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Hi DavidLaw,

.."Similar could happen here if SYME or a competitor doesn't care about the quality of the inventory .."

AIUI, broadly speaking, SYME originates the business and controls due diligence; controls StockCo which is the vehicle holding assets and liabilities; will appoint the CEO to the captive bank that (a) controls fundsflow to/from companies and funders and (b) security documentation. As time goes on and the network expands globally, there will be an increasing reliance on third parties.
We don't know what the power relationships at the various links are and it's perfectly possible to imagine conflicts of interest arising over the balance between risk and reward, transfer pricing (for tax planning and other reasons) that will lead to outcomes 'not necessarily to the benefit' of SYME Plc (and its shareholders).

AZ made a mistake (conscious or otherwise) on the accounting treatment at time of RTO; and another mistake (conscious or otherwise) in the 3 x pledge of 1AF2 shareholding, which appears to have had unintended consequences, at least as regards the s/price in the short term.

There's a lot of press at the moment about covid vaccines and rushing things through without proper tests...and the longer term as-yet-unknown outcomes.
SYME hasn't got the system up and running yet...and has up to 3 years (facility structure life) before we'll know whether it actually works in practice.

You're right , IMO, to recognise the possibility of something going wrong at some link in the chain.

ATB

Hi BlahBlahDoh,

No doubt covid slowed things down/caused a reprioritisation for many co's , aka 'survival', to be clear, not ORPH itself, but potential customers; CF is a scrooge, so won't take on overhead unnecessarily; his priorities have probably evolved , as new info/priorities come to light (cue John Maynard Keynes 'when the facts change, etc..').
I don't think he needs to 'market' the data, anyone in the field (ie 5, now 10 companies) will be aware, thanks - as he reminds us - to the incredible publicity from (a) HMG contracts and (b) Wellcome tie-up.

Steady as she goes...
ATB

Hi Aberdeenman,

Same take as you : that the 100K clips are likely Shard....so a help to funding.
Don't think we've exhausted the first 7m tranche yet, though, and IIRC they have to RNS the issue of the next tranche 7m shares before seeking subscribers ..

ATB

Hi all,

CF has spoken frequently about the eye they keep on the shareholder register, the level of II interest and that several of the lumpier sells are known to have been private individuals cashing in after the shareprice rise.

He must be keen to guage how 'sticky' his shareholders are ...and my guess/concern is that his biggest fear must be an early approach.

The business scope and potential spin-offs are juicy...but not there yet.....year-end is approaching, when a lot of II's (and PI's !) may need a boost to their performance....the rotation growth to value is throwing up /has already thrown up lots of opportunistic short-termism.

If SGS, say, were to offer 50-75p, I'm not sure how much resistance there would be.

I see CF's announcement of an intention to move to London not only as evidence of his commitment/view of the scope for growth (and also, likely, a canny intervention in the London property market ;->) but also a signal to would be predators that they'll have to make an outstanding offer.

All IMO and with long memories of how Tom Cross at Dana Petroleum DNX fought bitterly but had the rug pulled under him by II's who succumbed to a cheeky bid from KNOC, because they didn't appreciate or didn't care about the (subsequently confirmed) under-valuation.

Thoughts welcome !
ATB

Oops !

.."If they move the bid to 6p I would consider top-slicing my holding..."

Very noble of you to 'take one for the team', I must say... ;->

ATB

Hi G_G_G,

Forgot to add, there are 4 x options, so if the 'fundraising' triggers were all pulled, that would imply a minimum £ 1m fundraise.

ATB

Hi G_G_G,

The relevant bit, from the 13 Nov RNS, applies to each set of options, if I read correctly, the first says :

.."5,000,000 Shares at an exercise price of 3.0p per share upon (i) the Average Share Price equalling or exceeding 5.0p or (ii) a fundraising in one or more tranches of more than GBP250,000.00 in aggregate has occurred at any time after the Date of Grant whilst THIS [my caps] Option subsists at or above 5.0p per Share and before any participation in the fundraise by Scott Fletcher or his direct family either directly, through a majority owned company (taking into account all direct family holdings) or a family trust;..."

This SEEMS (my read) to be a protective clause for SF, saying that the relevant options vest for him whether the s/price trigger is reached or not IN THE SITUATION where NCCL does a £ 250K + fundraise (with juicy warrants , say , or generous coupon...and, if debt, higher in the credit chain) without him/(self, family or trust).

That's my take, anyway. If anybody has another view , pls share !

ATB

Hi G_G_G,

.."He needs to keep buying though. .."

He's got about 4.3m to go...but I think that there's an alternative vesting trigger, AIUI, which is if they go down the fundraise route (£ 250k or more)....

I may be misreading, though.

ATB

And again...

.."18 November 2020: Ncondezi Energy Limited ("Ncondezi" or the "Company") (AIM: NCCL) announces that it has been notified that on 17 November 2020, Scott Fletcher, Non-Executive Director, purchased an aggregate of 1,615,000 ordinary shares of no par value ("Ordinary Shares").

Following this transaction, Scott Fletcher's beneficial interest in Ordinary Shares in the Company increased to 60,728,197 Ordinary Shares, representing 17.37 per cent. of the Company's issued share capital...."

ATB

Hi fisch,

Very droll, if - in my case at least - not applicable.
The most common first German word - after ‘ nein’ that the English learn, apparently, is ‘ Schadenfreude‘...
Which, for the avoidance of doubt, isn’t applicable either.

Never mind, it gave us both a chance to wave our linguistic willies.
ATB

.

Hi seadoc,

I'm not as erudite as you but Thomas Mann gives us '"Eine schmerzliche Wahrheit ist besser als eine Lüge" (a painful truth is better than a lie), which may be partly what you're getting at.
Although I suspect you're operating on a much deeper level !

ATB

Hi WolfofWarks,

Re definition of 'origination', here's p42 of the Prospectus , speaking of SYME Italy :

.."5.2.1 Leading global platform in a large, underserved inventory financing market
Supply@ME is a growing innovative “inventory monetisation” platform, having originated more than
€300 million of prospective “inventory monetisation deals” in its first six months of operating (to June
2018).
In the first half of 2019, an additional prospective €300 million was originated. As at the date of this
document, €972 million of prospective contracts have been originated. The Directors and the
Proposed Directors believe this makes Supply@ME one of the fastest growing inventory FinTech
providers internationally...."

and later , p 49, as at Dec 2019 :

"The portfolio achieved shown above:
l implies a potential inventory under management value of roughly €909 million;
l has a potential of generating at least €4.2 million of net servicing fee; and
l has already generated €738k of down payments provided by companies..."

That was 11 months ago.

The trading statement 30/6 to 31/3/2020 should have captured this income.

From looking at the numbers in the RNS and these notes to the accounts ('Basis of preparation')

.."Revenues for services are recognised on the basis of performance and in accordance with the related contracts. Revenues relating to contract work in progress are recognised proportionately with the progress of the works.

Revenue is deferred where it relates to the provision of future services and is subsequently recognised when key milestones are reached..."

it now looks to me likely that 'on-boarding fees' aren't (to answer a long-standing doubt) recognised upfront.

Maybe Chalker or another suitably qualified person could confirm/correct ?

HTH and ATB

Hi 99icecream,

Thanks for this. All part of the 'great game' as China/Russia seek to undermine US reserve currency status.
Mind you, with a polarised electorate, the US is doing a good job of undermining itself anyway.

The article also points out that the corollary of US$ going down is that other currencies go up and specifically says ..."Investors should subsequently go long on the Australian dollar and the Norwegian krone as both are commodity-linked currencies that should benefit from a cyclical global recovery,.."
That'll push up the 'real cost' of Aussie iron ore exports.

China has already been buying gold as part of a slow recycling out of US Treasuries, time to look at other commodities, soft and hard ?

ATB

Hi G_G_G et al,

You can follow the score in (almost) real time : the list of major shareholders has been updated to show THIS MORNING'S RNS.

That's a first for any AIM co I've followed.

ATB

Hi G_G_G,

.."Even more obvious is what some genuinely good news will do at the moment as well e.g. tariff update, historical cost agreement etc. .."

Where's Hanno when you need him ?!
ATB

Hi Sam12345,

Sorry to hear about the GF ;-<
It'll be no consolation, but a 'rule of thumb' post-divorce formula is that you allow 1 year for every 5 years of the marriage before you get over it .
Now you know why there are so many grumpy old men around....

As to AZ's call option, we don't really know the purpose - tell me if you do ! ; there's already been confusion over the grantor/grantee; it's an unusual structure; we don't know the counterparty; and we don't know what form delivery will take if the option is exercised (likely' direct transfer to security account'), adding to the general vagueness.

Here's an historic example of how call options can be misused :
https://www.financial-spread-betting.com/news/uncategorized/6101-fsa-to-pay-costs-in-cyprotex-case/

To be clear, I'm absolutely NOT saying that that's what's happening here. And, significantly, the FSA lost the case. I AM saying that - on the limited facts we have - it's one possible explanation/interpretation.

As investors, we should always consider the 'worst case' scenario. As the CIA motto supposedly has it ' We listen to their intentions. But we plan according to their capabilities'.

The saga of the 3 x lenders , who appear to have sold pledged shares (which seems to be now the consensus view, AIUI) and pushed the s/p down , is a case in point.

All IMO
ATB

Hi G_G_G,

.."on 16 November 2020, Scott Fletcher, Non-Executive Director, purchased an aggregate of 2,200,000 ordinary shares of no par value ("Ordinary Shares").
Following this transaction, Scott Fletcher's beneficial interest in Ordinary Shares in the Company increased to 59,113,197 Ordinary Shares, representing 16.9 per cent. of the Company's issued share capital..."

Steady as she goes...

ATB

Hi Chalker,

.."@wolf, I'm not sure if other parties have ownership of some of the IP. I would have guessed it would need to be disclosed in the prospectus if so..."

The SYME Italy accounts in the Prospectus suggested an IP 'spend' over 3 years of about Euro 1.5million...and this was for what was evidently still a 'half-baked' concept, because the bulk of the Placing * proceeds (£ 1.4m out of £2.2m) was specified as being for on-going development work programmed through to Q3 2021 and even into 2022.

* The Vendor Placing - not mentioned in this Prospectus, rather curiously - handed out at the same time £ 39m 'worth' of Consolidation Shares to parties unknown, with no seeming benefit to SYME in return.

See 'Strategic actions' p45 and 'use of Proceeds' pp63-64

.."The Company’s intention is to use the Net Proceeds of the Placing to fund the development and growth of
the Supply@ME business.
1. aiming to be the best fintech inventory data monitoring business (£0.6m); this means investing in these
technology streams: banking account integration, due diligence/onboarding digitization (trusted data
environment, online simulators and external rating integration), ERP full integration (firstly SAP, IBM,
Oracle and Microsoft), Internet of Things (smart cameras, RFID, other connected objects) integration
for inventory off-site monitoring, remarketing digital workplace (e-marketplace where remarketer can
monitor and place inventory purchase offers);

2. developing a multi-channel funding strategy (£0.4m); this requires the setting up of marketing activities
focused on these areas:
o Companies – omni-customer strategy (edu-marketing initiatives, ERPs vendors partnerships,
social activities, web/online simulators development);
o Funders – diversifying the sources (securitisation notes continuous road shows, commercial
banks partnerships, partnerships with digital platforms – e.g. CrossLend);

3. creating a highly scalable global business (£0.3m): this implies the inception of internal projects focused
on these areas:
o operations: enhancement of a new level of “Group” internal governance functions directly
into the Company (e.g. ICT Compliance, Risk Management);
o legal framework: roll out of the current legal framework (currently in the Italian market) in
order to serve new geography.
for general corporate purposes, and the Company’s ongoing costs and expenses (£0.14m) .."

So, still a ways to go for the concept to be 'fully baked' (tm 'The Graduate') it would seem.

ATB

PS I asked for the name of the valuer of the IP, but answer came there none.
Most of the 'IP' -valued at £ 225m (Prospectus p14) - is in 'the premium to net asset value of the New Ordinary Shares [which] places an intangible value on the STRATEGY proposed by the Board and the HUMAN CAPITAL contained in the Board, as well as reflecting the costs incurred in the Acquisition, Placing and Admission. .."
Basically, a 'business plan'.

Hi Firststopthemoon,

.." his investors in one of his previous investments made 3x so at a minimum you would expect that here as a ballpark..."

Scott seems to have significant property interests in Spain, if THAT were the benchmark you could argue (a) there's no read-across to a different sector, (b) there are different country risk considerations.

With NCCL, he might even - perish the thought - be making an investment in part because he wants to improve the lot of some desperately poor people, where the 'return on his investment' may not all be in cash...

Unless he tells us, we won't know. And a lot depends on what his base cost is :

- if we speculate 6p (wild-assed guess), on the 3 x metric you'd be talking 18-20p;
- if you take account of country risk, maybe a 5-6x 'reward for risk' might apply, so , say 30-36p;
- go back to humanitarian and you might end up back at 3x.

Mutatis mutandis, of course.

And his target exit price - which we might all agree with - is an aspiration dependent on a number of variables outwith his/our control

Just IMO
ATB

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