The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
There seems to be some misunderstanding regarding Gross and net debt.. Net Debt as per the recent accounts stands at circa £320m. According to the October trading update circa £60m of income was held over to October/November due to accounting adjustment. So in theory net debt circa £260-£270m. I don,t personally see Top Shop being sold I think it is more likely one of the two major shareholders will make a bid for the whole company. Top Shop is the jewel.
Has really good article today looking at impact of AI for fashion industry and predicting trends. I suspect this is one of the core reasons why ASOS is leading the test and react initiative. I know they are really utilising AI with their collaborative ventures and hopefully this will come out in the Final Results Analysts Q & A.
Sorry bu one final point re 14% reduction in fiscal year T/O. Jose identified that core strategy was to reduce stock and one implication was p4 reduction in option count by 30%, whcih would have a huge impact upon sales. This was to allow for the stock clearence and to reduce old stock by 30% against a projected 20% means the team have ready thrown the kitchen sink at this. I think this aspect will take front and centre in the 25th presentation and I really got the feeling from the Q & A that management are really excited at what they will be presenting and the intial success of the test and react model.
I just wanted to explain my thesis re ASOS, Please ignore if not interested. But some of it may be helpful. I researched and then took a large position (for me) before the May qtr results. I put my hands up and say management is key for me and asset second. I really rate Jose and the team he has built up, the structure and particularly the collegite style. I also hope that the interim CFO stays permanently. Jose and the team have a back to basics plan and have stuck to it since October 2022. They have been open and transparent about what is needed. They simply need time and I think it will be 12 months, this time next year that ASOS will really begin to fly. I personally don,t buy the T/O scenario, not because there aren't suitors but due to the shareholding structure. It would require a really hefty premium 200%- 300% to get them to shift. The two recent Q & A's have really developed my understanding of Jose's thinking. quality of customer and profit ,which requires the short term pain of low margins to get rid of old stock and focus upon the Test and React model. Indeed I think it was the City AM article, I may be mistaken but one article, that called this a trail blazing approach and one that many companies will need to follow. In the half year results presentation, I think Jose was asked by analyst if he had growth strategy and he stated that the key was to return ASOS to profitibility and stabilise. The reduction by 30% of stock cannot be underestimated as it will allow ASOS to become leaner which is what the test and react model requires. I suspect that by the January update (4 months trading), we shall see the 40% target (pre Covid stock levels) achieved albeit at the short term expense of margins. What any company needs, what the employees need is to be motivated I believe Jose and the team are providing this. The management team are engaging and exude confidence and a plan that simply needs time. In the recent Q & A Jose mentioned return to growth on a number of occasions and said this would be spealt out on 25th at Full year presentation. This I believe will be a turning point for the company. Add to falling inflation the headwinds of input costs etc... are subsiding quite markedly giving margin breath. So for me I have penciled in a P1 to 4 2024 trading year profit target of circa £90m and FCF of circa £200m ( including the carry forward of the £60m from this year). The one enormous fly in all this is the breath and level of shorts. They are clever, unscrupulous people and that is a worry to me. I cannot figure it out. I thought something would have been leaked prior to the last qtr results but no. To be at 7.4% with institutional sticky investors at circa 65% means that in reality the shorts are nearer 18% of the free float. That is a huge risk particularly with the institutions/major shareholders adding not reducing and with their own motivations. So that is a significant worry. Hope thats ok!
A Convertible bond gives the bond holder the option (not the company) to convert the bond value at an agreed price. Otherwise they will recieve the value in cash. ie £500m. The confusion here and hence my reason for posting, is the difference between Gross and net Debt. The gross debt includes the bonds and other drawn facilities . The net debt is what we should be concerned about and that is the Gross debt minus readily realisable liquid assets, ie Cash and financial instruments ( not stock, plant etc... So taking the figure from the Q & A from the latest qtly update ( excellent presentation and Q & A), ASOS has a net debt of circa £330m (bonds included). Take off the £60m brought forward via accounting to Sept/October and real net debt is circa £270m. This is much more reasonable. The final results presentation on 25th October will hopefully give a projection for 24 trading and particularly FCF and net debt at the end of next trading year. My hope/guestimate is circa £120m. net debt which is easily covered. I hope that clarifies the situation.
Just for transparency. I,m OUT. This is so disappointing I,m afraid. Sorry for all LTH's. Good luck everyone!
Looks like the chancellor is going to amend the tax threshold in imminent budget to have taper with lower oil prices.
So basically weare at cash now. The uncertainty and boredom has just hammered any perspective , for very understandable reason. Volume incredibly low and hence generating outsized swings. What we do know however is that , from recent email replies, management are still intending to distribute capital in the next couple of weeks, before the end of March and that we have had no indication of any acceptable offers from the FSP. We also know that CA are biding their time. For me, if CA wern,t confident of the success of the FSP they would have reinstated the EGM request by now. There would have been clarity of offers communicated by Stifel, and if CA believed those offers were not acceptable and would not get Board recommendation then they would have acted. So although the Shareprice just matches cash (with next offload) I am optimistic that we will recieve an offer that the board and CA find acceptable. Thats my take anyway.
This share price is being so well managed its crazy. ! Keeping a low range I suspect to make any offer seem overly attractive. The longer the FSP takes the discount reduces as daily production fills coffers and reduces risk. Can,t be long now before we are put out of our misery!
Really interesting that Harbour generated profits of only circa $15m due to EPL and general taxes. Really puts HUR's tax credits in the spotlight.
The FSP must be pretty complex to navigate for Stifel and BOD. Multiple interested parties as opposed to one suitor carrying out traditional D/D. Each suitor may be focusing upon one particular element. The Tax credits, Aim listing via reverse takeover, The acerage and potential for additional wells and then the simplist being the cash in the bank and future revenue. Each will have put forward bids , as we know, with individual conditions, and all bids have staged payments. The key is the level of bids and then the degree competition comes in. I would be really surprised if we don,t get a confirmation of an offer to put before shareholders, this week or next. Crystal Amber will have acted on re presenting EGM motion otherwise and the email reply from Maris , to a poster, confirming the maintenance of end of month deadline for distribution plays into this.
Maybe joining too many dots, but possibly if Viaro were the originally "unsolicited" bidders at 7.7p, then maybe they know something more about the prospectivity of the Lancaster basin as some LTH's have been arguing? This , for me would then add some legitimacy as to why CA/Buckingham consortium would believe that the acerage warranted a $300m (£250m) investment? I couldn,t get my head around the latter intentions as to how the acerage could justify such significant investment and who would lend the money? But if Viaro have seen the same data now then that would explain the possibility. Or maybe 2 + 2 only equals 4!!
I have a real gut feeling we will hear of outcome of FSP and I am targeting 12p as you know.
It doesn,t really matter if Viaro are interested to the extent that we know that there are "multiple" bidders and that CA believe such interest warrants the continued postponement of the EGM notice. Add Maris's recent reply to an email , it appears that some conclusion to the FSP will be in the next couple of weeks as the intention is to stick with the end of March deadline for either a successful bid being recommended by the BOD to shareholders or the intial capital distribution. Either way there will be some clarity to all the rumours in the next couple of weeks! My money is on an offer of circa 12p, firmed up by the 2 offloads since the 7.7p speculative offer.
Luck. Interesting point. Reverse takeover to obtain listing has significant merits if Viaro wish to raise cash. And as you quite rightly point out has a real value with costs and compliance savings.
I have read so many industry articles where journalists use sloppy english. ! It may infact be that Viaro are infact acquiring 2 significant proudcing assets, rather than one entity with 2 producing assets. Interesting as I don,t know of any other NWS assets that are on the table or being offloaded,? We shall see!
good find. The tax credits will be really attractive.
fandg2. Good point. But my assumption is that The BOD was anticipating a January, Feb distribution without including the last offload as payment will only be today based upon 5 day average over 1st and last of Feb. Maybe I am being optimistic that BOD is thinking of shareholders!!! But as I said in previous post, I would be really surprised if an acceptable offer isn,t tabled as additional offloads provide cash comfort and the D/D delay will I am sure be in calculating as accurate picture as possible of the tax credits.
Thanks Oldman45. To me the most significant part of the answer to your question is the implication that the BOD believes a conclusion to the FSP by end of March. "In the event that the sales process does not deliver a satisfactory outcome, the target of before the end of March 2023 remains." I am hoping that if the FSP isn,t successful ( I am confident it will be) the distribution will be nearer $100m with the additional offload and ongoing production.
Its interesting, if indeed the potential for an agreeable offer isn,t to come in until May/June, that would mean potentially another 2 offloads which would bring Cash to circa 8.5p (excl escrow). I personally would be surprised if we wern,t given an offer by the end of March as HUR is incredibly straightforward and the only complication I can see is the value of allowable tax credit and that may involve liasing with HMRC which could be a considerable delay. I think any suitors would take a view via their own tax advisers as losses will be carried forward via HUR's accounts and will have been audited.
That is a good point. I think maybe Buckingham was a stalking horse as cannot for the life of me see how HUR could raise £250m! But yes my hope is on a circa 12p Bid, which is I believe quite realistic with latest offload.