RE: Significant Case Completion18 Nov 2020 17:01
I wouldn't go near these shares. From April 2015 to September 2020 this company generated a cumulative £30.7m in EBITDA, of which £30.5m was in "fair value adjustments" so a whopping £0.2m in cash profits in 5.5 years! In the same period a net £6.1m was invested in cases, working capital absorbed £5.3m, corporation tax payments totalled £4.4m, net interest payments were £1.4m, and £2.8m was paid in dividends. This net £20m outflow was financed by the net proceeds from the IPO of £14.7m and an increase in borrowings of £5.1m. So, in effect, shareholders have received their dividends from money subscribed for new shares at the IPO, not from any cash generated by the business.
Profits that do not turn into cash are illusory. The market cap is roughly 5 times the value (net of tax) of unrealised profits shown on the balance sheet. Absurd. A further equity issue is inevitable, in my view.