RE: Nice buy13 Dec 2019 19:37
We were told by PIs who attended the AGM that the Chairman said, 'shareholders are in safe hands’ and referred them back to the RNS sketching out the board’s ambitions/plans for the plc.
The vision sounds exciting, has the BoD identified suitable and willing RTOs? probably, can the BoD execute? Probably but there are a lot of moving parts with RTOs and they take time.
Looking at their recent Prelim's the working capital from the last fund raise plus existing cash in bank should see this company through to April, they've appointed a new Chair, new NEDs and intimated they will recruit new sales people all which costs money. I haven’t factored in any sales from the Ltd as it’s impossible to forecast based on previous trading performances. Also, they are developing the IoT for the IP they own so cash will be tight.
Running costs for this tiddler have increased since August 2018 even when factoring in cost saving of the recently exited CEO. The tone of that RNS was telling (in my view), his departure was amicable, and the CEO would remain a shareholder. Looking at his holding would be surprised if he was locked in, but he may still be privy to inside information.
If by Feb20 there is no material update on RTOs the company will need to raise new money in March/April. I'm hoping we hear news soon and predict the shares will be suspended pending the completion of RTO transaction(s).
I mulled over since my last post here how they will fund any RTO(s), issuing equity at this level would be ridiculous and hugely dilutionary, Truell would have to subscribe heavily just to stand his corner and then some if he wants to control the board without having to make a bid for the whole company. This is an unlikely funding route.
Instead it will be executed with debt, any RTO would have to be profitable at point of entry and demonstrate same for previous 3-5 years. This is the exciting part for me, the group will finally have earnings visibility and if they do multiple RTOs the same logic applies. The market decides a share price and the current one is about fair bearing in mind nobody apart from the board and its advisors know where this company is headed.