1pm today is latest deadline for acceptance of offer. Then I think we're getting fairly close to decision time for SPD.
"Sports Direct has until 4 May 2019 to improve or otherwise change its Offer, should it wish to do so"
But they're not replacing them all are they? Those 3 UCC's in Sunderland extended for only 4 months, having originally been due to close at end-March 2019. So that will be £4m or so of revenue gone from end July unless closure is further delayed. And there were some other contracts which have now passed the end-date I think, where I haven't seen an announcement about further extension.
Brass - the £35m is not annual revenue though - some of it is aggregate value over as much as 6 years. £35m, as I read it, is the total value of contract wins/extensions announced in the financial year. So £80m of contract value has been used up in the financial year and £35m of new or renewed business has been announced. So I think Upthejunction's maths stands up, although as he suggests it doesn't have to be a 1-1 relationship - they can't win the renewal business until it actually comes up for tender so if most of their current business wasn't up for tender last year then we couldn't expect them to have announced extensions.
This FY we have had the £7.7m announced in the 8th April TU. £1.3m of that might be the 4 month extension on the 3 UCCs in Sunderland that are due to close (contract value announced in January 2018 was £2.1m for 7 months to end-March 2019).
What might be helpful to investors is the size/length of the order book. How much business (how many years' worth of £80m/year) is currently secured?
This is the challenge though isn't it? If the sector has been staffed on a shoestring budget and bids made on that basis, and now Tly is trying to change that by resourcing its operations "properly" to provide a good quality service, how does it win business? Are those awarding the IUC contracts going to recognise the higher quality of service that TLY might be able to provide and award business to them even if they are bidding at a price above the level of the competition? What they're going to want is the higher quality of service at the same budget price. And if TLY loses some bids how does it react - does it give in to the pressure to maintain revenue and lower its bid prices?
Yahoo! Finance reports the following volumes:
4.5m 2nd April
2.2m 3rd April
0.7m 4th April
7.4m shares traded over the 3 days and a clear decline in volume after the "shock" of merger completion, R1 profit warning and the finnCap note. There could be some delayed trades still to report of course.
Toscafund's holdings notice shows them acquiring has picked up exactly 2.8m shares between 2nd April and 2nd April (presumably on the 2nd then). So even if that includes some transactions not yet reported, it dwarfs the share buyback volumes of under 100k a day.
Unless Toscafund is itself driving down the price through use of "clever" buying algorithms it seems to me both Taptica and other shareholders have reason to be grateful for such strong support in the market, facilitating the reduction or withdrawal of less-committed holders without having to up the buyback volumes.
If the pattern of declining volumes continues then the buyback will become more significant as a factor supporting the share price. Given Toscafund's buying I can't see that it would have made sense to increase the buyback volumes materially. Far better, I think, to let the price find a level in the early days of high volume and then optimise the buyback strategy with plenty of ammunition left.
Tardis - I have no idea if gross vs net in some area(s) of the business is the issue with R1 vs Tap revenue booking policy, but I seem to remember it was quite a big issue in US ad tech a year or two ago. If you look at the Rubicon Project's 4Q results, they still refer to it as in the year-on-year comparisons they still had some gross revenue in 2017. I think whether a company reports gross or net depends on the nature of the business and the nature of the contractual relationships - and gross reporting might be applicable for some bits but not others. Here's what Rubicon said in their 4Q results:
"Non-GAAP Net Revenue:
We define non-GAAP net revenue as GAAP revenue less amounts we pay sellers, where the amounts paid are included within cost of revenue for the portion of our revenue reported on a gross basis. The portion of our revenue reported on a gross basis was attributable to intent marketing services, which no longer generated revenue after the first quarter of 2017. Historically, non-GAAP net revenue was a useful measure in assessing the performance of our business in periods for which our revenue included revenue reported on a gross basis, because it showed the operating results of our business on a consistent basis without the effect of differing revenue reporting (gross vs. net) that we applied under GAAP across different types of transactions, and facilitated comparison of our results to the results of companies that report all of their revenue on a net basis. Revenue from intent marketing services in the first quarter of 2017 created the difference between our non-GAAP net revenue and our GAAP revenue for that period. We ceased offering our intent marketing solution in the first quarter of 2017, so for subsequent periods non-GAAP net revenue is the same as GAAP revenue, as there is no longer a reconciling item between GAAP and non-GAAP net revenue. Non-GAAP net revenue is presented for comparative purposes as the first quarter of 2017 still included the intent marketing solution reconciling item."
http://investor.rubiconproject.com/news-releases/news-release-details/rubicon-project-reports-fourth-quarter-2018-results
Not an accountant but one big area for difference is net vs gross. If you bill a client $100 and then pass $30 on to a publisher and $30 on to a filtering partner, how much do you count as revenue? This was a source of comment in US adtech quarterly reporting a little while ago, with some companies taking "hits" from having to move from gross to net reporting as a result I think of some change to US GAAP.
It's not just one PI lunch. I imagine there will be a series of meetings with institutions, both existing investors and potential ones as well as the lunches for individual investors. This is a roadshow.
FWIW what I think has happened is that Taptica have leant on finnCap to get that note out. At the EGM it was clear that finnCap and Taptica had different timescales in mind to get an update out to investors. It appears the customer prevailed and so the note was put out basically immediately after completion, presumably without much time to analyse the data from RhythmOne. Taptica were very keen to emphasise at the EGM that they were going to be conservative when it came to forecasts for the merged business.
The note is pretty good in terms of most of what it tries to do (a detailed review of Taptica's 2018 and a broad brush picture of the investment case for the merged company) but the instruction to be conservative and the instruction to get the note out immediately had consequences in the numbers reported for RhythmOne and the (lack of detailed) explanation given for the discrepancy between RhythmOne market expectations for revenue ($380m or so, I think) and the number reported by finnCap for the year. I think the instructions also had consequences in terms of the disappointing synergy expectations (both scale and timing).
The good news is that next week is a chance to correct any misunderstandings and get the "right" message out about the state of RhythmOne and the potential of the combination. I hope the presentation will include some kind of bridge between the market expectations and the finnCap reported number for R1 revenue and (adj) EBITDA, showing how much is down to underperformance and how much is down to switching from R1 reporting to Taptica reporting policies.
By 10th April they ought also to have a much better feel for how the R1 year actually closed and that in itself should provide them a good excuse to update the numbers.
Yes, brassneck, it looks to me like they've started pretty much on a pro-rata basis, rather than using up a disproportionate amount of ammunition on day 1 to try to support the price.
We should see a stream of holdings notices as everyone above the declaration threshold reports their new position following the issue of the shares to R1 holders.
So that's good news. They bought back only 85k shares yesterday paying nearly £2 for each so nearly all the volume and the rebound in the price was proper market trading. Presumably much of the buying by the usual suspects: some or all of Toscafund, Lombard Odier and Schroders.
Demand and confidence held the line today. It will be interesting to see how much of that was buyback. The amount they bought should be disclosed tomorrow I think, given the "without delay" comment in the rns.
Just to try to correct one misunderstanding that seems to be taking hold on some bulletin boards.
Tap and R1 did not have full (if any) access to each other's books before completion, at least based on what was said at the Tap EGM. If you read back to my post earlier in this EGM thread, you will see discussion of this, including reference to Tap believing they were being conservative in their assumptions about R1.
Very impressive and comprehensive report at this stage of the combination from a quick skim. Seems to include a fair bit of detail on R1's FY19 performance.
Looks like demand and confidence has it, for now. What chance of hitting the 105% limit?
Makes the 10th April more significant I think. A chance to get some quantification into the market, if they feel they've seen enough of the R1 engine by then.
Should be an interesting test of market dynamics this morning. Profit warning on R1 historic business, presumably having some impact on Tap 2019 expectations. But buyback starting. Will Tap holders sell into the buyback or do they have confidence in Tap management's judgement? And will some ex-R1 holders use this as an opportunity to get out? No mention of a dividend. At least it was only "below" and not "Materially below".
brassneck - For 2017 I think they only paid a final divi, not an interim. So total divi for 2017 was 5.4c/share, equal to 25% of full-year net profit and declared in March 2018. For 2018 they've already paid out 3.98c/share as an interim, declared in September. So they don't need to add much as a final 2018 divi to beat the 2017 payout.
But if they choose to pay out as a final divi the approx. 4c/share that I think would equate to 25% of 2H net profit on the pre-merger shares in issue, but pay it on the post-merger shares in issue (i.e. including the R1-related shares) I think that would appear as a very positive statement of intent to double the profits through the merger.
I am surprised we didn't get an announcement today on the details of the share buyback. So perhaps they are saving that to allow them to combine it with a pre-market update tomorrow which might also cover dividend, and/or something about what they've acquired from R1 (updated cash balance?) and/or something about plans for a shareholder webcast or the roadshow.
One wrinkle on the actual buying back of shares is the rule on the maximum price that can be paid, which is normally 105% of the average closing price over the preceding 5 trading days.
So if there's a burst of enthusiasm on merger completion and/or buyback announcement and the share price jumps, then they will have to wait until it gets into the permitted range before they can buy.
For example, according to the Yahoo! finance prices, the current 5-day average is 205.4, so if they were buying back on Monday the maximum price they could pay would be 215.7p per share.
instadeth - as far as I know, merger completion will be the same as the Effective Date of the Scheme, which should be Monday.
I expect an rns on Monday from Taptica, after delivery of the Court Order to the Registrar of Companies, confirming that the Scheme has become effective and so the merger has completed. They may also announce the details of the share buyback in the same release and perhaps the actual buying back of shares will start on Tuesday which is when the new Taptica shares are expected to be admitted to trading.