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AGE thanks for your analysis. I have been a s/h for 10years and tbh I am disgusted that we s/h have let ourselves be taken along this path. But until Rivuma’s potential was undersold we had hope. The board tries to make a compelling narrative in option 3 but I wonder who would give a value in an RTO of more than 400% to get to the 2.2p /s they are estimating. Seems pie in the sky yet again so I think I am going to vote with the motion.
44RJ an excellent analysis of the situation!
AGE
Well, what a shame that it has come to this. So much promise in the Neil Ritson / Solo days. I don't have any shares currently, but my wife has a few (...will I ever hear the end of that? I think not...) and I will be recommending to her to vote for option 1, the MVL. I agree with you Agneissearner; this BoD has been given plenty of opportunity to invest our hard earned cash and return a profit, but have failed to do so with each and every venture they pursue. Why would that change going forward? Clearly there is something drastically wrong with this set-up; is it a lack of competence, is it a lack of luck, is it a lack of desire to achieve? Whatever the reason, the track record speaks for itself. I also can't see the RTO option bearing fruit either; it will just be another vehicle for the next chancer to dilute shareholders to the bone chasing some dream.
Why they didn't prioritise Ruvuma and preserve cash to stay in the game is totally beyond me. This company was always all about Tanzania - for some reason they thought they could do everything all at once. Delusions of grandeur probably.
Sorry to all those that have lost money on this one, but this story needs and ending and it looks like the fat lady is about to step on to the stage.
Highlandmatt,
Have a look at the AGM presentation dated 9 August 2023 includes the following information which shows that it cost 428K pa to have an AIM listing:
Listing Costs £k
LSE costs 20
Nomad, Broker, FPR & legal 218
Audit costs 55
Outsourced accounting 90
Insurances 30
AGM 15
TOTAL 428k
It is going to take many years to receive all of of the Ruvuma proceeds so at £428k pa to maintain an AIM listing it makes financial sense to go with option 1 which is a members voluntary liquidation which cost £350k in total compared to £428k pa?
I can see no logic in the Boards recommendation as based upon the facts that they provided the total cost of keeping an AIM listing over all the years that the Ruvuma proceeds may or may not be received far exceeds the cost of MVL.
Shareholders have got to take the risk that going forward the Board has the ability to execute a successful strategy when they do not have a record of providing share holder value despite them engaging highly paid consultants such as Gneiss energy and other advisors and subcontracting out the running of EAG/GGL thereby duplicating overheads.
I am going to prepare some workings that I will post on here re the loss that is going to be made by SCIR having sold Ruvuma which is our main asset.
The purchaser is actually paying us out of the sale of the gas that we used to own which is akin to selling a business to someone and them then paying you your sale proceeds out of the cash flow and profits that you would have made if you would had kept it and not sold it to them!
AGE
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I do agree with you, just if you are doing an analysis of ins and outs from selling assets, then you need to include the biggest asset sale.
I would be prepared to entertain an RTO offer from the right company. I wonder if the BOD can be persuaded to detail the approaches received?
I should clarify that the business model was based upon the fact the related party loan would be repaid out of the sales proceeds on the sale of GGL rather all of it being repaid from the cash flows and profits being generated by GGL.
However to make a substantial capital profit from the sale of GGL it is necessary for it to generate a large turnover and to generate substantial profits but SCIR's share of EAG results for 6 months was actually a loss of £42k and not a profit!
AGE
When the Board have a set of accounts prepared they are required to consider if the carrying value of amounts included in the balance sheet are properly stated hence was the £1,522,000 going to be fully recoverable based upon future cash flows and expected profitability of the EAG/GGL business model.
The turnover and losses being generated by EAG/GGL provide strong evidence that the loan of £1,522,00 was not going to be repaid by EAG/GGL as they were not generating sufficient cash flows and profits for them to do so.
The sale of EAG/GGL was not a post balance sheet event as it did not happen during the period 1 July 2023 and 29 September 2023 which is the date the CEO signed off the accounts as the sale was approved by shareholders in January 2024.
The Board provided various reasons in their divestment document issued in December 2023 to explain why it was a good idea to sell EAG/GGL yet in September 2023 when the CEO signed off the accounts did he consider if those reasons would have an effect upon the carrying value of the related party loan?
The reasons were used to justify a sale at a massive loss however it appears they were not taken account of when signing off the accounts yet the Board were well aware that interest rates had increased dramatically by June 2023 and that this had an adverse effect upon the eventual sales price of EAG/GGL as they explained that in their document.
AGE
The Board included the following statement in their document:
At the AGM held in 2023, an authority to issue new Ordinary Shares was not granted by Shareholders, preventing the Company from raising capital through equity issuance to further invest in growing the EAG platform.
The SCIR shareholders action group blocked the Boards ability to issue yet more shares as you can see below that the current Chairman and previous Boards had raised a net amount of £35,059,000 and they had spent large amounts of money on consultancy fees e.g. Gneiss Energy £2,132,000 and they had failed to create shareholder value.
The presentations that the Board produced in August 2023 shows that EAG/GGL is a successful business model that is scalable and that it was going to be a highly profitable JV for SCIR when the AD plants were eventually sold however by December 2023 they were seeking shareholders permission to sell it at a loss between £725k and £875k.
In the document that was issued to shareholders for the divestment of EAG/GGL in December 2023 which was just 4 months after the AGM presentation they had a completely different opinion about the business model.
The SCIR interim accounts for the six months ended 30 June 2023 which were signed by the CEO on the 29 September 2023 included a loan from a related party for £1,522,000 which is the loan to EAG.
AGE
I do agree with you, just if you are doing an analysis of ins and outs from selling assets, then you need to include the biggest asset sale.
I would be prepared to entertain an RTO offer from the right company. I wonder if the BOD can be persuaded to detail the approaches received?
Indeed there is however it is better for the Ruvuma monies to be returned to shareholders rather than being paid to highly paid consultants to find yet another supposedly great investment opportunity
As the saying goes "Once bitten twice shy!"
EAG/GGL turned out be a disaster so I am not willing to give the Board another opportunity and I am sure lots of shareholders agree with me!
AGE
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There is the future value of Ruvuma to come.
There is the future value of Ruvuma to come.
Only you know what your average purchase price is.
My calculations demonstrate how shareholder wealth has been decimated and it does so by comparing the current market value of SCIR to the net proceeds that SCIR have received from issuing shares.
AGE
Where is the share price currently compared to your average share purchase price?
The current bid price is 0.30p and LSE shows that the market cap of SCIR is £3,150,000 however there are 900.5m shares in issue so 900.5m x 0.30p is £2,701,500
Now lets compare that to the total amount raised from issuing shares net of costs which is £35,059,000
2,701,500/35,059,000 X 100 is 7.7% so there has been a reduction in value of 92.3% of the net proceeds from issuing shares!
AGE
What is the current and past Board's record on creating shareholder value?
If you look at the cumulative P&L account below you will see that the total losses for the period 2009 to 2022 is £29,955,000
If you look at the cumulative cash flow statement you will see that a total of £37,414,000 has been raised by issuing shares and the costs for that were £2,355,000
The Board spent £1,293,000 on the abortive One Dyas deal
If you look at the document for the EAG/GGL divestment you will be able to calculate that EAG/GGL was sold at a loss of between £725k to £875k depending upon whether the £150k of contingent consideration is received or not.
In a period of just 4 years the Board paid £2,132,000 to Gneiss Energy in consultancy services which is owned by Jon Fitzpatrick and his wife.
Current and previous Board members have received a total of £5,037,000 pounds in Directors remuneration including share based payments.
My understanding of creating shareholder value is that the Board is able to generate both turnover and profits and that it rewards shareholders for taking risks in investing in the Company by paying dividends.
As the SCIR Group was not generating much in the way of turnover and it as has only ever made substantial losses then it is not possible to pay dividends to the shareholders but have they managed to increase the share price and make a profit on the sale of Ruvuma?
Well the answer to that would be a "No"!
AGE
Cumulative Directors remuneration including share based payments
2009 to
2022
Total £'000
Directors remuneration inc share based payments
Alastair Ferguson 485
Tom Reynolds 587
Donald Nicholson 244
Muir Miller 88
Doug Rycroft 50
Jon Fitzpatrick 305
Don Strang 193
Don Malling 443
Fergus Jenkins 462
Sandy Barblett 249
David Lenigas 669
Kiran Mozaria 124
Vincent Fodera 54
Neil Ritson 1,084
Total 5,037
I think the cumulative cash flow for the period 2009 to 2022 below give you a a good idea of the financial performance of the current and previous members of the SCIR Board
2009 to
2022 Cumulative
Total £'000
Cash & cash equivalents b/f 272
Cash absorbed by operations (14,094)
Proceeds from disposal of investments 5,265
Issue of shares 37,414
Share issue costs (2,355)
Income tax refund 13
Loans 1,070
Cash movement in relation to assets held for sale (2,467)
Purchase of intangible assets (17,952)
Purchase of investments (4,133)
Net payment on settlement of derivatives (1,310)
(Repayment)/proceeds of borrowings (616)
Cash settlement of shares not issued (362)
Interest/fx 5
Cash & cash equivalents c/f 750
I think the cumulative results for the period 2009 to 2022 below give you a a good idea of the financial performance of the current and previous members of the SCIR Board
2009 to Cumulative
2022
Total £'000
Revenue (1,457)
Share of profit of joint venture (40)
Exchange losses 56
No details 4,623
Audit fees 294
Prof legal & consulting 1,832
J Fitzpatrick (Gneiss) 2,132
AIM related costs including investor relations 916
One Dyas 1,293
Accounting related services 606
Travel & subsistence 188
Office and administrative 295
Other expenses 140
Impairment losses 1,384
Directors remuneration 3,549
Share based payments 1,922
Wages and salaries and other costs 1,023
Total of administrative expenses 20,253
Loss before investment activities 18,756
Operating expenses 268
Interest income (233)
Finance costs 786
Exchange losses 81
Amortisation costs 759
Impairment losses 3,332
Provision for losses on financial instruments 1,567
Other income (189)
Other gains and losses (3,384)
Sub total 2,719
Loss/(profit) continuing operations before tax 21,743
Loss discontinued operations before tax 8,225
Total Loss 29,968
Income tax (13)
Total Loss after tax 29,955
AGE
As the saying goes turkeys would not vote Christmas if they had the chose so if you were a Board member of an AIM Company you have to ask yourself would you advise shareholders to vote for a resolution that puts an end to your well paid part time job?
I must congratulate who ever created the Board's response document as it contains what appears to be compelling reasons as to why shareholders should vote against the resolution however I have been a SCIR shareholder since July 2011 and I have good accounting knowledge and I know how the AIM market actually works so I am going to vote in favour of the resolution to return cash to shareholders and I will provide you with facts so that you can decide if you want to vote in favour of the resolution or not!
I will provide you with lots of information in further posts and so as to not overload you with too much information I have summarised below why I am voting in favour and then you can read further facts and information in my later posts.
What is the Board's past record on creating shareholder value?
Where is the share price currently compared to your average share purchase price?
Have the Board spent shareholders wisely and managed to obtain the best value for money that was available?
Was the EAG/GGL a wise investment considering the Board spent £80k on legal costs and £100k on due diligence costs as it was sold at a loss of between £725k to £875k depending upon whether the £150k of contingent consideration is received or not.
How good was the due diligence to say that EAG/GGL was sold at such a large loss and that the GGL accounts for the year ended 30 September 2021 included a massive prior year adjustment as the finance leased AD plant had not been accounted for correctly?
The GGL accounts were submitted to Companies House on 18 August 2022 and SCIR announced that it would acquire GGL via EAG on 25 August 2021.
If the new strategy was such a great idea then why did the Board decide to sell EAG/GGL at a massive loss as they had spent a significant amount of money upgrading the AD plant and they had arranged a loan from AIB (UK) and they used it to repay the AD plant finance lease loan as a satisfaction of charge was registered at Companies house for GGL on 19 July 2023?
AGE
Sounds good to me. At least a lot better than anything to do with this company has sounded over the last 10 years.
If delisted, you won't see a share price rise, or be able to trade. But you should get a periodic cash return.
I would be quite happy to wait a year or so for a 200% rise rather than watch the BOD do nothing whilst draining our funds as they have done so far.
1.2p over time, if all the contingent payments come in.
So if we shut down we get 1.2p per share if I read that right???????? That would be much more than I would expect this bunch of muppets to produce. Wouldn't the best option for shareholders be to buy a load of shares at 0.4p then shut the company down and wait for the 1.2p return?????? Surely I must be wrong in that thinking????
No mention as to what the resolution is.
RNS - there is an attraction to a RTO, namely the BOD would not be in control.
Can the company delist to save cash, and we put in place a low cost caretaker BOD to simply file companies house returns and distribute cash received?