Member Info for TheTrotsky

Chesh, I have to say I'm am rather mystified by Turner Pope's investment. They didn't underwrite the Placing, so weren't obliged to "pick up the slack". They would appear to have particpated in the First Tranche Placing (they would seem to be one of the "associates" referred to in the Placing RNS). I'm not sure how many shares Turner Pope held before the Placing (any interest they previoulsy had wasn't notifiable) but, on a worst case scenario, they seem to have subscribed for up to two thirds of the First Tranche Placing. Assuming that they aren't participating in any of the further tranche placings, there interest should now have reduced below 3%. Personally, I'm not a fan of a company's broker holding shares; I think it affects their ability to objective.

Sonton1, Did you try reading yesterday's RNS? "... further to the announcements of 27 October 2022 and 1 November 2022 the Third Tranche Placing Shares, the Subscription Shares and Broker Option Shares were admitted to trading on AIM today ...". What more news were you expecting today?

Newuncle, Give it time. TR1s normally follow within a couple of days. As to today's trades I'm not sure they don't relate to Turner Pope (I can't see them holding 8.6% of the shares for the long term).

SD235, Are you suggesting that there has been a change in the bed and breakfasting rules? I've read that the annual CGT allowance has been reduced to £6,000 for 2023/24 and again to £3,000 for 2024/25 onwards (there have also been changes to the dividend allowance) but can't find details of any other changes on the HMRC website at the moment. As the rules, currently stand you have to wait 30 days to avoid the share matching rules when you "bed and breakfast" (the rule do not apply to "bed and SIPP" or "bed and ISA").

Dynamic/Corry, I bought DEC shares in my ii ISA in Apr/Jul 2021 and paid no stamp duty on either transaction. Likewise I bought DEC shares in my AJ Bell SIPP in Feb 2021 and Aug/Sept 2022 and paid stamp duty on all three transactions. It was definitely a mistake by ii; it shouldn't have taken them over a year or more to update their systems for such a basic change of designation (it's not an uncommon occurrence). I'm not complaining; ii's loss is my gain (one assumes that ii will have to foot the bill to HMRC for their error).

So Moniman, short of selling even more assets to try and pay down its debts (the circle of death) what would be your solution? VOD operates in competitive markets and has limited scope to either increase prices and/or gain additional market share (without even further investment). Simply moving the chairs around on the Titanic wouldn't have saved it! It would seem that the only realistic soultion would be for VOD to now undertake a sizeable capital raise (at least £10bn) to try and break the back of its debt mountain (put simply, VOD returned too much capital to shareholders in the past and should have retained more to pay down its debt).

Ceri, You are right about Interactive Investor. I've bought shares in the past 18 months using both AJ Bell and Interactive Investor where the former has charged stamp duty and the latter hasn't. On investigation I concluded that Interactive Investor were wrong not to charge stamp duty because DEC, despite all its trading activities being based in the USA, is actually a UK incorporated company and, as such, stamp duty is payable on the acquisition of its shares. It would seem that since Interactive Investor have been bought by Abrdn they've now realised the errors of their ways.

The fact that the ultimate holding company in the group, DEC, is incorporated in the UK (this was done for listing purposes) does not affect the treatment of its dividends (the US withholding tax rules still apply to its dividend payments)

The increase in the dividend is disappointing. Was hoping for at least 4.5c.

Why is the company's broker now holding circa 9% of the shares? Any thoughts?

But better than zero. Let's not forget that less than a month ago we were facing the prospect of no dividend because of the costs of the skilled person's review and/or delay due to the need for FCA approval. The dividend has, one would presume, been approved by the FCA. I think a (temporary) reduction was inevitable (costs/prudence). Let's see what the Q1 dividend in March has to bring (hopefully the end of the review and any potential consequences should be in sight by then).

PS. I have to admit that I'm not a current holder but nor am I a "Troll". I used to hold this in the heady Stanelco days, before getting burnt and bailing but have kept a watchful eye since. I saw the share rise this morning and read the RNS and, IMHO, the rise this morning doesn't seem to correlate with what's being said in the RNS. I'd love to see BIOM eventually succeed (biodegradable plastics have to be the way forward) but it doesn't appear to be out of the woods just yet.

Not sure what's driving the rise this morning, relief that the company is still solvent and revenues are rising (not to be belittled in the current economic climate), PIs perhaps reading too much into the 77% jump in quarterly revenues (and ignoring the slippage from Q2 to Q3; the 20% increase in YTD revenues is still respectable) or PIs misreading the RNS i.e. reading "... double the year's revenues ..." and missing the bit on the very next line "... from this source ..."? There doesn't appear, unless I've missed something else, to be anything in the RNS to warrant this morning's 70%+ jump. Importantly, despite the current year position improving, the management's view of expected financial performance in 2023 remains unchanged i.e. significantly below previous expectations (as outlined at the interims).

Vascular, They never definitively said they couldn't make the initial repayment (not interest) of £500k last month. However, what was abundantly clear was that they'd finally concluded that they wouldn't be able to repay the whole of the loan plus interest in the remaining timeframe and therefore needed to find a permanent fix (rather than a temporary Band-Aid). It should also be born in mind that the mezzanine loan was unsecured and therefore, if DVRG was facing the propsect of insolvency without a further cash injection, making the loan repayment in preference to other unsecured creditors may have become an issue. Also, there doesn't need to have been a hole in their revenues (sales) for them to have a cash crunch.

I've said it before, I think it was extremely unlikely that they'd have been able to generate circa £4.5m of surplus cash over a twelve month period to repay the mezzanine loan, even based on their original turnover forecasts, and suspect, but don't know for certain, that they would have originally expected to be able to raise a medium/long-term commercial mortgage on their new production facility once it was completed to enable them to, at least, repay part of the mezzanine loan.

I do think we would all benefit from more clarity from the new BoD as to why DVRG originally entered into, essentially, a short term loan facility to fund what was, predominantly, medium/long-term expenditure (property and intangibles) and how DVRG had originally expected to repay the loan and why this was subsequently derailed.

I agree that it would be insightful to know who the new investors are and why the Broker Offer was scaled back. The biggest risk to the remaining PIs would now seem to be that the new investors might seek to take DVRG private in the near future (albeit if that was the intention one would have expected that to have been laid out in the Placing document).

Thanks Newuncle. I wish somebody would explain to him that cash and profit/(loss) are not the same thing and that you can be making profits and still run out of cash if you don't control your debtor days. Have said oft before that DVRG has to improve its cash management and reduce its debtor days. Hopefully the new CEO and CFO will appreciate that.

£14m they lost? What are you talking about?

Some perspective. Once the dust settles I think we may still have a decent company here. Let's not forget that we have just raised £10m of new capital. Okay we've been significantly diluted but look around. I've invested in more than one company in the past that had a decent product (HiWave Technologies - flat screen speakers - and Toratrak - gearless transmissions and KERS; I know they had decent products becuae the vultures picked over the bones and picked up the technology on the cheap after they went into administration) but ran out of cash and couldn't raise new equity for love of money (have a look at today's RNS from Applied Graphene). I still believe that there is some untapped value in DVRG (otherwise they wouldn't have been able to get £10m of new equity) and that with better cash management this business can still thrive. GB's gone, we are where we are. Moaning about what's happened doesn't achieve anything. The real question is, "Is this a glass half empty or is this a glass half full?" If this still has the potential to be a Unicorn (not saying it has) then that would imply that, allowing for the new equity, it still has scope to rise more than 50-fold in value! I'm currently sitting on a paper loss of about £14k and, if I sell now, the £1k I'd receive for my shares won't make much odds. I'm sticking because I still believe that there is some upside, even if the warrants are exercised.

£61m in cash and about £26m in shares. Following the acquisition, APP shareholders will control about 5% of the enlarged shaer capital. At its last results APP has about £20m of "free cash" so I'd assume that some, or all, of that cash will be used to fund the acquisition. It would therefore seem that PAY will need to borrow an addditional £40-£50m to fund the remainder.

I'm just pointing out that this is how SAG operate. They are tough hombres and once they make an offer they don't budge on price and are quite happy to buy more in the market until they can force a vote. They pulled a similar move on Frontier Smart Technologies (a company I had shares in) years ago and we were powerless to stop them because FST didn't have the cash. Subsequently SAG more than doubled their money at our expense. I don't know the particulars of TPG but once SAG have their claws into you they are very tough to shake. They are very hard negotiators who absolutely refuse to overpay and are quite happy to walk away and bide their time. I'm not a fan of SAG but I do grudgingly respect them; they probably don't get the recognition they deserve. I wish you all luck but do not expect SAG to raise their offer price. At the moment they've got TPG over a barrel and, unless something materially changes in the next 6-9 months, it would appear that a fund raise will be the only recourse left to TPG.

There's clearly some potential value in TPG (SAG would not be wasting their time otherwise) but SAG will not do existing PIs any favours if it comes to an equity fund riase. It's brutal but frank. If you think that TPG can turn around its current travails in the next 6-9 months without financial support from HSBC and SAG beyond September 2023 then rebut the offer but if not then it's only likely to get worse from here on out. SAG will keep TPG alive but although they won't necessarily hinder TPG's existing activities they won't necessarily help them either. The termination of parent company guarantees (such guarantees are usually always best avoided), albeit proper and correct, being a case in point - termination of the guarantees will reduce TPG's prospects of renewing the contracts but SAG would rather risk losing the contracts than risk their investment.

Vanquish, Not sure the liquidity ratio would have helped. At the interims, after entering the loan financing agreement, the current rato was 1.39 as compared to 2.64 at the previous year end but this was primarily due to DVRG having taken on the short term mezzanine financing to primarily acquire non-current assets (property and intangibles). Also, this doesn't tell the whole story. Even the quick ratio would have still included trade debtors, despite debtor days being in excess of 6 months i.e. very slow cash payment.

The reality is that we all knew that the mezzanine loan was being used to purchase non-current assets (from the RNS) and none of us asked how the company expected to repay the initial loan plus interest within 12 months. Given that sales have always tended to be back-ended (H2 as opposed to H1) and the normal level of debtor days, it seems unrealistic to assume that DVRG simply expected to repay the debt from normal trading (regardless whether the annual sales were 24m or 18m). I don't know what there original plan was for the repayment of the mezzanine loan (perhaps they thought they could draw down additional funds to repay the original loan in the short to medium term) but clearly something was amiss, either in their original repayment plan or as a result of subsequent events (the deteriorating economic situation, customers taking even longer to pay, rising interest rates etc.) Bottom line trading is good but cash collection is far too slow and is not (was not) sufficient to support annual triple digit growth.

That was then and this is now. TP Grp's financial position has not improved and we're now facing economic headwinds. The Science Group is very canny at picking up distressed companies on the cheap. They do not haggle; the price is the price, like it or leave it. You've already rebuffed an offer 6.25p a year ago. Can you afford to rebuff this new offer now? The BoD thinks not.

sonton1, I obviously wasn't privy to the telephone conversation and it's very disturbing, but not necessarily surprising, that GB should be discussing potentially price sensitive information. He, like Musk, does not appear to understand his fiduciary duties and thinks that regulations don't apply to him. That said, it's wholly possible that the company is, indeed, in profits because profits are booked when they arise not when the cash is received.

Dingodog1, I think it would help if DVRG came clean and explained how the mezzanine loan went so pear-shaped after only six months (but I'm not holding my breath). Much of the initial £4m drawdown was used to service mid to long term capital requirements e.g. production facility, product development etc. and it is highly improbable that any company could have achieved a payback period of 12 months or less without either taking out significant costs (usually staff costs), significantly accelerating cash collection, obtaining alternative financing (China Resouces?) or refinancing capital assets. Even if DVRG had hit its original sales target it would have been highly optimistic to assume that it could have generated £4.5m of surplus cash in just 12 months to repay the loan plus interest without a massive improvement in cash collection. As I've said before, I would have expected a commercial mortgage on the production facility to have been part of the original repayment plan (DVRG did not have the tangible assets to pledge as security for such a mortgage before the facility was completed). I, like you, would love to know what assumptions were made at the outset (I suspect that some of them might have been "pie in the sky" and should not have formed the basis for any decision as to whether or not to enter into the mezzanine facility).