Member Info for extrader

Hi knokke,

.." your interpretation of the first loss tranches/negotiations seems the obvious one, but not fully convinced,.."

No need to listen to me, just spool up the proactive interview on 30 July, intended in part (as the interviewer puts it and he acknowledges) to clarify and allay concerns re the issue about 'pledged shares' ex 1AF2 and you can hear the main man, AZ himself, saying exactly that.

ATB

Hi Aquakidd,

AZ's 'purchase' of 1.63 BN Consideration shares from 4.98% shareholder Ceresio S.p.a. - a 'direct transfer' - DIDN'T require him to shell out £ 11m odd , as people have been suggesting...and may not have required him to pay anything.

If you were to think of the 99% 'Consideration Shares' (issued for the RTO) as SYME's 'inventory' and value them at 'lesser of cost or net realisable value', you'd be looking at them being 'worth' somewhere between 'cost' - which is virtually nil and whatever they're currently selling for in the market . To be clear, 'sales or 'purchases' involving Consideration Shares 'off-market' are 'worth' whatever the 2 x parties decide.

Apunter2 has made this point clear several times.

HTH and ATB

Hi futuresbright,

I spent 10 years in the M East participating and arranging syndicated loans...and later providing input to some of our larger syndications when we'd reached our max comfort levels with valued customers.

From what I saw there (which granted (a) is dated and (b) may not reflect Europe ), a lot depends on the relative strengths of the 2 sides negotiating positions and their strategic reasons for syndicating or not.

From the bank side , greed and fear are conflicting pressures : you may want 'exclusivity' to get / maintain a headstart on the competition (or to preserve/protect an existing relationship - not the case here , AFAIAA.) On the other hand, if its a new relationship, the banks may prefer 'safety in numbers' : (a) start small and if it goes pear-shaped, at least I'm in good company (b) the company won't want to sh** in its own backyard and alienate everybody...surely?

That usually works, but not always : I remember we joined a deal led by Amex and Barclays on just that basis. It did not end well ;-<

From the customer side , it's more work schmoozing a bunch of names, but you're expanding your connections for the future : an individual bank will hit credit/sector limits, often at the most inconvenient time. You've got to be careful that the banks don't get together and gang up on you, trying to dictate terms . This appears to have happened with SYME (the 'first loss' security requirement that AZ mentions in the Proactive 30 Jul interview).

'Divide and rule' is a good guideline here, if you can get away with it : having several different groups 'on the go' at the same time increases the likelihood that you'll get away with it. Maybe AZ's a quick learner !

All just my ha'porth.
ATB

Hi knokke

So even you knew about the regs...but SYME apparently didn’t.

QED

Hi knokke,

.."Yep, under EU securitisation regulations, entities have to have skin in the game, risk retention, creating working/regulatory capital requirements, that we know from previous RNSes will by handled through 1AF2, a syme spv."

Aren't you a little surprised that - 4 years after its first pilot - and all the fine-tuning it's done since - that SYME only appears to have become aware of this fairly 'basic but kinda important ' issue , affecting its business model, in July/August 2020....And then had to scramble to cover ?

ATB

Hi justthefactsmam,

Best post of the day so far.

People are overlooking - if they were ever aware - that SYME UK (ie post RTO) started life with 3 x financial institutions already 'on board', see p. 6 of the Prospectus. These were :

Parrot Capital (Global Capital p.l.c.) – – 1,630,000,000 4.98 %
Equita Sim S.p.A. – – 1,630,000,000 4.98 %
Ceresio Sim S.p.A. – – 1,630,000,000 4.98 %.

(1) Ceresio has already transferred its shares (Consideration Shares, to AZ, per the 18/7 RNS.
Ceresio is a private banking subsidiary , part of https://www.ceresioinvestors.com/en/societa/banca-del-ceresio-SA.html
Banca del Ceresio SA is a Swiss bank established in 1958 founded and owned by the Foglia family active in the financial services sector since 1919. Banca del Ceresio specializes in offering asset management services, financial consultancy, brokerage and custody services for private and institutional clients.

(2) Parrot Capital (Global Capital) plc is more difficult to track down, it appears to be part of this Italian -owned, Malta based Group https://www.globalcapital.com.mt/investors-relation-corporate/, which interestingly has a number of fintech connections.

It has attracted some regulatory controversy eg http://www.newsmalta.com/2018/03/18/what-exactly-is-global-capital-plc-all-about/

(3) Equita SIM spa is part of https://www.equita.eu/en/the-equita-group/who-we-are.html, a leading Italian investment bank.

(1) and (3) seem exactly the sort of institutions one would want as 'core investors', because of their conections, yet (1) has , seemingly dropped out; and (3) has apparently remained passive.

ATB

Hi all,

This from Bloomberg https://www.bloomberg.com/opinion/articles/2020-09-12/australia-china-diplomacy-economic-ties-come-down-to-iron-ore

I've forwarded to AT.

The article is a bit of a bellicose non-story, but continuing the theme - and with reference to the Simandou option - it seemed appropriate to mention that , in things nuclear, the US made sure it had a fallback...

ATB
PS Unless they intend to use Covid as an excuse to delay the interims, it looks as though we're heading for a bunch-up of RNS's...

Buses, eh ? !

ATB

Hi Weathergeek,

Fair enough re the dividend timing, as you say, we'll see.

As to .."Provided they've not been shut down by the FCA (as reading your posts may imply).." I very much doubt that SYME will be shut down by the FCA, for reasons I've already given.

ATB

Hi apunter2,

.."What I say to you, is Chairman buys £1.5 mill ....get over it.."

What have I got to 'get over' ?

If I've understood correctly, this should surely read : .." Chairman adds 220m shares at 0.70p = £ 1.54 million to his existing holding of 'essentially free' 6.47 billion shares, increasing his holding by 0.67% from 19.76% to 20.43%, for a total of 6.691 billion shares at a blended average cost of 0 .023p...." and an implied market value , at that date, of £ 46.8 million.

I've no idea of DW's net worth (ie the materiality of this investment) and of course it's always good to see the Chair have 'skin in the game', esp when it's paid for, but the 'read-across' implications for the rest of his holding is certainly positive.... and seen by 'the market' as such.

ATB
PS You've referred again to something I said @ 1805 a while back.....and I've asked for more specifics. I'm pretty certain I'll have a good answer (not necessarily what you want to hear), but you'll have to give me a clue.

On that note, have you (or anyone else reading this) ever been disappointed by what you've heard AZ say ? Just curious.

Hi Weathergeek,

'Trust is good, but checking is better' (Lenin) or ..."zero-trust is better' , to use a 'fintech' buzzword I recently happened upon.

Having extended this financial year (per the same RNS) to Sept 20, figs out Jan 21, the next financial year, figs out Jan 22, AGM to approve a first dividend sometime in spring, I think some delay in your timing is already 'baked in'.....

ATB

Hi apunter2,

I would direct that question to the Finance Director, if SYME had one (curious omission, no ? Lots of investment in the 'TECH'' , not so much in the 'FIN' , if you consider (1) the need to change the basis of presentation of the RTO and (2) the belated discovery that funders wanted SYME at least indirectly to have 'skin in the game' ......did this never come up in the pilots over the last few years ?) or to any accountant out there, not to AZ.
Horses for courses , etc.
Not that I'm doubting that's what you were told.

ATB

Hi apunter2,

.."I don’t think I am wrong but if anyone can prove I am wrong it’s extrader.. lol.."

You do me too much honour, Sire....;->

Seriously, I'm still way back working on your IAF2 comments ;->

I have a roofing project to finish off, a chapter of a translation of a book to edit and people over for a barbie Sunday night, so don't hold your breath.

But DO enjoy the weekend : life is too short to be small.

ATB

Hi apunter2,

That's exactly what I said, no ?

The only 'green room' I've heard of is - per weathergeek's big brother - this one

"https://www.wisegeek.com/what-is-a-green-room.htm
27/8/2020 · A green room is a space in a performing venue that is set aside for performers to lounge in when they are not required on stage. It typically is set apart from the stage and the audience so that the performers can hold conversations and do other things without being heard by the audience. "

Not sure I'm a performer, but I do 'other things' and am in any event a solo act.

ATB

Hi Weathergeek,

.."I'm 100% certain of future dividends with earnings per share like SYME should see..."

I'm not so sure that'll be possible, even if they wanted to, which they tell us they don't.

FWIW, the Prospectus says this (p 52) :

"16. Dividend policy
The Directors and Proposed Directors believe that the Enlarged Group should seek principally to generate
capital growth for its Shareholders but may recommend dividends at some future date, depending upon
the generation of sustainable profits, if and when it becomes commercially prudent to do so, subject to
having distributable reserves available for the purpose. There can be no assurance that the Company will
declare and pay, or have the ability to declare and pay, any dividends in the future. "

Firstly, they say the aim is capital growth, ploughing money back into the business a la Amazon, presumably.

Secondly, I think the treatment of Consideration Shares will cause a problem (maybe accountants out there will confirm ) ?

In the Prospectus , the basis of presentation left the Co with £ 225 m of 'goodwill' for the intangible IP, which would have to be amortised over 3-5 years, so maybe profitable on an EBITDA basis but posting a massive accounting loss each year.

Having switched basis of presentation and written off most of the £ 225m (excess of value ascribed over real value, they call this 'extraordinary costs of placing'), SYME will show humongous negative retained earnings for the foreseeable, which AIUI precludes the payment of dividends.

Maybe AZ has found a clever way around that too, like the inventory recognition/de-recognition issue.

It'll be truly disruptive, not just for this industry but for business everywhere if he has.

Happy to be corrected if I've misrepresented or misunderstood something , in which case I'm sure someone will be very happy to tell me.

ATB

Hi apunter2,

.."So not new inventory each time. It’s same products going into same end product . Follow me ? "

I think you're wrong there. It may be generically the same widget, but it'll have a different serial number or RFIDtag or barcode - some unique identifier, at any rate - otherwise the different funders (if they are different) have no identifiable security...and you wouldn't know what'd been sold to or bought from whom....and you'd not be using blockchain to 'high tech' the process....

Just my ha'porth.

ATB

Hi tyla

..." why would a director put 11mil in at . 68p ...?"

Simples. He didn't. As plenty of posters, not just me, have showed. Check apunter2, for example.

ATB

Hi tyla

..." why would a director put 11mil in at . 68p ...?"

Simples. He didn't. As plenty of posters, not just me, have showed. Check apunter2, for example.

ATB

Hi all,

Some further thoughts re RTO :

In the RTO (of a 'cash shell', hint) they acquired abt £ 2m in cash and a London main market listing.

They had a placing of about 1 % of the expanded shares to raise gross proceeds of £ 2.2m.

They have to pay out £ 800K in fees for the advisers/arrangers etc (30% approx.) and will be using the balance to pay for IP, R & D etc . About £ 1.4m , from memory.

So : (a) they've paid £ 800 K to advisers who either didn't realise the accounting implications (which is bad, remarkably poor value for the money, I'd say) or did realise the accounting implications and were party to this apparent 'bait and switch ' (which is worse. But - if indeed the case - arguably "better value" - from SYME's point of view....).

(b) The 'consideration' - 99% of the 'purchase price' £ 225million - was the ascribed value of SYME's historic IP, R & D etc. The Prospectus tells us that SYME invested a total of Euro 1.5 million to this end.

SYME's business model/IP clearly wasn't fully developed at the time of RTO ( what about the duty to provide goods/services of 'merchantable quality ' ?) ..and it isn't fully developed and actually working 6 months later. The 'spend' on R & D proceeds was supposed to be through to Q1 -2 2021, so seemingly a ways to go before they themselves think they'll have something 'fit for purpose'.

If you were to think of the 99% 'Consideration Shares' as SYME's 'inventory' and value them at 'lesser of cost or net realisable value', you'd be looking at them being 'worth' somewhere between 'cost' - which is virtually nil and whatever they're currently selling for in the market . To be clear, 'sales or 'purchases' involving Consideration Shares 'off-market' are 'worth' whatever the 2 x parties decide.

So AZ's 'purchase' of 1.63 BN Consideration shares from 4.98% shareholder Ceresio S.p.a. - a 'direct transfer' - DIDN'T require him to shell out £ 11m odd , as people have been suggesting...and may not have required him to pay anything.

I doubt he has the resources, witness the need to pledge shares to the 3 x securities lenders.

It's worth looking at all of these 'direct transfers' in that light.

ATB

Hi all,

I'm on record as having been puzzled as to how SYME would ever be able to declare a profit (other than, maybe , EBITDA) , given the phenomenal amount of goodwill (about £ 224M ) that it would have to write off over the next few years. This goodwill being based on the ' premium to NAV' inherent in having ascribed a value of £ 225M approx to "SYME's and the BoD's intellectual and human capital."
Can't speak to the human capital, but the IP from SYME cost about Euro 1.5 million over 4 years .

My mistake was to rely on the Prospectus and fail to take into account the change of accounting treatment as reported in the RNS of 30th June , reporting Interim Results to 31 March., see https://uk.advfn.com/stock-market/london/supply-me-capital-SYME/share-news/Supply-ME-Capital-PLC-Interim-Statement-12-month/82761501

On drilling down to the notes, I see that the change in accounting for the RTO is described as follows : "Prior to the completion of the reverse acquisition, the current directors considered Supply@Me Capital plc did not meet the definition of a business in accordance with IFRS 3. Consequently, the reverse acquisition has not been accounted for as a business combination, but as a share based payment."

The effects of this are that the reverse acquisition of Supply@Me S.r.l. does not meet the requirements of IFRS 3 Business Combinations so has been accounted for under IFRS 2 Share Based Payments. Under IFRS 2, the "goodwill" element of the transaction is EXPENSED AS THE DEEMED COSTS OF OBTAINING THE LISTING (my caps).

Cute ! The 'goodwill' disappears (so no hefty amortisation bill going forward) and it may even be (I'm not an accountant) that the resultant humongous loss is in some way tax-deductible..?

However, the NAV of NewCo also drops , from around £ 228m TNAV to about £ 5m NAV. These are pro-forma numbers, the audited numbers to end Sept 2020 will be out in January 2021.

ATB

Hi Aim2makemonee,

.."Free float has got to be 5% now..."
You may be technically right, I haven't checked. But you're forgetting that AZ has said that he or his Concert Party will make shares available to support the business/entice institutions , so those 'sticky' shares may be available for the right price...or the right business deal.
And remember, most of these shares will have started life as Consideration Shares (ie valued at a 98% premium to NAV) so the 'pain' of divesting won't be as great as for those who bought Placing Shares.

ATB