The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Having spent 2 hours looking at this, I think he might spend some time in a much smaller room. Just found some comments on the Internet about the Arc transaction myself and CP22 got caught in. Apparently, the investment that set the value of the Company (i.e. Capital Spreads buying £150K at a certain price) was done at the same time as a 20 fold free issue of shares to the same companies at next to nothing for services rendered. So, we thought they were buying in at the market rate but it seems like it was a ploy to make us think the 15% discount was legitimate. Two posters called "JackNife" and "Sharedealer" seem to be all over it. See this: http://boards.fool.co.uk/worldlink-group-10952928.aspx?sort=whole
The loan has to be a) in cash, b) in services c) in shares. You cannot carry forward your own debts from companies that were liquidated and even so, you would need to evidence them (but you can't in any case). Impossible to have incurred them from Services because he was being paid either directly or as a Contractor. On shares, the correct tax route is to issue new shares to new investment which dilutes shareholders. Buying off a shareholder and loaning back would a) have a corresponding deposit and b) would be regarded as an avoidance to secure CGT rates rather than taxed as a distribution later (trust me, I know this well). So, forgetting the whole amount for the moment, we have the Audited history before and after the £500K loan in 2009. Our upside as shareholders has just dropped 46% in 3 days and only 10% of that is for funds that can be used by the Company. Not happy at all and want those Director shares returned and the "Loans" investigated. Option A: Inland Revenue on the tax Option B: FSA again (must be the Market Abuse team Lucky or you don't get any joy).
Can you help me understand the huge jump in Mr Riches shares from 2.2m shares to 11 million shares over the last few days? Looking back at the Accounts of the past 3 years, Mr Riches manage to have loans of £900K against his name without any corresponding cash deposits from him or balance sheet entries (cash available to the company). Interest payments to Crispin and himself were £156K in 2010. The interest on this loan is more than twice the combined total revenue of Worldlink since 2007. Plus he received £120K salary and other costs in 2010 and also received £113K in 2008. Crispin received over £200K in 2009. During the entire period, the average number of employees in each year was 2. In 2009, Mr Riches appears to increased his loans by £500K just in that year - no corresponding cash available to the company. The upshot, he had 2.2million shares on Thursday, today he has 11million for a £1m plus loan. Where did this loan come from. It can't be from share related activities because you are required to issue new shares for investment not buy from existing shareholders. For example, buying shares of a shareholder who then loans it back to the company (rather than the normal issue of new shares), is classed as a tax avoidance unless the shareholder pay distribution tax rather than Capita Gains.
The guy in the press all day today on the access to the Prime Minister for money scandal is a) the Conservative Party Treasurer yes but also....b) the Owner of CMC Markets, a CFD/Forex firm with a real-time mobile trading platform that must surely infringe if people like City Index, TD Waterhouse, Esignal and Ladbrokes are alleged to. Peter Cruddas. Surely WGP skills at spinning facts into positive Press Releases can mean they can get a decent angle/publicity from this situation to pop the share price?
Agree on the patent and court thing. On the debt matter, no point going to the High Court for a winding up petition if there are a lot of creditors. I suspect that the debtors would view this as the best way to liquidate the debt with the major advantage that the share price is depressed so now they have an big upside too. Good move for them I think.
Good point again, of course the debt would have been settled first from the consideration before being priced for shareholders so it is actually the same. I also rang London Stock Exchange today and they said that it is fine provided they had the shareholders consent to issue first (which I assume was the disclosure in the prospectus) and that a refactoring doesn't get enforced, it is left to the market to naturally adjust. So if 15p is solidified as the floor, all the better. ps. remember they still have to pay the £150K bill to Paros but thankfully no more than that.
Unfortunately, this was in the prospectus so nothing we can do. It's in the section "Risk of future issues of shares" listing Falcon, Bridge Hall, Link2Law, convertible loans etc. Well, we know you can't just issue new shares onto the London Stock Exchange and increase your market cap arbitrarily so I wonder if this means the share price will get refactored next week as a normal Rights Issue.. By my calculation, a flat refactoring would be 8.1p based on today's price. For once, I really hope I am wrong, been sat in the sun all day...
Do you (or anyone else) understand these numbers? It looks like they have raised an amount that is 10% of the company valuation but we have all been diluted by 46% in an instant yet Neil Riches is somehow simultaneously back up to 28% ownership? Someone please tell me I am misreading this.
Just seen this. Does that mean with 42 million shares in issue rather than 23 million, our holdings are diluted? I.e. if someone offered say £10million for the company, we would get a lower price for our shares? I.e. £10m/42 million gives a lower price per share than £10m/23million shares?
Tough call really. I have thought for a while that WGP would have upward pops on PR releases so people can make money or exit at better prices but the last few press releases have not popped the share price at all (Chryson, Worldlink Brokers, City Index issuing, new Bet Butler partner etc). I think the biggest actual threat in the near term is potential administration but we will get a clue to the real risk (or not) of that from their 2011 Accounts which must be posted by the end of April. You might also want to ask Gem123 want he/she would do as you will get a more bullish view. Gem123 stated he/she was close to WGP and claimed to know about the One Media offer long before anyone else on the forum. Might get a better inside view from Gem as a few of us are increasingly bearish on the stock. Maybe even a hint about the revenue/profit for 2011.
Very good points there. It's a shame Worldspreads didn't licence it for their own mobile platform. I still think IDC is the one to get because they own Esignal and Quotrek. WGP are partners to the company that own the biggest and most advanced mobile financial data company in the world which would provide a hugely powerful platform for both US and UK patents. It is so incredibly frustrating that they have not been able to close it over the past 2-3 years but haven't given up hope...yet. I suspect these are the $8million infringers WGP talk about, no-one else is even a decent proportion of Esignal/Quotrek's size.
I suspect after a year of letters, official letter before action etc, City Index are clearly not bothered or interested. Nothing of significance happens until WGP SERVE the notice. So far, all they have done is issue/list the claim. They will have 4 months from when the court seals the claim to Serve it which is when the case is real. At that point, WGP cannot withdraw from the case without Court permission and paying City costs (and all costs from that point become valid for both parties). It is also when the patent is genuinely on the line for invalidity action. My guess is it will be considered another bluff until it is properly served then you might see some action.
Worldspreads - administration, Arc Equities - administration, Bridgehall Brokers - administration, Capital Ideas Plc - administration, Quest - looking very dodgy indeed, QED (who wrote the patent valuation for WGP in 2008) just showing a text page with a mobile and CEO has left to join...Worldlink. I suspect Ladbrokes and IDC are safe though but XCAP must be looking over their shoulder! I think the Share Price is showing remarkable resilience at this level though. I am expecting the Annual Accounts to get released on a Friday after close with a Monday morning pre-market RNS to shore it up. You read it here first.
Just gone into Special Administration with thousand of clients expected to lose money. The FSA have warned there could be "shortfall in the client money accounts". I think Worldlink were just a Appointed Rep or Introducing Broker so hopefully doesn't hurt them and maybe the Saxo one can pick up the slack. See: http://www.worldspreads.com/default.html and http://www.worldlink-data.com/web/partners.php
This is from EuroWeek magazine dated September 29, 2000. "Worldlink IPO before year end as mobile data takes off" "Worldlink is banking on its unique technology getting investors' attention when the company lists on the LSE toward the end of the year..." "...IPO is likely to raise around £70m of new money and the company should have a market capitalisation of between £120m and £130m on listing, according to Neil Riches, managing director of the company." This was 11.5 years ago. ps. If WGP go under, you will find that the Preference Loans in favour of certain people (5% and 7% preference) are the highest level of precedence which will enable them to cut a deal to get the IPR off the Liquidator. That has been the MO the last two times. pps. let's give them a chance on the numbers. they announce in less than six weeks so if revenue is £1M+ or even high hundreds of thousands for 2011, all is forgiven because they would have proved themselves with real results.
Might be people with negative sentiment in here yes but there are DEFINITELY people in here that do not want anything negative said and fire it down irrespective of the content. The arguments used for positivity are the same arguments originally used in WGP's favour by the now negative people before they got burnt. That is why this Board is often argumentative because many think history is relevant ("what does history tell us"), others think it irrelevant. Dismissing irrelevant history is fine but dismissing relevant history is foolhardy. You know, some people regard WW1 and WW2 as two events. Others regard them as a single linked event. Either way, if someone has a history of doing something, of saying certain things, of acting in certain ways, which result is negative outcomes; being aware of this when they 'look' like they are doing it again is not irrelevant. That is not to say they are necessarily guilty a second (or third) time or that the same outcomes will arise, just that caution is required and a willingness to know the facts even if your own judgement then dismisses it (which is every person's right). People pointing out that they might be doing the same thing again does not mean they have an agenda except maybe to stop other people being hurt the same way (or they are the bravest Short traders I have ever seen!).