Member Info for Toadhall1

Good read across from Morgan Sindall MGNS FY results to end Dec in terms of market demand and inflation expectations.

GFRD have mentioned a slight risk of slightly longer decision making by customers due to high inflation. Doesn’t appear to have impacted MGNS too much which they specifically talk to. However remains to be seen if GFRD was slightly more exposed due to smaller size.

‘
Where projects are being priced for future delivery, the inflationary environment has continued to place some project budgets under pressure particularly in Construction & Infrastructure, which in turn has led to some delays in decision-making and project commencement. However, these have been minimal in number, with generally most of the public and regulated sector clients which the Group serves indicating that committed spending on capital projects remains in place.’

Interestingly I think the holdings update is because he’s sold 700k worth. On CNS website, holders were updated on 11th Jan. He held 30,061,222. 6.01%

I think he has taken most of the shares off Miton at some point. Miton were selling and had 24.6mm at end of July per RNS. But I don’t see an update after that. They’re no longer listed.

https://en.m.wikipedia.org/wiki/Richard_Koch

I think this is Richard

https://twitter.com/richardkoch8020/status/1620889173736693760?s=46&t=YP7J4l6vmyFpQJrdhz4b1Q

One reason might be because market has realised that they’ve lost £32mm annualised in contracts. ( use the £19mm contract extension value from last summer till end of July and annualise).

Another reason might be that cash balance at end of March is going to be a lot lower than last year. They just paid out £5mm in cash vs interim balance of £7.8. Which already had reduced substantially from £15mm end of March due to the working capital required for the new businesses.

Just gone on to their website to see who directors are - but you can't even find a list of directors or names in About Us or Investors section. Just a comment on board composition. No names, no mugshots. Unusual.

This is also symptomatic of the acquisition model. Buy too many service business that have little cross-over. Mngt of the businesses don't want to give up control. Problem integrating staff and services. In the short term, results look good, mngt pay themselves shares and bonuses. Then the problems start , but founders have made their money and walk away.
Little wonder they hastily got rid of the 'panoply' name - the original concept - because the collection of businesses was no longer stronger together!

The point Jolly is making is that this basis between GDRs and DSE does not mean that equity in DSE is mispriced, it just means that there are not enough £ investors willing to buy the GDRs. Reasons for the basis include: ccy exposure; emerging market risk eg ccy devaluation, country default; geopolitical risk; gdr liquidity. And that basis may never resolve.

Lucky mngt sold 1.34mm shares yesterday

https://www.hsj.co.uk/quality-and-performance/ics-cancels-four-urgent-treatment-centre-contracts-after-performance-concerns/7034101.article

Just had a look at this. Yes problem is not just admin / sales and marketing , which you could justify for a growing business, the bigger issue is the GP% which was 2% for the last half. So the key question is - if the business adds 60% revenue growth over 2023, what will happen to the GP? - how much of that will feed through to GP?

So of the $8.7mm, $5mm now matures Dec23 ie £4.2mm. Then there is $3mm of CLN maturing end May 2023 of which $2.5mm is external investors. Conversion price is 11.3cents which is 9.4p at current fx so they’re not going to convert. So that’s £2.1mm that needs to be found or refinanced in 6months time.

Meanwhile from the interims to end May, the CLN will accrue £0.5mm interest cost. The Gati loan will accrue another £0.7-0.8 roughly as I forget the exact principal.

So question is where is the cash coming from. The company is looking like it will be insolvent unless there’s a strong recovery in MNTO share price. Currently worth £5.4mm. All depends on copper price I guess.

But you’re missing the $8.7mm debt as at end June. £7.25mm. This would have to be repaid first.

I note the Gati loan was extended by a year and a little clause inserted in case you did manage to club together some revolting shareholders! :

3. Company's right to dispose of any of its assets is subject to lender's prior approva

I would say- Its not yet clear why mngt was so keen to buy Sanofi / Sanovia. It has pushed up interest costs on the debt used.

Ha doing your best to push it down. Q1 looked decent to me given the macro backdrop. Maybe mngt comments are referring to a further drop-off in Q2.

Always enjoy watching the back and forth on this board. Not a holder, was looking for a bottom, but given my thought about cash, I'll wait: For FY just gone, on £37MM revenues, it generated merely £1.3MM cash from operations. Cash overall was positive due to new loan taken out offset by some capex. On forecast revs of $22MM, that could be a sizeable impact to cash. Actually, Singer forecasted a FY23 FCF yield of -17.3% on EV of £40, i.e. £7mm cash loss. Have to watch that if revenues do not meet forecasts. There is the annualised saving of £5mm to take into account, but that excludes restructuring expenses. I guess that is what the SP is reacting to at present.

Anyone notice the first RNS of approach was titled Project Clarity. It was then corrected in a re-release.
What is Project Clarity? And why would you need an internal project to give clarity ?

https://twitter.com/toad_hall1/status/1585540602464182272?s=46&t=bdQKFcGTYmEInlItMFJrCQ

Yes it’s unfortunate that ARR does not yet make up a very large % of revenues. It’s also unfortunate that they have ramped up sales and marketing this year but don’t have the sales to compensate. Hence revenues expected to be up slightly but EBITDA down a lot yoy.
On the flip side their strengthening of relationship with Juniper recently should prove valuable

Weak update, but not entirely surprising. I questioned the viability of the FY22 revenue forecasts in broker quotes at the last investormeet, as they needed to hit $20mm in H2! They seemed confident of the growth.

Unusually large trades booked.