Member Info for 1GW_

Net cash generated by operating activities, as I read the financial statements:
$38m 2018
$45m 2019
$35m 2020
$19m 1Q 2021

Difficult to discern any cashflow problems there, isn't it? Operating cash generated in 2020 may have been down on 2019, but it was still $35m, post-tax. And cash generated in 1Q this year is more than 1/2 of the cash generated in the whole of 2020.

Personally I would take the statements on purpose of the IPO at face value. Post-listing it should be easier for the company to raise further capital should it need to in the future (for example for a big acquisition) and the greater visibility of the company to US investors should help ensure that the shareprice moves towards something like fair value in comparison to US-quoted adtech companies.

"The principal purposes of this offering are to create a public market for our ADSs, facilitate greater access to the public equity markets, increase our visibility in the marketplace, as well as to obtain additional capital."

I don't think there's anything new there, that's just a summary of what's in the circular. The effective date in the circular for the reduction of capital is indicated in the "expected timetable" as "On or around 20 May" so I think the broker has just shortened that to 20th May.

Roadrunnr, how you can look at byot's performance last year and not see multiple indications of how they are positioning for growth in the coming years is beyond me. As a reminder:
o Licensed B24 in US to IRI, who sub-licensed to Turtle Wax - which means the TW (B24) product is now in multiple retail/automotive chains in the US as well as part of the Shell/Turtle Wax Move Clean B2B initiative;
o Upgraded UK hospital alcohol-free hand sanitiser licensing deal with SC Johnson to be multi-year;
o Extended Turtle Wax relationship by signing direct licensing deal for Europe - product already on sale in Halfords in the UK;
o Signed licence for alcohol-free hand sanitiser in Middle East with Soltech;
o Re-energised Byoworks license to cover all byotrol technologies in sub-saharan Africa;
o Secured £350k grant to further seaweed research programme, potentially opening up whole new product set at minimal direct cost to byotrol;
o Opened dedicated virology lab with 2 specialist virologists;
o Started investing in marketing, advertising, advertising and promotion, PR & product proposition development research.

The point about these multi-year license deals is that they tend to be slow-burners. A nice profit contribution in the year the deal is done due to booking the guaranteed payment elements, then a bit of a lag while actual sales of the licensee build up to cover the guaranteed element and contribute further revenue (although cash continues to arrive from the guaranteed payments). The best example of this is perhaps the Solvay deal where, many years after the first deal, Solvay has now launched Actizone and is talking about it being a "blockbuster" product set - and byotrol is expecting royalty revenue from that deal this year. Equally the various Tristel licenses which were signed in FY20 should be progressing in the background even if we won't see much, or any, royalty revenue last year as it would have been largely (or all) covered by the guaranteed payments.

It's not at all questionable IMO. What is questionable is doing share transactions when you are in possession of inside information. Clearly the CEO and CFO, and probably the CTO and chairman, have a good idea of how the current year is going and what they might expect to happen this year.
It appears to me they made a good attempt to get the market as fully up to speed as they could without breaching confidentiality requirements (e.g. terms of Solvay commission). They published their view of FY21 figures and also through finnCap gave guidance on FY22, very early in the financial year. Through the videos they gave colour on how the business is going.
Having done that they then collectively exercised options and sold the resulting shares.
The chairman's options expire on 14th October i.e. just after the end of 1H. Clearly you would be unhappy (I presume) if he exercised options towards the end of 1H or in October before an end-half TU had been published. What about May or June or July? Well given the company does not normally publish TUs, that's difficult isn't it as he would likely be in possession of information on how sales and biz dev negotiations were going? Maybe he could wait until the full year results are published but then it's going to be the same position as now isn't it? The company will likely provide a TU and some interviews and if they are confident about the future that will come across in those presentations.

Do you think it would be better to sell before publishing a TU?

As far as I can see, they've played it by the book: publish a TU, give guidance for the current year and then exercise options and sell the resulting shares.

All but 800k (presumably the CFO's) of the options were going to expire this calendar year, so there were not many windows left when they could reasonably have exercised/sold. When do you think they should have exercised/sold them if not now?

If you want a feel for what just some of the IP might be worth, I suggest you read the latest finnCap note and see what they say in the "Valuation" section about the value of the potential royalty (or commission) stream from Solvay Actizone. This stream is part of the deal under which byotrol sold the relevant IP to Solvay.

In terms of near-term business progression, the really positive thing for me is the guidance to year-on-year growth in earnings, backing up the idea that coronavirus has just accelerated what was already underway, not provided an unsustainable one-year spike.

2 mins 10 secs:
"We've just put out analyst guidance via finnCap that we should beat this year's numbers in the year to 31st March 2021 [should be 2022]. Not a massive beat but a bit on the bottom line to deliver about £2m EBITDA and I would hope we would actually beat that as well when we get to the end of the year."

In terms of 2H slowdown in product sales, he did a good job of explaining why Boots online retail sales are not necessarily representative of the business as a whole.

4 mins 17 secs:
"First half of the year just gone was very, very good. Third quarter was good. Fourth quarter tailed off in terms of product sales because 3/4 of our business is to business environments, so professional products for use in professional environments. That's a consumables business and obviously when the professional environments are being closed down you're not selling a lot of consumables. So the 4th quarter wasn't so good but that's now opening up again."

[stt1 should perhaps listen to that last para rather than making it up]

I don't know about Stifel, but I think we have similar concerns about Frasers motivations and what might happen next, Ejackson. I put a couple of posts on the advf n board to that effect. Note also Fraser's niggling sales of shares during the strategic process, as evidenced by the 8.3's. Just the sort of activity that might fit with trying to stop the shareprice popping up and making an ultimate bid more expensive.

One of the interesting things about Studio is the very full disclosed shareholder list. Thanks to the recent offer period, all holders down to 1% have declared, and on face value their ownership comes to more than 100%, so presumably someone like perhaps Norges Bank is the legal owner of one of the other declared beneficial owners. There is no significant short interest it appears, with Euroclear reporting only 90,500 shares (0.1%) on loan on average in March.

That means there's virtually no free float for retail investors to play in, and only any liquidity to the extent one of the existing declared holders wants to sell.

According to a trawl through the 8.3's, the last declared positions are as follows:

35.6% Frasers
20.6% Schroders
10.0% FIL
6.0% AIB
5.0% Janus Henderson
4.8% Lombard Odier
4.3% Hargreave Hale
3.0% Ennismore
2.6% Premier Miton
2.2% Norges Bank
1.4% Blackrock
1.3% Legal & General
1.2% Teviot Partners
1.1% M&G
1.1% Keith Chapman
0.6% Trustee of Fine Art Developments Employee Trust (Studio opening decl)
0.3% Phil Maudsley (director)

101.3% Total

The 600ml size was added to the range in October.

I would be very surprised if they slip out a TU late on a Friday - that is normally only for trying to bury bad news isn't it?

I am hoping that they have convinced themselves that "the middle of April" runs from 10th to 20th April and therefore they can leave it until Monday or Tuesday. It does feel rather as though they might be waiting for something to happen in the hope they can put it in the TU release when it comes.

Or put another way, they did almost as much adj EBITDA in 2H 2020 ($59m) as in the whole of 2019 ($60m). And they have guided 1Q 2021 adj EBITDA ($26.5m mid-point) to be 44% of the whole of 2019.

So that looks like a very strong growth trajectory doesn't it?

Worth noting the strength of the adjusted EBITDA position:

$59m 2H 2020 (actual)
$25-28m 1Q 2021 (guidance in 22nd March TU)

So in the last 3 quarters they are already at $84-87m. They should easily do $100m adj EBITDA for the 12 month period July-June, and if 2Q matches 1Q then they would be at around $112m.

So TTM (trailing twelve month) metrics should look very impressive once they start to include 2Q.

Personally I think they will effectively issue shares for the IPO. They could come from the treasury shares but that amounts to the same thing as treasury shares are "dormant" and don't get counted for market cap or ratio purposes - so issuing treasury shares would still be dilution as far as existing shareholders are concerned.

A tender offer would be a neat way of securing supply for an IPO without diluting, but I would be surprised if they would want the complexity of a tender offer running in parallel with the complexity of getting ready for the IPO. They would have to run with uncertainty on price and quantity, wouldn't they, until any tender offer was completed? And even then they might leave themselves exposed to price risk if they couldn't get the IPO away at a price which exceeded the price they had paid in the tender.

I don't think there's much "experimental" or "testing the water" about a Nasdaq IPO. The prospectus is a pretty major undertaking, as are the reporting requirements (Sarbanes Oxley etc) that will be in place once TRMR is listed and subject to some SEC regulations. I expect to see a certain poster rejoice in pointing out many of the business "risks" that will be identified in the prospectus, almost certainly including some around the state of financial controls.

The issue about liquidity and price is to some extent one of timing. Summit Therapeutics (another biotech that was originally AIM quoted before listing also on Nasdaq) eventually gave up its AIM listing (SUMM) as its business was increasingly US- focused and it wanted all trading to be on the Nasdaq SMMT listing in order to increase liquidity there. Once a company is listed on Nasdaq, the regular quarterly reporting, business development and IR activity (such as participation in conferences) gets the company known and liquidity and interest should pick up. SLN appears to have taken the view that the key was to establish the US office, Nasdaq listing and start the publicity process (it rang the bell on its listing day, albeit virtually), rather than provide any liquidity immediately. By the nature of its business (just starting its first clinical trials of drug candidates) it will have a stream of material news coming through which should, if trial results are positive, generate investor interest and over time move the price to "fair value" in US peer terms. For TRMR though the calculation may be different if it feels it has fewer natural catalysts looking forward and instead wants to capture investor interest and any US listing premium in the near-term to take advantage of the current adtech/CTV excitement and its own strong current financial performance. That will inform the decision on how much new equity to make available in the IPO.

So although they are in different sectors, the logic for listing in the US is perhaps fairly similar for SLN and TRMR (neither appeared to need cash immediately, both might want to be able to raise in the future and both felt their companies were not fully valued on AIM compared to Nasdaq-listed peers).

SLN's experience perhaps suggests that an IPO route, provided enough shares are issued to enough market participants, might be a better way of promoting liquidity in the Nasdaq listing, which ultimately should lead to "fair" value being achieved. Issuing a lot of shares on Nasdaq leads to dilution of course, and leads to cash sitting on the balance sheet until they can find a use for it, which is hardly efficient although it does create optionality to participate in industry consolidation. So it's a tricky balance. If they do intend to issue a "lot" of shares then they really need to do a very good marketing campaign ahead of the IPO so that prices are bid up to a level that existing shareholders are happy with, given the dilution. It is difficult to say to what extent that has already happened given the stellar shareprice run that TRMR has been on this year.

For an example of a Nasdaq listing not involving an "offering" of new equity have a look at SLN. They had and have maintained an AIM listing and did a "direct listing" recently on Nasdaq (8th September) under which various existing shareholders ("Registered Holders") agreed to register their shares for trading on Nasdaq. So around 54m of the existing shares were registered, as around 18m ADSs (each ADS was 3 shares).

The company received none of the proceeds (as no new equity was issued) and it is up to the existing Registered Holders as to whether and when they actually sell any of the registered shares. The company was interested in getting a Nasdaq listing to get more exposure to US investors and to make it possible to raise capital at a later date if they wished. They also wanted, I think, to try to correct what they saw as a valuation discrepancy with US peers. In fact they did subsequently do a raise on Nasdaq, issuing new shares.

The issue with the direct listing for SLN, with no new equity issued, is that liquidity was very poor, although it hasn't so far improved noticeably even after the subsequent raise. If you have a look at shares traded after the listing, it has been very low volume on the Nasdaq, presumably because the Registered Holders (and those institutions which participated in the subsequent raise) were not interested in selling their shares at the price new investors were prepared to pay on the Nasdaq.

The attached links to the first public version of the F-1 prospectus filed by SLN, who had also confidentially filed a first draft at an earlier date (about 2 months before this public one).
https://www.sec.gov/Archives/edgar/data/1479615/000095012320009257/cik0001479615-s1.htm

The intention of MOGP to pursue a reverse was detailed in the recent circular, as was some discussion of the consequences and risks.

"The Company intends to pursue a reverse takeover transaction, subject to shareholder approval, with the aim of delivering shareholder value. Pursuant to Rule 14 of the AIM Rules, a reverse takeover transaction would require the publication of an admission document in respect of the proposed enlarged entity and would be conditional upon the consent of the Shareholders being given at a general meeting. As per the guidance notes to Rule 14 of the AIM Rules, trading in the Ordinary Shares would be suspended following the announcement that a reverse takeover had been agreed or was in contemplation until the publication of an AIM Admission Document or an announcement that the transaction was not proceeding.

The Board has not yet identified any potential reverse takeover targets which will be the primary responsibility of the new board. In seeking and considering potential acquisitions, it is intended that the new board will seek to identify opportunities offering the potential to deliver value creation and returns to shareholders over the medium to long-term. The Company will consider investment opportunities in any sectors as they arise.

Any failure in completing an acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 (including seeking re-admission as an investment company (as defined under the AIM Rules)) will after 12 months result in cancellation of the Company's Ordinary Shares from trading on AIM."

hTtp://www.mountfieldgroupplc.com/component/docman/doc_details/96-circular-and-notice-of-general-meeting.html

I don't think there's anything to worry about with this, quite the opposite. To my mind this is just CF doing the things he thinks he needs to do to optimise the value of ORPH. CF has said that 2 of the non-core assets are likely to go to AIM hasn't he? i.e. floated directly on AIM or more likely reversed into an existing AIM company with Orph shareholders given shares in the floated or reversed company.

So he needs to find the right AIM company to reverse into. The cleanest one would be one that didn't contain any other assets because then there wouldn't be a substantive negotiation about the relative value of the Orph asset(s) vs that of the existing assets in the other company. MOGP appears to be just such a company following the sale of its previous assets. It has been funded with the £3m or so raised from placees to tide it over and is trying to rename itself as UK SPAC PLC, which gives a very clear idea of the intent. It has said in its 15th Feb RNS that it is prepared to invest in any sector:

"The Board has not yet identified any potential reverse takeover targets which will be the primary responsibility of the new board. In seeking and considering potential acquisitions, it is intended that the new board will seek to identify opportunities offering the potential to deliver value creation and returns to shareholders over the medium to long-term. The Company will consider investment opportunities in any sectors as they arise."

It looks to me as though CF has identified MOGP as a potential vehicle to reverse 1 or more of the Orph non-core assets into, and as a sign of goodwill if nothing else has put some of his own money in (through Raglan) in order to set it up as a viable SPAC while the reverse is evaluated. It might work and Orph might reverse 1 or more assets into it (Orph shareholders then getting shares in MOGP/UK SPAC), or it might just be used to keep another potential vehicle "honest" by providing an alternative home for negotiation purposes. I think he has taken just under 5% in MOGP so he is relatively indifferent (having just under 7% of ORPH) to the outcome of any negotiations between MOGP and ORPH, especially as he has the warrants in MOGP which would effectively increase his holding in MOGP if exercised.

I agree on there almost certainly not being enough time for an offer to be declared unconditional.

It looks like I've been reading the average share price test wrong. I was reading it as satisfied if the volume-weighted average share price over the period 23rd Feb to 22nd Mar was above the threshold (i.e. the averaging period is 1 month). But looking up VWAP on investopoedia it suggests the averaging period is 1 day, so that each day a VWAP is calculated. For the test to be met, that daily VWAP would have to exceed the threshold for a (continuous period of 1) month. If that's the case, you're right , we already know that test can no longer be met.