Member Info for DaKen

Yeah remember the £700m NAV at 31 Dec included £1bn net assets of housing arm and the £100m loan notes.

Received £400m so NAV post-sale £100m. Less 2H losses of approx £50m and it's not as rosy as you might think!

Still, no bank debt and strong £3.2bn billion order book - even if they can average 1% margin that's £32m medium term profits

SauerKraut, I'm hoping you are just being mischievous and not so desperately ill-informed to think the recent PMO share crash was caused by the known loss.

If it is the latter, suggest you read up about the MUCH higher than expected rights issue terms, the uncertainty surrounding it, and expensive debt restructuring they announced that day

I assume the 10p price being discussed relates to the following excerpt from the Annual Shareholders Meeting agenda:

10.-   Approval of a reduction in share capital by means of reducing the par value of the shares by € 0.40 each, to € 0.10 per share, to increase non-distributable reserves

This is just a change to the nominal value of the shares in their accounts and has no impact on the market value of the shares in issue - and it will be the market value which determines the RI price. This is my understanding but happy to he corrected

They sold their housing business so mortgage concerns not an issue. Main issue is profitability - expected loss of circa 60m before exceptionals for y/e 30/6/20. That could take a few years to make up based on expected margins. Still seems undervalued though...

Yeah it's exhausting. It was over 150p end April, 133p last month. Positive RNS and it's hovering just above 100p. Something's not right

Encouraging update on the whole. Particularly pleased to see they are maintaining high cash balances (but as I said yesterday, a good chunk of this will be needed to meet ongoing liabilities - it's not all excess cash).

5% operating loss expexted though - that's about a £50-60m hit I think...

Yeah but easy enough to roll forward the working capital position from 31st Dec to 3rd Jan I think - extra £300m cash which still leaves a net current liability position. Paid off short term bank debt but that just nets off within working capital.

I just noticed in the notes, however, that they also received a "further working capital cash adjustment" as part of the sale, but can't see a value. Hopefully that will have addressed my concerns!

Clearer picture tomorrow morning I guess, GLA

Wouldn't say it's pointless - it's the most up-to-date info we have on their financial position! And that was pre-covid.

They paid off their bank debt yes, but still had significant trade creditors which were not covered by trade debtors and the admittedly large cash balance.

We have to hope that they got their short term liquidity / working capital under control, otherwise the 100m cash balance people will need topped up somehow!

Yeah after saying some people are overly-optimistic, my post perhaps came across as overly-pessimistic!

I still feel the sp is undervalued (hence why it's my biggest investment) but I'm thinking 150-175p is a more realistic target in the medium term.

Hopefully you're right about month end cash balances re liquidity. Perhaps much of the current liabilities at 31 December were related to sale and hence non-recurring. That's what I'm hoping for anyway ??

*exceed current assets

Doh!

Hello all.

This is my single biggest investment but I do think there is a lot of over-optimism on here, caused largely by misconceptions on the value of having 100m cash and the fact the cash balance is roughly same as market cap.

100m in cash doesn't mean much if overall current liabilities exceed current liabilities - it's effectively our creditor's cash not ours. I think Londoner has made this point before - cash balance only worth writing home about if it's EXCESS cash.

In latest balance sheet, current assets were £645m and current liabilities were £972m (does not include housing business, such assets and liabilities are shown separately on the BS). Even after the £300m cash received for sale of housing business, there is still a net current liability position - which is very precarious.

Net assets at 31 December £700m, of which £1bn was housing business subsequently sold. £400m sale proceeds went to the company (rest to shareholders) so net assets after the sale would be around £100m - largely made up of goodwill and investments.

This is just my understanding and I could be wrong - happy to be corrected if I'm missing something!