The way to think of this is if you buy ATM via OTC then you are transacting on a security with a dealer, not transaction on an exchange (like the AIM exchange). The dealer holds the share and you hold the "beneficial interest". Just like if you buy shares via Hargreaves or the rest, they physically own the share and you have the "beneficial interest".
This is a helpful link: (https://www.investopedia.com/terms/o/otc.asp)
So no, no new shares would be issued because of the listing on the OTCB and the pool of shares remains the same.
GLA
Speaking of the Unicorn Bolt - they've just agreed a $126m framework to roll out car sharing further across Europe. So if you live in a city like Berlin or Tallinn you pay £7 an hour to use a car:
https://bolt.eu/en/blog/bolt-secures-126m-for-bolt-drive-expansion/
https://bolt.eu/en/blog/bolt-launches-car-sharing-service-bolt-drive/
And this major financial backing is a no brainer for the banks because of the ESG merits!
Eero Treumann, Head of Corporate Banking at Swedbank, says, “We are used to seeing Bolt Drive cars on the streets of Tallinn, but it’s still a novel business model on a wider scale. In the future, we can be a part of the solution to save cities from car dependency”.
GLA
Rhymes with PoxMarkets and it starts with a V
https://www.xxxmarkets.co.uk/articles/vox-sector-special-five-companies-bringing-next-generation-ev-technology-to-market-de3077a
"A separate yet complimentary technology that is often discussed in the same context as EVs is autonomous driving. Guident, a Tekcapital portfolio company, is a pioneer in the rapidly growing field, having developed a proprietary "remote monitoring and control" (RMCC) system to improve the safety of autonomous vehicles, including land-based delivery devices.
Separately, Guident continues to develop its patented Regenerative Shock Absorber (RSA) technology that converts more of an EV's motion into electrical energy, extending range. Regenerative braking is a well-known technology, however Guident's system harnesses energy from shock absorbers. "With precise force and displacement measurements, we aim to demonstrate the advantages of the modern energy-harvesting shock absorber over traditional oil-filled shock absorbers", the company has said.
Guident's RSA technology can make all types of vehicles more sustainable, including ICEs, hybrid, and EVs. It increases the energy harvesting efficiency by c. 70% over existing energy-harvesting shock absorbers, and can deliver extra EV range of 6-12 miles per charge."
AGRICORE>> It hadn't really twigged in my mind that the regenerative shock absorbers would also work with ICE and hybrid vehicles but actually it makes a great deal of sense. My own experience of using START-STOP is that is usually stops working i.e. the braking I do is insufficient to provide enough charge. Perhaps if I drove more erratically then I could make more use of START-STOP. Or I could get some Guident Springs :)
Interestingly, 95% of cars come with START STOP (Source: https://www.bannerbatterien.com/en-gb/Battery-knowledge/6-Start-stop-technology)
The concept of adding Guident Springs seems like a no brainer, and that got me thinking - will Guident Springs only be used in cars? It appears START STOP is increasingly common for ICE bikes or e-bikes (https://www.webbikeworld.com/will-stop-start-tech-come-bikes/)
Market size for cars is 67m units/year and motorbikes is 65m units/year. If 95% are equiped with Start/Stop (like now) AND Guident Springs there's just a $25 licence fee on each one that equates to an annual income of $3.13bn. Let's suppose only 1 in a 1000 new cars/bikes adopt Guident Springs. That's licence fees of $3,135,000 a year. Selling the licence for 15X that would yield $47m or £37.6m. More than twice TEK's current market cap.
Oh and that's just 1 in a 1000 new vehicles. What if you retrofitted Guident Springs as an aftermarket "range extender" technology too?
Oh and let's not get started on the new 24.1m vans, 1.7m new trucks and 0.5m new buses per annum too.
(https://www.statista.com/outlook/mmo/shared-mobility/shared-vehicles/buses/worldwide)
GLA
And a comparable "food technology" business to Microsalt which might give further food for thought would be Treat (LON:TET). If you look at their 10 year performance this is a 6X (6 bagger) or 10X at its zenith.
https://www.treatt.com/media/pages/investor-relations/financial-results-presentations/presentations-media/presentation-to-major-shareholder-may-2023/75cf33178d-1683302154/2023.05-fy23-h1-presentation-city-final.pdf
It's citrus essence for herbal teas, not endorsed by Chef Stein, and arguably nicer herbal tea is a less pressing need than the annual early 28,000-50,000 deaths caused by excess sodium in the US alone. It does provide something of a template for how Microsalt could progress from here.
GLA
BAF, you make a good point which should not be underestimated.
The wider application of the technology is that flavouring is big business. Flavour and fragrance is worth €18bn per annum. (Source: https://www.statista.com/topics/6300/flavor-and-fragrances-market-worldwide/#topicOverview)
A technology which halves the necessary addition of non-liquid flavouring is worth a great deal, well a proportion of €9bn per annum to be precise - in addition to the growing sodium reduction ingredients market worth $1.62 bn per annum and the salty snack market worth $26b per annum.
It's certainly (flavoured) food for thought.
GLA
Sorry, I meant the market price would be at an estimated 44% discount to NAV!
Re-reading the annual report and their recent presentation I almost fell off my chair reading the 30% holding in Recycling Technologies Ltd could actually be worth a whole lot more. There was a planned and cancelled IPO at a premoney of £80m. If that can be replicated that doubles the NAV of NSCI. 30% would rerate the £0.5m book value to be worth £24m.
Looking at companies house records the business had £9.7m of assets, which were written down and sold by the insolvency practioner for just £1.1m. So I would guess that the £0.5m value by NSCI includes a contribution of £170k of cash into that business along with £0.33m for the 30%.
You can read this for yourself here: https://find-and-update.company-information.service.gov.uk/company/07528795/filing-history?page=1
Or put another way, the current price could actually be an astonishing 70% discount to NAV (NAV £51.9m; market price £16.1m) based solely on some fairly reasonable assumptions - and based on progress in just a few of the holdings.
GLA
Don't really understand the concern here since NSCI holds 1.34m shares in PDS which is NASDAQ listed and at current price of $9.42/share translates to £10.1m of liquidity - if needed - and as they point out on page 23 of the annual report.
Also not inconceivable that some of its existing holdings could be syndicated to its managed capital via Martlet or via EMV.
Of course £10.1m is a £4.6m movement down on NSCI's NAV as at 31/12/23. So net assets are £20.6m or 25% above the current market price. But taking into account what we know around progress and funding rounds at Glycotest, Sofant, Qbot, EMV, a net assets price at or above £24m+ appears a reasonable estimate. If PDS reverts to it's $13.2 price point. That reaches £28.6m+ net assets..... or 44% discount to the current market price.
Certainly all appears to be heading in the right direction, and happy to hold here.
GLA
I've just finished reading SP Angel's report on TEK. No great insights but it spurred me to look at the NAV valuations of the past few years.
I offer a perspective for those struggling with the current malaise in the markets and barrage of negativity. Consider this. Have any of the portfolio companies gone backwards in terms of their progress? Have they failed to launch their product? Have they lost customers? Have they concluded their technology can't "improve peoples' quality of life?" (i.e. the TEK mission statement). Has what's changed simply been the market's appetite for microcaps and growth co's?
No, it's fair to say substantial macro factors of covid/supply chain/interest rate rises/and an inflation burst have smashed into TEK. Some raises/dilution are as a result. But are those still headwinds? Arguably all 4 are receding or gone. So is the night darkest before the dawn?
There's been some seriously disappointed investors including some seemingly "get rich quick" schemers bemoaning their special dividend. Bitterly holding on to losses here. It's also true that TEK have diluted several times including 20% dilution in 2023. We have gone from 150m shares to 180m recently.
Poor sentiment and macro headwinds obscure the technical and commercial success of the TEK portfolio. And poor sentiment and the (lack of) market appetite reflects in its market pricing right now.
But, as a fellow long-term holder (LTH) consider that we are watching 4 progressive portfolio companies who are navigating challenges of macro factors, growth and cash flow then would it be a reasonable approach to consider for a moment a valuation based on the highest valuation point for each of the 4 businesses?:
For BELL this was Nov-21 and was $22.7m.
For Guident this was May-21 and was $22m.
For LUCY this was May-22 and was $27m.
For Microsalt this is Dec-22 and $16.5m.
I arrive at $78.6m which equates to $0.44 or £0.357 a share. (This includes dilution and is based on 180m shares)
Tek's cash is currently at ~$3m so 1.7p a share cash. So 37.4p/share.
So today's price is at a 66% discount to theoretical NAV. Today. 37.4p a share even before we consider growth and future potential.
IFRS13 forces TEK to revalue things down but we are not witnessing a shrinking or regressive opportunity. Using these data points provides, an interesting perspective why there's *substantial* upside here.
Each market - AV, eyewear, sodium reduction and pulmonary disorders are all substantial, and growing fast. Plus portfolio company offers a market leading way in each market to "improve peoples' quality of life".
I previously set out how TEK could be valued at 18p a share on a liquidate basis. Now I set out how 37.5p on a reasonable/optimistic TODAY basis. But even more on an optimistic tomorrow basis. I repeat my assertion that 12-13p bid-ask is simply too low.
GLA
Nth, I'd have no wish for DEC to initiate a buy back.
This is the DEC presentation from their most recent acquisition, Tanos.
https://d1io3yog0oux5.cloudfront.net/_4f580065c9f9acf0ccf37db791dc031c/dgoc/db/562/4590/pdf/DEC+Central+Region+Acquisition.pdf
Look for the NPV10 values (Net present value of cash discounted by a compounded annual rate of 10%). This is the future value if we assume the future value of any earnings drop by 10% every year (i.e. quite a harsh metric)
Do you see it on page 4?
Let me help you. DEC bought Tanos for $250m. The acquisition has a NPV10 of $589m - including $107m of additional EBITDA in the coming year (i.e. nearly half the initial outlay).
A buy back would not achieve those kinds of increase to returns - and therefore accretion to NAV. A buy back wouldn't produce all the synergies DEC list on page 6. I find it incredible that I was able to top up at 82.7p this afternoon. Rusty Hudson's dealmaking expertise is superb. The operational ubiquity they achieve is impressive. Their progress (albeit from a poor start) on ESG and specifically methane emissions is good. People speak to "risk". But I'm reminded that these have a solid track record, solid profitability, including substantial hedges for the next 8 years, and are buying producing assets for a growing market of natural gas - replacing coal, increasing international LNG exports, including increasingly to the UK as the Labour Party are putting the knife to any O&G development.
It's not like DEC is selling tobacco - but feels like it's being classed as such. In fact it's classed worse - you can only get 8.3% yield with Imperial Brands - but today it's 17% with DEC!
GLA
Hi all,
I wrote this back in March 2023. I hope this helps explain "the rules of IFRS":
The following 5 points will hopefully explain how DEC's profitability works. I've used the 2022 Annual Report so refer to the page numbers for substantiation of what I'm saying:
1. There's a realised loss and unrealised loss. As you rightly point out if I've X revenue and Y cost therefore how can things be ok when X-Y and I'm making a loss! Well, if we split Y cost into hedging losses for 2022 then that's $1.92bn minus $0.895bn of realised losses = $1.02bn net revenue. (See Page 46). Then if you take main expenses of Operating Costs, Dep'n, G&A, Finance Cost, Asset Retirement Obligation (See Page 128) that comes to $0.94bn. So there's a $60m net profit or $282m if you exclude depreciation.
2. Looking at it another way, if you go to P131 Statement of Cash Flows. Look at what cash is being generated through operating activities we can see $388m generated. This is largely the $282m you see above plus some adjustments. This is a "proof" of profitability in that it is generating cash at operating level ($166m "sustaining" cash - including depreciation).
3. The next thing I'd point to is expansion. There's an expanding volume of 7% net but that's net of a natural 8.5% decline rate. More production means more hedging so the gains and losses are magnified because to maintain a certain percentage of future years hedged then you need to increase your hedges year on year.
4. Fair Value. I've not yet talked about unrealised losses. The way DEC have to account for future hedges is to make a "fair value" assessment of the gain or loss (IFRS rules). At 31st December 2022 the oil and gas prices were $77/barrel and $3.57/mmbtu. The average floor was $3.63/mmbtu. That's significant because gas today is $2.17/mmbtu. More about that in a minute.... But as at 31/12/22 the future 2023-2032 future hedges had to be assessed based on the prevailing oil/gas price. So the result of that led to the paper loss. Because it's a paper loss that assumes a/ future prices are the same as today's prices b/ all the losses (10 years worth) are coming at once. They don't. As an accountant, the matching principle is that you ignore future gains/losses where they are profit and loss however when accounting for financial instruments you need to account for their "fair value" and record a gain or loss. The break out of future losses is set out on Page 152 and 153 and equate to about circa $250m in 2023. That's a lot of money but assumes the price of gas stays at high prices (it hasn't in 2023 has it?).
5. As at today 26/3/23 we now know that the losses have substantially reversed because of the lower gas prices in the USA. Looking at the strike prices of $3.65, $2.81 and even $2.14 March 26th price is below all of them.... in other words the hedging has actually swung to profit.
So that's an accountant's explanation to a non-accountant.
GLA
DEC is number 3 today on Cash Magic screens behind Enquest and Harbour: https://www.investorschronicle.co.uk/ideas/2023/05/30/why-our-cash-magic-screen-is-doubling-down-on-oil/
I've just topped up to bring my average down to 91.66p which I'm delighted with.
GLA
Setanta,
>>> Sipps,(not something to be recommended with AIM quoted companies, in my opinion )
Entirely depends on your age, or perhaps better said, your numbers of years to retirement. A person with many years to retirement (aka a young person) would be wise to take higher risks on more speculative shares; whereas a person with few years would be risking their retirement, so should hold the bulk in lower risk holdings.
Rather than any small change like on this little forum a REAL reform would be the way that the vast majority of investors have "nominee" holdings. So the "owner" is Hargreaves Lansdown or Interactive Investor - not the human called Setanta or Agricore. In today's digital world, it would be easy to manage electronic share registers where the shareholders are logged. Marks & Spencers are pushing for this for example. Companies increasingly simply don't know who their shareholders are because of nominee accounts. Around 1% more of all shares become "nominee" each year.
GLA
Lolly - Couple of things:
1. >> As a majority holder in Bell & Lucy.......12.1% of BELL is not a majority holding!
2. There is no such thing as a "Reduction Sale Mechanism". (Will I find this term in Wikipedia?). This perhaps explains why you ended up "blue in the face"? Setting some arbitrary date to offload shares and telling people about that in advance would create a hangover to a stock - not a wise move. Businesses do that when forced to - and not as a clever strategy to unlock value. Glad you don't run TEK.
3. Valuing the intrinsic value of a share which is an investment vehicle (like TEK) is based on assessing what "the market" would pay. If there's a publicly listed price then that's how you value it. Try reading Buffett or anyone who knows a thing or two about investing.... this isn't something that Agricore dreamt up.
4. I agree with your "fact" that TEK has down over HALF from its highest ever market price. But that market price isn't driven by fact, it's currently driven by sentiment. Sentiment is a feeling not a fact, hence the point that I - and lots of others - are optimistic about TEK because of its underlying and growing value and progress.
But regarding of any sunlit future, right now the component parts are simply worth more than the current 13p buy price. And I've explained how. Meanwhile your only explanation to your negativity is a fact based on sentiment.
GLA
Discounted cash flow and rising rates would matter if revenues were a distant prospect. All 4 businesses are revenue generative and their growth is forecast rapid and near. The logic doesn’t stand up.
Which means the market price isn’t based on logic but based on emotion. People like Lolly who regularly post negative or fatalistic views - it can’t be worth more than half its net asset value because its market price is what it is. How does someone like Buffett profit from emotion? Bet against it.
I ran the numbers and if today’s market price is X and Tek holds Y shares of bell and Lucy which it could sell if it chose, it could give every shareholder 18p per share and throw guident and microsalt in the bin and shut down - and you’re telling me there’s a “logic” to that? Seriously?!!!
Even since this morning BELL has bounced which considering the placing at 25p is a positive sign.
My other point about another perspective of 2020 vs 2022 was that the market cap is roughly the same as back then yet back then Lucyd was a prototype pair of glasses, guident was a concept, microsalt was a lab test and belluscura a concept. I don’t need to lay out the progress made but there is no comparison- other than that emotions have changed. And 4% interest rates which over 1 year reduce the value of future revenues by 4% and 9% over 2 years.
Simon Thompson will be posting similar today or next week as the fundamentals are there.
Gla
Another perspective is this. Compare 2022 to 2020. The 2020 price was roughly 14p/share (it varied between about 10p-18p). This was when NAV was $32.7m. As at December it was $57.8m. Post Period BELL's market value is less (by almost precisely $7.5m) but LUCY has rised from $1.37 to $1.82 which is +$5.7m) and it's fair to say Guident and Microsalt have made progress. So let's net all that off to $57.8+$5.7m-$7.5m = $56m NAV as at 26/05/23 equates to £44.8m.... so a 50% discount to a NAV where 66% is publicly listed and the bad news isn't already baked in. The other 34% is not far away from IPO and therefore gets baked in.
So the 50% discount to NAV equates to Microsalt is worth zero, Guident is worth zero, and that selling off BELL and LUCY can only be achieved at a 25% discount.
If you believe that then you're a fool. Stay hopeful.
GLA
Starling is 12% of NAV. The valuation is book value not mark to market. We will see an IPO of Starling at some point … we are almost into the 7th quarter since the IPO market dried up. History suggests the drought will end soon
Gla
There's so much positive news beyond "Dividend Unchanged" actually:
-> Disposals YTD aka CASH £8.8m (£0.2m in Q1). While the gearing increased to 50.5% (as predicted) the realisations continue which will help bring this back towards 40%.
-> Uplifts achieved during period a/ new lettings +7.3% and b/ Renewals +11.7%. Remember debt is fixed @ 3.5% yet rental income was hoped to be increasing (in an inflationary environment). This confirmation is super positive and reflects what Stephen Inglis said in his recent interview - that the valuers have downgraded valuations and haven't taken rising incomes properly into consideration (i.e. that valuations in relation to their yields are therefore below fair value).
-> Uplifts achieved post period e.g. Manchester Green currently let at an average £17.07/sq.ft. (per the 2022 accounts) was let at £18.25 so a 6.5% uplift - so the post period (Q2) notes are also showing rising rents.
-> Today's inflation figures demonstrate that inflation is potentially going to be stickier/higher for longer. This is positive for future rent reviews and reletting as above.
And a possible negative:
-> The post period sale of £8.6m for Building 3 which is 80k sq.ft (see: https://finnandcompany.co.uk/building.php?slug=building-3&type=acquisitions) appears to have been sold for a £3.3m loss. Building 2&3 combined are 140k sq.ft are on the books at £20.9m so 57% (using the Sq.Ft ratio) suggests a £11.95m book value. Obviously this is my inference rather than known. Perhaps building 2 is far nicer? I actually visited one of the tenants there some 8 years ago, and I do remember they had "nice offices". :)
Overall lots to feel happy about, and as important the update doesn't reveal skeletons or reasons for the YOY price drop and its discount to NAV.
Meanwhile Dividend Unchanged too!
GLA
MrCautious, my analysis has inacuracies? Did you mean inaccuracies?
Amapa isn't shipping ore.... but I concede there is a legacy stockpile of ore at the docks some 100km away, earmarked to repay creditors, but which at current prices isn't economical to transport/sell. EMH I concede is a former (tin) mine, but is not producing (awaiting DFS) so no, not a current mine.
I don't disagree that KDNC/EMH have got huge potential but I still do disagree that KZG and KDNC are very similar.
Many/most microcaps are at crazy valuations - I'd agree that similarity does exist - just look at the highs and lows on IC this week it's only got FTSE100/FTSE250 company shares at 12 month highs:
https://www.investorschronicle.co.uk/tips-ideas/2020/11/19/shares-hitting-highs-and-lows-updated-18-nov/
Holding cash, and being cash generative are the 2 distinctive qualities for the current market.
GLA
Nice article from the A-r-m-c-h-a-i-r-i-n-v-e-s-tor
https://www.thearmchairtrader.com/tmt-investments-on-the-unicorn-hunt/
"On the unicorn hunt, you occasionally find a few donkeys"
"The current jewel in TMT’s crown is Bolt, the Estonia-headquartered competitor to the ubiquitous Uber [NYSE:UBER], which was founded in 2013 by a high-schooler with a EUR5,000 family loan. Bolt now operates in over 500 cities in more than 45 countries with 100 million customers. TMT were early in on the opportunity, having been investors for eight years. The fund’s current stake is worth around USD69.8m with a return on investment of 217x."