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Flex pay growth - 500%. US disposal . £164m of cash. £25m buyback. £1.50 share price coming in short order
Off we go ...to 75 -80p starters
Good points there SC, just wait till the buy back kicks in as no rns as of yet and so i expect a strong rerate from current levels as its clearly undervalued imo as trading below cash, so business in for free. Just look at the growth in Flexipay, its going from strength to strength.
They hadn't started the buyback as of Friday close as they have to RNS each day the amount of shares acquired, once they do it will be really interesting to see how many they can buy at these levels.
The KPI's for Flexipay look really good indeed;
H2 Income per active account grew to £861 (6500 accounts, £5.6m income), vs H1 which was £605 (3800 accounts, £2.3m income)
Average month end balances per active account held steady (£56m / 6500 = £8600, vs H1 which was £34m / 3800 = £8900), I'd say this stat is especially impressive given the 71% growth in active accounts during the half who wouldn't have been using the product for a whole period.
In H123 they added a net 1800 active accounts, in H223 this increased to a net 2700. Should this cadence continue for the next 12 months, FY24 would end with 14600 active accounts, if income per active account stays at £861 per 6 months (£1723 annualised) , then revenue would hit £25m
What we can say with a fair bit of certainty is that Flexipay has good product market fit, now it's about scaling this product to as many UK SME's as possible. As of YE22 they had lent to 84k UK SME's since 2010, so there is loads of runway...
Ignore that last post. February volume was 21m in total. Therefore a total of 10.5m can be re purchased this month. Thats £4.8m which should really motor the share price. US disposal will be well received too.
I actually think they have started buying back. That can buy up to 50% of the total Volume in Feb which was around 5m shares. Therefore they can buyback 2.5m shares or £1.25m this month.
V strong buy here now.
Any idea when the buy backs will start. Is there a timeline? From a company perspective, it would be better to kick it off BEFORE the US sale.
Whatever they secure for the US disposal will be hugely positive. Very exciting times ahead here. All the right ingredients for a multi bagger
They should be looking at retrieving sunk costs as a minimum
They could sell the US business for a pound as it would be immediately earnings enhancing . The US business is loss making so whatever they get for it will be a bonus. Pretty exciting business model now and it’s all coming together nicely with the £25n buy back too
Any ideas as to sell value of the US business?
I wonder if they have bought in any shares yet for cancellation .
Funding Circle, a prominent fintech firm specialising in small business lending, announced today a strategic shift in its operations aimed at curbing losses and revitalising its share value. Alongside its release of full-year results, the London-listed company unveiled plans for a £25 million share buyback initiative and disclosed intentions to divest its struggling US division.
The firm’s decision to embark on a share buyback program signals a proactive approach to address its share price, which has seen a significant decline since its 2018 initial public offering (IPO). Funding Circle’s shares have plummeted by over 93% from its IPO valuation of approximately £1.5 billion, reflecting investor concerns amid mounting losses and operational challenges.
Funding Circle reported widened losses of £33.2 million in 2023, compared to a pre-tax loss of £12.9 million in the previous year. The expansion into the US market, coupled with investments in its lend-now-pay-later offering Flexipay, contributed to the deepening losses. In light of these developments, the company intends to refocus its efforts on its profitable UK business segment and explore options for divesting its US operations.
Lisa Jacobs, CEO of Funding Circle, emphasised the company’s commitment to maximising shareholder value by addressing the undervaluation of its shares. Jacobs stated, “We believe the share price materially undervalues the business and as such will be buying back up to £25m shares,” indicating confidence in the company’s prospects despite recent challenges.
The announcement of the potential divestment of the US arm follows indications of interest from potential buyers. Jacobs highlighted the need for substantial cash and capital to sustain growth in the US, prompting the company to reassess its strategic priorities and streamline its operations.
As Funding Circle shifts its focus towards its UK business, it aims to capitalize on its core strengths while optimizing operational efficiency. The company’s FlexiPay offering, which nearly quadrupled to £234 million in 2023, underscores the potential for growth in its home market.
Investors responded positively to the news, with Funding Circle shares surging by 22% in early trading following the announcement. The company’s proactive measures and strategic realignment signal a concerted effort to navigate challenges and position itself for sustainable growth in the evolving fintech landscape.
Institutional stake building into the bargain too. These guys are quietly going about their business accumulating monthly. 1. Solid results. 2. 164m of cash Vs 158m Mkt cap. 3. Flex Pay up 500% and growing. 4. £25m buyback. 5. US loss making business about to be sold. You get all this for nothing as cash is higher than market cap.
£214m cash at bank in hand. Unrestricted cash now over £160m which is more than market cap. 40m shares to be bought and cancelled so 360m shares at present will soon be 320m shares. US business about to be sold and update is pending. Flex pay growth off the charts. What a business model and you can buy at cash !!!
Really good volume and consolidation today, it will be interesting to see whether they have started the buyback or whether this is institutional investors shuffling their cards.
I make it around 270m shares with notifiable holders & sub 3% holders specificed on Simply Wall Street's register (who must get the data from Bloomberg, date unknown).
So if FCH buy back 40-50m with this £25m tranche then there will be very few shares left in circulation. Hopefully we'll break above 45p early next week, there were very few sellers on the book in the last hour and none in the closing auction, there was a buy for 450k shares at 42p though which went unmatched.
The flex pay is growing link stink and so everyone knows that model is all covered by personal guarantees so theres no risk to funding circle. This could triple in pretty sharp order
Yes of course as unrestricted cash is above mkt cap and the price doesn't even factor in how well the business is doing, growth etc - some large AT buys coming through
Buyback is just the cherry on the top
Out and out buy at 42p regardless of the buyback
Yes, Flexipay growth near quadrupled and is going from strength to strength. Mkt cap now below cash, this is ridiculously undervalued and the significant buyback puts this business in a strong position to propel the share price much higher and close the anomaly
I did say yesterday that Market makers in control and keep things under control.
Terrific set up for a multi bagger. Flex pay growth incredible
"With 25 million buys needing to be executed under 45p, I don't expect this stock to move much higher anytime soon. GLA"
What on earth does this mean? The price will only stay sub 45p if there are sellers out there to match the £25m buyback money flow + PI buying volume. The aim of the buyback is to increase the share price to fair value, which is clearly well north of the current price.
No surprise to see a little profit taking this afternoon, I suspect there will be a few US shareholders who will sell up with the US business being on the verge of disposal. But get the next few days out of the way & let the buyback do it's thing, I'll be amazed if an uptrend doesn't form.
I'm here for Flexipay growth, £256m of transactions from 6.5k businesses last year, and now they've introduced a Flexipay card to further aid business spending. The best part is that these products are interest free, so they should be extremely sticky and therefore valuable. £50m income by FY25 was the previous guidance, they are guiding for £24m for FY24 so that still looks attainable.
Very interesting to see where this goes over the next 12-24 months. Target price £1.50 based on them achieving 8p EPS in FY26.