Member Info for Hedgehog100

"LATEST NEWS"

"15th November, 2022

Amcomri Group has confirmed its intention to seek a public listing of its key specialist engineering and print services companies through a Reverse TakeOver (“RTO”) of Rockpool Acquisitions plc, a company listed on the London Stock Exchange.

The RTO is expected to initially value Amcomri at around £22m subject to the addition of a number of new acquisitions which are currently being worked on by the Group.

The acquisition of SpiralWeld Limited, a company providing specialist services to the marine, power and nuclear sectors was completed during April 2023 and two more transactions are expected to complete before the planned completion of the RTO in July 2023."

http://amcomrigroup.com/amcomri-to-list-on-london-stock-exchange-via-reverse-takeover-of-rockpool-acquisitions-plc/

https://amcomrigroup.com/

The above article, dated 15.11.22, appears to have been updated since then with some positive news re the RTO into ROC.

And with apparently over a thousand employees, Amcomri looks to be quite a sizeable group, and with an attractive business model:-

"BUSINESS PROCESS IMPROVEMENT

Through the application of our manufacturing and engineering knowledge, commercial expertise and investment capital, we aim to progressively develop the performance of each of our businesses.

Building profitability through process optimisation and investment.

Amcomri Group has grown through acquiring or investing in businesses in the specialist engineering services and classic automotive sectors and also in the consumer manufacturing area. The focus of the engineering division is in providing key specialist services into the infrastructure sectors which struggle to acquire the massive investment capital needed to replace operating assets. The repair and re-certification of those key assets is becoming more and more important as capital becomes less available and infrastructure companies seek to extend the useful life of their assets beyond original design periods.

A core feature of our approach post-acquisition is helping our businesses further improve their profitability and performance using systematic business process improvement techniques whilst encouraging our team leaders to interact with each other to create mutually profitable opportunities.

We have acquired or invested in businesses in financial distress as a result of difficult trading circumstances, or alternatively, ‘good businesses’ where a retirement objective exists but with some management transition risk. The Amcomri team brings extensive financial management, process optimisation and ‘common sense’ commercial skills to these situations, helping to provide a smooth and low risk transition to new ownership. Our team then work closely with the business to help further optimise performance and improve operating processes going forward."

https://amcomrigroup.com/what-we-do/

NWT's revenue growth and outlook is clearly very positive.

And its profit growth should significantly outperform its revenue growth, due to a greater proportion of higher margin business, combined with increased economies of scale.

In addition, its rating should also increase, to reflect its improving profits and cash, growth prospects, much greater tech focus, and greater proportion of recurring revenues.

So from NWT's currently very modest rating, there is clearly excellent medium term multibagger potential.

Increasing profits and an increased rating should go hand in hand, complementing and enhancing each other's impact to create a double positive whammy.

For example:-

• Doubling earnings & a doubled rating = a quadrupled s.p.

• Trebling earnings & a trebled rating = a 9-fold rise in s.p. (i.e. 1,000%).

• Quadrupling earnings & a quadrupled rating = a 16-fold rise in s.p.

NWT's shareholders base - most of which is long term - seems pretty sticky, so should require some quite aggressive bidding from buyers to wrestle away significant amounts of shares from them.

This should be an ongoing process over quite some time, underpinned by ongoing growth from the company.

And some other rerating stimulators could be:-

• A broker note.

• Press coverage.

• Grosvenor Technology spin-out news &/or US fundraising.

"How Common Are Bank Robberies In The UK?

25 May, 2023

The idea of a group of masked criminals storming into a bank, guns blazing, and making off with bags of cash is a staple of both movies and popular culture. However, in reality, bank robberies are much less common and far less lucrative, especially in the UK. Bank robberies were very common in the 1990s, with near-daily bank robberies in London. By 2011, there were just 66 bank robberies. Today, it’s virtually unheard of.

Bank Robberies in the UK

According to recent statistics, the number of bank robberies in the UK has declined by more than 90% over the past 20 years. In 2000, there were over 700 bank robberies in the UK. By 2020, that number had fallen to just 58. ...

Despite the declining trend of bank robberies in the UK, banks still require protection and safety screens to deter potential robbers and ensure the safety of their employees and customers. ...

Safetell’s innovative solutions for banks – including fast-rising security screens and access controls – have played a big part in ensuring that banks are safer places for their employees and customers."

https://www.safetell.co.uk/insights/how-common-are-bank-robberies-in-the-uk/

Well done to Safetell for playing such a big role in reducing UK bank robberies.

What a quite striking and visceral testament to the quality and effectiveness of its offering.

17th May 2023 7:00 am RNS Year-end trading update

" ... Safetell has continued to increase its market share in the Entrance Control market with successful installations direct to end users and within the enlarged construction sector, including newbuild and refurbishment. ..."

https://www.lse.co.uk/rns/NWT/year-end-trading-update-5xr1fml6a08a34o.html

The related areas of entrance control and access control are a good link between Safetell and Grosvenor Technology, so both sides should be benefitting from referral business between the two.

"Entrance Control vs Access Control

10 February, 2021

Entrance and Access Control are both necessary elements to control who enters and exits any premises or secure area, but do you know the true difference between the two?

Access Control

Access Control refers to the selective systems that are used to verify authorised personnel using their credentials for example, biometrics, pin numbers, access cards, bluetooth etc, and permits or denies entry based on the requirements predefined in the system.

Entrance Control

Entrance control is the physical system which actually prevents or allows entry into an area when the decision has been fed to it by an Access Control system. This can be done by a range of high and low security systems, for example:

Security Portals ...

Revolving Doors ...

Security Pass Doors ...

Speed Gates ...

Full Height Turnstiles ...

Tripod Turnstiles ...

Swing Gates ..."

https://www.safetell.co.uk/insights/entrance-control-vs-access-control/

Today's RNS sounds like very significant and positive news.

500 BOPD, at an oil price of say c. US$80/barrel, would equate to c. US$14.6M. p.a.

And that is just at the production rate that might be achieved upon completion: the RNS suggests that development activities could potentially increase this further.

"If any of these Potential Acquisitions are completed, the Company will make further announcements, and at this stage, no terms are finalised."

So there could potentially be a series of US acquisition announcements from ZEN.

And with the sector in the doldrums at the moment, but with a robust energy prices outlook going forward, this looks like the ideal time to be a buyer.

Such additional significant revenue could help ZEN to pass a 'tipping point' into strong profitability, as well as providing more 'safe country' exposure and geographical diversification - all of which would help to further de-risk it.

I think this helps to explain why ZEN's CFO (a profession renowned for being financially cautious) invested c. £150K. into ZEN in February at 0.54p/share:-

28th Feb 2023 7:00 am RNS Institutional investment in Zenith

"... Mr. Luca Benedetto, Chief Financial Officer of Zenith has subscribed for 27,726,716 common shares of no-par value in the capital of the Company in connection with the Norwegian Financing.

Upon the Norwegian Financing Admission, Mr. Benedetto will be directly beneficially interested in a total of 27,726,716 common shares in the capital of the Company, representing 1.20% percent of the total issued and outstanding common share capital of the Company. ..."

https://www.lse.co.uk/rns/ZEN/institutional-investment-in-zenith-443cyzkax6xzhbk.html

Along with its Italian and Tunisian revenues, significant US revenues would further help to underpin ZEN's downside, but with the enormous potential upside of the Benin and Yemen deals.

From its current price, ZEN could certainly be one of the stellar performers of the resources sector going forward, with good share price gains very possible over both the short, medium, and long terms.

"GT Clocks at SHRM23 in Las Vegas ...

GT Clocks will be showcasing its elite selection of HCM devices at SHRM23 on 11-14 June 2023 in Las Vegas, where attendees can discover how GT Clocks is revolutionizing the industry.

Showcasing GT8 – The Powerhouse Of HCM ..."

http://gtclocks.com/insights/gt-clocks-at-shrm23-in-las-vegas/

It's clearly GreaT8 news that GT is having such an industry impact.

Which should also shortly be revolutionising NWT's profits & s.p.

In fact, GT's is the most explosive small British share expansion into America that I have seen for decades.

Since the legendary Pentland-Reebok success, forty years ago.

American sales were key to the success of British 150-bagger Pentland Industries, which sold Reebok into the US through its US subsidiary Reebok USA Ltd.

" ... In 1987, Reebok’s sales totalled $1.4 billion—a thousand times what Fireman first generated in 1981. By 1988, that number had grown to $1.8 billion, with Reebok controlling 26.7 percent of the athletic footwear market and besting Nike’s $1.2 billion in revenue. ... "

https://www.grailed.com/drycleanonly/reebok-history

Reebok is an excellent example of how investment into the right new products and services, to supply a compelling trend, can pay off handsomely as sales really take off - as they have been doing for NWT in America recently.

NWT's success stateside deserves to be the talk of the City; and I predict that in due course it will be.

Some more good news for the UK battery sector:-

"Jaguar Land Rover-owner to pick UK over Spain for giant car battery plant

21 hours ago

By Simon Jack

Business editor

The UK is set to win a battle with Spain to host a multi-billion-pound electric car battery plant in Somerset, the BBC understands

The boss of Jaguar Land Rover-owner Tata is expected to fly to London next week to finalise the deal.

Some in the car industry have described the plant as the most significant investment in UK automotive since Nissan came to Britain in the 1980s.

Tata's chairman is scheduled to meet the prime minister mid-next week.

Sources familiar with the matter say that although the deal has yet to be signed, engagement has moved from negotiations to drafting and choreography of how the landmark agreement will be presented.

Up to 9,000 jobs would be created at the Bridgwater site, close to the M5.

The UK government has acknowledged the urgent need for electric vehicle battery manufacturing in the UK to secure the future of the car industry.

The country's automotive sector employs up to 800,000 people directly and in the supply chain.

When pressed on the subject last week, Chancellor Jeremy Hunt told the BBC to "watch this space".

Tata was considering another site in Spain and the expected decision to choose Somerset will be presented as a major achievement for the UK government. ..."

https://www.bbc.co.uk/news/business-65698529

"My estimates for full year ending 30.4.23: G.T. c. £18M.* / Safetell c. £4.5 - £5M."

Amendment:-

For Safetell that should actually be c. £4.6 - £5M., as it was confirmed last week that it will be higher than the 2022 figure of £4.586M.

"DRIVE YOUR CAREER FORWARD

Change in the workplace and in your own work doesn’t come easy. It takes vision, connections, commitment and access to the right resources. All the things you’ll get and all the things we’ll celebrate at SHRM23, SHRM’s 75th anniversary conference. It’s not only going to be bigger than ever. It’s going to be better than ever, featuring four days of curated experiences throughout the Las Vegas Convention Center, around town and even live online. So, join us for this historic event and join us to make a real change in the world of work."

"HERE’S WHY YOU SHOULD ATTEND THE SHRM ANNUAL CONFERENCE & EXPO.

Catch a glimpse of what your experience will be like attending the world’s largest HR conference and hear from former attendees on what they get out of this can’t miss event for HR professionals."

https://annual.shrm.org/

Fantastic to see GT attending this important exhibition, the world's largest of its kind.

I think this indicates how GT is now really coming of age in America, and of just how impressive its ambitions and opportunity really are.

"GT Clocks at SHRM23 in Las Vegas

Colin Leatherbarrow

Managing Director

24 May 2023 2 min read

GT Clocks will be showcasing its elite selection of HCM devices at SHRM23 on 11-14 June 2023 in Las Vegas, where attendees can discover how GT Clocks is revolutionizing the industry.

What Will You See From GT Clocks?

HR professionals will be impressed by the comprehensive reporting and advanced analytics offered by GT’s HCM devices. This cutting-edge technology empowers organizations with deeper insights into crucial aspects of their business, enabling strategic growth. These seamless solutions effortlessly integrate into your existing business operations.

The GT Series enhances employee engagement, empowering a business to effortlessly improve workforce efficiency and reduce the burden on busy HR teams. Our working demonstrations will provide a firsthand experience so HR professionals can see the remarkable effectiveness of our processes in action.

Attendees will have the opportunity to connect with Ben Lagden, our VP of Commercial, Matthew Smith, our VP of Global Sales, and Mike Braun, our National Sales Manager. They eagerly look forward to discussing how GT Clocks can support your HR functionality. Visit us on booth #2722.

Showcasing GT8 – The Powerhouse Of HCM

The GT8 surpasses expectations with its rapid and precise facial and fingerprint recognition technology and stringent security measures. This ensures high performance, effectively streamlining your HCM processes.

Featuring high-speed facial recognition for swift clocking, the GT8 promotes efficient time management. Moreover, its enhanced security protocols, including encrypted PII/biometric data, safeguards sensitive information ensuring compliance.

With the added advantage of surface Employee Self-Service data, administrative tasks are significantly reduced, freeing up valuable time for more strategic HR initiatives.

When selecting an HR system, it’s crucial to choose one that not only streamlines your HR tasks but also adapts seamlessly to your organization’s growth. Scalability is key, whether you’re adding a new team member or onboarding a large group of employees following a recent corporate acquisition.

GT Clocks go beyond clocks and terminals. As a business, we offer a comprehensive end-to-end solution designed to minimize both administrative workload and life cycle costs. With our comprehensive approach, you can optimize your HR processes and unlock the true potential of your workforce.

To register to attend click here."

https://gtclocks.com/insights/gt-clocks-at-shrm23-in-las-vegas/

NWT annual revenue split ten-year evolution:-

Years ending 30th. April: Grosvenor Technology / Safetell

30.4.13: £6.615M. / £11.701M.

30.4.14: £7.234M. / £11.937M.

30.4.15: £7.577M. / £15.277M.

30.4.16: £7.639M. / £14.184M.

30.4.17: £7.092M. / £8.944M.

30.4.18: £7.960M. / £8.092M.

30.4.19: £10.979M. / £8.604M.

30.4.20: £13.357M. / £5.410M.

30.4.21: £12.647M. / £5.011M.

30.4.22: £14.559M. / £4.586M.

Half year ending 31.10.22: G.T. £8.415M. / Safetell £2.210M.

My estimates for full year ending 30.4.23: G.T. c. £18M.* / Safetell c. £4.5 - £5M.

*Including c. £10M.+ in North American HCM revenues.

I.e. the tech side of NWT's business has seen its annual revenue nearly treble in the last ten years, fuelled by the hugely successful expansion into the USA.

But this success has been 'masked' by the decline of the non-tech side, with the decline of Safetell's traditional banking business.

The aggregate change though has been transformative, with NWT's tech side now making up about 80% of Group revenues, and rising, compared to a third in 2015.

Which means that NWT as a whole is now deserving of a far more generous tech-style rating, especially with its rapidly growing proportion of recurring revenues.

In addition, Safetell's negative effect on NWT's overall growth is now reversing, with it adding to the growth instead.

And with its expansion in the UK autodoor servicing market (estimated at twice the size of Safetell's traditional markets) already achieving significant success, which should also provide a a strong increase in its proportion of recurring revenues.

It all points to a quite transformative breakthrough in NWT's Group revenues and profits over the next couple of years, followed by further excellent growth going forward.

And with investors in NWT getting two attractive businesses for the price of one or less.

From today's RNS:-

"Following this exercise, it became clear that broad support existed amongst shareholders to continue with the proposed Acquisition, with them making a final decision upon the publication of the final prospectus and at the subsequent General Meeting."

There may have been support for the acquisition per se, but not necessarily on the 0.5p terms.

I haven't seen one poster say that they would vote for the 0.5p option: the closest is JustHereForHemo earlier today who is broadly neutral.

Why would anyone vote for giving away the asset (i.e. TMOR) for half it's minimum current worth for a RTO?

The difference to TMOR shareholders of 1p v. 0.5p is clearly 100% more, but only adding c. 2% to the enlarged equity.

That's because the price being paid for Megasteel doesn't change, you just issue half the number of shares at double the price; and TMOR's share of the enlarged equity nearly doubles from 2% to 3.9%.

As at 31.20.22, TMOR's cash was £1.151M., and it's first year costs from 4.3.22 were capped at £50K.

It's market cap. at 1p would be £1.25M.

24th May 2023 12:04 pm RNS Update on Proposed Acquisition of Megasteel

" ... faced with an unwarranted tirade of abuse and vitriol directly addressed at them, the Board and owners of Megasteel yesterday afternoon formally informed the Company that it was withdrawing from the Acquisition. ..."

https://www.lse.co.uk/rns/TMOR/update-on-proposed-acquisition-of-megasteel-lhq7fm45bwyvavh.html

Can't be too disappointed about a 0.5p RTO being aborted, however good an investment it may have been from there .

Obviously Megasteel were at best lukewarm about floating, and to a degree abused that by insisting upon rip-off terms, that there is no way would have been supported by 75% of the TMOR votes cast.

TMOR aggravated the situation by blatantly lying in Monday's RNS with this piece of statistical nonsense:-

"The Directors believe that this material reduction in valuations retains the relative post-completion ownership of the Enlarged Group ..."

So while I don't condone the abuse, I can understand it. It would have been better though to have been constructive, and see if the RTO price could be raised to 1p (which would cost Megasteel just an additional 2%.)

So I agree, a wasted opportunity, but one for which TMOR's board and Megasteel are primarily responsible.

"If it proceeds on that basis, the s.p. could still potentially reach 2p by the"

The end of the last sentence in my last post was cut off: it should say:

"If it proceeds on that basis, the s.p. could still potentially reach 2p by the end of the year."

Megasteel's post tax profits of £5.34 million last year suggest pre tax profits of c. £6.6M. on a 19% corporation tax rate, i.e. well over double the previous years.

The post-RTO market cap. at 1p, on a 1p shell valuation for TMOR, would be just £32.125M., with c. £10M. cash.

I.e. a enterprise value pre-tax profit multiple of barely three, for a cash rich company growing like Topsy!

Clearly you would expect the s.p. to move ahead very strongly, and in due course be a very good multibagger.

That said, I think there's a good chance that TMOR can extract better RTO terms, once it becomes apparent that shareholders won't back the deal as it currently stands.

They need 75% of the votes cast to get the deal through, which is quite a high threshold.

Just to clarify: Megasteel haven't done a runner, and the Megasteel RTO hasn't been aborted (yet): the terms have been changed, which is very different.

Well done to both sides for 'thinking laterally', in being willing to proceed without raising more funds.

That said, my view is that Megasteel is a good RTO for TMOR, but at the wrong shell price, and I'll explain why.

Megasteel looks like a very impressive and exciting growth company:-

23rd Sep 2022 7:45 am RNS Acquisition - Megasteel and Suspension of Trading

" ... In its financial year ended 31 October 2021, Megasteel made audited pre-tax profits of £3m on turnover of £19.7m. ..."

https://www.lse.co.uk/rns/TMOR/acquisition-megasteel-and-suspension-of-trading-ccsbb9s9yt991oi.html

22nd May 2023 3:30 pm RNS Update on Proposed Acquisition of Megasteel

" ... Megasteel is a cash flow positive , profitable, business, which reported audited post tax profits of £5.34 million, on revenue of £30 million, in its financial year ended 31 October 2022. As at that date, Megasteel had cash of approximately £10 million and therefore has no requirement to raise any additional funds. ..."

https://www.lse.co.uk/rns/TMOR/update-on-proposed-acquisition-of-megasteel-pwaoo4yy004oj3o.html

And its CEO Nigel Roberts has shown himself to be a negotiator of brillance, to extract such a lowly shell value from TMOR. That bodes very well for him cutting good deals for his business - in both buying and selling.

Moreover, the value being attributed the Megasteel is comparatively modest.

The problem is that the value being attributed to TMOR isn't just comparatively modest, it is clearly way below even its minimum current fair value for a RTO.

That I believe would be c. 1p/share: which is still a 55.5% price reduction from the previous level of 2.25p, which would still be more that the % price reduction in Megasteel's valuation.

And I think that TMOR shareholders are entitled to it in view of this statement from yesterday's RNS, which would otherwise be completely false:-

"The Directors believe that this material reduction in valuations retains the relative post-completion ownership of the Enlarged Group ..."

A further changed in the terms to 1p, from 0.5p, would provide a 100% benefit to TMOR shareholders compared to the latest proposals, but at a cost of only c. 2% to Megasteel.

I don't believe that Megasteel would be able to get a better RTO deal that that elsewhere, especially as other shells would be wary of dealing with them if they've been seen to reject fair value from another shell.

That would leave the IPO route, which might not fully recover for years, and would still be comparatively risky and uncertain, and require Megasteel to give away a far bigger share of its equity.

So I'm afraid I'm going to have to vote a 'sad no' to a 0.5p Megasteel RTO, but would willing support a 1p deal.

If it proceeds on that basis, the s.p. could still potentially reach 2p by the

17th May 2023 7:00 am RNS Year-end trading update

" ... The Group's market share has continued to grow in Automatic Doors Services, with new national service contracts increasing recurring revenues. ..."

https://www.lse.co.uk/rns/NWT/year-end-trading-update-5xr1fml6a08a34o.html

Safetell's expansion in the UK autodoor servicing market (estimated at twice the size of Safetell's traditional markets) is clearly already achieving significant success.

And remember the strong regulatory driver helping to fuel this expansion opportunity:-

"Global Automatic Door Market Trending Upwards, EN 16005 Demands Annual Maintenance

JANUARY 19, 2023"

https://newmarksecurity.com/company-insights/

And in a further sign of its enthusiasm for this large and attractive expansion opportunity, Safetell's website just recently put a further seven new articles on automatic doors at the top of its "Insights" section, in addition to the nine new articles on automatic doors that it put there several weeks previously:-

"Insights

Keep up to date on our product news, business announcements and industry-related content on how to effectively and efficiently secure and maintain your organisation."

http://www.safetell.co.uk/insights/

Here's some extracts from one of the new articles, on automatic doors in hospital etc. ... there should be a huge health sector opportunity here for NWT:-

"Why do hospitals have automatic doors?

Hospital automatic doors are installed for a variety of reasons, not least because they play an essential role in ensuring that medical facilities are safe and accessible. One of the most common locations where you’ll find automatic doors is in hospitals and medical facilities. In fact, it’s increasingly unusual to find manual doors in hospitals and other medical centres. What is it about automatic doors that makes them such a great fit for hospitals and medical centres?

Convenience ...

Sanitation is a reason for automatic hospital doors ...

Accessibility ...

Automatic hospital doors offer added safety ...

Contact the experienced team at Safetell to find out more about hospital automatic doors and the vital role they can play in hospitals and medical settings."

https://insights.safetell.co.uk/why-do-hospitals-have-automatic-doors

17th May 2023 7:00 am RNS Year-end trading update

" FY23 year-on-year revenue growth, driven by a strong performance in the People, Data Management, and Physical Security divisions. ...

Physical Security Solutions division - Safetell

The organisational changes have been successfully implemented within Safetell following the restructuring of sales and marketing in 2022. This restructuring has helped Safetell deliver FY23 revenue growth, primarily from retail screens, entrance control installations and automatic door services.

During the year, Safetell developed a redesigned, cost-effective retail attack-resistant screen for convenience stores, and this has been subject to strong demand, having rolled out over £1 million of installations for major UK retailers and built a pipeline of over £2 million for installations for FY24.

Safetell has continued to increase its market share in the Entrance Control market with successful installations direct to end users and within the enlarged construction sector, including newbuild and refurbishment. The Group's market share has continued to grow in Automatic Doors Services, with new national service contracts increasing recurring revenues. ..."

https://www.lse.co.uk/rns/NWT/year-end-trading-update-5xr1fml6a08a34o.html

It was significant that this week's NWT trading update also reported strong performance from its Safetell subsidiary, with full year revenue growth, not just from its Grosvenor Technology subsidiary.

This confirms that the turnaround at Safetell is starting already.

Safetell's last H1 revenue fell 14% year-on-year, to £2.21M. (although this was an increase on the previous half year revenue, which was £2.018M.), and its full year revenue the previous year was £4.56M., so H2 revenue last year must be over £2.35M. - that's as a minimum.

Which also means a minimum increase on the previous H2 revenue of about a sixth.

I think this demonstrates how NWT management can deliver, and if anything prefer to 'under promise and over deliver', which is a refreshing change to many AIM shares.

Safetell's speed of progress also looks impressive. During the year just ended Safetell was able to develop a redesigned, cost-effective retail attack-resistant screen, and still roll out £1M.+ of installations of this by the year end.

And with a pipeline already of £2M.+ of installations of this for its current year just started, the outlook for Safetell this year is starting to sound quite exciting.

Safetell's increase in revenues may not yet be huge, but after a lengthy, multi-year downtrend it's a significant milestone to have a full year of revenue growth, combined with two half year half-on-half revenue increases.

And of course Safetell's expansion of its higher margin, recurring revenues should mean that it can grow its profits faster than its revenue.

19th May 2023 10:00 am RNS Placing, Subscription and Retail Offer

" ... About Fusion Antibodies plc

Fusion is a Belfast based contract research organisation ("CRO") providing a range of antibody engineering services for the development of antibodies for both therapeutic drug and diagnostic applications. ..."

https://www.lse.co.uk/rns/FAB/placing-subscription-and-retail-offer-j7yevkgvnt3pkjn.html

FAB's recent performance clearly hasn't been great.

But the tiny number of London-listed N.I. shares includes former 15-bagger Kainos (KNOS) (still currently an 8.8-bagger from its 2015 IPO price of 139p); and FD Technologies (FDP) - currently a 37.6-bagger from its 2002 IPO price of 50p.

See the "Rockpool Acquisitions (ROC)" board for details (it's a Northern Ireland shell company currently arranging a RTO):-

https://www.lse.co.uk/SharePrice.html?shareprice=ROC&share=Rockpool-Acqui

Peronifund,

Why should the average price that shareholders may have paid for their shareholding be any determinant of fair value?

Applying your 'logic', if a company goes bust, then fair value would still be far higher than 0, because shareholders' averages would be much higher than 0.

Conversely, if a company multiplies its revenues and profits from IPO, and its s.p. multibags, the fair value would still be far lower, and you'd have to discount the average profit of shareholders on their average buy price.

So let's try some more robust valuation analysis:-

Assuming full subscription for the 41,171,746 fundraising shares, added to existing 26,014,946 shares, then FAB will have 67,186,692 shares in issue. At 5p/share that would be a market cap. of c. £3.6M.; and c. £4.956M. at the current s.p. of 7.375p.

The company's H1 cash-burn was £800K., and the net fundraising cash if full subscription will be c. £1.42M.

It plans to cut costs, but revenue is collapsing: down massively to min. £2.8M. in 2023, but with about two thirds of that in H1.

So current annualised revenue based on H2 is probably below £2M., and the cash looks like it will probably be burnt within a year.

The CRO sector is very fragmented and competitive, and with reduced investment in the broader biotech sector, margins could come under pressure, to compound falling revenues.

From Wikipedia:-

" ... Organizations who have had success in working with a particular CRO in a particular context (e.g. therapeutic area) might be tempted or encouraged to expand their engagement with that CRO into other, unrelated areas; however, caution is required as CROs are always seeking to expand their experience and success in one area cannot reliably predict success in unrelated areas that might be new to the organization.[5] ...

As of 2013, there were over 1,100 CROs in the world, despite continued trends toward consolidation. Many CROs have been acquired while others have gone out of business.[9] ..."

https://en.wikipedia.org/wiki/Contract_research_organization

By way of comparison with what you could get elsewhere for a market cap. of £5M., NWT (market cap. £5.015M.at 53.5p) announced a positive trading update this week:-

17th May 2023 7:00 am RNS Year-end trading update

"Continued revenue growth and a return to profitability

Newmark Security plc (AIM: NWT), a leading provider of electronic, software and physical security systems, today provides an update on trading for the year ended 30 April 2023 ("FY23"), reaffirming the Company's return to profitability. ..."

https://www.lse.co.uk/rns/NWT/year-end-trading-update-5xr1fml6a08a34o.html

NWT's FY revenue is expected to be £20M.+, & pre-tax profit £1M.+.

It's outlook is buoyant, and there's plenty of business for everyone.

'Cash is king' at the moment, and ARA has it, and is trading at a significant discount to it.

And at its current very low rate of cash burn, it would take years for that discount to be eroded away.

In theory it could arrange a RTO of a profitable company without having to raise any further funds, though it will probably want to raise at least some to accompany a battery tech RTO.

But it wouldn't necessarily need to be a particularly large amount, and the enlarged entity could look to raise more later - which could be in better market conditions, after company progress, and at a higher s.p.

There is still some small cap equity investment money available, especially for good value and quality companies, and the situation seems to have improved this year. This is shown by some recent new issues this year, like Ocean Harvest Technology Group (OHT), and World Chess (CHSS).

But the IPO route can be quite risky and uncertain - if the IPO has to be aborted, due to market conditions, then the company trying to float can be saddled with huge costs but with nothing to show for it.

The RTO route, into an already listed shell like ARA, is safer and more certain.

And the fact that the company reversing in may have to give away far less equity than in a IPO can be a major attraction, especially if the price being offered is seen as low.

With regard to the choice of shell for a floating company, such companies won't have to look far to see what good value ARA is compared to other shells, as well as having very attractive management.

So it's no surprise that ARA is seeing a very healthy level of interest in reversing into it, enabling it to express deal confidence in the way that it has.

I would add that there seems to be an inverse correlation between the salaries of shell directors, and RTO success.

Unpaid directors have no incentive to spin things out to retain their salaries, but rather have a real incentive to get something done ASAP, as well as being of the highest level of integrity and professionalism.