Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Maybe, I would want to see H2 results to see if they had no choice.
Checking past financials, IDP H1 results always had negative free cash flow due to it being a seasonable business where the money is made in H2.
They burned £1m cash this Half Year which is less than previous half years as well.
Per this statement:
> The Board remains optimistic that the transformation plan enacted this year, as well as underlying improved consumer consumption and retail momentum versus last year will enable the business to continue its improvement trajectory over the second half year with a return to profitability this year remaining the Board's intention.
So presumably this means they are expecting to have positive net income this financial year (i.e H2 would make up for H1 losses to make them a profitable company) but obviously who knows if they would actually achieve this.
Also, IDP results were good imo.
current merger value is now c41p a share based on BAR current price. When CRL was rejected it valued IDP at 44p, and that was before the £4.5m placing.
IDP has no choice - it has burned through the cash at an alarming rate. Cash burn in last 6 months was £1.8m as per cashflow statement and the current level includes a £900k loan.
I don't see anything wrong with management...
In terms of BAR share price dropping -25% on this news it seems very bizarre as this is definitely a good thing for both companies given the similarities and costs.
Usually merges and public acquisitions are not good because of the premium paid is usually overpriced. However in this case IDP was definitely worth >=47p. My estimates had it at around 60p.
However the merger agreement doesn't seem to have any collar agreement in it (https://www.investopedia.com/terms/c/collar-agreement.asp)
So not sure if the merger will go through if BAR share price keeps dropping?
Bar also has a net-net working capital of 40p per share.
I see, that would make more sense then.
Thanks
Lemonade311 - I believe it is in connection with the cross company guarantee from the CBILS loan facility ST drew down on.
For the JV to happen, Ergon couldn't have a guarantee over its head.
This is unbelievable. Surely a related party transaction. Always though Ward had things his way, particularly as the Chair wouldn't stand up to him. Disappointed to say the least.
Deal needs to get done. I am afraid the current management can't get the job done.
- On 3 December 2021, InnovaDerma plc signed a deed of release forgiving in full debt totalling £805,310 owed by the Ergon Medical Limited to InnovaDerma plc and its subsidiaries. It is this debt forgiveness that gives rise to the loss on disposal of investment in the period.
So if I read this correctly then IDP loaned the joint venture Prolong £800k and then just wrote it off? So essentially as IDP only has 50% of Prolong we just lost £400k by doing this while Mark Ward gained £400k essentially.
BAR share price is 90p now. Not 106p. And you have to like BAR company to want to do this.
Merger could also get rejected.
I think the merger makes sense. Huge cost savings on Headcount and LSE listing which makes a difference for a tiny company.
To ask a very simple question; what is the downside to buying more at 37p, getting the 7p and the BAR shares valued at 40p?
Seems too good to be true and if things seem that way usually they are.
I am not a finance expert so have no authority to say this but I believe from previous takeovers/mergers I have been involved in it is regarded as neutral by HMRC as we are merely swapping one thing for another. As my average is over twice the 47p cgt doesn't apply to me but if your average is less than the 7p might come into play.
Not very helpful, sorry, and there might be others who have the financial standing to be more sure about it. To reiterate I have no financial status and you should not rely on me.
Interesting: 47.7p with 7p in cash and the rest in BAR shares. Will see what, if anything, FinnCap have to say about it. One point I want to get clear on is the tax treatment of the 7p and the new BAR shares for income and CGT purposes - I'd be grateful for any help on this.
Any thoughts on this major news - RNS suggests IDP is being valued at 47.7p
H1 numbers should be out in the next week or so and hopefully there will be some positive comments on H2 performance as the new marketing strategy beds in and the country opens up - both the weather and lack of travel restrictions are encouraging. This has slipped from c40p in the last few months on no news.
Just took advantage of C+L 3 for 2 offer currently via the website.
Creightons hasn't been immune to wider market trends either. Closed at 75p on 21 Feb 2022. Currently 53.5p.
You are right about shareholders in the red Lord. Me included !! The ghost of Creightons in our memory??
surface - not sure why you "fear MW has his hands all over this". I'd say hands on involvement from him can only be good, given his track record. And yes he will be underwater currently. But then a lot of shareholders are in the red on a lot of shares right now.
Yes Shandy, that is a traditional NED but i fear MW has his hands all over this from day 1. Unfortunately I suspect he is underwater on this one even with the gracious buy in at 35p. Looking for their half year result which in the past was out 3rd week of Feb. Cash will be critical.
As Ward is a NED he has no day to day involvement with the company. As Lord says he is clearly committed based on the number of shares he has purchased and continues to do so.
H1 results will be interesting from a cash perspective (we already know the revenue), but as ST is a seasonal brand the April to June period will be key. External factors may impact on this e.g. the weather, covid and the current war situation.
Just as an example Holland and Barrett are currently being boycotted as they are owned by a Russian - i know this doesn't impact IDP, but it's just an example of how things can move quite quickly and are outside of the BOD's control.
Maybe so Lord. I am less convinced. All sounds good on paper but I don't think they have converted strategies to results. Time will tell. I seriously would hate to see these chaps as pretenders. Too much at stake.
surface - as I said before, time will tell. Turnarounds require patience & there HAS already been fundamental change in the company's strategy (prioritising profit over sales, increased focus on ST & Charles + Lee brands, ceasing loss-making promotional activity, reducing Facebook ad spend, collaborating with social media influencers, commencing - & now growing - sales volume via Amazon, initiating a JV for Prolong) What more do you want! To date, Ward has bought over 5 million IDP shares (most, if not all, above the current market price) and I don't see him giving up on this commitment any time soon.
Sorry wasn't a big turnaround I meant.
It fundamentally was a big turnaround. One brand needing tweeking. Half year announcement was pretty uninformative. Lets hope.
Turnarounds never happen overnight. Let's wait & see what the peak tanning season brings.