Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
DunnieBoy:- You went toe to toe with me and you were wrong. In the same way that this person is making all sorts of unfounded assertions. You pressed to know what my professional standing was, I didn't volunteer it. There are people on the BB who seem to have been lost for answers and I provided some insight. As I put it to you, you can either accept, reject or modify what I have posted. I am a simple guy and if you think I look down my nose at people, then that says more about the chip on you shoulder than it says about me.
You seem to make statements of absolute certainty, when in fact the position is far from that. The Q3 results stated a financing cost of £78m. Fact read it. Grossed up for the full year this would equate to £104m. The new bond issue as far as I am aware was for UD$1.05bn at 10.5%. The current, but variable, exchange rate is circa $1.3/£1. This means that the issue value is circa £807m and the interest cost for the year is £84m. The £253m interest rate isn't disclosed as far as I can see. However, at the same rate it would be about £25m. As far as I understand AML used the bond proceeds to pay down addition al debt. No one knows what the exchange rate will be over the coming year or so. Under IFRS regulation, the USD debt will have to be revalued each year at the balance sheet date. Additionally, interest payments made will be converted at the point the expense is incurred or offset against USD revenues. The P&L on exchange over the life of the notes makes a mockery of the assertions you have made. Your argument that the 'ONLY' way to service the debt is a by way of further dilutions is unfounded as neither you or anyone else knows what the economic backdrop will look like going forwards and no one knows what the sales will be. As previously stated, they appear to have sufficient cash to fund the debt interest payments for the coming year if there is insufficient cash generation this year. It may be the case that Stroll will consolidate the shares in order to further dilute, but your statement of fact that the only way to service the interest is to dilute is complete nonsense. It appears that you just want to strike fear into people so they sell their shares. I doubt that you are a shareholder.
You don't know 'jack'. If you are worried about dilution, then sell you shares and take a hike. You haven't seen the notes. You don't know the T's&C's. If you look at the accounts the charge for finance was circa £86m in 2019. How can they settle these notes and replace them with a lower coupon and end up paying 50% more? In my opinion someone else told you what to write as you don't know what you are talking about.
3300 - re RR. I used to manage our company jet. As aircraft fly they have to pay into an engine maintenance fund each month based on hours flown. RR are an engine supplier and as the aviation sector recovers, RR revenues will increase. Obviously RR also supply the military and provide the engines for the Eurofighter. They also are involved in marine engines and other areas of construction. Hope that helps.
c2645sg - Thank you for the link to the complete idiot's guide to EBITDA. Not on the 11 problem list is indication of cash generation, which is the required knowledge to answer your original question about debt servicing. Clearly, providing such a naff link along with the fact that you refuse to accept the explanation given, suggests that you have no idea what EBITDA is and how to use it....or you are a shorter and simply want people to sell based on the fear you are trying to generate. It may well be that there will be a future dilution, but at this point it is not necessary. If you want to challenge a point, at least bring some knowledge of substance to the table.
So this is just an opinion...just as easily wrong as right. Prior to the RR pump and dump, the sp was at £1.75. I draw a line in the sand at that price and not the £2.50 + prior to the dump to about 68p. If you take the 3 for 10 and 32p and recalculate it come out at about £1.35, so in my view at 90p it is under. It surged to £1.37 the other day so based on todays announcement I would expect it to rise. Additionally, RR derive revenue from engine hours, so in that sense the sp should rise as operators get gong once the vaccine is being distributed. I apply similar logic to TUI but I would like to see the shares row back abit more before I buy.
c2645sg. You seem not to have understood my reply. In simple terms looking at whether a company made net profit or loss does not tell you much. It is the EBITDA that you need to look at as the alternative measure. The net profit or loss will include depreciation and or amortisation of historical costs that have already been paid for with past cash flows. The EBITDA measure ignores this and looks at cash generated. EBITDA is easier to understand than the cash flow statement for the average person.
Firstly it is not £90m. The second is that the cost of the bond is exposed to FX and as such Brexit will have an impact on that. IMO it is unlikely that GBP/USD will stay where it is. In terms of how it will be funded, again I think in terms of EBITDA AML have over £1bn of intangible asset and the difficulty with that is the level of impairment recognised. Accounting contrivances, otherwise know as policies or the basis of measurement, which are subject to change and as a result can be misleading. The EBITDA numbers reflect cash generated and if you take 2018 and 2019, they absorbed a significant cost in finance either equal to or greater than the cost of the current bond. In 2020 I anticipate the costs to be higher as there are likely penalties in early settlement of the old bonds, plus there is a cost for the new issue. In the short term the shortfall will be met by the funds created by the bond issue, so shrinkage on the bank balance. In the medium term this is about selling more units. I note that the product mix demand has skewed towards the Vantage, and as a result this will require more units to be sold as the contribution to EBITDA from the cheaper car is less. A pure guess on my part is that they will need to shift circa 6,500 units to stand still. The broad cost of running the business appears to be circa £300m, with financing costs, lets say £400m. This will require about £60k contribution per car, contribution being direct materials and direct labour (fully loaded) deducted from the price the unit exits the business for. This excludes the amortisation of development costs and tooling.
It looks very doable to me viewing it from the out side. The issue that Stroll will have to grapple with is keeping the O/H down as unit numbers ramp up.
DunnieBoy:- AML have not been listed long enough with earnings as such to have developed a reliable track record in terms of p/e. My preferred metric is EBITDA as this strips out any issues related to IFRS or US GAAP. The EBITDA in 2018 was £247m and £119m in 2019. As at period ending Q3 2020 the EBITDA was negative, but I have assumed nil for the full year as Q4 will be a net contribution in all probability. My estimate of the rolling three year average for EBITDA is therefore circa £200m. using a range of x17 to x25 and based on the number of shares in issue today, this provides a notional share price range of £1.83 - £2.70. As such, an sp of 62.5p would suggest that the enterprise is undervalued. Obviously people will have their own view of where the sp should be, so I will leave that to each.
My understanding of the RNS is that MB are not buying the shares at 62.5p. The GM will authorise the additional shares and they will be issued to MB, save for a small number, as payment for Tech. There will be a second such issue. Unless the agreement between AML and MB is broken then it will be 2023 at least before the shares can be sold. Will it have an impact on the sp? Who knows. Is a 62.5p share price important to the deal? My reading is that AML are obligated to pay £28.6m if the share price is below the 62.5p, but the fine detail is not published. Whether that sp has to be extant on the day each tranche is issued, or calculated as a average over the time between 1st and 2nd tranche are all unknown/unclear. The £28.6m is 10% of the whole deal, so if the sp was below target in the short term and above in the long term, then it is unlikely the £28.6m would be called on. Not enough detail in the RNS to be sure, but perhaps it will be in the agenda for the GM.
It will be interesting to see how RP is treated. by owning RP this gives Stroll a way to syphon funds from AML for sponsorship and development work on the production cars. Obviously he will declare his connection, and it would be very difficult if not impossible to challenge the bills levied by RP on AML. This is a way he can recoup money he has put into AML without the requirements for a dividend to be met. MB is a clear play for both RP and AML, but only Stroll really knows what he is about.
At the moment I feel the answer is yes and for a set reason. That said, plans can change. But I feel uneasy about the amplification of bad news and the suppression of good news.....just seems counter intuitive if the goal is to build the company.
Dunnieboy, I trust you now have an understanding of my standing. I am fully conversant with the difference between illiquid and insolvent. I have been called upon many times to make a judgement call regarding insolvency of a company and advising those concerned. Fraud is something different. Give the point up. Also, when auditors produce a report, there is a specific meaning attached to certain statements which may not be properly understood by a lay person. The use of the word material with regard to the going concern along with other comments, were a clear alarm bell and not a low level comment. A low level comment might have stated, there is some degree of concern, but they used the term 'material'. Understanding the law around the going concern is important when a company is on the edge. The difference in emphasis is that whilst the Chairman should ensure the interests of the shareholders are kept in focus, when a company trades whilst insolvent, the focus switches to the interest of the creditors see CA. s172 (3). As far as the directors were concerned if they believed that the bond issue was going to be successful, which they sort of claim was fully underwritten as per Brendan's response to 3300, then the use of the word 'material' was OTT. If the liquidity position they have stated was not just on the day of the statement and liquidity was strong going forwards, then the question I ask my self is what undisclosed event was sufficient to warrant the severity of the qualification. the rest of your comment I will just let slide by.
Dunnieboy, it's fair enough that you haven't read all of my posts, why on earth should you :-) I have stated that I am an Ex CEO, CFO and MD and that I was an FCCA. I apologise if the FCCA caught you or anyone out. That stand for Fellow of the Association of Chartered Certified Accountants. I also held a practicing certificate to operate as a business consultant. I haven't disclosed my academic qualifications. I have had experience in preparing financial statements audited by the likes of PWC under IFRs and US GAAP. I have worked extensively in Europe and the US. I have worked in a number of sectors, including automotive. In addition to my experience as a CFO, I have owned a number of companies in different sectors and I have been involved in M&A DD and fund raising. I have no interest in impressing people, I don't play games and of course I don't take **** from anybody. :-)
David....as far as the company is concerned, Stroll is most definitely doing his best to make it successful. I will do a bit of number crunching, subject to severe limitations, to see what I can come up with. From the last annual report I might be able to ball park the breakeven point and translate that in to cars (units). I agree with you concern with the sp and I think that is linked to Stroll. The December vote requirement will be what ever it is fair or foul. My interpretation of the sp is it reflects the break up value. If the companies liquidity is good and the cars are priced correctly, the shortfalls in the design are addressed and with all the other positives in the pipeline, the sp will respond positively. Consolidation and or dilution aside, the Covid factor will diminish in 2021 and people who make money buy Aston Martins. As long as the company isn't taken private, all will be well.
I would like to apologise unreservedly to anyone who thought I was suggesting that such circulation of data was not welcome. DunnieBoy has been on my back all day challenging virtually everything I posted. His understanding of company law with regard to wrongful trading was completely wrong, which he conceded after constantly challenging me on the point. The comparison with regard to contribution was highlight the knowledge that is required to understand certain issues, as opposed to one of diligence and effort, which on his part cannot be faulted. I thought I was broadening the spectrum of the spectrum of contributions on the BB, but it seems that is not what some people want. I don't have to work so I trade shares as I enjoy it and as the saying goes 'having skin in the game' focusses the mind and makes it interesting. As I have stated, I have a particular affinity for Aston Martin and find it sad that they have found it difficult to be successful.
BTW - one of the reasons for my blunt and direct approach is that there may be a small chance that someone from AML will be monitoring this board. If they are, then they will know that there is concern about what they are doing and if it continues it may result in a complaint being lodged...as a result that may be prepared to back off to some degree.
Always someone with a smart mouth. Dunnieboy called my out, I replied to him not you. let him fight his own battles. Your comments don't quite wash in the sense that my contribution to the BB was initially totally hostile. I have found that there are some very straight people on here and they were clearly looking for some clue as to what might be happening with the sp and other issues. I provided an honest input. Right or wrong...it was just honest. Some people can't and don't like or want to accept such straight talking, because they have an agenda. By all means attack this post, but don't try and take ownership of comments directed properly at someone else.
Dunnieboy, you are like a number of people on the BB, you judge people by your own yardstick. From what I have read of your posts, and no disrespect intended, you are very unlikely to understand my mindset. I have no major issue with the sp per se, I have an issue with being caught in an unfair game. I like to use my knowledge and experience to pick shares, but that only has a value on a level playing field. If I take a loss, its only my ego that gets dented, my bank balance will be fine as I only use money I can afford to lose.
The concerns I have raised relate to my experience of companies and dealing with UHNWI. I have done extensive work at a 'C' level and this includes the turnaround of basket case companies and much more besides. I am not concerned with debt. After all, as long as its managed properly it is nothing more than quasi capital that has a fixed as opposed to an indefinite and variable cost, such as that attached to a shareholder with the call a member has on dividends and share of the equity. Getting the WACC balance correct is part of the CFO's job. For a number of reasons I have a particular affinity with Aston Martin. The issues here in my opinion are not straight forward. If as you say, you are a 'basic man' then don't question my professional judgement with nonsense and accusation, both of which are unfounded. It does not take a lot of business acumen to cut and paste the share volumes and generally available data. I have monitored the posts for months on the BB with people constantly expecting the sp to rise and on every occasion, bar when the sp shot up to circa 80p they have been confounded. And when it did get to 80p it was quickly shot down. I am not a team player, but I thought it would be interesting to share an insight. as one of my academic supervisors constantly said to me, 'you can accept reject or modify input and feedback' , I say the same to you. But if you are going to rubbish what I have to say...then make your comments evidence based. And just so we are clear... I look at my share dealing in a company over a period of time, not just the holding I have on a given day. If I dumped my AML shares in the morning I will be ahead as I made a profit on the spike.
3300 - Over the next week or so I will go over the Q3 report and last years final accounts. I will see if I can build a basic model of the business and then overlay that with some car numbers. The trouble with doing all of the work is that at the end of the day it will be just a guess. It is much easier to be wrong than right when making such guesses. There are also some other, what I would call, minor issues. In terms of costs they will be settling the existing binds early and there may be a one off hit to the P&L for this. Depending on the terms of the existing notes, they may have to pay all of the interest that will fall due through to maturity. That will mean paying a lot of interest this year. Also, depending on how the old versus new notes are secured, they may not settle all of them now. I just got that impression from the wording. These could be quite big numbers so trying to guesstimate financing costs would be very difficult. Putting to one side the issue of what might be put before the members in December as a curve ball, I do think that Stroll has assembled a first class team. After all it is because of my innate knowledge of the company, the cars, F1 and Eon productions, that I decided to invest in AML. What has soured the position as far as I am concerned is the management/manipulation of the share price and the obfuscation regarding a lot of key information that would enhance the sp. For me it sp does not have to run away for me to be comfortable, it is the way it is being blocked. I look for patterns and even in random or chaotic systems there often patterns of behaviour. We all see support levels and resistance levels that can move over a period, but I have rarely seen a share so controlled. It does make me wonder why. There would be a lot of upside for Stroll if there was a strong share price based on the progress he is making. It would have resulted in perhaps a lower coupon on the bond. Money is cheaper now then when the original bond were issued. Also, issuing the report with the particular wording in relation to the going concern just before the bond issue. I don't think it was a coincidence that the UK debt portion was cancelled once the Q3 report was issued. Proceed with caution is where I am at the moment.