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The declarations should now be in and it's a mixed bag. Good to see that LO have been buying (shouldn't they have been giving daily dealing notices though?), but disappointing to see there aren't more institutions holding under the normal declaration level (5% or 3%). By my records we have the following 1%+ positions:
25.3% Toscafund
12.6% Lombard Odier
9.9% River & Mercantile
5.2% Eric Singer/Viex
1.6% Majedie
1.6% Schroders
1.5% Norges Bank
For a total of about 58%, leaving what looks like a very long tail of 42% or so in the hands of sub-1% institutions and private investors.
So Lombard are buying up RTHM and Tosca are buying up TAP. Common link - both are major share holders in S4 Capital. This I believe is the end game.
Goodwill is only an issue when you can't pass the impairment test. But if they end up with a lot of other intangibles (which would be amortised over several years) then that might be a consideration. But amortization is only a way of spreading the cost of what you're buying. If you don't think it's worth it then you shouldn't be buying the asset in the first place! ie they're going to take the gross margin into the profit numbers so it's only right that they should also take the corresponding cost including the amortization, isn't it?
Wouldn’t surprise me if they took the first opportunity to impair a chunk of the R1 goodwill to help boost the PBT numbers. This could help re-rate the share price as everyone has some concerns over protracted use of EBITDA.
The goodwill write-offs in FY16 by R1 might carry a bit of a warning for Tap as they think about how to bring R1 onto their own balance sheet post merger. R1 had bought various companies and as a result had a lot of goodwill on the balance sheet. In FY16 they decided to rebrand as RhythmOne and bring everything (or most parts of the company) together. As part of that they had to sit down with the auditors and decide if they could reasonably map the goodwill from the individual CGUs across to a new R1 CGU. The result was a fairly massive writedown of goodwill. If I remember correctly, of course.
Stt As I have said, people engaging with you, simply give you a further opportunity to continue spreading your poison. You are or have been an insider at some point and are intent on trashing RTHM. You Have been pursuing your vendetta for over a year and it is clearly eating into you. I honestly think you should seek advice while you still can.
2 MORE PURCHASES FROM Tosca at prices well above the prevailing share price.
Replying to 1GW_'s thoughtful observations.
Goodwill: Yes, in monetary terms RTHM’s is much larger, but related to total assets/net equity it’s smaller – 44% versus 51%. Treating it all as a single CGU might make it easier to fudge. With regard to goodwill impairment, I’m not an expert, but I think goodwill write-offs relate to balance sheets of companies taken over, to be replaced by goodwill arising from the takeover.
Audit: The length of an audit report should not be seen as a product of regulation but as a measure of how detailed an audit was. To read, “I looked at the figures and everything seemed OK” should not be seen as at all comfort-giving, especially when the accounts contain a lot that’s subjective.
Revenue: One aspect that ought not to be subjective but might be is revenue recognition, especially when the ratio of trade debtors to revenue is high. RTHM’s note about this is very detailed and perhaps worrying because of the complexity, but TAP’s is quite brief and therefore perhaps more worrying.
Debtors: TAP’s trade receivables rose to 37% in 2017, from only 22% in 2016, with no analysis or comment provided in the notes or CFO’s review. RTHM’s rose too, but only to 33% from 28% and coupled with detailed analysis.
Intangibles: TAP’s interim results do suggest an improvement, but it’s 64% - $58m over $91m after discounting the new equity less loan repayment. But what will it be like after taking over RTHM - $200m over $230m perhaps, 87%?
Governance: Both 2018 AGMs were in London, but whereas RTHM’s was at the comfortable time of 11.00, TAP’s was at the extremely unfriendly time of 08.00. TAP also broke a QCA rule (to which it claims to adhere) by not posting either the resolutions or the proxy votes.
Conclusion: I can see why TAP is a commercially attractive business, for which some even paid £4.50 a share a year ago, but with strong doubts about the accounts it is not an attractive investment proposition (especially with the world headed for recession), so I still think that, for me, the right decision was to sell RTHM at £2. I’m signing off now, but good luck to the rest of you.
your talking c+++ they are sending out letters to non EU company's and that's it
you still won't post the WP stuff or not found it yep
;-)
From Investopedia:
“Short and distort” is an illegal tactic used by unscrupulous short sellers wherein they short a stock and then spread rumours and innuendo to drive down its price. A bear raid refers to short sellers who connive to push a stock lower through concerted short selling and rumors of negative developments.
ILLEGAL is the key word here. Beware.
Stop talking rubbish Stt. You are trying to sabotage the share price here.
Tardis,
"RTHM have low levels of income form Europe. As you know most of their income comes from the US."
It doesn't matter how much income they get from Europe, if they receive any income from European citizens then they need to comply with GDPR... Not just rthm.. How is consent passed between themselves and their partners..
Given they run a full stack, I think GDPR would impact rthm more.
Secondly the last time I checked Apple's ITP changes would affect companies across the world.
Recent article with comments from a Google Exec.. Have you heard of Google?.
Fallout From Apple ITP Is Severe “ And 7 Other Takeaways From Google Exec Sean Downey At Industry Preview
Privacy-first is the new normal.
Many of the changes and regulations are consumer-driven.
We're all very aware of GDPR, and the importance of consent. But that's just one piece impacting the ecosystem and it's just one region.
We all know about the California [Consumer] Privacy Act and similar things are happening in Brazil and India. It's just the new normal.
Then there are other things that technology companies need to do to protect users as well, outside of regulation, like the elimination of third-party cross-site cookie tracking.
It's not too soon, however, to talk about the fallout from Apple's Intelligent Tracking Prevention (ITP), which has been severe.
This was the number one talking point from all advertisers and agencies at CES “ noisier than October [when Apple released a very difficult-to-track iPhone] because people were going through the results and seeing the impact.
Programmatic is based on the ability to use third-party cookies to track and target. When that's interrupted, there's an impact to your results and how you do business. It's a pretty substantial impact."
https://adexchanger.com/industry-events/fallout-from-apple-itp-is-severe-and-seven-other-takeaways-from-google-exec-sean-downey-at-industry-preview/
About 2 years back I read an interesting article about Shorteres and their TACTICS
deployed on BBs in order to influence and mislead their audience .
I wish I had saved the content!!
The similarities of those Tactics with what we are seeing from our “Constantly Negative” friend is uncanny.
RUSTY-
He knows very well that he is Recycling the same old links and arguments.
The idea from his point of view is that some of his intended points and veiled messages will eventually get through and some people will start to agree If they hear them often enough!!
Eddie
stt1, put on a new record, or better still upgrade to a cd. Same old reverbetrated rubbish.
You’re going over old ground here Stt. RTHM have low levels of income form Europe. As you know most of their income comes from the US. Don’t know how many times people have to tell you that...
Tardis,
The rthm/Yume completed a year ago then 6 months later they publish the 20-F, warn of material weaknesses in internal control over financial reporting. They also warn of impact from GDPR changes.
A few weeks later they sign the NDA with TAP.
A month after that the CFO resigns...
Do you think it's all a coincidence? Did they find anything untoward whilst changing their internal processes that they decided to the best course of action was to 'sell'? Has GDPR or Apple's ITP impacted the business that they have to change their strategy, as they mentioned in their 20-F
- Page 13:
"In particular, Europe's new General Data Protection Regulation ("GDPR") (which came into force in May 2018) extends the jurisdictional scope of European data protection law. As a result, RhythmOne IS subject to the GDPR when it provides its targeting services in Europe. The GDPR imposes stricter data protection requirements that may necessitate changes to RhythmOne's services and business practices. Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide turnover. Complying with any new regulatory requirements HAS resulted in increased costs and could force RhythmOne to incur further substantial costs or require RhythmOne to change its business practices in a manner that could reduce its revenue or compromise its ability to effectively pursue its growth strategy."
https://www.sec.gov/Archives/edgar/data/1713721/000143774918014094/rhyth20180713_20f.htm
Thank you, stt1. But 1GW_'s are worthy of study, which I will do and post again.
Bott,
good post..
"It's fine to believe in a company, or if you prefer in a share, but when the facts change, as Keynes famously said, he changed his mind and so to I."
exactly and so far rthm nor anyone here has shown any evidence to suggest that things are materially any different now than they were under the previous management. The sp is a lot lower now than the rthm/Yume takeover and it could be that Singer has decided that it's better to 'sell' (deal) at current levels... After all the sp was been drifting for a while and fell after the fy2018 results...
rthm is still a 'show me the money' share...There's a lot of trader's talk and hype...
Is the merger a good fit and good for the future, especially given other companies seem to be moving away from the full stack model...
Perhaps my last post needs qualifying (for the avoidance of doubt) with the statement that Goodwill isn't amortized of course, but sits around until the relevant CGU (cash-generating unit) fails an impairment test.
R1 has $124m of goodwill on the balance sheet at 30th September 2018
Tap has $33m of goodwill on the balance sheet at 31st December 2017
There does appear to be a material difference between R1 and Tap policies on goodwill in relation to the impairment test. TAP identifies a single CGU (the entire operation) and bases the recoverable amount on the fair value of the shareprice. R1 on the other hand splits its operation into CGUs (RhythmOne, Perk, RadiumOne and YuMe) and tests goodwill in each one against a cashflow forecast.
Tap's goodwill tests sounds easier to pass given the boundary is the whole operation, but I don't think I would try to defend R1's goodwill history, having seen the huge impairment charge in FY16 and the variablility in assumed discount rates from year to year in the cashflow forecasts.
Bott - just to challenge a bit on your comments on the Taptica audit report and the weight of intangibles in the balance sheet.
The length of audit report is I think principally a function of expectations under UK company law vs expectations under Israeli company law isn't it? Isn't there a lot of stuff that needs to be reported on now under UK company law? One criticism I have seen made of UK audits these days is that there's too much box-ticking and not enough focus on the fundamentals of auditing. Both R1 and Taptica prepare accounts in accordance with IFRS and have been audited by professional auditors, as I understand it.
Then on balance sheet, one of the impressive things about Taptica is the improvement in balance sheet quality between end-2017 and end-1H 2018 isn't it? Total assets increase from $175m to $190m, mainly due to an increase in cash & equivalents, while total liabilities decrease from $110m to $84m thanks mainly to a reduction in payables and a reduction in debt (they raised $30m equity in 1H to reduce debt). As a result net assets increase from $65m to $106m and the weight of intangibles drops materially (from $62m out of $65m down to $58m out of $106m).
Admittedly the 1H numbers are unaudited while the end-2017 numbers are audited, but we are due full year numbers on 26th March which I think will be audited numbers (the 2017 audit statement is dated March). So we should be able to see before completion of the merger whether or not cash generation and balance sheet quality improvement has continued.
It is also perhaps worth noting in passing that Taptica's amortisation policy on intangibles appears more conservative than RhythmOne's. As I read their policy they amortise over a maximum of 5 years whereas R1 amortise some things over up to 12 years.
My point with Singer is that at this price, he has lost money on his shareholding since the Yume takeover. So he must think the new combined entity will do better than RTHM on its own.
People buy and sell stuff all the time with little regard for anything other than turning a profit.
Sentiment has no place at all, indeed why should it have?
If something can be sold on then it must typically have even greater value to its buyer.
If the companies R1 bought did not increase the profitability of the parent company then either the market was falling as a whole, down to various problems or the deals were seriously misguided.
I believe the market has taken a recent battering (the much-berated stt1 will agree) and we see the small-fry attempting various survival mechanisms.
The next step up in the chain for R1 was/is a merger anyway and not a simple sale for profit so horses for courses and all that!
To Rustybucket and anyone else who thinks similarly. What is the question you would like me to answer?
I don't intervene in these chats unless I have something to add which I think has been overlooked by others. No-one has commented on the published facts that I've mentioned in this instance and I've declared my position (ie all sold and I won't buy again, RTHM or TAP). I really thought RTHM was in a good position when I bought more at the end of 2018, but it's evident that none of the contributors here can explain with confidence "What's Going on Again" now. It's fine to believe in a company, or if you prefer in a share, but when the facts change, as Keynes famously said, he changed his mind and so to I. I'm sad for those who are suffering a lot of value, but so do I from time to time and we should expect it: those are sunk costs and the question now is whether what's left is worth leaving in RTHM/TAP, or better off somewhere else.
Rusty,
My view is that Singer is a business man who buys and sells companies and has little interest in running them … like a second car salesman! (and just as trustworthy). I am hanging my hat on him set on making money for himself and we get dragged along hanging to his coat-tails. I guess we will soon find out on April the 3rd. For a humble PI, I have a huge stake having averaged down unwisely.
jr