Member Info for TheTrotsky

OXB had a fairly positive write up by Alex Ralph in the Times yesterday; he rated OXB a hold because of "... progress building a multisite and multi-technology capability in key markets ..."

In the article he quoted Stifel telling clients on Wednesday that it viewed OXB as a “unique and underappreciated asset in the UK listing life science space”, trading on a valuation of 2.8 times 2026 enterprise value to sales.

The link is here, if you're able to read it: https://www.thetimes.com/business-money/markets/article/is-this-a-good-time-to-buy-shares-in-oxb-jzxqnjbb9

It's disappointing that PAY continues to struggle to maintain even its adjusted pre-Collect+ announcement share price follwing the special dividend going ex-div and the subsequent share consolidation.

I estimate that the pre-Collect+ announcement share price would now be equivalent to c730p and that the adjusted post-close share price last Friday (after adjusting for the special dividend) would now be equivalent to c742p. The fact that the share price initially fell below 730p earlier this week might not have been a complete surprise to the Chartists amongst us; one would hazard that a "gap" was created following the announcement of the Collect+ deal and that the "gap" would first need to "be filled" before the share price could move back upwards.

The fact that the share price is still lingering at, or around, 730p is therefore a bit of a surprise given that one would suspect the MMs would now want to try and move the share price back above c742p before the special dividend becomes available to re-invest on 31 October, even if the share price was to then fall back in the days/weeks thereafter (the MMs are never ones to miss an opportunity to make some corn). I therefore currently expect the share price to rise to c742p, or more, before 31 October. Thereafter, is in the laps of the gods.

There does seem to be one fly in the ointment presently. China's new rare earth policies are highly likely to affect the availability of GaN chips. Given that the main sources of gallium are aluminium (bauxite) and zinc ores, it's unbelievable that China supplies over 90% (I've seen one table that suggested that it was over 98%) of the available gallium! The other main suppliers are Russia and Ukraine (which doesn't really help anybody). Given the use of FTC's GaN chips it would now seem probable that it will struggle to obtain the necessary licence without compromising its IP.

What's galling is that there are abundant supplies of gallium to be found outside China, Russia and Ukraine (Australia and South America to name but two) but the West has allowed China in particular, because of its lower costs of production, to corner the supply market and now hold us to ransom. The lack of political foresight is truly shocking. Globalisation was always a dubious process. It was always difficult to see how we might "balance the books" and avoid the potential situation that we now find ourselves in today. Globalisation supporters often postulated, without any supporting evidence, that the production of high value, low volume goods would remain in the West whilst China would satisfy itself with the production of low value, high volume goods and/or that China would never be able to breach the technology gap. Given everything we knew about China even then, how illogical was that? It was only ever a matter of time!

Good update this morning. Now that AEWU is, more or less, fully invested, quarterly EPRA earnings exceed 2p and, prospectively, annual EPRA earnings going forward now look set to breach the 8.89p level (the point at which the current dividend would fall below the 90% distribution de minimis) once you factor in the impact of expected organic rental growth. It's quite possible, whilst it remains fully invested, that, in 12-15 months time, it may actually be in a position to consider paying an additional periodic special dividend. Plus, now that the share price is trading at, or close to, NAV there's also the prospect that it may be able to make further equity issues (at a premium to NAV) to fund further new acquisitions.

Patience. The launch will happen (hopefully in Q4) when the product is ready and not before. Rushing a product to market to satisfy investor expectations is never a good idea. They have one opportunity to make a good impression, both on end users and potential future customers. Botching the launch helps no-one. A good launch is far more critical than its actual timing (within reason).

Personally, I don't think there's any profit in selling goods to people you pay to buy your goods but maybe I'm just being naive ;-)

SG2005, It's always the "last" kitchen sink exercise until the next one ;-)

Every company tends to have a few "lurking" skeletons that will generally "wash their face" given time and certain accounting practises that could always be a bit more prudent (the timing of revenue recognition ususally being one of the main areas of contention).

When revenues are increasing year-on-year, early recognition of, say, volume discounts tends not to cause too many nasty accounting surprises (because the next year's discounts tend to exceed the previous year's) but once revenues start flat-lining or decreasing then it can start causing some nasty, unexpected surprises. Profits can start declining at a faster rate than revenues.

So, when you set in motion a "comprehensive third-party review" they will tend to turn over every stone (they'll be keen to show that shareholders' money hasn't been wasted on a frivolous review and it also gives them an opportunity to undermine their professional competitor with a view to a future potential appointment) and pay very close attention to revenue recognition. Meanwhile a newly appointed CEO will be loath to leave anything to chance and take every opportunity to lay any blame at the feet of his predecessor(s). It gives him/her a chance to "clear the decks" and avoid taking any personal blame.

I'd be very surprised if they found nothing. As I say, resetting the timing of revenue recognition is a low hanging fruit that can pay bottom line dividends when revenues/margins are under pressure. Effectively you take profits booked in previous years and book them forward for the price of a one-off adjustment that the market is half expecting.

Finally, I think people are significantly underestimating the challenge that BME is currently facing. Several people have already commented on their dowdy stores, narrow aisles, poor customer service etc. On the face of it all of these problems can be fixed if you invest but that ignores some potentially far bigger problems. When you're the cheapest on the street customers will willingly sacrifice some "creature comforts" to save money but, when you are competing with the likes of Aldi and Lidl, the competition goes to a completely higher level. Not only are their stores clean, spacious and well staffed but their buying power dwarfs the likes of BME (their annual sales in the UK alone are double or triple BME's total sales); BME is highly unlikely to ever be able to compete on price and achieve the same margins. Furthermore, the likes of Asda, Morrisons, Sainsburys and Tesco are all looking to pick up some of BME's customers to offset their own customer losses to Aldi/Lidl. BME are being squeezed big time (the cake is only so large and something has to give).

This link to a YouTube video by Richard Crow (****ney Rebel) might interest some: https://www.youtube.com/watch?v=mCAXFhF7nm8

They talk about BME from 13:35 minutes in. Seems fairly even handed.

Over £6.2m traded at the bell at 747p. Unusual. Higher than normal but, in the scheme of thigns, only amounts to c0.37% of the issued share capital. Might or might not be the sign of something to come.

I bet if you read some of the posts when BME issued it's first profit warning you'd probably have heard many of the same types of comment "highly profitable business", "healthy dividend", "good turnaround prospects", "could go lower but will attract heavy buying" etc. etc.

On paper those comments don't look unreasonable. At the moment the only potential fly in the ointment is whether or not the special dividend is sustainable (based on BME's expected profits and cash flow it's looking very vulnerable unless BME is willing to increase its borrowing; borrowing to pay a dividend, especially when you need to fund new investment, is rarely, if ever, justifiable). Cutting a special dividend, which is normally only temporary and comes with none of the usual "guarantees", is always a more palatable option than cutting a normal dividend (normal dividends are often looked upon as sacrosanct and usually only ever cut in deep duress).

However, one should never forget the old adage that profit warnings often come in threes. A new CEO, coupled with an external review is rarely a good combination. A new CEO will want to kitchen sink the bad news and if there are any dubious or debatable accounting practices (the timing of the recognition of volume discounts is often a "fruitful" source) he'll want them weeded out now before he can be blamed. Also shifting nailed on profit from pre-CEO to post-CEO appointment never does any harm to their personal image 😀

It says that the video isn't available any more. This link should work: https://www.youtube.com/watch?v=mCAXFhF7nm8

Potentially yes but hopefully not. TFIF has had a very good track record since it was established in 2013. It's investment team is pretty selective about what it buys and it prides itself on having never suffered a default on any ABS or other fixed-income product they've purchased. Whether that would still be the case if TFIF had been established prior to the 2008 finiancial crash, who knows? However, there's always a potential risk and one would hope that they exercise as much, if not more, caution in the US market and try to avoid private credit as far as possible.

Interactive Investor have now fixed their system and advised that the new Paypoint shares should be available to trade online in an ISA either later today or tomorrow morning. In the meantime, it's possible trade in an ISA by telephone.

Managed to buy the new PayPoint shares on AJ Bell this morning (using the Sedol - BVMTNR9) but still am unable to trade the new shares on Interactive Investor because, they informed me over the phone this morning, the new PayPoint shares can't be held in an ISA! This is patently ridiculous; somebody appears to have erred in their back office when setting up the new share on their system and forgotten to "tick" the ISA box. Am awaiting a call back to confirm that the error has been fixed.

In fairness, the error may only been £7m but they've also knocked a further £40m off their annual EBITDA guidance at least in part, if not entirely, because of the error which has left analysts scrathching their heads and wondering whether the third party review will throw up further problems. FY26 guidance is now between £470m and £520m, compared to £620m in FY25.

One would suspect that the special dividend will have to be cut or foregone completely unless BME takes on additional debt. After allowing for the reduction in corporation tax payable, the c£100m-£150m annual reduction in EBITDA could reduce free cash flow by c£75m-£112m, all other factors remaining equal.

Free cash flow in FY25 was £311m, so a £75-£112m cut in the FY26 free cash flow shouldn't prevent them from paying the ordinary dividend but wouldn't be sufficient to cover the current 15p special dividend too (they had barely enough free cash flow in FY25 to cover their dividend payments).

Cutting, or foregoing entirely, the special dividend would likely be unpopular but might be a sensible course of action in the circumstances. The only reason not to is investor sentiment but sometimes its better to be unpopular than racking up additional debt at times like these. Assuming that BME foregoes its current special dividend and maintains its current ordinary dividend (at least for FY26), then it would be currently trading on a forward DPS of c8.8% based on tonight's closing price.

On paper, that sounds good, but given the remaining uncertainty as to whether BME has got to the bottom of all its financial reporting issues and its current trading environment I wouldn't be totally surprised if the share price eased a bit further by tomorrow's close. PIs are wont to see this as a buying opportunity but the metrics for the special dividend, in particular, aren't looking good and, given everything elese that's going on (the ever increasing competition in its market sector) these accounting issues are probably the last thing that the CEO needed. One's only hope is that they've now kitchen sinked the FY26 results and that the third party review doesn't throw up yet more nasties.

Changing operating/accounting systems shouldn't create so many problems but they often do, unfortunately. An old client had to ditch their expensive, new SAP accounting system after less than 24 months because the results it was generating were so anomalous that they had to resort back to pen and paper!

Pot and kettle come to mind ;-)

It did go sub-NAV when you factor in the unexercised 2.5p warrants (there's currently a 99.9% certainty that they will be exercised, whether that be in April 2026 or later, and, as such, anybody investing now to hold beyond April 2026 needs to factor in the dilution)

Most of the trades thus far today have been autotrades and the few ordinary trades seem to have been mostly sells (the largest was c90k sell early doors at c719p. The dust may be settling but it isn't yet settled. The spread is still fairly nasty and it doesn't take much for the bid price to drop (sellers beware).

MarkBellUK, I would postulate that most PIs don't have DMA

Chelsea, I've said all along that Im a shareholder and have never, ever been anything other than transparent. So, get off your high horse.