Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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The pre-close H1 update reports strong trading at Crestchic plus a positive order book. Equity Development upgrades PBT estimates for FY21 and see a conservative fair value at the moment of 152p/share
Read that new research here, free access: https://www.equitydevelopment.co.uk/research/group-hits-strategic-targets-our-forecasts-rise
"These new facilities have also already enabled us to offer to redeem the Group's £4 million convertible loan notes, the interest rate on which was set to rise to 10% on 1 July 2021. The Company is pleased to confirm that all bondholders have responded to our offer and that they requested that £3,056,938 of the loan notes to be repaid in cash and £943,062 to be converted into Ordinary Shares in the Company.
As per the original terms of the loan notes, the redemption is subject to a 25% early redemption premium and a total redemption payment of £3,821,172.50 will be made today. The early redemption penalty included of £764,234.50 will be disclosed as an exceptional interest cost in the half year report."
So, a 25% penalty for early redemption. With interest rate at 10% that is 2.5 years of interest. Should have kept the loan. Is the board working for all shareholders or just for the shareholder that lent the money?
More of the gravy train: LTIP...
https://ir.design-portfolio.co.uk/viewer/22/12845
typical of an AIM company when things go wrong for the PIs...
Discussed in Paul Hill interview with Laurence Hulse of Gresham from about 23mins in
https://youtu.be/Ppt16lTCZ9g
Increasing their position
yeah I know Crusty, that's why I hold quite a few shares, but sometimes you have to stand up and point things out (won't have any impact but makes me feel better!!)
Just listened to Paul Hill who could actually use his platform but as usual dodges all the tough questions. 25% early redemption fee versus one more year of 10% interest might have been worth a question! Iwan Phillips and his grown up facility... go on Paul, think there is a bit of follow up there, or no that would not suit your narrative. Peter Harris can barely keep a straight face during these interviews!
Agree with you Lavenonews, but even a company such as this which seems to be run for the benefit of management might be a good investment. Going forward the stars are aligning nicely for Crestchic - pity about the name. Meanwhile any announcement about the disposal of Tasman could give rise to a surge of interest. Hope they have some sort of moat, but the next 12 months will be interesting.
I am a long standing shareholder based on the underlying two operating companies, both of which are standalone good businesses. However, that does not stop me from highlighting the unreasonable rewards at Group Board level (who rely on their NOMAD for cover - Shore also stated that the Loan Note actions were reasonable as well, so that fairness opinion is a waste of paper to any critical thinker).
We are handing out 10% of the equity upside to this group via the LTIP. Last year, this same group of directors (minus Eric Hook) waived through the extension of the Loan Note by a year. Any reasonable amount of research into the liquidity at corporate banks would have suggested it was worth waiting. Had they done this, the Loan Notes would have matured this July and there would be no 25% penalty as disclosed today nor any shareholder dilution at all.
It is noteworthy that HSBC managed to turn this around very quickly - hardly surprising given the asset backing and underlying prospects that left most critical observers scratching their heads at the Loan Notes, even at day 1 in 2018. This was always a bizarre set of terms on the financing, even in 2018, yet the FD is still here and now being rewarded with equity upside!
Whilst Crestchic and Tasman (and the share price) have great potential as operating businesses, it is wrong that this group of Directors is being handed equity upside for navigating their way out of their own errors. Crestchic has been starved of capital for years, and that was a Board level decision. Now we are handing upside over for the decision to realise the potential in this business. I know most people on here are traders but I cannot believe I am the only shareholder who looks at this in disbelief.
Another encouraging update from Northbridge with activity at Crestchic much higher. A restructured balance sheet + redemption of loan notes means Equity Development ups its adj. EPS projections by 5.6%.
The shares remain too cheap vs peers, as per updated research note here (free access) :
https://www.equitydevelopment.co.uk/research/good-news-from-crestchic-and-on-refinancing
This really made me laugh (I've already given up getting worked up by the Board level lack of any accountability to shareholders other than Gresham at this company)!
The justification for handing 10% of the equity upside to a group of people who largely destroyed value for the last 5 years is:
"...to align and incentivise the whole Board of Directors to work collectively to deliver both growth and increased returns on investment..."
So, putting to one side that this is actually their job for which they receive a salary, I think what they are saying is that without this incentive the Directors would not work collectively and not be too worried about maximising returns for the shareholders they are meant to be representing.
Given that in the past they have so badly misallocated capital, signed up to ridiculous 10% financing costs for a secured line of credit and so on, that is not too unlikely! The conclusion can only be that this incentive will sharpen up their minds in a way that pride in their job or a salary didn't seem able!
On a serious note, I'm all in favour of sensible incentives that align the outcomes for all, particularly for Chris Caldwell, but most of these Directors should not be incentivised this heavily to redress their own past failings.
If they are having to work harder and commit more time to right the wrongs of the past, this should come through salary adjustment not greedy capital returns - none of what they are doing is rocket science, and therefore the upside to them of doing their job properly should not be structured in this way.
Heatwave in south China causing power outages. Probs caused by everyone crypto mining etc. CEOs on risk management meetings talking about testing power banks for sure. Don’t want to lose there jobs!!
Stephen yap buying with real money at this level is great. As Paul hill annunciates so eloquently. NBI great value and should run to £2 with ease.
When they get the planning permission and announce this, I want the company to state the impact of the super-deduction tax relief on CAPEX.
Investments into cranes, factory equipment etc should be set off 130% against Corporation Tax, so expect Crestchic to benefit from this.
Note for that Paul Hill character - what an opportunity you have and you are not making the most of it. Calm down for goodness sake and ask some more detailed questions like this (or how about if Tasman's hard operating net assets are £14m with no intangibles into a cyclical upswing, is that a fair expectation for value of a disposal? If so, what would the company do with that cash - any element of special dividend?) and so on and so on.
That aside, very interesting year coming up, if Management deliver on the vision then they have a lot of options for shareholder value creation.
Does the late reported sale of 191,796 on 14 April represent the final clearing of the stock overhang ?
Let us hope so & that we can look forward to a steady rerating.
Quite agree laveonews:
In my opinion a significant re-rate is beginning. This is a company that exits the pandemic period in a stronger position than it entered it. Clearly there has been a stock overhang that looks as though it is close to being cleared.
IMO a buy & long tern hold.
None of this was rocket science and finally NBI focuses on ROI, stops misallocating capital and gets out of the ridiculously expensive line of credit from Gresham (albeit by diluting all of us if they convert at the ridiculous 90p).
Hopefully they can get an attractive offer for Tasman, it's time will come and NBI should get some reflection of that.
Then expect them to change their name to Crestchic now Hook has retired. Northbridge has no meaning and Crestchic deserves to be rated on an altogether different multiple.
It's all going to take time but investors with a decent time horizon should see £1 as a very attractive entry point.
FY results read well + Board is now examining disposal of Tasman. Crestchic is set for further growth and looks cheap vs hire service peers. Scope seen for a re-rating as investors focus on prospects and a ‘greener’ NBI.
New research note here: https://www.equitydevelopment.co.uk/research/increased-confidence-and-strategic-review
Tomorrow. GLA
Hi Beza - because of the sectors or regions where they operate, there are still many listed companies not giving guidance on forecasts until the economic picture gets clearer. Given the speed of vaccination roll-out that hopefully wont be too long.
Equity D, or anyone else for that matter,
have any of you seen broker forecasts for p/e, eps, divi, etc for NBI? Regards
Little disruption seen from retirement of CEO given Experienced Chairman becoming Executive and proven Divisional Heads. Crestchic to deliver good growth in FY21 and Tasman set for H2 recovery too: not at all reflected in shares yet.
See new research note from Equity Dev here:
https://www.equitydevelopment.co.uk/research/planning-in-place-for-further-success
i also have a position here.
Looks like I’m alone on NBI. On a positive note anyone that wants a decent chunk is going to have to move the price quite a bit. Of course the reverse is true also. However I feel that this is a very under valued company so onwards and upwards. Possible T/O candidate too.
Look at the power outages in Texas and other parts of us. Can only mean more ups issues for where power reliability is mission critical. Web services, crypto mining etc etc
Let's Hook off the Hook on the debt.
Er, sorry why are you paying 10pc on secured debt of 3m when the replacement cost of your assets is so high? And you have freehold land with planning permission? And bank debt is only 1m? And you dropped the conversion price to 90p ?Why oh why? You really do have some explaining to do here. And your FD must be hopeless in terms of capital management. As for the 4 non execs, thanks for representing all shareholders equally.
I am invested here long term as the two operating businesses are great, there is value here but it makes me mad that the NBI Board is getting away with such an awful decision on the debt without far more criticism from shareholders and accountability.
Yep that was a great interview. Eric sounds like a very capable understated guy. Bought some today so let’s see.