Member Info for Theanalyzer

The majority of life insurers are trading below IFRS and in JRs case a significant discount.

I think concerns over SII capital adequacy driven by Equity Release Mortgage and NNEG were biggest concerns here.

The increased volume of business at a lower capital strain indicate that JR may be over the worst.

Stangemartian. Most business only go bust because they run out cash and convertible loan notes provide the cash to stop that happening. Mercator do provide the cash upfront as opposed to on each tranche of conversion which adds a bit more credit risk but whilst SYME is listed it can always refinance via another convertible and so is unlikely to run out of cash. A key risk is the Iconic scenario where the share is suspended and CLN provider can’t sell converted shares to recover their money.

Strangemartian

The only success factor Mercator and other convertible loan note holders need is a listed company with the liquidity to enable them to sell down shares and not get suspended like Iconic Labs. They aren’t long equity investors and don’t care about the company’s prospects. They convert and sell and typically conversion notice only arrives after they have sold shares of a forward settlement basis. Ironically if SYME does well they get repaid in cash which demonstrates they aren’t interested in being equity owners of SYME merely provides of financing at a 10% upfront fee, plus warrants and the profit they make on conversion achieved at 85% VWAP.

They are the form of finance only used by the most desperate of Standard Listed and AIM companies who can’t raise equity or debt from conventional sources.

Why have the majority of the new Board members still have purchased not shares?

A) there is always a price sensitive Kraken sized IM related RNS about to be released which prohibits any purchase and has done so since interim results were published or
B) Insiders such as the CFO an ex PWC qualified accountant, who is a PMDR and would have knowledge of what contracts are in force and being negotiated still but highlighted a material uncertainty over going concern, doesn't think it’s worth backing by buying shares at this stage?

Accountants aren’t poorly paid surely she could have invested £10,000 as a token punt if it’s going to be a 10 or 100 bagger?

Also why did ex Chairman who led the IPO sell most of his shares if there is so much potential?

Hmmm

Cookie No public company would provide the valuation model used for acquisitions in my experience.

What they would do frequently is to provide some financial metrics for the target when the deal is announced which SYME didn’t do.

Not telling shareholders the funds under management is unusual for a listed group and an a metric that I e expect to see when 2021 results are published.

Cookie

Good point the £2 million share based payments fee will be an expense to 2021 results to add to the red ink that will be reported.

The Baltic Exchange is further support for Tradeflow which based on data we can see looks to be an interesting business with in my opinion potential for growth.

The biggest challenge for Tradeflow in my opinion is their current lack of scale.

Revenue was under £300,000 in first half and we know that it charges 1.5% for funds under management (plus 15% profit commission if it exceeds target interest returns for investors) so you can work out funds under management were under £40 million on that basis.

SYME paid over 10 times Tradeflow annual revenue upfront being £7 million plus additional earnout of up to £24 million so it wasn’t cheap and unlikely to be profitable at current scale. Hedge funds trade at a few percent of funds under management so SYME paid way over normal price for that type of business.

The $40 million increase funding will add $600,000 per annum which helps but it still a tiny fund.

To justify £31 million valuation Tradeflow would need funds under management in excess of £1 / 1.5 billion.

2021 results will give better data and insight on Tradeflow value and metrics.

Amazon took about 6 years to turn a profit. However, it built scale fast inside two months of launch sales were $20,000 a week.

For a tech business building rapid scale is often the differentiator between winners and losers. Strong tech businesses attract money from Fintech investors who extrapolate the growth and market size.

Meanwhile back at SYME sales for first year are at most £800,000 21 months after IPO and it has failed to launch a new fund after two initial proofs of concept. It is not growing fast and has no tech investors.

On the plus side one vocal investor earns £65 pounds per hour and might buy more shares!

Swiss Re were always going to sell out as part of their exit from U.K. life run off market so getting them out is a positive development.

Lex
Another stock that TW criticised heavily was CHLL formerly ZOE where initially price soared, now it down 80%

That had massive PI support but has lost a lot of punters money.

No pundit is right on all calls but you can’t objectively say that TW is always wrong nor would I argue that he is he always right.

Personally I think the TF acquisition plus its Directors, new Chairman and CFO make SYME a stronger business but jury is still out until first IM occurs

A realisation at small uplift to prior fair value which is ok and supports view that the discount to fair value is unjustified.

Summa wasn’t a huge success but sale and loan repayment mean that cash can be reinvested in hopefully an investment that performs much better in terms of IRR.

Extrader. The volume throughput flow Tradeflow funds is I suspect partly dependent on journey times and value of cargos financed as shorter journeys with more expensive cargo would increase transactions financed and vice versa which is why I used fund charges as metric for Tradeflow revenue.

Tex
Tradeflow is remunerated at 1.5% on funds under management plus a profit commission of 15% if it exceeds interest rate hurdle targets it sets for investors. Tradeflow earns a spread between interest charged to clients and that paid to investors and generated yield of 6% in 2019 for investors.

At present Tradeflow looks to be under £100 million funds under management which equates to a base revenue of £1.5 million per annum (simply grossing up first half revenue by 1.5% fee). Tradeflow remains tiny in fund management industry terms and my estimate includes the additional $40 million it raised recently. I suspect SYME will disclose it is either a small profit maker or loss making when 2021 results are published in April.

Tradeflow was valued at £31 million of which £24 million is contingent on future revenue targets, payable in shares or cash at SYME’s option. At year end I expect to see £31 million in assets primarily in goodwill or intangible assets and £24 million in deferred consideration assuming valuation is unchanged from acquisition date.

Positive news that former CEO stake has been sold to Tavistock which underpins their own valuation holding by a trade buyer.

The Tavistock RNS indicates that LEBC has returned to profitability and cashflow generation and I suspect there will be some key benefits from involvement of an industry specialist into business.

The fact that Tavistock has right of first refusal which means that BP Marsh may now have another potential exit route for its stake in medium term. At present time Tavistock is too small to buy 100% capitalised at only £27 million but in a couple of years time maybe a share for share swap and open offer could pave way for sale.

JS Van
Dec 2021 and Jan 2022 CLN repayments will have both occurred as CLN repayments are due on 1st of each month.

The big issue for me is can SYME get IM over the line, if it can, then in my view CLN dilution doesn’t matter as it’s minor at present around 1% per month.

The clock is ticking though as I reckon cash headroom is down to under 5 months unless AZ is lending cash to SYME via AvantGarde as he has done in the past and in absence of IM SYME will need to raise more cash via a further refinancing.

It was stated as £411,000 per interim accounts (see section under going concern).

Off topic

Prophets
Fidelity have a chargeable gains and losses report which takes out some of the effort.

II don’t have such a facility.

Guitarman is correct that at present dilution from CLNs is minor, less than 1% for each monthly conversion.

BenFou is wrong thinking that SYME have plenty of cash. A simple analysis of interim balance sheet updated for £4 million cash paid for Tradeflow, payoff of £2 million to Negma and ongoing cash burn in trading losses and capex shows that SYME have under 6 months cash left unless IM comes to the rescue it will need more funding.

The tight cash position is why SYME are repaying Mercator in cash but If IM hits CLN dilution to date will be irrelevant.

So SYME remains a big bet on whether AZ can execute and get a deal over the line after 21 months of listing or not.

Today’s acquisition plus other quarries in pipeline is a sizeable increase relative to interim turnover.

Fact that it is being acquired without issue of new shares is a positive for me.

Havegun

Your no big drop post hasn’t aged well

Down 26% on Google.