Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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BigLittle123/YankHanson/AAAAA1111
Have you got both hands on the keyboard while you write all this?
Just kidding, I'm not impressed either but your 10 year vendetta does worry me
This is a major point some people have overlooked. F1 2023 was likely a bigger disaster than we see, Frontier concealing the sales numbers, and its model is one Frontier is now steering away from. But.... Warhammer, which has cost even more, is on the same model! It shows all the same blunders such as casual audience targetting, and with only a month before release, is much too late to steer away. Anyone expecting Warhammer to be a less of a disaster is simply not being realistic.
I see your point but then that £1.5m to pay plus the £1.6m already paid does not add up to the £3.3m total.
Anyway, the difference is just one month respite before cash runs out. Even including that, how do you come to the conclusion they have plenty cash and will not hit zero?
On headcount, they have declared growing the teams a major pillar of their recovery plan. I can't see why would you think they won't do it.
"£36 to £2 indicates the ‘train went over the cliff’ is pretty old news."
The train to which I refer is the business rather than the share price, as I thought was clear. The wise investor understands they are very different things, often connected only indirectly. In this case, the business news of this video has yet to reach most investors.
"Plenty of vultures will be considering their opinions at this price."
I find vultures rarely attempt to catch falling trains, or perch directly under one. They await the crash then pick through the remains. Hence my comment about buying shares at cash value.
Regards.
Agree Spacerat, a good time to be bearish on this would have been any time before it dropped 50% in a few months. I was in early August when I clocked poor F1 Manager user feedback and posted as such at the time, while exiting that earlier trade - before company announced corresponding weaker outlook.
Now with the benefit of hindsight every man and his dog seems to be saying the end is nigh. This kind of retail despair can be a pretty good contrarian indicator.
What these calls at the lows miss is that it's no longer a growth play but a recovery/sum of parts one. Yes it may well fall further from here - momentum is currently against it - but if this was on someone's radar as an acquisition target, the dramatic drop in enterprise value will only have made it more attractive.
£36 to £2 indicates the ‘train went over the cliff’ is pretty old news. Plenty of vultures will be considering their opinions at this price.
Fillipo. You are welcome.
Your question about share price influence, cascudo"s answer says it all.
Your question about the Warhammer game development cost, £20m is the figure from the CFO in the results presentation video call. Plus £3-4m for marketing.
If you might buy FDEV at any price above cash value you should view that video taking close note of the info the CEO and CFO is witholding and the analyst questions they refuse to answer. There are more red flags than I can count. I did think this share was a train speeding towards a cliff edge, but able to stop.. The video tells me this train has already gone over the cliff and is on its way down to the ground. Time will tell, sooner rather than later.
Best wishes and good luck.
Note 6 is pretty clear that only £1.5m deferred consideration is payable in FY24 so that's what i've included in my estimate of annual cash burn:
"Deferred cash consideration of £1.6 million was paid during FY23, with a further £1.5 million due for payment during FY24 and is included within trade and other payables. "
I would be surprised if they add much if any headcount this year. Certainly if they were to add 200 plus heads then they would deserve to run out of cash. Given they've signed the accounts on a going concern basis that doesn't seem likely.
ATB
Where did you get £1.5m remaining payable for the aquisition? Financials explicitly state £3.3m, plus conditional £7.5m over five years.
I got £26.4m cash burn for this FY completely from the current financials' figures and declarations. Take Q1 burn from Current Trading add additional spends such as costs of the aqusition, EBF, staff increase to 1100+, etc.
This consevatively assumes the declared "headcount growth plans" do not exceed the current rate of 230 heads added per year.
Their is nothing that suggests a future improvement in ROIC, margins or revenue.
Company is destroying shareholder value consistently.
This is a classic value trap in it's current form imo. Shares are worthless until new management comes in or they pivot away from this f1, warhammer crap.
This share has been absolutely hammered since I was last in but has now dropped too far imo, so I'm back in.
They unquestionably dropped the ball on F1 manager but now believe all the bad news is more than priced in and having dropped this far makes it absolutely ripe for acquisition - especially while industry is consolidating.
GLA
Fair point on deferred consideration, but if i add in the remaining £1.5m payable then the company still has plenty of cash through to the end of next calendar year.
Can you give me a flavour at how you arrive at your figure for cash burn? Thanks
Crypto, we have no need for the CFO's so-called proxy for cash flow because we have the actual cash flow.
£26.4m is the true cash burn for this FY, projected from the given figures including the next two payments for the Canadian aquisition which you left out, assuming unchanged rates of earnings and hiring.
From starting cash of £28.3m leaves year end cash at under £2m.
Looks like quite a problem.
Yeah i would agree that most adjusted EBITDA numbers are nonsense and typically i ignore them, but to be fair this one does subtract all the cash costs of development that were capitalised in the year so it doesn't look too bad a proxy for cash flow.
I'm estimating the cash burn here at around £10m pa maybe, taking into account lease payments and purchase of shares for the employee trust, so adjusted EBITDA of (£5m) isn't a terrible proxy.
The shares seemed surprisingly strong towards the end of the week. Maybe a "dead cat bounce" or maybe someone picking up some shares. Interesting.
"The adjusted EBITDA figure is the one that they look at" Yes and the one they want you to look at. The CFO's claim it measures cash profit is utter bull. EBITDA is fairytale accounting. Cash, not EBITDA, is what pays the bills.
Teddy yes I saw the investor webcast and heard the CFO say he's confortable wth the cash. Huge red flag. Because his figures show he should not be comfortable at all. If you think he won't go for a cash raising issue, then let us hear your theory on how the company will meet the cost of making the next game.
"agree much was spent on R&D for last 2 years but that's expected with 2 completely new games and genres outside of FDEV comfort zone, to create new market audiences"
Those two games completely failed to create new audiences and delivered a £15m loss. That is what we expect when a company wanders a mile outside its competance zone. The fact the board didn't expect it is one of the reasons they have to go.
With the amount of lay-offs in the industry coming into this recession I don't know how likely that is.
Some are saying it's a readjustment for over-hiring during the pandemic when games really were booming.
There is a school of thought that considers games to have the "lipstick" effect and buck recessions generally - I think because generally its cheaper to stay home and play games than it is to do almost anything else. And there's a limit to how much Netflix you can watch and remain sane and your brains not dribble out of your ears.
Also, with more unemployment games offer that dopamine hit that unemployed cannot get from a job.
Does this relate to FDev? Potentially, but I think they have over-hired for their output and possibly have some fat to trim. Or they need to massively up their output.
Cash flow benefited from an £8m working capital inflow which likely won't be repeated so i do think they are cash flow negative. The adjusted EBITDA figure is the one that they look at, and that was negative to the tune of around £5m.
So likely no immediate concerns on cash, but there are 900 people to pay so those costs are cash costs whether they go into capitalised development on new games or straight to P&L.
AAAA's issue with FDEV is an historic one and well documented on this BB and the other one. I tend to agree with him that mangement are complacent about poor products, but i still see value here albeit it doesn't feel like there is any urgency to buy in.
ATB
Their mindset is even worse than that. They cannot even accept they are making mistakes. Years back on the Elite Dangerous Odyssey shambles Braben publicly apologised but F1M has been far bigger a disaster and Braben is completely silent. The company is blaming everyone else from the customers to Max Verstappen. No kidding.
"Issuing new shares and buying more studios, won’t help, if you’ve still got the same people that messed up over and over again in place."
Yes yes yes.
There needs to be a motion of no confidence at the AGM
If they used some new money to relaunch a fixed Elite on all devices it could be interesting. I’m not sure they have the leadership and vision to pull it off though.
Otherwise, I would be incredibly worried that they work with a mindset that tells them they can keep making HUGE mistakes because all they gotta do is print more money by issuing new shares.
Issuing new shares and buying more studios, won’t help, if you’ve still got the same people that messed up over and over again in place.
Pretty sure they have the wording about the ability to allot shares at every AGM so i don't read too much into it. DB would be reluctant to be diluted and would he really want to put more money in to maintain his percentage holding?
I do think the reducing cash balance will concentrate minds and hopefully spark some change here. It is needed for the long term health of the company. Hard to detect any urgency though.
If Braben and his team are being replaced, yes this cash rescue is prudent and could save the company.
If Braben and team are staying, well who in their right mind will give that bunch more money to p*ss away making garbage games. So yes this share issue will simply accelerate the SP drop.
Or a nice way to deflate the share price further and take private.
Seems quite prudent to me.
From today's AGM agenda.
Resolution 13. That the Directors be and are hereby generally and unconditionally authorised to exercise all powers of the Company, pursuant to Section 551 of the Act, to allot equity securities (within the meaning of Section 560 of the Act) up to an aggregate nominal amount of £65,797.56, which represents one-third of the nominal value of the Company’s issued share capital at the date of this notice