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Can’t be long now until administrators come calling share price has collapsed further , is that numpty hedge still on here ? 1 billion market cap think the ceo was smoking weed when he said that
Why would administrators come calling? enough liquidity until march 2025...please elaborate
Here's an idea for you Diamond and tighten that seat belt ...
.... don't buy any!
Added more last week. An absolute gift. I expect the 2024 EBITDA to be higher than current not cap.
Most of the debt covered by rental contracts and assets.
If I had the money I’d happily buy the company, pay off the small amount of debt and you have a business that will give me a return on my cash in 1 year
How is it going to give you a return? Yearly losses are higher than the market cap. Debt is £23m, and most of that is tied up in long term debt against the buildings, so that money isn’t coming back until they sell their property.
On a £23m + £6m market cap, you’d have made their adjusted EBITDA by just holding S+P for the last year…
I think I might have been mistaken on the debt against property. It looks like only £6m was used to purchase property, plant and equipment.
Regardless, debt + market cap is still nearly £30m, and would perform better on an index than even their inflated EBITDA, let alone actual P/L
Property wise they don't own any freeholds, all they have are lease liabilities. The company's overall debts are such that if it went into administration today, creditors would not be made whole, let alone shareholders. Liabilities outweigh the physical assets, and that's assets at reported book value - realistically the assets they do have, kiosks, depreciating phones etc, would realise less than the reported balance sheet values. This is a real distress situation.
There is nothing to suggest it is going into administration. The business is trading in line with expectations in 2024 based on what we’ve been seen so far and we know they trades very well in the latter part of the last financial year.
The only talk of administration is from those who seemingly are looking to profit from its demise.
The reality here is the vast majority of the debt is due to rental prop. This is why the bank loan was set-up. We know the company is favouring non rental sales so I expect to see an improved debt figure when they next update.
If losing more than your market cap in 12 months isn’t enough to suggest administration might happen, then nothing short of actually going into administration is going to suggest administration.
With the reduction in rental activity they announced for this year, hiding the cost of goods under depreciation and below EBITDA won’t be taking place anymore. This makes it far more likely that the covenant would be breached
I would like someone to reply to me with some logic, all I am reading is opinions based on very little fact. “ To build the rental book requires a carefully balanced approach to opportunity cost, because each phone rented has the lost opportunity of an outright sale, and while the rental over the long term provides more profits, an outright sale in the short term provides immediate cash. ” “ Total Rental revenues for 2023 were £8.3m (2022: £5.3m), and gross profit was £7.4m (2022: £4.2m). With the current refined product, we expect to see similar levels of revenues in 2024, but without the requirement for significant capital investment. ” This is quoted from the most recent report. Basically the debt increase has come from rental phones as MMAG have had to purchase and rent the product. Now that this channel will reduce, we will have more cash to pay back debt. Not only this but interest rates are likely to fall, which is great news for any one with debt. Please can you elaborate on why we would go into administration given that we are heading into lower debt, lower interest rates, higher margin?
I hope you're not basing your investment decision based on what the company report for gross profit.
Look further down at the actual bottom line, where you'll see they've made a statutory loss for the last 3 consecutive financial years. They even made a loss during the lockdown ecommerce boom year in 2021 - and you can't blame rental for that loss as it they hadn't even started it then. This is simply not sustainable.
With net debt going up and revenue going down year after year, lenders are the only thing keeping the business alive. If any of them pull the plug - for example RCF recall due to a covenant breach, it would be game over.
Nowhere in there does it suggest higher margin. Rental revenue is recognised as almost purely margin in their accounts, as the device is never treated as sold, and just remains in inventory and only hits as depreciation.
Reducing the number of devices being rented out will reduce revenue and depreciation proportionally, so no benefit to margin.
If anything, they risk reduced margins, because as those rental contracts expire, they will sell the devices that come back conventionally, and may produce lower than normal margins if they’ve misjudged the breakage and depreciation of the handsets.
When they sell the devices conventionally, they will allocate far higher costs to the accounts proportional to the revenue, so the losses that were being put under depreciation will now be on cost of goods, impacting EBITDA as well, when they didn’t previously
Would not worry about it Mike12345. Would expect comments like this all week regarding admin/covenants and the like and they will have nothing solid to back it up aside from obvious headlines which are batted away with ease. Would expect quite a few that sold up will be looking to buy back in before next Wednesday. Take the covenant one for instance ... it has nothing to do with MCAP, it's a measurement against EBITDA of 2.5x. EBITDA is not an issue for this company.
Really is why you should simply make your own assessment and decide on the risk level. Personally I think the reward outweighs the risk and if they manage the business effectively.
As outlined in my previous comment. EBITDA will become a serious issue if rental activity slows, as they won’t be able to hide the cost of goods under depreciation, which didn’t impact EBITDA
Over the asset lifecycle the rental income + EOL asset re-sale generate increased margin....but then you know that already MikePickle/404x. You really won't be able to buy many shares at this level.
I would not bothering arguing Josey.
Sadly too many people don't listen to sense and other viewpoints; Been like it since the Brexit referendum
As I have said before, MMAG have challenges; they do need to find ways of growing profitably. I believe this is very doable and can see a number of opportunities for them.
However they do a lot of things well; they operate in a growing market in a recovering macro economy. They are trading well and they can manage their liquidity, They are not at risk of going into administration.
I certainly am not basing my investment solely on gross profit, it is based on many factors. I hope you are not solely making an investment based the potential / speculation of a business going into administration, when the facts state otherwise.
Why would a bank ask a business to return the debt when it would cause distress for no reason?
1. interest rates are about to reduce
2. economy returning to normality due to reduced inflation
3. gross margin up 1.4% and EBITDA up £1m. With more debt being repaid due to less rentals and interest rate drops, finance expense will reduce based on capital repayment and lower rates.
4. we are within covenants and are likely to continue to do so especially with reducing rates and less rental capital expense.
I am not ignoring the fact that the business is not in perfect shape. What I am saying it that it is worth more than the Market cap and share price it stands at now. I cant see this being worth £1 but its certainly worth more than the bid price of 5.5p.
I agree with you Mike12345
No surprise to see a bit of red today - the half wits who list the Tom Winnifrith will have heard his latest rubbish this company yesterday. (no idea what he said but I saw a headline to suggest it was in his daily podcast)
I have to admit it is tough and frustrating seeing the SP drift downwards; but the thought that his minnions will wake up one day to a RNS that will hopefully bring a more realstic conclusion to the offer period cheers me up. It must be 6mths now, I appreciate that these things can take time but we must get an update soon
Report states gross margin increase of 1.4%, have you read it? almost accessible within 5 seconds to see gross margin has increased. Yes so rental is very profitable as the person rents and MMAG still owns the asset, so they get rental income and own the asset which is then sold. Yes its true rental reduction will reduce the gross profit as its very profitable, however, in this environment of high interest rates it is a necessary requirement. It is simply too expensive to continue investing in more phones at the moment, as more debt is required. The company could complete a capital raise but they are fully aware that this is not in the interest of shareholders, or themselves so they are taking correct measures.
It is a tough situation but this is a potential multi bagger over night in my opinion. I think regardless of whether we are bought, coming out of the offer period will boost the share price as there will be a bit more certainty. No one is really making a profit at these prices and there is not enough stock in issue to short this share. With so little trades this needs a wake up and hopefully management can do something.
Not the Mike Pickles I saw on TV last night? ex accountant at a plastics company? or is that another Mike Pickles?
I largely agree with you Mike12345 but I’m left somewhat confused by the assumption that MMAGs Leadership team advised by Shore would be remaining in the offer period when they know the uncertainty is tanking the SP? Ie what possible rationale is there staying in the offer period unless something was potentially on the table? Also by staying in the offer period it means the directors can’t buy shares at this basement price - which makes no sense? Especially as they know they are righting the ship through the cost savings & moving away from rental.
I completely agree, so they must be in conversation still. Otherwise there would be no point at all, so perhaps they are waiting on certain information i have no idea. Yes i imagine there would be director buys but obviously they cannot.
The problem is that the BOD have wasted their wages on share purchases historically. Mind you they weren’t daft when they cashed in at 193p IPO. It’s the staff who bought into the BS that I feel sorry for
Very sad and disingenuous to suggest that the BOD were wasting theor money when buying shares.