Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Maybe the results are a little downbeat but absolutely nothing to justify the ridiculous 60% discount, so compared to market sentiment they are a fantastic set of results. Basically with interest rates so high and stock market volumes so low it's going to take a while until the share price recovers. The other problem is that lazy investors and journalists will look at the yield and assume the company is in trouble "any company yielding more than 7% must be in trouble".
Interesting to note the change of purpose of the Glasgow offices, this probably won't be possible for out of town buildings but shows there's value in some/many of the unused offices.
As soon as I get some cash I'll be averaging down.
please buy more shares in the company to demonstrate your belief and be more aligned with us shareholders. especially patrick maxwell and gillian el****.
All the more reason to invest in an outside London property Investment trust (not a fund where redemptions are forced) with a 82.5% occupancy rate, 99% rent collection and long leases at a 63% discount to NAV yielding 18%. Looks to me like the bad news is already in the price then some.
The Non-executive directors have just been given a big pay rise to a minimum of £82,500 on the very high side for a UK IT. How much scrutiny have they given to this? Surely they have access to the finer detail of these agreements?
In my opinion both the board and the management company are at fault here, my preference is for the trust to wind up. Hopefully the sale of the assets will be some time off when interest rates are a lot lower and the return will be somewhere between the current share price and the NAV.
And in the 2019 report:
“Contingent consideration
Under the terms of the acquisition agreements for Catalogues, contingent consideration may be payable dependent on future independent valuations of the Catalogues or revenue received within a specific time frame of acquiring the Catalogues. Contingent consideration will be recognised when performance conditions are met or the amount is a deferred liability. In such cases, a liability will be recognised alongside an associated finance charge which will be accrued over the respective deferral period.”
As far as I can tell there is no reference to this in the prospectus or accompanying documents.
So it appears that when some catalogues were bought there was an additional amount to the be paid in the future if the catalogue performed better than expected. It would be usual that the performance bonus would be less than the actual performance. Surely the idiots aren’t paying out a bonus that is higher than the actual performance increase? I think the board are duty bound to provide more information about the bonus arrangements.
In the above definitions there are comments about the expected level of future performance bonuses, basically saying there is nothing to worry about. This is what was said in the 2023 annual report:
“As a result of the strong performance of certain Catalogues, a Catalogue bonus provision was
recognised. This is based on actual and expected future Catalogue performance that is highly probable. Whilst these liabilities are recognised in the current year, the Company doesn’t anticipate that these liabilities will be incurred at a material level in future years.”
Compare this to yesterday’s RNS:
“It has been determined that the Catalogue bonus provision is expected to increase by approximately $23 million to $68 million at 30 September 2023 as there are now ten (31 March 2023: six) out of the Company's 146 Catalogues likely to meet performance hurdles as defined in their acquisition agreements.”
Given the completely incompetent assessment of these liabilities this is really worrying:
“In addition, there are a further nineteen Catalogues with active bonus provisions totalling $75 million, that are unlikely to meet performance hurdles; these are not recognised as provisions but are contingent liabilities and will be disclosed in the forthcoming interim results with associated sensitivity analysis.”
The problem is that there is not sufficient information in the pubic domain for shareholders to understand the implications of this. Going back to my main concern, is it possible that the bonus payments are higher than the actual out performance, which would be the only sensible reason to stop the dividend. If the forecasted revenue for the relevant catalogues was below the performance threshold then now that the catalogues have performed better than expected then revenues will be higher, not 10% lower.
As a holder of SONG shares I thought I would share the results of my research into the latest RNS.
As far as I can tell the phrase Catalogue bonus provision first appeared in the 2023 annual report:
“i) Catalogue bonus provision
Under the terms of the acquisition agreements for Catalogues, the Group recognises a financial liability for consideration that may be payable in line with the acquisition agreements that are dependent on the performance of the respective Catalogues. Such financial liabilities are initially recognised at fair value and subsequently carried at amortised cost. Management consider both the revenue forecasts used in the independent valuation and their expectation of revenue expected to be received within the specified performance time frame of acquiring the Catalogues when assessing the initial recognition of this financial liability. At 31 March 2023 a provision for the financial
liability of $45.0 million was recognised as a Catalogue bonus provision given the likelihood of economic outflow being triggered through respective Catalogue performance (31 March 2022: $1.3 million).” Page 133.
Prior to this the phrase used was contingent bonuses in the 2022 annual report:
“The Group have a number of contingent bonuses which are dependent on the individual catalogues meeting certain defined performance hurdles as defined in the catalogue acquisition agreement. Management’s assessment based on the underlying catalogue acquisition agreement and catalogue performance to date, is that there is a remote probability that a number of contingent bonuses will become payable. The fair value of this contingent liability is $5.8 million.” Page 149. Note the actual value in the report $939,000.
Then contingent consideration in the 2021 annual report:
“i) Contingent consideration
Under the terms of the acquisition agreements for Catalogues, contingent consideration may be payable dependent on future independent valuations of the Catalogues or revenue received within a specific time frame of acquiring the Catalogues that reach agreed upon revenue targets. At 31 March 2021 the likelihood of the aforementioned performance condition to be met was deemed remote and hence the possibility of economic outflows remote, and therefore no contingent consideration was disclosed.” Page 133.
Similar in 2020:
“h) Contingent consideration
Under the terms of the acquisition agreements for Catalogues, contingent consideration may be payable dependent on future independent valuations of the Catalogues or revenue received within a specific time frame of acquiring the Catalogues that reach agreed upon revenue targets. At 31 March 2020 the likelihood of the aforementioned performance condition to be met was deemed remote and hence the possibility of economic outflows remote, and therefore no contingent consideration was disclosed.” Page 94.
If I've understood the rns correctly, when Hipgnosis bought the catalogues there was provision for extra payments if the catalogue performed above a certain hurdle. Some of these are now due for payment and there might be some due at a later date which means no dividends will be paid this financial year. Before buying this share I did some research but didn't spot this. Was this information publically available before today?
FYI
FYI
If I remember correctly, the musicians were underpaid and the royalty board recalculated giving them a boost (after SONG bought them), then it seems this number has been reduced but still above the original royalties.
Interesting to see AVI putting their money where their mouth is, they've moved from 3.13% ownership to 5.01%, with 1209m shares in issue I make that about 22m shares. The timing is interesting, 13th October before the bombshell, so maybe they bought at 74p or lower over the counter. So it could have been about £16m or less.
Judging by what happened with Round Hill Music Royalty fund (67% premium to share price take over), there's a lot of value in the assets. I haven't been directly involved in the closure of an IT but as far as I can tell it isn't a fire sale just a long slow painful process of selling. So I'm gambling on a close to NAV return.
So it looks like the valuers have made a £9.75m mistake, assuming this counts towards the NAV then it will be a 9.75/2391*100 = 0.4% reduction. As far as I can see the divi will be recalculated, maybe a bit less. The discount widens to more than 50% so either a take over or assets sale if the continuation vote fails, which lets face it there's no chance of it succeeding at a 50% discount. I'm holding.
If I could answer your question I would be extremely rich.
It looks like the market doesn't like the interim report.
Tickhilton, IT boards hire the management company not the other way round. Sometimes the management company has a board member which is not good but the vaste majority are independent. The best current example is TLEI, messy business but the board have dump the aifm by encouraging investors to vote against continuation.
0715, you said "Current yields are around 10 to 12% on Secondary assets so the current valuation of £790 million will fall to £650 to £700 million which is at covenant breach.". This is quite alarming but my question is how do you know? I assume that loan covenants are not public knowledge. If I am wrong please post a link to your source.
UnicornHunter, I believe one of the benefits of buybacks is to provide liquidity in the market, so SSIT are the buyer helping any sellers. "The Market" likes this so the share price goes up. I think that's why they are buying back daily, similar to other trusts I own.
I couldn't agree more saga999. I'm hearing people now complaining that they've been told to come into the office more often but there's not enough desks.
Also, my son has just started renting a flat at extortionate rent in a newly converted office. In the worse case there's still high value in RGL's property portfolio.
I think once interest rates stop being increased and inflation appears to be under control we'll see the value of assets like RGL rise as well as growth stocks as seen in the false rallies.