Member Info for Merciaman

AML_SAVE-A-BRAND,

Full disclosure, I sold out of Aston Martin in July 2023 for a loss, having held the shares for a couple of years.

The reason for selling was that I couldn't see how, as it was and is presently structured, AML could turn enough of a profit to cover 1) the investment it needs to make in its range, and 2) to start addressing its debt pile.

The price of the cars has risen, and the gross margin % had risen (up until the last quarter or two), but the gross margin £s per car was largely eaten up by the operating costs (opex). It was also noticeable that in a strong sales quarter the opex per car would fall sharply, and in a poor sales quarter the opex per car would rise sharply - indicating that there's a lot of fixed operating cost in the business.

Therefore to become sufficiently profitable to cover investment and maybe start to address the debt pile, they'd need to sell what I considered would be an unrealistically high number of cars to cover their opex overhead. And, if they were to increase sales that sharply, you'd wonder whether this would actually damage the exclusivity of the brand, and hence the price and margin. A potentially vicious circle.

So all I could see was an ongoing need for cash (raises) to cover investment even with a gradual increase in the number of cars sold, and little prospect of reducing the debt pile.

Hence my decision to sell, and despite taking a loss it was the right decision given what has subsequently happened to the share price.

I see little prospect of shareholders recouping losses. There may well be some money to be made in trading the share to and from its periodic "highs", but I don't think AML is a long term investment prospect - and so my advice to you would be to sell.

Thoughtful posts from both Roberson and Jdubya.

I hope / expect that the final results - due in maybe 4 weeks ? - will provide some further enlightenment.

Just noticed an RNS from Versarien today that it has signed a "non-binding heads of terms" with a "UK quoted public company" for the disposal of its remaining material assets and subsidiaries. Doubt it is, but this just made me think wonder whether the UK quoted public company was Haydale.

Looks to me like he's essentially transferred the shares into something more tax efficient.

Indeed, who knows Pumpky - but given the need for £30 million and a current market cap of £3 million, there will be a significant dilution for current shareholders who don't participate in the issue / fundraise.

Another question is what % of shares might be availabile given I would imagine that institutions will be heavily involved in providing funds for shares.

I think Hamiltonbro or Flightman mentioned in a previous post that the potential dilution might be 90% if new shares are issued at something around the current market price. Sounds right to me. I suspect some potential share buyers are holding off until there's more clarity about the RTO details.

2nd December in 2024, so expect something similar date-wise this year. Maybe 6 weeks to go ?

Are people getting out because they don't want to be around for, or participate in, the likely upcoming share issue ?

I'm unsure as to how it will all work, but I assume (at present) that there will be a lot more shares in issue come the reverse takeover ? So if you as a current shareholder want to avoid dilution you'd need to subscribe to more shares - indeed, be able to do so, since I guess a lot of shares would be bought by institutions and the like so you may not get the chance ?

Hi Hants, just interested in your rationale for the comment that the reverse takeover would represent a doubling on the mkt cap from now ? Wondering what that was based on ?

Agreed Jay, think I mentioned something along these lines a while ago. 17 billion shares is ridiculous, I suspect a consolidation of some sort would be sensible.

Of course the business needs to have its future ensured to make the costs / fees of a consolidation justifiable / worthwhile ?

AOBFC, I'm very much in wait and see mode. Bought a few thousand a while back as a long term hold. Not expecting much comment from the company until early in the new year, after the 31/12 financial year end date.

Maybe a few investors are quietly building a position of their own, one or two institutions reducing their own holdings a little ?

Lovable, you're probably right.

Although historically Mirriad's revenue has been skewed toward the 2nd half of the year. While the clock will be ticking on boosting sales (as usual), with that sharply reduced cost base and a more realistic approach to their markets, they've maybe got more of a chance of surviving than at any time over the past 2 or 3 years ?

Not that anyone's going to get rich with Mirriad - other than the previous CEO.....

Nothing I can see, and nor could I see anything in the prior couple of weeks when the SP dropped sharply.

Just wonder whether the relatively small % of shares traded magnify any movement up or down ?

Interims coming up of course, some good numbers already flagged up.

Kiwitwo, there should be no drop tomorrow relating to payment of the dividend.

That drop has already happened, at the ex-dividend / record date on the 7th / 8th August.

Thanks Sheltie - I originally thought the interims were due on the31st July, but checking the Melrose website it's got the 1st August as the date for the announcement.

It seems like it is stuck in a bit of a holding pattern - probably awaiting the H1 results in just over 3 weeks time on August 1st ?

Doubt there'll be too much movement in the share price before then ?

MrH_m, I don't think the company has any products or tech that anyone else wants - if they did, then Mirriad would have been bought out or merged either earlier this year or indeed in early 2023 when it effectively put itself up for sale as part of a strategic review.

The business has, through issues with rights and technology, been unable to develop what would indeed have been a ground breaking programmatic solution to insert seamlessly promotional material seamlessly into content. It was the hope that this could be realised that drove its market capitalisation well north of £50 million many moons ago.

In the absence of that type of software, and to survive as an independent entity, the business needs to somehow get to breakeven and beyond on its lower tech more manual insertion solution. Its 5 cash raises since the IPO in 2017 have raised ever decreasing amounts of finance, so it's hard to see anyone coming to the rescue again.

Let's be clear about the numbers.

As per the results announcement, cash at end May was £2.1 million. Add in net proceeds from the May raise of £1.4 million, £200k from the JV partner, and take off the £900k of costs associated with the restructuring, and you had an effective cash position end May of £2.8 million.

At end June with a month's costs and a bit of turnover I suspect the cash balance will have been £2.6 million.

Turnover last year was £1 million, cost base going forward is around £3 million (monthly costs of £250k). So with no increase on last year's turnover the business should lose something of the order of £2 million over the next 12 months, taking it to the brink.

Mention of new contracts, and £400k, is great, and needed. But the business needs to triple last year's turnover to break even.

I suspect this is why the share price isn't going anywhere at present.

It is possible there'll be some news, although any material change (eg contract win) that would increase turnover by 10% or more needs to be the subject of a specific RNS as per AIM rules. Given Mirriad's turnover was so low last year at around only £1 million, then obviously any win of £100k or more would need to be RNSed.

The AGM is on the 21st by the way (2 weeks today).

No surprises in the results I think, maybe a more realistic tone ? Essentially it's very hard to see Mirriad surviving for long as an independent AIM listed company.

Fair point from LOTM about the protracted discussions with another party who then lost interest. You have to wonder why.

Very little mention of a programmatic solution - and the essence of Mirriad was to create a programmatic solution that would enable a sharp growth in activity / revenue without a commensurate increase in cost. Rights and technical issues seem to have killed off that idea.

A refocus on EMEA is their third refocus I think - initially China (Tencent), then the US (now a joint venture with decreasing % of revenues for Mirriad over time), and now EMEA. If they do achieve £1 million revenue this year (and they've not achieved a forecast as yet to my knowledge) then their cash balance will fall from around £2.8 million at end May to at best £1.9 million at end December '25, and that's assuming that their cost of sales is included in the £250k per month operating cost base. They would need to triple their revenues to cover their costs.

Long term I see no investible future here without something (and I've no idea what) of a material change. Good luck to those hoping to trade their way to a profit short term.

I guess it depends a lot on where you think American Axle's share price will go from its current trading level of around $4.26. Back to $5.80 in which case the deal is worth 80 to 85p per share ? Or not ? And for how long would you want to hold the shares ?

I certainly don't think the offer terms were very generous for Dowlais shareholders, but I suspect there is potentially some upside from where we are just now. As for dividends, it will be interesting to what happens, given Dowlais have paid a pretty generous dividend to its shareholders over the past 12 - 18 months.