly.

Nosey

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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141904 of 146461
Subject: Re: SID Date: 02/07/2013 14:07
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Ive had another brief look through their accounts and nothing stands out as being a problem on a consolidated basis.

41 days on average to collect receivables, 67 days on average to settle trade creditors. Cant see there being a cashflow problem and it seems a solid company if published figures can be believed.

Given their penchant for putting out strange statements, perhaps this is just an over-reaction on their part.

The disputed amount seems small, innocuous even - perhaps this is just a dispute that went too far. A wind-up order just seems extreme for a business that seems healthy and cash positive. KPMG are the auditors and there were no going concern issues at the last audit.

Something very strange is going on here. This sounds like sopmebody dropped the ball - possibly missed a court hearing or something.

Nevertheless, time for a head or two to roll - these missteps are becoming way too frequent to be excused as one-offs.

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Author: JakNife Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141905 of 146461
Subject: Re: SID Date: 02/07/2013 14:21
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BrianGeee,

So the hearing went ahead. Apparently at the beginning of the hearing, the company requested that it was adjourned for one week, as HSBC was planning to wind-up "the group" within the week. Seems astonishing, but that's what I heard.

This doesn’t follow logically, a bank doesn’t normally plan to wind-up a group, they seek to keep subsidiaries trading on a solvent basis so that they can be sold as a going concern to maximise recoveries. Also, if a bank has a problem, then it rarely waits, it gets stuck in straight away. Given the suggestions that the creditor was paid to go away then this looks like gross incompetence by subsidiary management who’ve let a supplier disagreement get out of control and the supplier has played the ace card and won.


ClubNosey,

The judgement was made against Kitsons on the 19th June. It was for a total of £28,330. Looking at their last accounts, there was no debt so I there must be more than this. If anyone wants a copy of their accounts then feel free to contact me directly.

I have the same accounts. If you look at note 13 on page 14 you’ll see a line of “trade creditors” for £2,378,928. The “debt” will be in this line, it would appear to be a “debt” arising from the late payment of a trade creditor.


I also have a stake in SID and met management at the Mello Central on Mon 10th June. I found the CEO, Sean Nutley, convincing and enthusiastic; the CFO, Ian Johnson, was less convincing. Given what was said at the meeting (particularly when Sean was focusing on clarifying the comments about raising additional capital, which he thought had been taken out of context and somewhat misreported) then I’m currently expecting this to turn out to be a monumental cock-up with trading restored by the end of the week and a lot of humble pie. If it’s not then I have an issue reconciling the comments at that meeting with where we find ourselves today.

JakNife

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Author: TMFMayn Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141906 of 146461
Subject: Re: SID Date: 02/07/2013 14:26
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Ok, so I don't normally post on these boards much and have never followed Silverdell, but I feel some comment is warranted anyway :-)

To me at least, the problem is not one of Nomads, poor regulatory disclosure, AIM rules, cavalier management, Google alerts or informed selling...

..but one of poor basic investing skills.

Look at the full-year results:
http://www.investegate.co.uk/silverdell-plc--sid-/rns/final-...

I see a number of warnings:

Net debt of £11m -- looked large versus op profit of £4.5m

Acquisition of £18m -- looked large versus op profit of £4.5m (and goodwill of £26m suggests sizeable earlier purchases)

Cash generated from operations of £954k -- looked very low versus op profit of £4.5m.

In my experience, large debts + large acquisitions + poor cash convesion = trouble.

Taken together, while not suggesting imminent bankruptcy, the numbers would tell me not to risk being sweet-talked by the managers. Instead I'd have decided to spend the time looking at companies with more robust accounts.

If there is any shock from this, it is that so many investors have either not looked at the accounts, just plainly ignored the accounting warnings, and/or believe executives are always honest and will privately tell you their company is in trouble in advance of an RNS.

I've copied an article I wrote for Champion Shares PRO here for more information on what I look for (sorry about the formatting).

Mayn

29 June 2010

Spotting Small Companies In Big Trouble

"You become a better doctor if you pass by the mortuary once in a while." -- Warren Buffett.

Successful investment has as much to do with avoiding losers as it has picking winners. Companies heading for problems commonly exhibit some of the same sorry traits, with poor cash generation, substantial debt levels and hefty acquisition activity in particular often mixing to become a deadly investment formula.

A textbook example of a company that displayed all the signs of disappointment was Vantis (LSE: VTS). This AIM-traded small-cap suspended its shares the other week after admitting it might not have enough money to enable it to trade as a 'going concern'. Importantly for us as prudent stock-pickers, the signs spelling D-A-N-G-E-R were apparent in 2007 when the shares were still above 200p. The price at suspension was 10.25p.

Cash is king

Let me (Maynard here) start by saying I'm not using hindsight to evaluate Vantis. I wrote about this company for the old Champion Shares service way back in 2005, when I declared "I'm staying well away", and again in 2009, when I believed "shareholders still have everything to lose". What put me off initially was the group's cash flow.

You see, I always feel the best businesses to back are those that generate plenty of cash. On the other hand, companies that aren't generating cash -- perhaps because they bought stock that now can't be sold, or sold it to customers that now can't pay -- should be treated with caution.

So let's go back to 2007. The table below shows reported operating profits at Vantis growing nicely from 2003, but actual cash generated from operations being substantially lower than operating profits every year.


Year to April 30 2003 2004 2005 2006 2007
Operating profit (£000) 3,557 5,197 7,900 12,363 13,233
Cash generated from operations (£000) (2,561) (68) (10) 2,413 4,726


So something looked wrong in the cash-flow department three years ago, and reported profits did seem to be flattered significantly.

Debt and acquisitions

A by-product of the group's poor cash flow was growing debt levels. Between 2003 and 2007, net borrowings at Vantis increased from £8m to £34m.

Year to April 30 2003 2004 2005 2006 2007
Operating profit (£000) 3,557 5,197 7,900 12,363 13,233
End of year net debt (£000) (7,901) (12,258) (18,137) (32,842) (33,606)


So if you were looking at this share three years ago, you'd have calculated net borrowings were 2.5 times the firm's annual profit. So that's quite a lot of debt to service, especially when those annual profits were not actually backed by cash flow. My rule of thumb to avoid borrowing trouble is to ensure net debts are lower than current profits.

Vantis' financial position was not helped either by its desire for acquisitions. In my experience, constant corporate deals can stretch company directors as they spend more time integrating staff, systems and services. Ongoing acquisitions suggest the core business might have run out of steam, too.


Year to April 30 2003 2004 2005 2006 2007
Operating profit (£000) 3,557 5,197 7,900 12,363 13,233
Cash spent on acquisitions (£000) (4,692) (7,837) (2,732) (15,257) (6,359)


My rule of thumb with acquisitions is to treat with suspicion those companies that spend more than their annual profits on purchases. Vantis fell into that category three times between 2003 and 2007, so for me at least this was another warning of potential problems ahead.

Summary

True, many shares have disappointed since 2007. But Vantis is a good case study because it wasn't just the recession that caught it out. During 2009, the group was obliged to amend its past results to show lower profits, which confirmed my earlier concerns about the firm's cash flow. Throw in the substantial debts and all the acquisition activity as well and, when the credit crunch got going, there was only one direction this story was going.

As a footnote, it's worth pointing out Vantis' (now ex-) chief exec had a long-time entrepreneurial background, owned 13% of the business and had spent £2m on the shares in late 2008 at 75p. So there's a lesson here that dedicated bosses do not always run their businesses well.

And finally, I have not yet mentioned what Vantis actually did. Amazingly enough, it provided accountancy, tax and business advice!

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Author: scoodooby One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141907 of 146461
Subject: Re: SID Date: 02/07/2013 15:00
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I must admit i was abit confused why the Net Debt figure wasnt discussed more on here considering the low level of FCF this company has made. And put together with the large increase in receivables it seemed abit alarming but with my somewhat lack of confidence with accounts i also fell for this one abit but didnt buy.

But even the newly appointed director who forked out 22k didnt know about the issues on the 5th June ?

Good luck all.

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Author: ClubNosey Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141908 of 146461
Subject: Re: SID Date: 02/07/2013 15:22
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I have the same accounts. If you look at note 13 on page 14 you’ll see a line of “trade creditors” for £2,378,928. The “debt” will be in this line, it would appear to be a “debt” arising from the late payment of a trade creditor.



Jaknife

Thanks for your message. My inference was to the fact that Kiton has no borrowings so that HSBC could have no claim on the company.

Cheers Nosey

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Author: paulypilot Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141910 of 146461
Subject: Re: SID Date: 02/07/2013 18:12
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Hi,

I think it's too early to jump to conclusions about what's gone wrong here, and what the lessons are to be learned. I wouldn't rule out this being some kind of massive cock-up over the Winding Up Petition - such petitions are issued routinely by companies which have not been paid by their customers. It's the nuclear option, but it usually gets results, and you're usually paid within a few days.

But, if the Court papers just sit in someone's in-tray, and are not dealt with, then the consequences can be catastrophic. I know someone whose profitable, cash-rich company was wound up accidentally in just this way, and it took a long time to sort out.


A winding-up petition being issued for a relatively trivial amount of money, as in this case, would certainly not be RNS-able, it should have just been paid, and never have been allowed to get to Court. So I reckon it's a failure to manage the Court paperwork possibly, that could have resulted in disastrous consequences. But who knows, there's an element of speculation in that.

I've heard from a source close to the company that a chain of unfortunate events occurred, leading to Silverdell's Bank jumping onto the winding up petition "pre-emptively", i.e. to protect their position in some way.


Anyway, let's see what happens.

As one of the people who met management here 2 or 3 times, can I also point out that the group of investors of which I was part, dissected the figures in great detail, and were fully up to speed with all the numbers, including the issue of the company requiring more working capital as it grew - we quizzed management on that in depth.

So to read posts here & elsewhere telling us where we all went wrong by not spotting this, is just laughable. People who invested after meeting management fully understood the issues & the figures, and made an informed judgement.

Although the poor working capital aspect of their business model is actually one of the reasons I didn't hold shares here for more than a few weeks, because I was uneasy about SID being paid on 60 days by its customers, and having to pay most of its costs through a weekly payroll.


Management knew & were open about the business needing more working capital if they were to grow it faster (the "supercharged" option).

Furthermore, the total level of net debt was fairly reasonable in relation to EBITDA. Again, no great issue there, unless it turns out there were hidden liabilities which have now surfaced?


We don't know whether the business did run out of cash anyway. I felt the balance sheet was a bit stretched, which is why I don't hold any shares in Silverdell. Personally I prefer companies where there is net cash, and no debt at all, as then it doesn't matter what the Bank think about anything.

Free cashflow in this case was distorted by a number of factors, including the adoption of a different model for some contracts, where they bought an asset outright (e.g. a disused power station) so paid for up-front, and then received cashflows over a year or two from the dismantling & sale of scrap.

So I don't think free cashflow in itself is a wonder metric, you have to look at what factors are driving all the various lines in the accounts, and understand the accounts as a whole. There can be perfectly legitimate reasons for a growing business not generating free cashflow, in fact you would expect that as growth causes stock/WIP and debtors to rise considerably, which consumes cash.

For me it erred slightly on the side of more risk than I wanted to take, hence I didn't hold shares in it.

Anyway, we should have more information shortly, then we can genuinely pick apart what went wrong & what the lessons are. I think for the moment people are jumping the gun, as we don't have anywhere near full information on what has actually gone wrong.

Cheers, Paul.

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141911 of 146461
Subject: Re: SID Date: 02/07/2013 18:30
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Well it seems to me the only thing we know for certain is that a winding up petition was presented on May 10th and published on the 10th June in the London Gazette;

http://www.london-gazette.co.uk/issues/60529/notices/1840846...

It was made by GPM who are construction suppliers.

Before a petition is made to court a company has to;

https://www.gov.uk/wind-up-a-company-that-owes-you-money/ove...

a)prove the company owes more than £750 (to one or more creditors)
b) prove the company can’t repay what they owe

You can use a statutory demand to do this. This is a formal request for the debt to be paid. You can petition the court if the company:

c) doesn’t respond to the statutory demand within 21 days
d) breaks a written promise to pay the debt



These are the only facts I know. There are numerous rumours including;
a) The GPM debt is non material and already been paid
b) Suppliers are being paid late, presumably GPM being one.
c) HSBC is threatening a winding up order
d) HMRC is threatening a winding up order

What I would conclude from all this is;
a) The winding up petition was not successful otherwise the court would already have appointed receivers.
b) If the debt has been paid then SID has had substantial administrative failings to allow a winding up petition to be presented.
c) HSBC are not threatening a winding up order. They have loans and covenants. If they can't repay the loans, or covenants broken, they are entitled to demand immediate repayment. If this is the case then an administrator will be jointly agreed if necessary.
d) HMRC may be threatening a winding up order if they are being paid late.
e) It would seem highly likely that either covenants have been broken or they are going to go through their limits imminently otherwise why issue today's RNS. I have not found the covenants but there may be a condition regarding winding up orders.
f) There was a rumour that their credit rating had been downgraded as a result of the petition. This as well as the fact of the petition may have changed suppliers, or insurers, positions and caused cash flow problems.

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141912 of 146461
Subject: Re: SID Date: 02/07/2013 20:56
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Well, having read through all today's posts to try and catch up with events I am as dismayed as so many others. Still, as has been said by a few, facts are thin on the ground, speculation rife, so I see little else to do at this stage other than sit tight and wait for more concrete news. I do have two thoughts though:

1. At the recent meeting with PIs the CEO said he would be happy if anyone had any questions for Carmensfella to contact him with them - any chance you could ask him "what the heck is going on?!?"

2. I think many people thought the CFO responsible for not dealing with the recent Edison report, with that and this situation, if there is a Silverdell left after all this I hope he is 'toast'.

It is not a huge part of my portfolio, under 1%, but it still hurts when this sort of thing happens, just glad I didn't double up on it as I was thinking of doing about a week ago!

Wizard9999.

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141915 of 146461
Subject: Re: SID Date: 03/07/2013 08:50
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Report in The Times today;

Trading in Silverdell and Pursuit Dynamics shares was suspended. Less than a fortnight ago, Silverdell... told investors that it had picked up contracts for £12m - a big deal for a company with £80m of annual revenues. Now trading in shares will remain suspended...

It follows a decision to put a subsidiary in administration on Monday after a trade creditor, owed a not insubstantial amount, applied for a winding up order. Questions are being asked about the role of Silverdell's banker, HSBC, and how management allowed this to happen in a business that seems in decent health.

Last night there were only guesses as to the scale of financial and reputational damage incurred. Babcock International, believed to have been interested in Silverdell in the past, may be again in what is sure to be a far cheaper company than investors who have been caught out would have hoped.


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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141916 of 146461
Subject: Re: SID Date: 03/07/2013 09:55
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I'm almost annoyed that the shares are suspended. You'd pick these up for a steal with the current level of hysteria.

I dont know what happened, but im doubtful Silverdell is toast; hopefully the same cant be said for Ian Johnson or whomever is responsible for this fiasco.

I think their cashflow is somewhat stretched, but that is to be expected, following the acquisition and nature of their business whereby investment in the decommissioning business is front-loaded.

I dont believe the company is in anyway over-leveraged and the business plan is solid. Wait and see I suppose.

You better believe Silverdell has just painted a massive take-over bulls eye on their back though. So unnecessary.

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Author: mrwhits Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141917 of 146461
Subject: Re: SID Date: 03/07/2013 10:06
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they've prob run out of cash to pay the bill,

then went to the bank who said "you want more! no, sorry, do a fund raising instead",

thought about it for 10 seconds,

argued with the bank, as they didn't want to lose face with investors and look silly, as they had told all and sundry they didn't need to do a fund raise, including the house broker,

by which time the bank thought they were too risky and pulled the plug.

sound reasonable?

or they could have just been a teeny weeny bit ambitious with growth and overdone it, and been caught out by sheer bad luck.

for me though the acquisition would have been the time to leave the party....even when they are "buying" work, as for me it's one leg of a death knell for a company.

now wouldn't beg.l look attractive after this morning if they just hadn't said they were probably going on another buying spree.

my heart goes out to anyone who invested in them, as it all really sounded good, not even too good to be true, but solid.

bad luck has dealt another blow.

no position in either.

regards

mrwhits.

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141918 of 146461
Subject: Re: SID Date: 03/07/2013 10:56
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no position in either.

regards

mrwhits.


Thanks for teh constructive, detailed piece of analysis which is absent from any conjecture whatsoever

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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141919 of 146461
Subject: Re: SID Date: 03/07/2013 11:01
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Reading every scrap I can find gives this most-likely explanation:

* Silverdell group tight on cash since EDS acquisition a year ago. Subsidiaries pay suppliers late to minimise working capital.
* Kitsons AKA Silverdell Ltd, through cock-ups or playing poker, allows a winding up petition to go all the way.
* Administration of Kitsons causes immediate cash crisis at group, covenants may be breached.
* Group negotiates with HSBC with a very weak hand.

So at best an appalling management failure threatens the whole Plc.

The worst case scenario is that the group became insolvent and it just happened that Kitsons was the first domino.

@MrContrarian

PS: Silverdell - if you don't like people speculating in public, then tell us what is happening.

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141920 of 146461
Subject: Re: SID Date: 03/07/2013 11:16
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I'm almost annoyed that the shares are suspended. You'd pick these up for a steal with the current level of hysteria.

I dont know what happened, but im doubtful Silverdell is toast; hopefully the same cant be said for Ian Johnson or whomever is responsible for this fiasco.

I think their cashflow is somewhat stretched, but that is to be expected, following the acquisition and nature of their business whereby investment in the decommissioning business is front-loaded.

I dont believe the company is in anyway over-leveraged and the business plan is solid. Wait and see I suppose.

You better believe Silverdell has just painted a massive take-over bulls eye on their back though. So unnecessary.


Agree with most of that.

Assuming the rumours are right and that this relates to one supplier and the subsidiary then the CFO needs to go and on statutory dismissal terms rather than with a decent payoff, there needs to be someone more senior/capable brought in from a general counsel/legal/contract management perspective and the CEO should forego any bonuses/LTIPs etc this year, as a gesture to shareholders.

I dont believe that this, if the rumours are right, should have done material financial damage to the company - the damage will be reputational, both with customers (will they get as big contracts?) and with investors (in terms of lower multiple). Perhaps that will lead to someone acquiring them however thats not going to be for at least 12 months given that any acquiror will wait til the next set of audited accounts have come out to gain more comfort.Its quiet incredible that a company will shoot themselves in the foot like SID have done this week.

Lastly, some of the people who have come on here in the last 24 hours viewing themselves as superior intellectual beings really annoy me. Its somewhat similar to the way people on advfn seem to always say 'yeah, sold out of these last month at twice the current price' or, where the price has shot up, 'bought these two years ago for 1p each as I say the signs early'! Slightly different but people pontificating with hindsight and also when ignoring facts just isnt helpful - where were all these people over the last year or so when there were many complimentary posts about SID?!?! On the two points questions which people have raised about them:

- SID aren't over-levered - they have some debt but its far from being at terminal levels
- The working cap is as you expect in industries such as this where a lot of your bills come early and get paid in stages (contrast with supermarkets). If you dont like those dynamics then you avoid SID and others in this sector and related industries. And if you avoid these and others, then just do so quietly rather than deem it your duty to come on here and tell people what they should be doing.

Adam

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Author: mrwhits Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141921 of 146461
Subject: Re: SID Date: 03/07/2013 11:23
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you forgot the customary "rant over" at then end of our post...

:-)

mrwhits.

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Author: maffs0 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141923 of 146461
Subject: Re: SID Date: 03/07/2013 13:36
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As someone who has recently bought into SID, I have to say I found TMYMayn's post incredibly helpful. We can argue whether SID is "over-leveraged or not", but Mayn's point is that if cashflow isn't coming through and th company is in debt, eventually there may be trouble.

It doesn't mean I'll never invest in such a company again, but next time I'll look more closely at the cashflow numbers and include that in my risk/reward calculations.

Mayn's post was educational. You can question whether it applies directly to Silverdell. But as a piece, I found it very helpful.

M.

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Author: scoodooby One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141924 of 146461
Subject: Re: SID Date: 03/07/2013 14:22
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I see there were certain agreements on the EDS acquisition ;

30 May 2012

Acquisition of EDS
Placing of New Ordinary Shares


''Andrew Owen McGee will lend £675,000 back to the Company by subscribing for £675,000 in nominal value of loan notes designated as Series A Loan Notes. The Series A Loan Notes are to be secured, repayable by a single payment on 31 March 2015 and carry interest at 8.5% per annum;
· £75,000 by the issue of loan notes to Darren James Palin designated as Series B Loan Notes. The Series B Loan Notes are to be secured, repayable by a single payment on 31 March 2015 and carry interest at 8.5% per annum.

In addition, deferred consideration of up to £3.6 million will be payable if certain future financial targets are achieved by EDS. The deferred consideration will be payable in cash''


''Andrew Owen McGee and Darren James Palin have undertaken to the Company that they will not sell or dispose of, except in certain limited circumstances (as detailed in the paragraph below), any of their respective interests in the Acquisition Shares at any time for a period of one year from the date of allotment. Andrew Owen McGee and Darren James Palin will also be subject to orderly market arrangements during the following twelve months after the initial one-year lock-in period

The above restrictions on Andrew Owen McGee and Darren James Palin regarding their respective interests in the Acquisition Shares will not apply in the following circumstances:
· in the event of any offer being announced or by way of acceptance of an offer for any class of share in the capital of the Company;
· in the event of any demerger, reconstruction, amalgamation being proposed in respect of the Company or any class of share capital of the Company;
· pursuant to a compromise or arrangement under Part 26 of the Companies Act 2006 between the Company and its members or any class of them;
· pursuant to an offer made by the Company to purchase its own shares (or any class of them);
· to a disposal of the Acquisition Shares to an associate;
· pursuant to a The above restrictions on Andrew Owen McGee and Darren James Palin regarding their respective interests in the Acquisition Shares will not apply in the following circumstances:
· in the event of any offer being announced or by way of acceptance of an offer for any class of share in the capital of the Company;
· in the event of any demerger, reconstruction, amalgamation being proposed in respect of the Company or any class of share capital of the Company;
· pursuant to a compromise or arrangement under Part 26 of the Companies Act 2006 between the Company and its members or any class of them;
· pursuant to an offer made by the Company to purchase its own shares (or any class of them);
· to a disposal of the Acquisition Shares to an associate;
· pursuant to a court order or judgment requiring the disposal of the Acquisition Shares; or
· in the event of the death of a Seller during certain specified periods, to a disposal by the personal representatives of that Seller.
court order or judgment requiring the disposal of the Acquisition Shares; or
· in the event of the death of a Seller during certain specified periods, to a disposal by the personal representatives of that Seller.''


08 March 2013

''The Company released Mr. McGee from his undertaking not to dispose of Ordinary Shares, as announced on 30 May 2012, to undertake this sale in order to satisfy institutional demand''

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141933 of 146461
Subject: Re: SID Date: 03/07/2013 23:33
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Well I am mildly optimistic that not all has been lost at SID. I am not clear as to the sequence of events but it seems that HSBC has only appointed administrators to Kitsons and not the whole group.

I am not sure why this should be so as HSBC has given loans secured by debentures over the assets of the whole group.

One point to make about Kitsons was at the last year end, 30/9/12, had no bank debt. Kitsons says;

The company only requires borrowings at certain times. The short term flexibility is achieved through overdrafts

The company paid £37k in interest which would imply an average overdraft of about £0.5m during the year.

This is in the context of a company which had a post tax profit of £1m in 2011-12.

The reasonable question could be asked why a company producing this profit should need an overdraft and why it isn't quickly paid off.

Basically it has been invested in work in progress which is £1m more than the previous year and is necessary to achieve the growth targets.

If the company stopped growing, or slowed its rate of growth, then it would start throwing off cash. Would this make it a more valuable company than one which is growing. I don't think so.

Anyway it may all be hypothetical yet.

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Author: JakNife Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141934 of 146461
Subject: Re: SID Date: 03/07/2013 23:54
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One point to make about Kitsons was at the last year end, 30/9/12, had no bank debt. Kitsons says;

Kitsons is part of a group though and it would be perfectly normal for large operating subsidiaries to guarantee the debt of the group as a whole. And then on top of that, it would be standard for the various parts of the group to make "representations and warranties" including along the lines of: "we are not insolvent".

Bank loan documents are designed to catch problems as early as possible. What has happened would definitely be considered a "problem" by a bank, regardless of whether the debt is in the sub or the parent. We should expect HSBC to be super interested in SID at the moment and it's not unreasonable that they have some legal rights to protect themselves in case there is a serious problem.

HSBC will now want to double check that everything is OK. Therefore at the best expect big fees for bank appointed accountants. At the worst we've all been woodwinked.

JakNife

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Author: Jockblue Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141935 of 146461
Subject: Re: SID Date: 04/07/2013 00:04
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HSBC will now want to double check that everything is OK. Therefore at the best expect big fees for bank appointed accountants

There's a big leap between sending some accountants in to check the books, and putting a subsidiary into administration. Even if there was no time to react once the court judgement was issued, the Group should have been able to reassure HSBC to stop them pushing the nuclear button. Unless of course there's a bigger issue yet to emerge...

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Author: scoodooby One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141936 of 146461
Subject: Re: SID Date: 04/07/2013 05:27
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This company had some heavy impairment charges in 2008 and 2009 ;

2009

''During the year, the Directors assessed that the goodwill arising on the acquisition of the Kitsons Group had been reduced to an amount below the net present value of that business and accordingly an impairment charge of £4.8m (2008:£14.6m) has been charged to the income statement''

After that large impairment charge in 2008 the company had to meet with its banks and then get an equity fund raising ;

''Further to the announcement on 10 February 2009, the Company wishes to report that whilst it continues to generate revenues broadly in line with the corresponding period in the previous financial year, its banking facilities with Barclays Bank are currently being negotiated to reflect the present economic climate, as future levels of profitability are hard to predict. Whilst the Company has no reason to believe that the bank does not remain supportive of Silverdell, it is currently anticipated that, as part of these discussions, there will be a reduction in the facilities drawn down. The Company is therefore in discussions with its largest shareholder about the raising of additional equity from shareholders.



As also announced on 10 February 2009, the Company is due to report its final results for the year to 30 September 2008 before the end of March, at which time it will also seek to provide further details of any equity fund raise together with guidance on the trading outlook''

2012

Goodwill 26,420
Other intangible assets 7,216
Trade and other receivables 34,646 (Revenue 82,521)

Total liabilities 53,230

Total equity 38,198


With that level of goodwill and intangibles i wonder what the banking covenants are with regards to the balance sheet and capitalisation if something like the court case happened ?



Note 14 (EDS Acquistion)

Trade and other payables ;

Fair value (12,678)
Book value (11,919)

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141938 of 146461
Subject: Re: SID Date: 04/07/2013 09:06
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http://www.constructionenquirer.com/2013/07/04/administrator...

Demolition, scaffolding and asbestos removal specialist Silverdell is in the hands of administrators.

The Enquirer understands that administrators from Zolfo Cooper are now running the company following suspension of trading in its shares on the Stock Exchange on Monday.

Company sources told the Enquirer that staff are confident the business will continue trading with Zolfo Cooper set to unveil a turnaround plan.

A winding-up order against the firm’s trading subsidiary Kitsons Environmental Europe is believed to have caused the current problems.

One insider said: “A supplier took us to court which had had a knock-on effect.

“We have masses of work and people are confident that we can get through this.

“Zolfo Cooper have been in for a couple of days and are due to announce their plans for the business shortly.”

Latest results for the six months to March 31 2013 showed revenue up 103% at £63.9m (2012:£31.4m) and adjusted operating profit up 157% at £3.6m (2012: £1.4m).


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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141939 of 146461
Subject: Re: SID Date: 04/07/2013 09:18
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I phoned Zolfo Cooper just now. It's the subsidiary Kitsons (who trade as Silverdell) in administration, not the Plc.

It's irresponsible of SID to not tell the market this. Trade confidence in the group is being eroded more than necessary.

Do they have to compound their terrible error? What is the matter with them?

@MrContrarian

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Author: MrContrarian Big red star, 1000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141940 of 146461
Subject: Re: SID Date: 04/07/2013 09:36
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I phoned the NOMAD FinnCap to press them to squash the idea that the Plc is in administration. They stuck to the line "when the company is in a position to make an announcement they will."

It seems to me that they are in a position to announce something that is already in the public domain, albeit not published explicitly but are choosing not to do so, probably because some lawyer is playing it safe (from his own point of view). It is not safe from the Plc's point of view.

MrC

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141941 of 146461
Subject: Re: SID Date: 04/07/2013 09:48
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Not unsurprising that a NOMAD would give that answer. Might be worth emailing the Chairman or CEO to express your displeasure - you might not get a response however it cant hurt registering your thoughts with them. I did so yesterday morning though not got a reply or acknowledgement as yet - maybe I got the email address wrong though it wasnt bounced back. Worth a try though and as a shareholder I think you're fully entitled to express your views

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Author: InTheHighlands One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141942 of 146461
Subject: Re: SID Date: 04/07/2013 10:07
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I rang the Silverdell plc phone (020 7389 6800) no 5 minutes ago and got the building's receptionist who works for Marwyn - I'm pretty sure this is the same Marwyn who are the largest investor....

Anyway, the message was that all Silverdell staff are currently in a meeting.

I left my phone no, requesting a call back.

InTheHighlands

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Author: Ganthorpe One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141944 of 146461
Subject: Re: SID Date: 04/07/2013 10:17
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Thinking that Trade Magazines usually have a better idea of what is going on , I looked at Construction Enquirer.
Two days ago they quoted a trade source as saying that SIDs Accounts Dept
"Had not been taking calls for a few weeks"
Doesn't sound like the £18000 debt was an isolated error?
GAN
As Mr Whits always says "No position"
By the way Does he own ANY shares ?

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141945 of 146461
Subject: Re: SID Date: 04/07/2013 10:20
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If they are unwilling to tell the facts that would imply either;

a) The facts are unknown or liquid
b) The facts are contentious
c) The facts are sensitive to the outcome
d) The facts are embarrassing

or all four.

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141946 of 146461
Subject: Re: SID Date: 04/07/2013 10:30
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I will follow the suggestion of others and email as many Board members as I can track down email addresses for.

However, I am afraid I have concluded two things:

1. I am now assuming my investment in SID is a totally write off, anything slavaged is up side; and,

2. The management (CEO and CFO) have, by their failure to manage this situation effectively, put the final nail in their coffins as far as future employement at SID. They may (or may not) be fine to run a private company, or division of a larger quoted plc, but IMHO they have demonstrated that they are neither qualified nor adequately skilled to run a quoted company.

Wizard999

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141947 of 146461
Subject: Re: SID Date: 04/07/2013 10:34
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I have no idea personally but I am getting as much information as I can before challenging the advisors and the management...

David

As others have had little luck getting anything out of SID and given Sean seemed so well disposed to you contacting him at the recent PI meeting, have you tried to get anything more out of them yet? If so, what luck have you had?

Wizard9999

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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141949 of 146461
Subject: Re: SID Date: 04/07/2013 12:53
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Wizard,

1. I am now assuming my investment in SID is a totally write off, anything slavaged is up side; and,

I'll take then off your hands if you believe them to be worthless. I'll even throw in a few quid for your effort. Shall we say 25p on the pound?

Unless the public, audited accounts are complete fiction, I believe this business has a solid business plan and are a very viable long-term proposition.

I find it mildly amusing to witness the hysterics on this board and others.
Yes, somebody obviously f'ed up, but to believe, possible fraud and misrepresentation aside, that there is no value in Silverdell is quite simply preposterous.

Perhaps wait for a shred of information that isnt mere speculation?

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Author: rmillaree Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141950 of 146461
Subject: Re: SID Date: 04/07/2013 13:18
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Unless the public, audited accounts are complete fiction, I believe this business has a solid business plan and are a very viable long-term proposition.

I find it mildly amusing to witness the hysterics on this board and others.


There are so many "profitable on paper" companies that have turned out to be worthless from a shareholder perspective that - i don't think it is hysteria to presume the worst and have a pleasant surprise to the upside if it turns out not to be case.

If the directors do not have robust financial controls in place to know all contingent costs - and it sounds like this is a distinct possibility - this has a shades of ROK ** or Caunnaught or a Jarvis - it is often in the interests of management(sometimes shareholders too?? if it makes otherwise impossible finance possible !) to put best spin on the figures that may be partly subjective - if there are unknown end of contract expenses or near end of contract expenses stating figures that give a true and accurate representation of facts may not be easy or may not even be possible if accounting rules say do something else. There mere fact we are where we are suggests at the minimum someone/some people here has the job that they are not fit and proper to do whether that is staff/advisors or auditors i know not but as normal shareholders may be the ones holding the bucket of water with lots of holes.

**
Per ROK announcement 11/8/2010 - (the company entered administration less than 3 months later !!)

The Group's cash flow generation profile has strengthened during the first half of 2010 and the Board expects this will lead to a material reduction in net debt by the end of this financial year. In consequence, the Group continues to have adequate headroom on its banking facilities, and the Board is confident in the Group being able to meet its covenants.

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Author: PeterGray Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141951 of 146461
Subject: Re: SID Date: 04/07/2013 13:46
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but to believe, possible fraud and misrepresentation aside, that there is no value in Silverdell is quite simply preposterous.

I don't think anyone is saying that there definitely isn't - but it's certainly not preposterous to consider the possibility that the situation could end being one where any value is not sufficient after creditors have been paid to leave much for shareholders.

Peter

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141952 of 146461
Subject: Re: SID Date: 04/07/2013 14:35
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I'll take then off your hands if you believe them to be worthless. I'll even throw in a few quid for your effort. Shall we say 25p on the pound?

Unless the public, audited accounts are complete fiction, I believe this business has a solid business plan and are a very viable long-term proposition.


Vinchainsaw

I agree there is very little fact out there, but lots of speculation filling the void. However, the fact that the company is not providing facts is not, IMHO, a good sign. Clearly, I also considered that the business had a solid business plan and viable future, that's why I bought the shares, now I am not so sure.

In part, my view that this investment is now worthless is not a rational one, but one that reflects my own psychological disposition. I find it much easier to swallow the pain of accepting a total loss and then if it isn't get some pleasure from anything salvaged, rather than accept a large number of small realisations of reducing value over a period of time. But that's just me, and as I say it isn't rational.

As I also own a slug of Co-Op subordinated debt (a significantly larger amount than my holding in Silverdell) I also can't escape the irony that where I won equity, those further up the creditor hierarchy understandably are inside the business looking after their interest and I as a holder of equity will get anything left on the table after they have been satisfied. Yet, where I hold bonds it seems the equity holder wants me to bear the brunt of the pain in order to keep them whole. Oh well, nobody said this stuff was easy.

Yours preposterously,
Wizard9999.

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141953 of 146461
Subject: Re: SID Date: 04/07/2013 14:35
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...it's certainly not preposterous to consider the possibility that the situation could end being one where any value is not sufficient after creditors have been paid to leave much for shareholders

Nothing is impossible when we only have partial information. However in 2007 SID paid £14m for Kitsons;

http://www.investegate.co.uk/silverdell-plc--sid-/rns/acquis...

The price was on a debt free cash free basis and 8 times EBITDA. The turnover was £18.7m and EBITDA was £1.7m.

In the 2012 return to September 30th Kitsons was debt free and had £600k in the bank. The turnover was £27.3m and EBITDA was £1.6m.

The explanation for all this will be interesting when it emerges.

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141954 of 146461
Subject: Re: SID Date: 04/07/2013 14:41
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where I won equity

I would like to clarify this, I mean "own" equity, my Silverdell shares were not third prize in last years raffle at the local school fayre...

Wizard9999.

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Author: Gengulphus Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141955 of 146461
Subject: Re: SID Date: 04/07/2013 14:41
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I dont believe that this, if the rumours are right, should have done material financial damage to the company - the damage will be reputational, both with customers (will they get as big contracts?) and with investors (in terms of lower multiple).

Suppliers as well, I would have thought - and suppliers who are unwilling to extend as much credit as before can definitely be a financial problem, especially if the company has cashflow issues already...

Gengulphus

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Author: vinchainsaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141956 of 146461
Subject: Re: SID Date: 04/07/2013 15:56
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Fair enough Wizard, it seems you werent being completely serious about i being a write-off!

I'm pretty sanguine about it. Yes there will be damage and yes , there will almost definitely be a capital call now as creditors of all shapes and sizes will be tightening their terms.

But the work is there to be done and Ive not heard faults on the qulaity of their workmanship.
This is still an industry with a big moat and, especially with regards the power plant decommmissioning, the work will only rise as time goes by.

Unless this is a fraud, it seems as if somebody just took their eye off the ball and allowed a squabble with a creditor to get out of hand.

Heads will most certainly roll, but this looks like a failure of management and, importantly, not a failure in the business model.

Of course I could be completely wrong and this could be a much bigger deal than I think. That would most likely be predicated on a fraud or some other large undisclosed item.

If this turns out to be as innocuous as I suspect it is, I'll be a buyer, hopefully at a bargain basement price.

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Author: kimboy100 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141957 of 146461
Subject: Re: SID Date: 04/07/2013 18:32
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A bit more optimistic;

http://www.constructionenquirer.com/2013/07/04/administrator...

One insider told the Enquirer: “A supplier took us to court which had had a knock-on effect.

“We have masses of work and people are confident that we can get through this.

“Zolfo Cooper have been in for a couple of days and are due to announce their plans for the business shortly.”...

Peter Saville, Joint Administrator said: “We appreciate that this is an unsettling time for all concerned.

“Given the specialist nature of the Company’s operations our immediate priority is to work closely with all stakeholders, in particular the management team, to stabilise the position and agree a route forward.”

The administration is not believed to affect the Silverdell plc holding company which is why no update has been made to the Stock Exchange since Monday’s share suspension


I don't accept the excuse about why there is no update. However I suspect the biggest danger is a placing at a derisory price rather than the company going belly up.

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Author: AdamB1978 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141958 of 146461
Subject: Re: SID Date: 04/07/2013 20:24
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Kimboy

I don't accept the excuse about why there is no update. However I suspect the biggest danger is a placing at a derisory price rather than the company going belly up.

Agree. You might be right about the placing but the big question is what has happened to their business and finances as a result of this and which might mean they need an equity raising? They didn't appear to need one before...

Cancelled contracts? I doubt there's a provision in their customer contracts which would be tripped by this. Suppliers wanting paying quicker? Probably, though a lot of their 'suppliers' are their employees. I think the bigger impact to the business is where the pipeline is actually now a lot lower as they'll lose a lot of potential business given their reputation will be in tatters, and we wouldn't see that impact til next year.

I hope to god they don't do a placing as it'll be at some horrendous price

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Author: Wizard9999 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141959 of 146461
Subject: Re: SID Date: 04/07/2013 21:18
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I rang the Silverdell plc phone (020 7389 6800) no 5 minutes ago and got the building's receptionist who works for Marwyn - I'm pretty sure this is the same Marwyn who are the largest investor....

Anyway, the message was that all Silverdell staff are currently in a meeting.

I left my phone no, requesting a call back.


InTheHighlands

Can we take it they didn't return your call?

Wizard9999

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Author: InTheHighlands One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141960 of 146461
Subject: Re: SID Date: 05/07/2013 00:48
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Nope - no call returned. My guess is that the receptionist was told to give the meeting line to any callers.

Interestingly, I emailed a request for information to investors@silverdell.plc.uk and got 2 read receipts - Sean Nutley & Mark Roberts. But no reply.

InTheHighlands

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Author: KestonMark Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141961 of 146461
Subject: Re: SID Date: 05/07/2013 04:51
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I rang the Silverdell plc phone (020 7389 6800) no 5 minutes ago and got the building's receptionist who works for Marwyn - I'm pretty sure this is the same Marwyn who are the largest investor....(InTheHighlands)


Silverdell PLC HQ
20 Buckingham Street
London WC2N 6EF


Marwyn Investment Management LLP
11 Buckingham Street
London WC2N 6DF

That is a very close link to the largest shareholder. Are they in a Marwyn owned building or sharing reception/admin staff in some kind of cost saving link up because they are in the same road ? One of the non executive directors is also from Marwyn.

KM

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Author: InTheHighlands One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141962 of 146461
Subject: Re: SID Date: 05/07/2013 08:56
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The receptionist told me they were in the same building - she answered the phone as Marwyn.
InTheHighlands

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Author: Stemis3 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141963 of 146461
Subject: Re: SID Date: 05/07/2013 09:23
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This is still an industry with a big moat and, especially with regards the power plant decommmissioning, the work will only rise as time goes by.

Do Silverdell have any sort of moat? Having worked in a related industry, one of the things that kept me out of Silverdell was a view that they were just a licensed asbestos removal and demolition contractor dressed up as a 'specialist environmental service'. There are plenty of licensed asbestos removal firms, large and small, and the demolition industry is notoriously competitive. I couldn't see how they could hope to grow aggressively other than by compromising on their margins. It's easy to bid and win contracts by understating your costs. Rather harder then to deliver on budget. It'll be interesting to see how this pans out. It's an industry where you'd want strong financial and accounting controls to avoid contract losses and over budget costs being kicked down the road by the contract managers. Do Silverdell have a strong FD?

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Author: redcorner Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141983 of 146461
Subject: Re: SID Date: 05/07/2013 19:07
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"Do Silverdell have any sort of moat?"

Good post. The answer is no.

The buy-side investment thesis boiled down to the phrase "regulatory barriers to entry" but, as you've pointed out, a licensing requirement is not a regulatory barrier to entry.

The sell-side thesis led with the future market value of future decommissioning projects. But promising markets don't make for good investment returns, promising companies do. There is nothing in Silverdell's history to suggest that there's anything promising about it.

"I'm almost annoyed that the shares are suspended. You'd pick these up for a steal with the current level of hysteria."

The halt is an opportunity for people think again about whether they want to invest in a company that consistently turns £100 in investment into £2 of annual cash flow before changes in working capital.

Cheers & GLTA

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