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Great Post Plutos. The question marks over ingenuity have made me wonder about a mbo also for a while. Matt m for all his criticism was previously a chareted accountant so is no fool when it comes to the finances. He must see what we are seeing in terms of the question and financial projections over whether the ingenuity investment will be worth it long term. Maybe he's not bothering to big it up or justify it because it may suit him for sp to be subdued before a mbo?
Don't get how MM can apparently have just rejected a bid for nutrition at multiples of the market cap without asking shareholders or even properly rnsing to say rejected? Clearly that would have made sp go up significantly.
I must admit I had sold a portion of my shares a few months back to explore some other opportunities but bought back yest thinking surely it can't tank yet again after results and actually thought we'd have a good day. My timing was fairly bad to say the least but am now locked in heavily again. Still bullish on nutrition especially as that aspect is so undervalued but sceptical on ingenuity. I could be persuaded on it if matt m pushed it more but he doesn't, it's more it comes across that the spending in ingenuity is inevitable with no question on pivoting away from it yet the case for it doesn't seem to have been properly made as something that will be worth the years of investment.
Get rid of ingenuity spending and I feel the sp could currently be £2 at least.
The biggest confusing aspect is ingenuity commerce. It seems weird to put so much into it without spelling out the reward down the line. Ocado is valued at £6.3 billion and forecast to be 5 years from being cash flow positive (a lot longer than THG as a whole who predict next year but similar to ingenuity prediction). However with Ocado there is arguably a more solid financial expectation once that comes about, for ingenuity Matt doesn't seem to really big up what it will eventually be in terms of the finances etc?
IF you get rid of ingenuity spend the nutrition/beauty would look a lot better and be valued way higher than here.
It's fairly clear Adam M is still very proud of revolution. In this post he is congratulating his son for his time working there - "So proud to have had you part of the Revolution. What a product developer you became, “the products we develop are everything to our consumers”, and a so much loved member of every team x"
https://www.linkedin.com/feed/update/urn:li:activity:7091821082176802816/?commentUrn=urn%3Ali%3Acomment%3A%28activity%3A7091821082176802816%2C7092064937442693120%29&dashCommentUrn=urn%3Ali%3Afsd_comment%3A%287092064937442693120%2Curn%3Ali%3Aactivity%3A7091821082176802816%29
Ubik they would have to wait over a year to buy it out lower than 32.6p. That's a long time of hoping the sp doesn't go up/macro doesn't improve.
In the meantime I don't think they can afford to go over 30% due to then having to make a mandatory funded offer of at-least 32.6p.
I could see ELF beauty as a suitor...they are arguably fairly overvalued at the moment at £4.82 billion currently.
ELF could dilute themselves by 6-8 percent to raise money and if they bought Rev B would increase their predicted revenue this year by around 36% and their EBITDA around 12 - 13% and that's before all synergies etc.
Fair enough Redhammy and good post.
Worth pointing that while Bob sold some, Boo also bought more shares. As obv did William Currie investments who by Weds have built a position up to 3.14%.
I think while obv an FCA investigation isn't good news, it's mitigated to a degree by the fact that Rev B already had a 4 month independent investigation looking over everything.
It's also not clear whether if there are fines they may instead be targetted at individuals. Perhaps all of this was the part of the reason Rev B were taking legal action against Minto. However I also think if this action had been foreseen it would have been mentioned in the accounts as a potential liability so to speak but wasn't.
Even if there was a fine, the FCA would take into account the effect of such a fine on the company in a worst case scenario. I don't believe it would be a bad fine though as I said in a previous post the worst part was the £9.6 million revenue pulled forward which was around 5% of the genuine revenues. FCA consider the materiality when judging these things.
"Where an individual or firm claims that payment of the penalty proposed by the FCA will cause them serious financial hardship, the FCA will consider whether to reduce the proposed penalty only if:
(a)
the individual or firm provides verifiable evidence that payment of the penalty will cause them serious financial hardship; and
(b)
the individual or firm provides full, frank and timely disclosure of the verifiable evidence, and cooperates fully in answering any questions asked by the FCA about their financial position.
(3)
The onus is on the individual or firm to satisfy the FCA that payment of the penalty will cause them serious financial hardship."
(1)
The FCA will consider reducing the amount of a penalty if a firm will suffer serious financial hardship as a result of having to pay the entire penalty. In deciding whether it is appropriate to reduce the penalty, the FCA will take into consideration the firm’s financial circumstances, including whether the penalty would render the firm insolvent or threaten the firm’s solvency. The FCA will also take into account its statutory objectives, for example in situations where consumers would be harmed or market confidence would suffer, the FCA may consider it appropriate to reduce a penalty in order to allow a firm to continue in business and/or pay redress.
https://www.handbook.fca.org.uk/handbook/DEPP/6/5D.html
Oxygen, you mentioned petrofac who fell 30% after an announcement of investigation, but that wasn't the fca it was the serious fraud office. Also sounded slightly more severe for them I'd say - "The SFO said on 12 May that it was investigating the company, its employees and agents for suspected bribery, corruption and money laundering".
In the end they were fined £77 million, obv when deciding the amount of fine the companies revenue/profit is factored in. Petrofac make/made billions in revenue and hundreds of millions in profit.
https://www.theguardian.com/business/2017/may/25/petrofac-suspends-coo-sfo-investigation-oil-services
Worth noting too unlike petrofac Rev B have had their moment of realizing something was wrong which made it fall from 50/60p and also already had an independent investigation that took 4 months.
Here is details on how the FCA determines fine levels (if they decided to do one). Rev B are sueing Minto, maybe they can get him to pay if there was a fine?
https://www.handbook.fca.org.uk/handbook/DEPP/6/5A.pdf
It's clear from the rns it's focussed on the Minto/Allsworth period - IPO in July 2021 - Sept 2022.
However the actual regulation it refers to sounds more to do with share trading i.e things like insider dealing, than the issues we already know about such as the £9 million revenue etc.
I still think the actual issues found in investigation weren't as bad as initially feared. There were illegal loans (which were relatively small) etc but prob the most significant was the £9.6 million false revenue, but even that was £9.6 million out of £184.56 million genuine audited revenues. So 5.2% which had been illicit pulled forward revenue. Obv it was wrong, but it's not exactly wirecard levels of materiality.
Having said that, still not 100% if it wasn't more to do with share dealing? This is the regulation -
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0596