Member Info for TeelaBrown

I've had a look through the full document of the Woolard Review.

The general thrust relates to areas that should be improved in regards to Buy Now Pay Later and Employer Salary Advance Schemes.

The author recognises benefits of BNPL and the role these arrangements can play in accessing credit.

Areas requiring some amendment:

Payment history to be given to Credit Reference Agencies to allow an individual to build their credit record and access cheaper credit.

Greater care should be exercised when agreeing a BNPL, with regard to affordability rather than simply a credit check.

Preventing multiple BNPL's with different providers that collectively would be unaffordable for the individual.

Making reminders as to when payments are due easier to understand.

Not having BNPL's as a first payment option.

I don't see that any of the above could be considered unreasonable and all should be relatively simple to implement.

There is also some really interesting figures regarding BNPL.

25% of users aged 18-24
50% of users aged 25-36
75% of users female
Value of BNPL transactions Jan-Dec 2020 £2.7bn
Value of consumer credit borrowing Jan-Dec 2020 £246bn
BNPL is 1% of credit transactions
Growth of BNPL transactions Jan-Dec 2020 "... more than tripling, nearly quadrupling"
Average transaction between £65-£75
90% of transactions involve fashion and footwear
BNPL providers are looking to partner with higher value retailers including homeware and electricals.

ThinkSmart's holding of Clearpay looks as though it's well positioned in a market that's growing strongly. The likely requirement for regulation (the Woolard Report is simply making recommendations) should be seen as an opportunity and not a handicap.

All in all, in my view, today's price movement looks to have been an overreaction. I've taken the opportunity to make a small top up.

A bit convoluted this but bear with me:

Yesterday (13/1/21) saw the IPO of Affirm Holdings in NASDAQ. The IPO valued Affirm at $1.2 billion.
The first day of trading saw the shares surge 98% from their issue price of $49 to $97.24 giving a market capitalisation of $2.3 billion.

So far, so good.

Affirm is in the same line of business as Afterpay in that they both provide buy now pay later services. An initial consequence of this IPO is that investors appear to have reconsidered Afterpay and increased the share price to A$121.

This in turn may lead to a reappraisal of ThinkSmart's valuation. Replacing the current Afterpay share price into the calculations that Simon Thompson has previously published would now give a share price of 110p.

In my view, this makes ThinkSmart quite a bargain.

It'll be interesting seeing what, if any, progress Affirm makes and how that might drag Afterpay and ThinkSmart in its wake.

Hi Scoobydoo,

I think you may have been a tad off with your reporting of Simon Thompson's target price. Here's an extract from the Investors Chronicle article:

"...but still trades on an unwarranted 33 per cent discount to a conservative net asset value (NAV) of 403p (land is in the books at cost). A chart break-out above the December 2020 high of 278p looks firmly on the cards to set up a likely rally to the January 2020 high of 320p. That former high water mark is also my target price. Buy."

In this evening's Downing Street press conference, Professor Johnathon Van Tam has urged patience with regards to the roll out of the Astra Seneca/Oxford vaccine.

It appears that there is a major blockage that relates to "a global lack of fill/finish capacity" to distribute the vaccine.

If only there was a British company that specialised in producing packaging machinery and already had experience of working with the pharmaceutical companies.

Such a company might just do very well!

Now that's a vote of confidence!

UBS have just issued a TR1 showing that they now hold 8.41% of Watchstone having crossed the notification threshold two days ago.

I imagine that UBS will employ squads of solicitors to look at and create all sorts of contracts in the general running of an international investment behemoth. I would also imagine that part of their due diligence regarding a purchase of Watchstone would be to have some of these legal brains look at the various litigations that Watchstone has undertaken and ask the basic question: do you think that the litigation against PwC, KPMG, Aviva Canada has any merit?

What do you think the legal team has replied?

Tom W. of Shaare Proffits provided an account of Summerway Capital and the new CEO.

"The 1 AIM share you must fill your boots with NOW, don't wait, just buy"

The "bearcast" have an absolutely glowing and hugely complimentary account of Ms. Vinodka Murria. In brief, she has an outstanding track record of turning round and developing companies.

His view was that a purchase of the shares now, at any price (!) would make money.

He's not to everyone's taste but this recommendation will cover my subscription for quite some time.

Cheers Bunion. I have read the RNS of 30/11 giving the independent valuation of Southern Gold's 50%.

My thinking was/is that the last line of the 11/11 RNS was referring to another issue, a teaser flagging something else to come.

On 11/11/20 the company issued an RNS regarding a delay to early December for the Independent Expert's valuation of Southern Gold's 50% share.

The final paragraph of that RNS states:

"Prior to the conclusion of the acquisition process the Company expects to provide further positive updates from South Korea this month.[November]"

Have I missed it or is an update regarding South Korea overdue?

Today's RNS gives details of the sale of unexercised subscription shares:

10,336,782 have been sold for £4.77m. That's 12% of the full share count.

If my maths is correct, that equates to 46.14p each. It doesn't look as though holders who failed to exercise their subscription shares will get anything.

Hopefully, the buyers of the rump will be long term holders, however, I doubt if that will be the case. I suspect they'll look to dump their new shares fairly promptly in order to get a profit around 5%-10%. Why wouldn't they want to make that sort of return in a week?

If my view is correct, I think this will hold the shares back in the short term.

The individual referred to as the "PwC head of restructuring" has now been identified as Ian Green.

At the time of the Greenhill/PwC contact he was head of PwC’s business recovery service practice. He was later appointed to lead the firm’s business in the north of England in August 2019. He has stepped down from this position in summer 2020 but remains a partner of PwC.

There's a really good account of the recent hearing in Private Eye 1534.

The article concludes " The case echoes that of Premier Motorauctions...PwC's restructuring team was brought in...to end up in an administration … Previous owner … alleged a conspiracy… The man whose team he blamed...Ian Green."

The case was discontinued when the complainant was unable to afford to continue.

I think I now understand the reluctance of PwC to identify Mr Green earlier. I would also speculate that clients of PwC who've had unsatisfactory outcomes when Mr Green has been involved will be reviewing their involvement with him.

I've been reading around over the weekend and spotted an article regarding Afterpay.

On 13/11/20 Morgan Stanley have raised their target price to $120 from €115. In the event that the target is attained there should be a knock on effect with ThinkSmart.

Dyresearch posted a few days ago with a link to the Valmin code which is being used to value the 50% BMV is set to buy. I've copied what I think is the most relevant part below:

8.2. Common Valuation Approaches
The selection of the Valuation Approach and underlying Valuation Method used is the responsibility of a Practitioner and must not
be influenced by the Commissioning Entity or other parties.

Within each Valuation Approach, there are Valuation Methods that share a common rationale or basis but differ in how they are
calculated.
Three widely accepted Valuation Approaches are:

(a) Market-based, which is based primarily on the notion of substitution. In this Valuation Approach the Mineral Asset
being valued is compared with the transaction value of similar Mineral Assets under similar time and circumstance
on an open market.
(Valuation Methods include but are not limited to comparable sales transactions and joint venture terms)

(b) Income-based, which is based on the notion of cashflow generation. In this Valuation Approach the anticipated
benefits of the potential income or cash flow of a Mineral Asset are analysed.
(Valuation Methods include but are not limited to discounted cashflow and multiples of earnings.)

(c) Cost-based, which is based on the notion of cost contribution to Value. In this Valuation Approach the costs incurred
on the Mineral Asset are the basis of analysis.
Valuation Methods include but are not limited to sunk costs or current replacement costs.
(Guidance on Valuation Approaches and Valuation Methods may be obtained from International)

The document continues with some details of which of the three methods is to be used in which circumstances. "Cost based" is only used to value early stage exploration. The other two, "market based" and "discounted cash flow" are used as mines reach development.

On the basis of this it is my view that BMV will not be buying on a fairly low cost base but on a more expensive basis. I still think this will be a good purchase but not quite the steal that some people are expecting.

Thanks for the link poole, I'd never have found that myself. I remain astonished at the information that some people can dig out.

Slowly, slowly I'm getting progress in regards to putting a value on the Hayward Taylor, Luton site.

I now know that the site is 2.78 hectares (truthfully, that doesn't help me greatly as I've no idea as to units of area, however, another look at Google provides some help).

1 acre = 0.405 hectares.

1 hectare = 10,000 square metres.

This means the Hayward Taylor site is 6.86 acres (2.78 ÷ 0.405).

In metres it's 27,800 square metres ( 2.78 x 10,000)

Reviewing the "land for sale in Luton" hits I got earlier I see that the site for sheltered housing has gone, either taken off the market or sold. I didn't keep a record of its size.

The MOT garage on Ashburnham Road at 0.505 acres remains for sale at £1.4 million. This gives a value per acre of £2.72m (1.4m ÷ 0.505).
If we apply this price to the Hayward Taylor site we get a value of £19m (2.72 x 6.86).

A further site in Dordens Road LU4 covers 612 square metres and is for sale at £600k. This gives a value of £980 a square metre (600,000 ÷ 612).
If we apply this price to the Hayward Taylor site we get a value of £27.24m (27,800 x 980).

Finally a third site at Midland Road and Burr Street LU2 which covers 2.34 acres can be yours for the princely sum of £10m.
If we apply this price to the Hayward Taylor site we get a value of £29.3m: (6.86 ÷ 2.34)x 10.

So, three values of sites in the same general area: £19 million; £27.4 million; £29.3 million.

I'm sure there'll be a pile of factors that I know nothing of regarding each site. Putting my lack of local knowledge to one side, with around 32 million shares, that would add between 59.3p and 91.5p per share.

That would be on a straight sale. There are other routes to monetise the site such as working in conjunction with a builder/developer in order to share any valuation uplift as buildings are completed.

The next exciting thing will be to have a look at the full range of property and land owned by Avingtrans and decide what might be surplus to requirements and attributing values. Currently all property, plant and equipment is in the interim accounts at £34.45 million. That includes the Luton site!

I wonder, when last were all of the sites valued?

It strikes me that there's considerable upside available from a rerating of the company's property assets.

Hi addicknt,

I'd spotted some mention of this litigation over the weekend. I would have thought that we'd get an RNS giving an outline of the action and an indication of how much WTG are claiming.
Interestingly, Derby Counter pointed out that Grant Thornton has just given in with litigation of £29m from another AIM company, AssetCo in what appears to be a very similar action.
Hopefully we'll get some details shortly.

I've bought some more Eros bonds at 86.69.

The price has fallen from around 93 to the current price which, in my view, provides a good point to increase my holding.

Eros has recently merged with a US company STX to become "Eros STX Global Corporation". STX is involved with film production and distribution in the USA. The combined entity looks to spread its geographic coverage and cross sell products.

To date, the merger has delivered some interesting improvements relating to credit ratings; analyst upgrades and; now sees itself becoming a billion dollar company within two years.

My view is that the combined entity will not want to renege on the 6.5% bonds. The repercussions of such a move would deter future share/bond holders from supporting the company; possibly breach lending covenants; increase lending costs to the company; lead to downgrades from analysts; spoil their growth ambitions.

All in all, I'm comfortable with the risk of default and the risk of non redemption.

With 12 months (and 12 days which I'll ignore for simplicity) to redemption we're looking at the following return:

6.5p interest payment
13.31p capital appreciation (100-86.69)

19.81p return in 12 months.

If my sums are right, this gives a yield to maturity of 22.8%.

Today's results show considerable progress in each of the divisions. I can find no mention of the outline planning permission for the site in Luton (probably because this was obtained after the reporting period ended)

On 7/7/20 Avingtrans released an RNS providing a trading update. This included a somewhat understated comment relating to planning permission for 1,000 dwellings on the site of Hayward Taylor Luton.

No mention of valuation was made and I've no idea as to what something like this might be worth.

Turning quickly to Google and searching "land for sale Luton" brought up firstly a link to Rightmove.

Amongst the offerings were two that might have some relevance.

Firstly, a site for sale in Markgate Road, Luton with permission to construct an over 55's development with 158 residential units. This is for sale at £9.5m.

Secondly, a site on Ashburnham Road, Luton. This site is currently occupied by an MOT centre and 29 lock up garage. The asking price here is £1.4m

I know nothing of Luton. I don't know whether there's good parts or grotty parts and I've no idea as to how the Hayward Taylor site compares.

However, with prices of £9.5m for a 158 unit development and £1.4m for the site of an MOT centre, I'll bet the value for a site for 1,000 dwellings is going to be very substantial for a £86m company.

After 40 years of investing I've finally taken my first position with a Venture Capital Trust.

I've been quite heavily invested in AIM listed individual companies for a decade. It would be nice to say that these investments have all flourished, however, this is not the case. Several of the individual companies have crashed and remain little more than ash in my portfolio; some have simply gone bust. Despite these setbacks, several have produced significant returns that have more than compensated for the losses.

I had read that some AIM shares were eligible for EIS tax relief. I explored the possibility of getting some tax back on my holdings only to find that this was only possible at the point the shares were issued.

I was unable to find an EIS fund that suited my purposes but did find a small number of VCT's investing solely in qualifying AIM shares.

My view was (is) that Amati has the best prospects from this group so this is where I've invested.

I'm happy to put my money into a fund, holding several Investment Trusts.
I'm happy with a minimum hold of five years having held several individual shares and trusts for far longer.
I'm happy with investing in AIM: my new exposure to Amati will be around 3% of my AIM exposure.
I'm happy to diversify my holdings
I'm really happy to get a 30% rebate on my investment.

Like Pyueck I intend to invest annually and sell after five years to maximise the tax benefit. I'm not sure if all of my follow up investment will go to Amati, one of the other AIM VCT providers or into generalist VCT's

If you've any views on this as a strategy or recommendations as to further VCT investing, I'll be glad to read them.

The recent write up provided by Master Investor was, in my view, very bullish regarding the prospects for STM.

Whilst the projections and figures provided are very helpful, for me, the most interesting point that is made is:

"It looks for other companies in its own marketplace operating with revenues of £2m to £3m for which it is prepared to pay 2x revenue. Larger companies elsewhere in the sector are paying 5x to 7x for books of larger revenues."

In effect, if STM were to become a bid target for a larger company, that company would be paying around 5x revenue of £30m in 2021or 2022. That would give STM a valuation of £150m around seven times current valuation.

So, which larger finance company might find STM a valuable addition?

There has been a small article in The Daily Telegraph (Saturday 22nd August) regarding the litigation.

It's mostly a repeat of material I've already seen, however, there's a small section I don't recall having read elsewhere:

"Further emails show Greenhill bankers trying to arrange a follow up meeting. Mr Davies told colleagues: "I will arrange a time to sit with pwc on Monday [sic] [23rd February]. It is better face to face as over the phone won't be easy".
In documents submitted to the court, lawyers for Watchstone claim: "It is to be inferred from this that Mr Davies was concerned that the PwC Head of Restructuring would not want any record to be made of such communications with Mr Davies"

There's also mention in the article of PwC having failed to disclose the meetings with Greenhills in disclosures to the FCA.

Oh dear, oh dear. What can PwC say?

I've been giving further consideration to the litigation Watchstone has commenced. I've outlined my views below primarily for my own benefit but would welcome any comments .

An extract from the RNS of 7/8/20 announcing Watchstone's claim against PwC:

"The claim against PwC is for damages or equitable compensation of £63m plus exemplary damages, equitable compensation, interest and costs. Watchstone's claim against PwC is for breach of contract and/or breach of confidence and/or breach of fiduciary duty and/or unlawful means conspiracy ("Claim")."

Having read the summary of the action relating to Slater & Gordon, the full verdict of Mr Justice Bryant, the summary of the PwC claim and listened to TW's Bearcast on the matter, I'm convinced that Watchstone have a strong case.

I am not a QC and I have no direct experience of litigation.

I do have experience as a private investor and I'm able to assess information that is put before me.

In my view, PwC have well and truly been caught with their fingers in the till. How might their highly paid, qualified and experienced QC defend them?

Firstly I think it's likely that the figure of £63 million will be argued about. I've only read one line from an email that suggested S&G were considering paying £700m. Unless there's a paper trail showing deeper discussion of £700m; arrangements with lenders to be prepared to lend up to £700m; celebratory emails along the lines of "didn't we do well getting the price down from £700m" then I think we'll struggle.

Were there any deals similar to PSD around the same time that could be used as a benchmark?

The second leg of the claim regarding breach of contract and/or breach of confidence and/or breach of fiduciary duty and/or unlawful means conspiracy looks much stronger.

What on Earth can PwC say to defend or mitigate their actions in regards to the back channel with Greenhills?

It was just two old mates having a coffee?

Greenhills made more of it in order to increase their worth to S&G?

We didn't mention the contacts at the time as it was trivial?

We overlooked mentioning the contacts during the document search because it was so minor?

We had no duty or obligations to WTG as our work for them was over?

We won't disclose the identity of the PwC "Head of Restructuring" because…

This on its own looks to be the stumbling block: refusing to identify the individual hides his emails; his disclosures; his conduct with other companies. If there is nothing to hide, nothing to conceal why not give open disclosure and allow sunlight to disinfect?

My view is that if PwC wish to keep the "Head of Restructuring" anonymous, they'll end up paying Watchstone in order to do so.