The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Wr666,
Did they read this?
https://theoakbloke.substack.com/p/introducing-r-e-a-holdings
Hi Damofarl,
I agree the Fool article contains numerous inaccuracies. It is as though it were written by a 10 year old with a 30 minute time limit. My favourite one is how they discount $1.69bn to give $0.000435bn..... WHAT?!!!!
"The company estimates it will cost $1.69bn to cap all its wells. Discounting this to current values, gives the $435k disclosed in its latest annual accounts."
Whenever anyone quotes fool.co.uk or shares a link to it, there's a pause like in that Zoopla advert where the woman asks what they paid for their house. :)
According to Arix's interims it holds 5.8% of Harpoon. There was a $2.9m redeemable preference share in Harpoon it added during the period. However Harpoon's 8-Q shows shares in issue as of 07/01/24 are 16.95m (up from 4.1m) so ARIX holds a diluted 1.41% worth a £3.53m gain: ($680m x 1.41% = £7.53-£4m book). See:
https://open.substack.com/pub/theoakbloke/p/arix-merger-and-27m-gain-today
Tony,
DEC are a 24.98% yield. Have you actually read the counter argument, to DEC's alleged asset retirement black hole?
There are 20 articles relating to DEC at this blog:
https://theoakbloke.substack.com/p/dec-tecting-fact-and-fiction
There's an i3 energy article there too.
https://theoakbloke.substack.com/p/i3e-i3-energy
Using the last full year's data to compare DEC and i3e (2022):
If you compare i3e's and DEC's DD&A as a proportion of non-current assets:
DEC: $222m/$3,477m = 6.4% (15.6 years)
i3e: £34m/£299m = 11.4% (8.7 years)
So i3e has to accumulate an ARO faster.
ARO ratio as at end of 2022:
DEC: $452/$3477 = 13%
i3e: £90/£298m = 30.2%
i3e's ARO as a ratio of assets is higher.
But DEC's ARO is 80% of i3e's ARO accrued liability pro rated for depletion. (i3e don't show a separate depletion number and mix it in with depreciation and amortisation - I would venture to say they would be equal if we knew the depletion number - this is due to IAS37).
Also DEC decomissioned its wells 10% cheaper per well than i3e in 2022. i3e has to use a 3rd party contractor maybe, whereas DEC has 12 crews and 15 rigs focused on decommissioning 100% of their working lives. Income from decommissioning 3rd party wells can offset their cost too.
Using the last full year data:
i3e 70 wells / £1.369m = £19,557 ~ $25k
DEC 214 wells / $4.889m = $22.8k* (this is lower still in H1 2023)
So your argument that DEC has an ARO which is a "pitiful number" and i3e is "a little high" doesn't stand up to actual scrutiny of the facts. DEC accumulate their ARO in accordance with the IAS37 accoutning standard so there's nothing untoward or pitiful - the liability is being treated exactly as it should (the Oak Bloke article explains this further).
The final point I'd make is i3e and DEC have very different business models. DEC has a 71 year production profile to operate, shut in and work over with no drilling, while i3e is very much a drill and operate.
It's like comparing a Ferrari and a Ford Transit. Are we comparing load capacity or speed?
Hivedoff,
One should always seek to improve and learn from others, and since you positioned yourself as someone who's followed ANIC for years, I was curious to learn from you and gain insights from your posts of your "years of following ANIC".
Let's see:
We have your insight of 22/03/23 "the potential is huge is we get lucky...give it another 5 years."
What great insight you have for the year 2028 is left to our imagination, and never mind you appear to be the pot calling the kettle black, is we?
Before that we have your question from 5th December 2022 to ask:
"Is it time to cash in our warrants and buy some more shares at 28p yet?"
Hopefully you didn't cash in your warrants and buy some shares at 28p. Anyone following your years of experience would feel unhappy if they had followed you in at that peak price.
We have your thinking that at 13p in October 2022
"this should come back sooner rather than later..."
You don't explain why it should and here we are later.
Finally we have your post of 26/09/22 where you say:
"all the money Agrononics has invetsed as been used up"
After that I stopped trying to glean any insights from your years of being invetsed in Agrononics.
Https://open.substack.com/pub/theoakbloke/p/is-anic-in-a-pickle
ANIC is one of the OB top 20
https://theoakbloke.substack.com/p/happy-christmas-reader
Hi Nanopayments
I am including them. I said Cavendish didn't include them in their broker report. I don't know why - perhaps just overlooked it.
Hi Nanopayments,
First of all I think you're confusing pounds and pence. 15.8p not £15.80.
Second, the RNS 02/08/23 does quote 15.8p/share it's true.
But the final accounts do not.
In company law the final accounts would be the definitive numbers - not an RNS from 4 months before. Despite what you think.
That RNS 02/08/23 states as at 30/06 Net Assets stand at £157 million, including investments of £129 million and uninvested cash of £28 million.
The final accounts state 30/06 Net Assets stand at £168,256,998, including investments of £141,773,297 and uninvested cash of £28,093,984
.....That's an £11m difference of investments!
Cavendish's analysis of the FY2023 actuals also show a £10m difference where they agree the £141.8m of investments but think cash is £10m lower (£18m not £28m).
Nano,
thanks for your explanation.
But you've missed the point.
In the final accounts the 30/06/23 valuation has been raised from 15.8p to 16.94p a share
THEN there is are 2 uprounds at Meatable and Clean Food Group, post period, with ANIC gains of £3.9m and £5.37m, exactly as you say.
Yet we also know the NAV as at 30/09/23 is reported as 16.48p. (0.46p a share LESS than 30/06)
THEREFORE there is a drop not a rise in NAV per share.
I'll contact their investor relations to see if I can get any clarification.
Particularly that :
RNS 03/11/23 states the NAV per share as at 30/09/23 is 16.48p/share. And as at 30/06 was 15.80p
RN1 27/12/23 states NAV per share as at 30/06/23 was actually 16.94p/share.
So the NAV jumps 1.14p for 30/06 with no explanation. It also means the NAV/share drops in Q3, despite ANIC saying in interviews the NAV will be worth around "20p a share by the end of 2023" in I think interviews in November.
I'm feeling a bit irritated by what appears inconsistent/sloppy presentation of the numbers!
Hello,
I've been trying to reconcile the 30/06/23 report and particularly the valuations of holdings. There is a pie chart at the bottom of the Chairman's report on approximately page 4.
The problem I've got is either somehow holdings are magically revalued upwards by approximately the post period activity of the 30th June, or the pie chart is not as of 30/06/23.
Has anyone else realised this and can offer any perspective?
Thanks
Feeks
There is no RNS for SED dated 14/11/23.
Meanwhile your theory and speculation, or musing as you seem to prefer to call it, about an alternative explanation for the Going Concern appears to be contradicted by the news from a representative of Saietta VNA who confirms Indian production begins next month (in February 2024).
It is covered here: https://theoakbloke.substack.com/p/sed-ition-part-5
So the 50% investment alongside Padmini appears to be going full steam ahead - no scaling back it would appear.
Meanwhile for Sunderland, Ayro has received its first order from the US Govt today. Interestingly for their embassy in "South Asia". India? I read their recent fundraising to move to full production was $48m. In my mind that sort of budget translates to a facility capable of producing a few thousand a month Ayro Vanishes.
I agree we'll find out in due course whether the words from RNS 29/12/23 which states "high volume OEM relationships... which are set to utilise the production capacity they have developed in Delhi and Sunderland" means "used" vs "fully utilised"
But if you re-read it closely what else could the words "High volume relationships set to utilise the capacity" mean other than "fully utilised" (or at least heading towards full utilisation)?
For example if you have a 5 seater car and you have high volumes of passengers set to utilise the capacity it is not reasonable to think there are 5 people in that car, and if not, there are folk tapping on the window to be let in if there's a spare seat going?
Https://open.substack.com/pub/theoakbloke/p/eisb-trading-update
BMN a strong contender for 2024 at:
https://theoakbloke.substack.com/i/140201916/bmn
Bushy,
1. You refer to an event from 3 years ago. How is that still relevant for the prospects for JLP in 2024? Help me understand your logic that cashing in some shares 3 years ago in lieu of salary, therefore makes this a red-flagged horse manure today? (Brown flagged probably). Because I'm struggling to see any logic in your reasoning.
2. The options for both were "in lieu of amounts owed for remuneration." and "in lieu of cash payment for salary." - as clearly stated in the RNS. Do you not understand that start up business owners sometimes not take salary for a period to help grow the business? Then take one, when the business can afford it.
3. Colin Bird is irrelevant anyway in 2024.
4. Leon has purchased twice (at market price not at an option price) since then and has plenty of skin in the game as does Colin Bird's successor.
5. All exercised options and share-based compensation is always dilutive - so not sure why you say "PS those conversions were dilutive" either.
Feeks
Is it guesswork? Or interpretation? In the commercial world 3000 units isn't a high volume OEM relationship. And 3000 AFTs simply doesn't utilise the capacity at Sunderland. I don't know about your commercial experience but I do know Tony Gott has vast commercial experience and wouldn't use those words loosely - it would make him look silly if he did.
Let's rewind. Those calculations were to try to ascertain the validity of your alternative theory regarding the Going Concern. So you're pouring cold water on your own theory now.
The RNS relating to the 3000 for Ayro from 03/04/23 states:
"Delivery of eDrive systems to commence in Q3 2023 and production is expected to take place in batches, with the final batch scheduled for delivery in Q4 2024" it continues "the Company is hopeful of securing follow-on orders upon delivery of the first 3,000 units." So nothing in my interpretation contradicts that RNS does it?
By the way FY2024 Q4 is Jan-March 2024, not Oct-Dec - as you believe; Saietta's Y/E is March.
Feeks,
I hadn't thought of it that way but yes I see your point. Funding the JV (Saietta VNA) is a strategic priority but not a strict necessity.
But logically following this thought to fund 12 months (to September 2024) of cash burn (i.e. overheads @ £1.2m a month means earnings growth from Sunderland (alone) must be around **£5m higher** than my gross profit forecast (ex.VNA) because past March (to September 2024) there's a further £7.2m of cash burn, and while potentially up to £5m of "avoided" funding of the JV - assuming no funds have been committed (which is highly unlikely). And £2m less income through the sale of assets (the 2 Sunderland lines transferring to VNA).
So Sunderland would have to be producing/selling AFTs at a much, much higher rate. I've plugged these variables into my profit model and my calculations come back that Sunderland would have to be producing, selling and getting the cash in for at least 1,500 units a month from today, to have enough cash until 30/09/24. Or 2,200 units a month if say half the VNA cash has already been committed (£2.5m). (based on £2,500,000 / £400 margin per AFT = 6,250)
I think it highly unlikely the Indian JVs would be buying engines from Sunderland if SED reneged on the JV, and it assumes there are no cost penalties to reneging - which I also think unlikely. It would likely need for Ayro's "full production" to advance extremely rapidly in early 2024 as explored in Sed-ition-part-4 then this could hoover up many or all of those AFTs.
https://theoakbloke.substack.com/p/sed-ition-part-4
So to conclude, the likelihood of SED binning its VNA JV being the explanation for the Going Concern statement is far, far less likely, but I concede it could be a theoretically possible explanation.
Continuing:......
The comment "I have no idea whether the product is any good or not. That’s largely irrelevant to me" at least confirms there was no real analysis given beyond a view of the H1 numbers and was made in the absence of any real understanding of the market opportunity for SED and its future prospects. The value of a market opportunity and the strength of the proposition largely determines its success - and its ability to get funded. So largely irrelevant? Anything but, in my view. I'm not trying to be overly critical - it must be hard when they cover 100s of shares - how can they possibly get a detailed understanding of a share like SED?
Finally it is true that the funding round was at a 17% discount, and that this diluted SED holders. Will the further funding be a further funding round with further dilution? Maybe. But we also know SED has at least one funding option already in place. How?
The fact that SED did NOT include a going concern statement in its interim is significant. This means there's one or more offer on the table. There must be - otherwise they couldn't have made that statement. So when Stockopedia say:
"I challenge whether this statement here below is true, as it doesn’t align with the facts."
Leaving aside the allegation being made here that SED (and its NOMAD Canaccord Genuity) have lied, I would say this is Stockopedia's misunderstanding of the meaning.
If there's a funding offer on the table then it is also a fact that their comment that "funding runs out in March" is ALSO incorrect. (Whether the terms on offer are any good is another matter - but we know it must already exist).
I notice you repeat the mantra they themselves give - that "it is uninvestable".
Is it though?
PS A final thought. Does their StockRank system prejudice the assessment given? Isn't it inevitably yes otherwise wouldn't the StockRanks system otherwise be incorrect and worthless? In other words because SED had such a low score it must be in line for a harsh review. It's what's known as confirmational bias. So watch out! You could be vulnerable here, to further de-ramping from paid-for commentary.
PPS would 5 x OEMs and their due diligence not have considered funding? Would several OEMs plan the manufacturing of multiple vehicles using SED as a supplier if there was a question mark? Would several OEMs JV with them? I think it inconceivable why anyone would think there is not a funding plan in place. Once a manufacturer commits to a supplier they can't just swap out a Saietta motor for an alternative on a whim. That's what Buffett would call a moat.
Taltbong
I read the Stockopedia assessment too. I suppose you have to decide whether the following comments are fair:
1/ "no discernible commercial progress apparent" is fair when there's a $366m order book - and growing.
2/ "seems to limp along" is fair when this IPOd just 2 years ago. In those 2 years they've commercialised both AFT and RFT motor technology, inverter and software into multiple products, one which outpaces at least one global Car Manufacturer's own electrical motor, for both the heavy & light automotive and marine markets - where its Propel offering also outpaced the incumbent. Furthermore it has bought and kitted out 2 factories for automated production from 2024, and persuaded 2 Tier 1 OEMs to JV with them, and at least three major OEMs to buy from them (so passed due diligence at leas5 times - which in the automotive world isn't easy), persuaded some really senior people e.g. the ex-CEO of Rolls Royce and Bentley to join them.
Because in my opinion SED have achieved a great deal. I think it is fair to say the previous CEO overcommitted. However, the rapid and skillful way that's been dealt with since April 2023 is also impressive.
TBC.....