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shelzy In relation to your 05.01 post due to the size of the plot it would only be able to fit one DMG unit on the site.
Hi Piltick,
Has PEEL indicated how many units they intend to deploy at Protos?
I am new here so apologies if this info is already out there.
Thanks!
Hi operastar, according to the RNS dated 9th March the arrangement between PHE and Peel is that Peel will pay an annual fee of £500k for each DMG unit that they (Peel) develops, with the first payment when each DMG unit becomes operational. So when Peel has got 11 units up and running, they will be paying £5.5M to PHE annually.
Under this arrangement PHE do not have to pay any of the capital costs or running costs, but of course they don't share in any of the revenue from the operation of the DMG unit. PHE simply earn the fees for the licensing of the technology.
Hello Piltick. Very sorry I did not thank you for your post Last Fri 16.16 Re the merger for your explanation why you don't think think the share price will drop. From your explanation, it does seem to depend on the new company getting good earnings which in turn depends on the progress of the FOAK DMG and the roll out of the next 11 . Won't the new company only get a licence fee rather than the earnings from the running of the DMGs . I can't remember the details now. Heres hoping
That should be "the imminent issue of a further 1,375M shares " and not 1.375M.
What a difference a comma makes!
operastar: After the take-over, clearly there will be more shares in issue. But the reason for the take-over is so that the new merged company is in a stronger position than the previous two individual companies, and with greater potential. If it were not so, then frankly there would be no point in doing the take-over!
The current Market Cap of PHE is £71M with a share price of 3.425. If the share price was to remain at this level following the take-over, then the MCAP of the new enlarged company would be £118M. So the question is, what would the market regard as a fair MCAP following take-over - would it be more or less than £118M? Looking at the MCAP of some of our peers at the moment, my view is the £118 would not be excessive. To be sustainable that would require a Profit After Tax of £4.7M in the next 2 or 3 years, using a PE ratio of 25 which I think is a fair measure for a young rapidly developing company.
Another way to look at it is this: As the imminent issue of a further 1.375M shares is well known in advance, if any shareholders were concerned about a dilution of 66% surely they would have got out before now, and surely the SP would have dropped already. Why would they sit around and wait for their investment to drop by 66%? Instead, the SP has risen from 0.46p at the date of the announcement (23rd December 2019) to 3.4p today.
We also have to bear in mind that the shares that will be issued to the W2T shareholders cannot be sold for a period of time, and even then on a controlled basis, so they are not going to flood the market.
Now for the caveat! Obviously I cannot guarantee that the SP will not drop to some extent when the large chunk of PHE shares are issued, and that may be even more likely if the price keeps rising between now and then. But what I am saying is this, that given the prospects in the next several years, I don't believe that the company would be over-valued after the merger if the SP remained around where it is now.
Possibly but nees from Japan may follow in short order
Piltick Re your 10.06 post . How will that affect the merged share price? I seem to remember someone saying hardly at all but,I cant understand how that can be . Wont there be some dilution?
Piltick - many thanks for that.
closetrader: The current number of PHE shares in issue is 2,069 million. PHE will issue a further 2/3rds of these shares for the take-over of W2T, i.e. a further 1,379 million share. This means that the current shareholders of W2T will own 40% of the new merged PHE+W2T company, while current shareholders of PHE will own 60% of the new merged PHE+W2T company.
This was announced in the RNS dated 23rd December 2019. Unless the arrangement has changed since then, of course.
Hope all of that makes sense.
Do we know how many extra shares, if any, will be issued by PHE to acquire W2T?