Member Info for phenomenonnick

Jesus, what a way to invest.

Guess you missed the final paragraph about how 17% of their assets are going to need writing off. Think I bought into this at 0.03p and sold out at 0.02p some years ago now. Feels like it has potential but consistently fails to achieve it.

Looks like it’s coming back to life though!

I'm not sure why you're 50-50! You're sounding more like 100-0!

Play your scenario through - the resolutions are voted down, they don't do the acquisition, they need a bigger amount of cash sooner. This deal virtualy eliminates losses, after the current financial year.

Anython you appear to assume the bond issue was available on some kind of a la carte basis. Without the acquisition, which appears to cut losses by £900k a year, the whole prospect is significantly riskier. The bond holder has the downside of equity but the upside of an (admittedly high interest) loan. Why would they do it on anything like these terms without the acquisition.

I was hugely pessimistic about this this previously, they clearly didn’t have the funding. Now they do, and de-risking the whole thing is entirely sensible. Yes it shifts the risk profile but it was going bust. Now it isn’t, and indeed from these levels I think it can do well. I’ve topped up today.

Well, me obviously! I’ve been bearish on this at 0.3p, up to 0.35p and down to 0.16p. Investrip makes good points about the acquisition but look at the cost savings. If they can buy firms making £300k on £3m revenue for 5x earnings and strip out £600k of costs, they’re really buying earnings at 1.7x earnings. That’s going to be a great business within a couple of years. The only risk was they ran out of money. This deal (a) raises enough cash and (b) shows vendors will take Toople paper on a long term lock in. This will be 0.3p again inside 2 years.

Investrip it's surely better than not doing an acquisition. I'm not sure how you thought this was a good investment at higher levels. It's much better with the acquisition than without.

Raze this first came to my attention in the 0.3p placing, thought it was a basket case, didn't take part at 0.35p. Have committed to buying in at 0.1p which is my first investment. Guessing I'll have around 0.3%.

Investrip I feel your pain from similar situations. If I'd held 2.5% and wasn't given chance to take part I'd be fuming. You make some good points about the acquisition but I don't see the sense in trying to reject the resolutions. This might not be a brilliant strategic move but sometimes you need to be tactical. If there's right about £50k of cost savings this is going to add £900k to profit in a full year before we consider any growth. The vendor is mainly taking TOOP shares and is locked in for three years, if they thought their business was evaporating they wouldn't have sold on those terms. Without this deal I don't think they can raise money, because they can't grow fast enough to mop up the losses.

It's the acquisition which has transformed my view. It means the business has a funded path to profitability, and I can see the share price doubling or trebling over the next couple of years. Without it I just don't see how they survive.

Investrip that’s old news though. I said on 24 Jan the net loss would be £1.6m, it was easy to call. But the acquisition more than doubles the size of the business, adds £300k+ of profit, and gives scope for £600k of cost cutting in a full year. Clearly it’ll lose a bit of money in the year to sept 2020, but at the rate they’re growing it’s easy to see profitability next year.

Are you new to this? Don’t fall in love with a share. It’s all about the price you buy and the price you sell. Most companies have good and bad points. This was a sell at 0.16p when it was fast growing but subscale, losses 50%+ of turnover, and lacking the funds to reach profitability. Now it’s a £6m turnover business with losses less than 10% of turnover and still growing, with stacks of cash to provide a buffer or buy more revenue. And, more importantly, it’s 0.10p not 0.16p!

I posted at 8am on Weds saying they’ll need to raise cash in the next financial year, and maybe they can find loan note investors. Hilariously later that morning I got made inside and learned they were planning exactly that. What I didn’t foresee was the acquisition. Adds a decent amount of profit, the current financial year will clearly see losses hugely reduced, with cost savings they’re almost certainly going to be profitable next year given the likely further growth, even without the cash pile now available for further acquisitions.

Im suddenly 180deg different on this share. From this level it’s now a strong buy. So I did :)

It may well “rerate”, by which I guess you mean it’ll be worth 2x or 3x revenue instead of 1x revenue. But for the share price to go up it needs to not have to print loads of new shares (again) to get to that future point - or “medium term” as the RNS puts it.
Trouble is, as per my post last week, I think it will lose more this year than last year, and will need to raise cash in the next financial year. Maybe they can find some loan note investors to avoid diluting everybody. It’s possible this won’t be a disaster. I just don’t think it’s the dead cert that you seem to think it is.

jabberba the interims don't say the cost of customer acquisition is falling. It says they're spending more on sales and marketing in order to improve conversions, and that (if successful) this will in future reduce the cost per acquisition. Fact remains that the data we have so far shows the marketing costs rising faster than revenue.
Still can't see where your £61 figure came from. What did you divide by what, to reach the £61?

0.12p

tp - directors' costs were less than 3% of operating expenses at the last interims. Care to point me to any similarly sized investment company with fees that low?

If “this” is raise money at a premium to NAV, they can do it as many times as they like as far as I’m concerned. An investment company needs a board with a relentless focus on growing NAV. And the bigger the fund the more serious we’ll be taken as this new sector grows. Plus the fixed minimum running costs of being a plc are a smaller brake on returns the bigger the asset base too.

Falling continuously? The last interims had revenue up 57% and marketing costs up 80%.

How do you derive the £61 number?

Surely not. If they've done brilliantly they will have doubled revenue in the second half. Second half results with £2m revenue looks like £400k gross profit and a £600k net loss, eating up half their 31 March 2019 cash balance by 30 Sept 2019. (Full year £3m revenue, £600k gross profit, £1.6m net loss). If the first half of the current year adds another £1m of net new business, the six months to 31 March 2020 will be £3m revenue, £600k Gross Profit, £400k net loss. Placing in the second half of 2020 to keep the lights on. Admittedly if they keep up that pace of growth it'll be worth something soon enough, and a bigger rival might buy them. Be interesting to see if the results to 30 Sept 2019 show anything like that level of growth though.

Would surely have an IPO before then, they'll need punchy funding to start building factories. I rather expect it'll be a bit like biotech firms - once they've developed a drug big pharma often buys them. Similarly surely the big food producers are going to start snapping up people like BlueNalu when they've developed the know how. Wouldn't someone like Conagra buy it and build the factories for mass rollout?

Jarv55 - no, haven’t spoken to the management of RLD. Equally while I wouldn’t profess to be an expert on the regulatory position I don’t think I had “advice” from Peterhouse. They made me an insider, told me about the opportunity, I decided to invest, the fundraising completed, it got announced, I got advised I was no longer an insider. I don’t have any special insight. There are clearly no guarantees and this is a high risk situation. Equally If these things generally didn’t make money for investors they wouldn’t happen, so I’m happy to give this a go. I’ve made enough from Peterhouse that I can afford one to go wrong. However in my relatively brief time with them I’ve made money on everything they’ve brought me or could sell now at a profit.

Yup, I took £10k in the placing, same as here. Sold half last week at a decent profit - I figured RTOs normally have a fundraising and I might get the option to buy in that way, so banking a quick 20% profit on some made sense.