Member Info for TheTrotsky

I agree, I think 60pps would be very modest given the business prospects and that PIs would be daft to accept such a low offer.

Only if it's willing to offer over 80pps. Despite the share price dropping this morning (bit bizarre - energy costs undoubtedly will have some impact on the business but the tiles aren't being manufactured here in Europe for the most part) I think the optics for a successful bid below 80p must be zero.

Also, we shouldn't forget that energy costs will be affecting Cersanit's production costs in Poland and launching an outright bid against a background of high energy costs and likely worldwide recession is the short/medium term, along with the investment needed to transform Topps into Nexterio UK, now may not be the time to launch a bid. Some investors might accept 50-60p now (in the expectation that Topp's business and share price will not be immune to recession) but Topps is well placed to ride out any short term problems and rapidly recover. I think Topps now offers good, long term value and dividend prospects, and shareholders shouldn't allow themselves to be shortchanged by MSG.

Dartron, Imagine supplying a business that is wholly owned by a competitor that has one eye on taking market share off you (worldwide). Also, these days, retailers like suppliers to share business data with them (purchasing power); it could give MSG, from their perspective, an unwanted insight into their business operations. There's lots of sound business reasons why Topps's existing suppliers would want to find alternative UK outlets for their products (there are alternative retailers out there). I think it's a wholly different proposition to trying to persuade Topps to source Cersanit products.

Bottom line, if MSG was to acquire Topps then I think it's likely that Topps would end up with a (much) smaller share of the UK tile market over time with, perhaps, a wider product range; the question then becomes one of whether the cost of building Nexterio UK from scratch (with the optimal outlet size and online presence from the start) outweighs the likely value destruction that would occur if MSG acquired the remainder of Topps and transformed it into Nexterio UK. QED I think MSG would much prefer to pay 50-60p than (say) 80p and save itself an additional £30m-£40m on top of what it might cost to transform Topps into Nexterio UK.

I still think MSG is between a rock and a hard place. I don't see their proposals being passed at the EGM and, despite all the kerfuffle, Topps's business is going from strength to strength, which means the likelihood of an opportunistic bid at (say) 50-60p highly unlikely to succeed. Without access to Topps's BoD, MSG is not going to glean any business data that might help them launch Nexterio in the UK. If they sell down at the current price, I believe MSG would do so at a loss. So, unless MSG is willing to launch a bid above (say) 80p, then I think MSG may just well stick and bank the dividends.

Yes, MSG has the money to launch a bid at, or above, 80p but, from what I've read and understood, I'm still not convinced that acquiring Topps would actually meet their needs. If, as I believe, Cersanit is looking to get a piece of the high end tile market in the UK, then buying Topps to achieve that would appear very hamfisted. I think existing Topps suppliers would look to leave in droves (I don't think they'd want to supply a business controlled by one of their competitors, particularly if they might be expected to share business information - it could put them at a long term competitive disadvantage) and MSG would be left owning a business that operates in a different market niche. Topps is not a high end tile supplier and it isn't really set up to sell other ceramic products (its stores tend to be small with a relatively small product range).

Dartron, The conflict of interest would lie between Cersanit and other Topps suppliers. If MSG took Topps private then I could foresee Topps's current suppliers looking to sell their tiles thru other suppliers instead. Cersanit is a competitor and there are many sound business reasons why other suppliers would not want to supply tiles to a retailer wholly owned and controlled by one of their (major) competitors. It remains to be seen whether Cersanit can, or would want to, supply 100% of Topps's tile sales e.g. would it need to build additional production capacity in Poland, high volume low margin (and vice versa) considerations etc. As I say, if MSG bought the remainder of Topps at (say) 80p I could see value destruction following because Topps may prove too big for Cersanit's UK needs. It's one thing to supply 5-6% of the UK market (if Topps was to buy 30% of its tiles from Cersanit as MSG proposes) and having to try to supply 19-20% of the UK market if other suppliers upped and went elsewhere; in all probability Topps's share of the UK market would decline if MSG acquired Topps. Also, does Cersanit want to be a supplier of high volume low margin tiles or the opposite. Obviously Topps could offer Cersanit the opportunity to sell other ceramic products but its current retail outlets are too small, so a lot of investement would be needed to "right-size" Topps so that it could offer an expanded product range. So, at the end of the day, it becomes a question of which costs less - starting a new UK business from scratch or downsizing an existing UK business. The latter option may prove cheaper if the purchase price is right but I'm just not sure that 80p would be the price that MSG would want to pay. With Topps's Q1 sales up 10%, it's going to be difficult for MSG to persuade Topps's other shareholders that they should accept less than 80p.

muggins, my paper losses are real so take your ****e and shove it where the sun don't shine!

Nanoano, I suspect that Samsung's logic was that NANO was a one-trick pony (it's not) and that the business would run out of cash before the case came to court and fall into administration (seen it all too often before). Although the administrators could in pratcise still pursue the case through the courts, it's generally not in their interests to do so if there are sufficient funds to pay off the creditors (administrators act for the creditors not the shareholders) and their fees.

If NANO had fallen into administration, Samsung could probably have bought NANO's "worthless" patents "for a song" (just enough to make the creditors happy would have been all that was needed) - Samsung would have argued that paying a few tens of £millions for these "worthless" patents was worth paying to remove any "ambiguity". Samsung has been trying to delay proceedings for years but the prospect of a successful outcome for NANO in the court proceedings that were due to start on Friday would have changed the outlook completely. Even if NANO had fallen into administration at a later date, now the potentially "worthless" patents would suddenly have a court established value and the opportunity for Samsung to buy the patents "for a song" would have been lost. If the court had established that the patents did have value then there would have been plenty of vulture funds, with deep pockets willing to outbid Samsung for the patents in any winding up.

I don't think it's ever been an issue of whether Samsung had infringed NANO's patents. It's always been a question whether a small company, with limited finances, could survive long enough to have it's day in court. Samsung have been cynical. They're not the first and won't be the last (Microsoft, under Bill Gates, used to operate in this manner throughout the late 1980s and the 1990s; it was their modus operandi).

Samsung deserve to have a new hole ripped but, if NANO go for the jugular and seek large punitive damages as part of the negotiated settlement, then this case could just run and run. That's not in NANO's interests, so they'll probably settle for (a lot) less than they might; it will, no doubt, still be a sizeable sum (Mikey279's figures look about right) but a lot less than the US court might (nothing is certain) have awarded. Also, NANO will probably now be insisting that any negotiated settlement be on a worldwide basis, not just a US basis, which will save their senior management a lot of time, and effort, that would otherwise have been expended pursuing Samsung through the courts in each and every jurisdiction.

I have a low five figure (paper) loss too BUT a (paper) loss is never a loss until it's crystallised. Given the current value of my remaining investment (just over £1k), I'm happy to let it ride and see what happens. We need more guidance from the new BoD but I'm still to be convinced that GB lied (I just think he was a useless CEO who forgot about the mantra "look after the pennies and the pounds look after themselves"). For over 12 months before he was toppled I was saying that he should be replaced as CEO and moved to the (new) position of CTO, and was derided for saying so. Hey Ho. I still think that GB would make a great CTO (assuming that there aren't any more skeletons in the closet).

A good CEO, CFO and CTO working together could make DVRG fly. Hospitals, airports, shipping terminals etc. are still crying out for portable, rapid, COVID-testing equipment. The opportunity is still there, if it works. Likewise, the STC is a potential gold mine if they can marry the marketing with the testing; the fact that they launched STC in the USA without the testing capacity wasn't lamentable, it was a total disgrace. GB could sell an idea but without a proper implementation plan it was dead in the water. I think GB is/was one of those incurable optimists that likes to think that things will sort themselves out when in reality a good idea without a good implementation plan is just a disaster waiting to happen.

A good CEO doesn't just surround themselves with "Yes" people. Sure you need cheerleaders but if you don't have "No" people to point out the flaws in your "great" plan then you'll always go off half-****ed. A strong CFO is also vital.

My concern now is that the new BoD will only act in the interests of the new investors and will seek to take DVRG private on some spurious grounds which will only serve to line their, and their masters, pockets at our further expense. Don't let the ******** get you!

JedClampit, To increase their holding above 30% takeover law requires them to make an offer for the whole company (they can only then force through the sale at that offer price if they control 90% or more). They could indeed first look to acquire 20-21% from another investor but they'd still be required to make an offer for the remainder of the shares on the same, or better, terms. So, unless there's an investor out there now willing to sell them an additional 20-21% on the cheap, they are going to be forced to pay the "market rate" if they want to take control. There are also rules pertaining to "concert parties" that (ought to ) prevent them from circuventing the above rules.

Darton, I don't disagree with MSG simply buying Topps as an investment having its merits but it lacks business rationale. If it remains MSG's intention to persuade Topps to buy 30% of its tiles from Cersanit then they have all the same prospective conflicts of interest to deal with that have been outlined previously and those conflicts of interest won't disappear if MSG buys Topps as an investment. The fact that MSG are trying to persuade Topps to buy 30% of their tiles from Cersanit actually now makes it improbable that they are looking at Topps as simply an investment - if I was a Topps supplier I wouldn't trust them to run Topps independently from Cersanit given the current fracas. The one thing to know about billionnaires is that they didn't make their money by paying over the odds for a business simply because they could afford to do so. If MSG was to hold Topps as an investment, it only really makes sense if they retain their holding at its current level. I rather think that MSG may have made a misstep; they should have made an offer when Covid struck but now its valuation is rising and they are facing the prospect of having to pay more for control of Topps than they would like and that's perhaps why they've now served the requisition notices. MSG want to dampen the valuation and muddy the waters - hopefully most shareholders are wise to this.

I think buying Topps, at the right price, could be a great strategic move for MSG but given the possible conflicts of interest, the potential need to expand production capacity in Poland to cater for higher volume, lower margin tile ranges in the UK (to replace existing Topps suppliers who may no longer choose to supply Topps if MSG takes control), the potential need to reduce the number of Topps outlets if they only cater for Cersanit's existing tile range and/or the potential need to increase the size of Topps's outlets to allow for a wider range of ceramic products, then acquiring Topps will likely to result in value destruction (for MSG) in the short/medium term. Obviously starting a new UK company from scratch, marketing costs etc. is not cheap and the potential value destruction in Topps to "right-size" it for Cersanit's needs may cost less but "over paying" to acquire Topps doesn't make it cheaper ;-)

Basscadet, You miss the point. Whether it was $500m or $3bn, it's more than likely that NANO will settle for less than they might have evisaged if they'd won the case (that's just the nature of compromise and negotiation). As you say, the $500m was just speculation and, unless the quantum of the claim was set out in the court documents, nobody knows for certain what NANO actually expected. Undoubtedly NANO will have a minimum figure in mindand, likewise, no doubt Samsung have a maximum figure in mind and, so long, as Samsung's figure exceeds NANO's figure there should be scope for an agreement to be reached. The fact that Samsung has agreed to negotiate is undoubtedly a positive; it would suggest that Samsung now (grudgingly) accept that they are likely to lose any court case which, in turn, ought to give NANO the upper hand in the negotiations and make it more likely that any settlement will be towards the upper end of the range acceptable to both parties. At a minimum NANO would probably be looking to settle for an amount equivalent to past sales at the (now to be agreed) royalty rate plus interest and NANO's litigation and associated costs. Samsung will probably look for a lump sum discount (possible but difficult to justify without offering NANO some, unlooked for, future potential benefit in return) and also any additional damages, if any, to be nominal (more likely to be agreeable if NANO is able to secure good terms for any future royalties and an immediate, no quibbles, non-recourse, settlement payment).

Bottom line, I don't think it wholly unreasonable for the Times to suggest that any damages NANO receives are likley to be less than they might have received if they'd won the court case. The damages will however be within NANO's own range of acceptable outcomes.

I think you'll find the rationale for the comment is that any settlement will now be a compromise between the parties. When parties comprimise neither of them get what they want. Yeah, sure, NANO could have held out for (say) $500m but there was always a 5-10% chance (maybe more, perhaps less) that they might have ended up with nothing. Also, the settlement could have been drawn out for years, even if NANO, because Samsung delayed, procrastinated, appealed etc.

So, yes, the Times is quite right to speculate that any financial settlement will likely to be a lot less in absolute terms (the Times is still speculating a nine figure payout); NANO will accept a discount for certainty and no delay. Game theory tells you all you need to know.

I don't know. I reckon the take out price would have to be north of 80p. The business is doing well and it's likely going to be able to increase its profits and dividend payout going forward now that it's debt free and been able to put a number of one-off costs behind it e.g. acquistion costs.

So, it's probably going to cost MSG north of £110m to buy out the shares it doesn't already own, and for what?

Yes, MSGwould be buying an established UK business with a large, existing distribution network but it's unclear whether it would be able to sustain that business alone without significantly increasing its own production capacity in Poland or retain existing third party suppliers whilst augmenting the offering with its own products. It's one thing to seek an additional outlet for existing unutilised production capacity and quite another to increase production capacity to meet additional demand over and above what's currently available i.e. if Cersanit was to aim to meet 100% of Topps demand. Cersanit isn't a traditional discounter; it's a high end supplier (it wouldn't want to buy Topps to simply ramp up high volume, low margin tile production).

MSG and Solowow no doubt have the money but I'm really not sure whether there is any business logic in buying the 70% of Topps they don't already own i.e. they'd probably end up overpaying for what they need. If they could buy the remaining 70% of Topps for (say) £50m (about 36pps) then there might be some logic in them launching a bid but any shareholder who'd now agree to sell their shares for (just) 36pps would be a fool. There's a complete mismatch between what MSG would want to pay and what other shareholders might accept (not even in the same ballpark). It's also not clear whether Cersanit could supply Topps with (say) 30% of its tile volumes whilst buying the remaining 70% from other suppliers. Ideally Cersanit would want to just supply Topps's lower volume, higher margin business whilst Topps's other suppliers were left to supply its higher volume, lower margin business. Cersanit are unlikely to want to move down market and Topps's existing suppliers are unlikely to want to give a competitor a free leg up (and lose the opportunity to sell their own higher marging products). It just strikes me that Topps is too big for Cersanit's tile needs and that its existing show rooms are too small to offer Cersanit's wider range of ceramic products; Cersanit would just end up reducing the number of Topps outlets and/or moving to larger premises.

Not quite sure where we go from here. It doesn't strike me that MSG's Polish subsidiary is a discounter (based on the BoD's comments about the pricing of their products when they've looked at sourcing product to sell); so I doubt that MSG would be looking to compete head to head with Topps on price. Buying Topps to turn it into "Nexterio UK" would appear to be an expensive proposition - not sure how Topps's existing suppliers would react to a competitor taking over Topps (let's just say that it might not prove to be a smooth transition).

Personally, I think MSG have the bigger headache here. They can't increase their shareholding without making a formal bid and I don't think the BoD would even consider an offer of less than 70-80p. They can be a nuisance but as long as the BoD has the support of the other main investors and is able to maintain the current upwards trajectory then MSG's current self-serving propositions are going to fall on deaf ears. Despite the current economic backdrop, when house sales start to fall, DIY starts to rise and vice versa, and Topps is now well placed to benefit from either. Selling their holding might cause the share price to drop in the short term but, with a 3.6p dividend, I think any fall would not prove long lived and just give value shareholders the opportunity to pick up a (potential) bargain. Even if the general market was to decline in the next couple of years, MSG's proposals offer no incentive to other shareholders to support them.

Bottom line, I think MSG either launches an outright bid or becomes a silent investor. Given the prospect that Nexterio will be launching an operation in the UK, I think the BoD should be able to mount a pretty convincing case for MSG not being given any representation on the Board in any shape or form (given the realistic prospect that confidential business and contract information could end up being shared with a direct UK competitor)

;-)

A bit curious really. I actually bought 63,000 at 4.27p at 08:13 this morning which was below the mid-point of the bid-offer spread and yet the share price still fell after the acquisition of 950,000 at 4.39p at 08:50am!

I think it's unlikely that GB was a total liar; DVRG would never have been able to raise £10m if GB had been total hot air. I'm still of the view that GB allowed the business to over-trade (poor financial management; could never say "no, not now").

£1m per day! If only ;-) Somebody has been over imbibing ;-)

£1m per month I believe is the correct figure which gives a current yield of about 12.6%.

Having just read an article in today's Times, perhaps, depending on your viewpoint, I was being too pessimistic/optimistic about the USD/GBP exchange rate in FY24; the suggestion in the article being that the USD/GBP exchange rate is more likely to fall than rise in the next 12 months i.e. the average USD/GBP exchange rate for FY24 could still be 1.22 or less. Good news for DEC shareholders but not such good news for UK plc I fear.

Giantsquid, I think you are stretching credulity to suggest that ASOS is a "global giant". It certainly has global spread but circa 45% of its sales are still generated in the UK. Growth shouldn't be knocked but in reality 10% and 9% growth in the US and RoW respectively was fairly anaemic considering the relative size of their respective markets and their lower sales (the US generated circa 30% and RoW generated circa 26% of the equivalent UK sales respectively).

UK companies have historically struggled to crack the US market and ASOS is clearly not happy with its current US ROIC. In addition, it's facing very stiff competition in its market niche from Shein. Shein's US revenues already significantly exceed ASOS despite ASOS having entered the US market before Shein and ASOS is going to struggle to differentiate itself from Shein and other competitors based on price (as it does in the UK). It will be interesting to see if ASOS can turn around its US business (I don't think that 10% annual growth in the US is sufficient - the US is a big logistical nightmare and size matters).

As for Europe, it's a bit of a basket case presently. Firstly because of Brexit (ASOS can no longer fulfill EU orders from its UK fulfillment centres, because of export tariffs, resulting in additional capital having to be committed to meet and expand its EU distribution network) and secondly because of Russia. I don't think Europe is a lost cause (sales are still over double the US's) but it needs work and investment.

I don't expect ASOS to fail but I think it may have to re-think its sales and distribution strategy (certainly outside the UK). Its UK market is maturing (I think its going to be difficult for ASOS to generate annual growth rates in excess of 10% in the UK going forward unless it re-thinks its brands) and it therefore really needs to see signifiicant growth in sales outside the UK. Also, before anybody points out the "phenomenal" growth in TopShop sales, please do look at its figures and consider the implications - it's either starting from a very low base, replacing/canibalising other ASOS brand sales or hiding falls in sales of othe ASOS brands e.g. TopShop delivered 200% growth in the US and yet overall US sales only increased 10%. I suspect that it's starting from a very low base in the US, in which case 200% growth has to be taken with a large "pinch of salt" - it will only start to look really meaningful if TopShop can repeat YoY for the next (say) 2-3 years.

ASOS is no doubt a large international retailer but its far from a "global giant" and its presently got problems. Withdrawal from the US is not beyond the realms of possibility if it continues to underperform. The US is almost 40x larger than the UK with almost 5x the population - it creates huge logistical problems, particularly when using your own fulfillment centres - and, realistically, ASOS probably needs to be generating in excess of £2bn US sales to make the investment worthwhile

I'm also actually projecting my (GBP) dividend income to fall for the year ended 05-April-24 (FY24), as compared to the year ended 05-April-23 (FY23). If exchange rates stay at, or around, their current level for the remainder of FY23 then the average FY23 exchange rate will be circa 1.22 USD to GBP whilst, based on my "worst case" average FY24 exchange rate of circa 1.30 USD to GBP, the 0.125 cent quarterly dividend increase effective from March will not be sufficient to offset the prospectively higher average FY24 exchange rate. Indeed, even if the average FY24 exchange rate was a more realistic 1.25 USD to GBP it's still likely that we will receive less (GBP) dividends in FY24 than FY23.

I may be wrong but I don't currently expect FY24 exchange rates to plumb the same depths as FY23. Instead, I expect there to be some marginal recovery throughout FY24 as both inflation and interest rates (hopefully) peak and start to fall/plateau. May not help my DEC dividend income but would certainly help UK plc ;-)