Member Info for richred_uk

Total holding is unchanged (well it has 0.01% difference but I suspect that's rounding). What has happened is that they have had shares that they lent out returned to them (% of voting rights through financial instruments down from 1.38 to 0.44).

Growing companies that have good paper profits can be hamstrung bay cashflow. If I have a project that will bring me in £100k revenue and £30k profit, but I need to pay £50k for raw materials before I get paid (scale up/ down as appropriate for various companies), then financing is needed.

There are a few options:

1 Raise capital, sell shares - time consuming, not often appropriate for SME's
2 Private Loan - Directors, family etc - not always available
3 Unsecured Bank loan - not always available (even if not distressed, can be pricey - currently 6, 7, 8% ballpark)
4 Secured Bank finance/ loan - mortgage, asset finance, invoice discounting/ factoring, inventory financing - some can be too long term, might already have loans secured on the asset, can be admin nightmares probably about 1% cheaper than unsecured loans

Where SYME is interesting is that it looks like it could be a long term or short term source of working capital - either bring in funding for the growth project while the stock is on your factory floor, then when you sell it, repay (buy it back) from SYME and switch to your traditional customer financing until the customer pays you; or have 'extra' stock on hand maybe things that before would have been special orders - eliminate lead times for manufacture which makes you more attractive to customers and use the SYME funding to fund that extra stock holding, and what is sold to SYME is constantly changing, tracked by the blockchain, similar to invoice discounting/ factoring - you might have a constant £1M financed, but the underlying assets backing the finance are constantly changing. Pay SYME 3%, take an x% haircut on your buy/ sell price to the stock holding company/ funder - might be cheaper than the options above, although I have some doubts if I'm honest but haven't seen the numbers in black and white.

The block chain might make this a relatively smooth way of tracking complex transactions, BUT the fact that the first IM took so long and hasn't been replicated despite SYME having $8.5M of funding ready to go makes me question whether it is set up to run smoothly at this point, certainly the onboarding seemed to take a lot longer than expected for the first IM.

Waffled a lot, but I can see why this funding might be suitable for a non-distressed company and it's interesting, however I am not convinced that the practicalities work yet and I am not convinced that SYME has the funding to get the practicalities ready in time before the cash runs out.

Good point, I wasn't looking at the other warrants, just the Open Offer ones from the last RNS, I haven't looked at the other warrants for ages.

Does the prospectus assume that the warrants will all be exercised? That wouldn't have been unreasonable when you could flip shares you bought at 0.00065 for 0.0008. It's not a stunning amount of cash, but about half a month's cash burn on the last reported #'s.

Even the buy price is at the warrant price, the actual trading price is mostly lower. There are about 270M outstanding warrants which would have brought about £175k into the company, I doubt there will be many of those warrants exercised while the price is at this level.

If the concerns about the cash burn are valid and not covered by new revenue, this is a little extra added pressure, especially as the capital re-payments on the loan are due to start fairly soon.

Earlier this year of course means the lows last year - I am not in 2023 yet, still living in the past.

"1.5%?!! you call that nice?"

Have a look at the annual dividend flows. This is one payment , last year they made 5. This is the 4th so far this year and I would expect at least 1 more relating to the 22-23 FY.

Last year's total divi was £2.35, this payment takes this year to £2.95 with *finger in the air* maybe another £0.50 to come. That puts the divi in the region of 3-4% on current sp - not spectacular, but growing y-o-y, and if you bought in at the lows earlier this year you are more in the region of 5-6%.

It's the uncrossing trade

Ahhh yes, fantasy formulae are always interesting (I worked somewhere where the Bill of Materials for a drawstring bag had 1.6 miles of string in it because everyone ignored the units of measurement we bought the components in). :)

"Am I missing something?"

Briefly, yes, the 3? return is an annual figure, not on an in and out basis.

RNS 12th Sept 2022:

"The total expected average annual fees to be invoiced by the Company's fully owned subsidiaries, as detailed above, over the duration of this specific transaction, equates to approximately 3% of the gross value of the inventory to be monetised by the StockCo. "

Annual fees being the key phrase. I'm pretty sure that there are other places that SYME have used a 2-3% annual fee for amounts under management.

"If SYME gets the 50 million from V Chain, how much is this worth in revenue for them?"

based on 3% upper range, about $1.5m a year. Plus if it all worked, the potential for the fabled snowball effect and massively increased exposure.

END=RNS - autocorrect!

"It does read that Vechain have pledged a commitment of $50m "

I don't see how, without torturing the English language you can read that. IF it had read "reflecting the commitment budgeted by VeChain FULL STOP" then I would read VeChain as finding $50m. But this would represent $41.5m of new funding. It would not be buried halfway down an END as an adjunct to other announcements, it would be front and centre. As it is, with a very badly placed Oxford comma, SYME is putting a $50m portfolio together of which $8.5m is funded and they are looking to the VeChain ecosystem and other cryptos for the remainder. If they achieve it, it will be a great achievement for them, but I cannot see how you think that RBS is announcing they have a $50m portfolio of clients and $50m of funding to satisfy it.

Gosh that's misleadingly edited to make it read as a single piece of writing!

I can't read it as saying that the full $50M is available and ready to go, because of the word "and" between the "commitment budgeted by VeChain" and "the opportunity to raise additional capital ..." which to me reads that both are covered by the $50M. not that the additional capital would be additional to the $50M. Plus if VECHain had upped their commitment to $50M I am sure SYME would be shouting very loudly about it (and should do).

But, I have been wrong before and will be again ;)

"But funder gaining confidence and adding upto £50m is bullish imo"

This has not happened and is not in the RNS. What the RNS says is:

"reflecting the commitment budgeted by VeChain (i.e the initial $10M less the $1.5M used = $8.5M)and, the opportunity to raise additional capital from the VeChain community and other crypto/ digital assets investors" - the bit in brackets added by me.

"Next phase has increased from 8.5m to 50m - further commitments from Vechain"

Just to be clear, the RNS does not say that VeChain have commited further funds. SYME are compiling a list of customers with $50M funding requirement, they have $8.5M of this available from VeChain still undeployed. That leaves $41.5M to find.

That $41.5M is hoped to come from:

" the opportunity to raise additional capital from the VeChain community and other crypto/ digital assets investors"
plus
"SYME has also approached the market-leading Centrifuge[3] and MakerDAO[4] communities to explore potential funding of IM transactions through the Centrifuge protocol and to access liquidity through DeFi"

Nothing concrete.

Just for a sense check, from the last 6-month interims, the cash burn was £2.1M or £350k a month. Annualised, that is £4.2M a year. IF the $50m is raised and deployed, and IF it is at 3% margin for SYME (the upper end of their expectations), that would raise $1.5M annually which is roughly £1.25M or 3 1/2 months' cash burn.

In April/ May, SYME's cash burn will increase by about £15k per month as they start having to make capital repayments on top of the c.£4k a month interest - neither of these would be in the 2022 interim #'s.

SYME has had $8.5M available for a few months that it has not deployed in IM. Is this a lack of customers or is the process just too slow right now? Based on the first IM I would be surprised if anything was deployed before March/ April if they are now waiting until it gets to $50M of funds. This all feels very slow and risks them running out of cash, especially if the bank loan is ring-fenced for technology spending and can't be used for the day-to-day. At 30 June, SYME had £900k in cash - I haven; worked through the net effect of the Open Offer, Venus shares and warrant cash versus the Mercator repayment to see how much net cash was added to SYME's balance sheet, but I think it would be a worthwhile exercise.

"It surely can't be long now before the much-anticipated 4 x 2p dividend level is reached, maybe next f.y.?"

I think we'll get the 1.5p final this FY (in about August '23) - average NAV/ share over Q1-3 is £1.0897 so only needs Q4 to be about £1.01 to keep the average over £1.07. to hit the £1.14 NAV needed for 2p would take a Q4 NAV of £1.291. 2p by August 24 feels do-able with a good tail wind though.

I think my opinion is in my holdings since 2016.

My failing was that when I topped up in September, I set a stop loss once I was in profit and ended up selling out the top up for marginal gains which would have been much more significant had I held.

Monkeydluffy : Prove me wrong.

GAW Board: Hold my Beer

:)