Member Info for lemonade311

tangible net worth of wjg given that their rcf has a covenant based on it:

> watkin jones tangible net worth history

date total assets intangible assets total liabilities tangible net worth % of total assets31 march 2024 £343,638,000£11,326,000£211,626,000£120,686,00035.1%30 sept 2023 £371,516,000£11,606,000£241,511,000£118,399,00031.9%31 march 2023 £380,826,000£11,885,000£215,787,000£153,154,00040.2%30 sept 2022 £386,959,000£12,165,000£210,006,000£164,788,00042.6%

ask chatgpt to format it, this **** website cannot format properly.

I found that they had £100m revolving credit facility in their FY 22 year.

They reduced that to £50m in FY 23 given the lower land transactions (correct move given that you have to pay for unutilized reolving credit facilities and the market had stalled at that time.)

So the most likely meaning of 'Funding Options to exploit land market opportunities' should be an extension of the revolving credit facility to £100m again so WJG can do JV deals on these new land opportunities.

22 Report:

> The Group’s revolving credit facility (RCF)

is committed and has a five-year term to

May 2025. All financial covenants under

this facility were met at 30 September 2022

and are forecast to be met throughout the

period to 31 January 2024. This facility can

be accessed to fund land acquisitions.

23 Report:

> Strong liquidity has been maintained

through the first quarter of the year ending

30 September 2024, providing the Group

with a good level of cash and available

banking facilities for the year ahead.

The Group’s revolving credit facility (RCF)

is committed and has recently been

extended to November 2025 to give

flexibility to a renewal given the current

market conditions. The total facility

was reduced during the year, given the

anticipated volume of land acquisitions,

and to benefit from lower non-utilisation

fees. All financial covenants under this

facility were met at 30 September 2023

and are forecast to be met throughout the

period to 31 January 2025.

So the obvious answer the above funding to me is making their revolving credit facility go from £50m to £100m again, that's what RCF is for as well.

Yes I understand that.

I don't really care about short term price movements either. I'm not a trader.

Anyway, watkin jones is essentially trading for below the net asset value of it's properties only.

Taking only the tangible assets that can be liquidated for quick cash from march balance sheet:

Investment Property (leased) + PPE + Inventory & work in progress + Contract assets + Trade receivables + Reinbursment assets + Cash - Liabilities = £94m.

Shares outstanding = 256m

= £0.36 per share just in the above.

So unless the market was to think fire cladding provision was to materially change much higher or they go bankrupt then I don't see why WJG should ever be trading under £0.36 in an efficient market given that is currently it's liquidation value (presuming no huge discounts on any fire sales in liquidation). Especially given that the above assets have already been impaired given the new property values after interest rate spikes and such.

If I was another company builder with spare cash I'd be trying to buy WJG outright as it's a ridiculous price imo.

Well I phoned up watkin jones a week ago, they referred me to peel hunt to answer any questions.

Basically the peel hunt guy (who didn't draft the RNS language) said it was specifically done that way to be ambigious.

However he referred me to LSE:VID RNS as a comparison which has a much clearer tone that they needed an equity raise: https://www.lse.co.uk/rns/VID/videndum-plc-2023-interim-results-lf5654f1g14bzdk.html

> The Group has put additional mitigation plans in place to further reduce costs and conserve cash, and is proactively working to reduce leverage and recapitalise the business, which may require an equity raise

So, again, I personally think an equity raise is unlikely and would make no sense so best to take advantage of a cheap share price imo, there's no scenario I can get anywhere close to 27p per share intrinsically, even if cladding provision was to go up.

The market is pricing in a terminal decline at this point which I don't see how that's possible given BTR and Student acommodation is the future (I live in a BTR).

I came to the conclusion that management will be taking on more debt and not doing an equity raise.

An equity raise at this price destroys the intrinsic value by 20% whereas taking on more debt (which includes asset backed financing or revolving credit facility etc) only destroys 4% of the intrinsic value.

It's very clear that debt is the clear winner here, especially for short term liquidity issues. I'm hopeful that the CEO Alex, being an ex-finance and investment director understands this as well and has come to the same conclusion.

Market cap of £67m is pretty insane imo. Reminds me of jet2 going from £20 to £1.5 in a few weeks. Just continued panic.

No idea if it's the Grenfell report or what. Maybe I'm wrong but I don't see how this isn't a screaming buy. I though it was cheap at 50p too.

Had to buy again at this price...

The main value creation is driven from unwinding of inventory to allow more free cash flow.

They are struggling to release that inventory to cash, even with discounts. A large reason seems to be the huge glut of wine globally supressing prices that will last till next year too given China issues.

I expect more write-offs on their inventory and a slower turnover of their inventory. This is just back to being a watch-and-see given the global wine issues.

Their gamescon and reddit threads seem to be full of buzz. I think planet coaster 2 will be an 8/10 or 9/10 on steam ratings and do well in sales.

They have implemented everything the community was asking for I think. The only thing I saw that was missing was better interior lighting but that's due to their own CMS engine probably cause good lighting in engine code is insanely difficult.

They have better pathing, slides going to non-ending pools, turn tables, switch tracks etc.

All green flags for a successful launch right now.

Https://www.bbc.co.uk/news/articles/c8er93k051xo

Obviously this is not new news at this point but hopefully it doesn't result in the government forcing any new measures or something that affects watkin jones given the cladding.

I don't think it should but still

@E_AL I don't think that's correct. It's adjusted net cash definition, so they don't even take Operating lease or current provisions into account I believe:

> (3) Adjusted net cash is stated after deducting interest bearing loans and borrowings, but before deducting IFRS 16 operating lease liabilities of £44.7 million at 31 March 2024 (31 March 2023: £47.5 million).

They had £111m in current liabilities from Mar.24 results.

They had £101m in cash + trade receivables.

So while they aren't in trouble, it does make sense for them to do an Inventory Asset-Backed financing to make up the shortfall presuming they can't sell these immediately I think given they have £118m in inventories to make up this gap.

Yes i agree it's undervalued but every time I see someone post this it always fails to miss that they are obligied to spend £60m on cladding provisions.

So you can't just look at gross/net cash. You have to add £60m to it.

Yes. Thanks for raising this. I only just saw this comment, it isn't too clear from the RNS that it did get delayed again. I don't think the market has priced in this delay either as most people won't have remembered they said July, not August.

I've sold mine and will wait till 28th August for results, most times a delay is a bad sign. Although in this case it could just be cause of CFO leaving but still. Not really an excuse to delay again

I also think it's much more likely to be a JV type arrangement or asset backed financing.

Would make no sense to equity raise right now so I bought £20k more. I just don't think the chairman buys £50k more shares if he thinks an equity raise is coming. That would make no sense either.

And a 40%+ drop if there's no equity raise is way too much imo. This is still a company that has solid fundamentals long term.

well i presume they aren't considering a capital raise if they publish a statement like that, if they do a capital raise after this **** then they deserve to be fired. they have to do debt or asset-backed-financing or something else.

Wtf is going on lol, why the hell would it drop another 10% the day after when director buys too

Pure panic in this stock.

It's still a liquidity issue I guess.

They were expecting more sales to come through, those have been delayed again, so can't use that free cash flow to fund future growth like they were expecting I presume. So in meantime want to raise money to do that.

I've asked them to clarify what it means specifically and be less ambiguous on whether you are doing equity raises in the future though, cause if they do an equity raise AFTER telling the market they are looking at funding options then that's just shooting themselves in the face.

Why would they put they are seeking options to raise capital at the end of the RNS.

Of course this drops as this signals an equity raise. You don't say you are raising capital before you do it.

> I believe the US business was 10-15% of revenues in 2023, so should reach 30%+ in 2025

Where are you seeing this? Also this doesn't mean it's the same margins as the CFD business.

as far as I can see plus500 doesn't report US futures or japanese business in it's revenue split, which means it's probably an insignificant amount still.

Also, your investment case is a bit too rosy.

You don't mention plus500 terrible LTV/CAC ratio, Plus500 continually has to invest in acquiring new customers to replace the churned ones who lose money or are kicked off the platform (for winning too much). This is the real reason why institutions are not buying I think. Essentially their churn rates mean their growth in the CFD business is capped at where they are imo and eventually, they could run out of replacement gamblers.

FWIW I own plus500 in my portfolio, around 5% now, but refuse to ever go too high due to massive risk of them dropping 50% in a day like before or their churn rates skyrocketing.

Good to know, thanks.

Good results but the huge risk is still regulation: https://www.financemagnates.com/forex/9-out-of-10-fxcfd-firms-fear-regulations-in-europe-study-reveals/

I guess this is why plus500 is diversifying into institutional markets.

Spain banning CFD last year for retail gamblers for example