Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Something I will say. If you invest in a company. You should do your upmost to investigate and leave no stone unturned, whether you’ve invested £100 or £10,000. I would suggest boots on ground. For this business that would be using the website, actually buying products, using the kiosks etc. For me I’ve done it all and have no really bad word to say, except the kiosk was abit difficult but I found out it was because my screen brightness was too low.
It’s for accounting purposes. Rental vs lease purchase agreement are treated differently on the accounting side. Nothing to do with sales commission. The CEO AND CFO talked about it during one of the interviews
Toward the very bottom of the annual report is this statement.
"Once rental contracts pass a certain ageing of delinquency, the contracts are considered irrecoverable and the value of the handsets on rent impaired down to zero value. The profit impact of the impairment in the year was £1,463,000 (2022: £). The cash impact of the impairment was £2,610,000 (2022: £1,120,000)."
2.6m lost. they made 8.3m in revenues. spent 6.2 m on PPE.
the execution of the rental segment was poor and sadly management have failed to make this work. which is why they are no longer pursuing this segment. however this has hammered the share price and management are now pivoting away from their mistake leaving room for a potential turn around. ill explain why i believe this company still has potential to work in my next post
Okay we can all agree the results were not the best however a lot of the cash burn was coming from investments into the rental business and IT development, which I’m guessing is system put in place for the kiosks, rental management etc.
The outright sales side of the business is not loss making. So as they pivot away from the rental side we should see net cash flows improve and maybe even a profit as they reduce over heads and lower capital expenditure. They didn’t specifically state that they are going to lower debt but I don’t see any better place for them to use the cash. I’ll be looking at the half year report this year to see any positive signs of a turn around.
As they pause the rental model. Keeping the number of subscribers fairly static to slightly down, so anywhere from 37,100 to say 35,000. We should see debt reduce.
Cash flow statement says 8.1m in cash but 10.5m cash outflow with 6.2m spent on rental assets( 30,500 to 37,100) if they don’t expand the number of subscribers that 6.2m outflow disappears and can instead be used on paying down debt. They also had 4.1m in capital development cost so things like improving the website, adding AI grading, magpie circular website, systems to manage rental customers, systems to manage kiosks. These cost should reduce over 2024 as the money has already been spent, systems already built. Now just maintenance cost which should be much lower. This to should reduce cash outflow and again allow for debt repayment.
Things I dont like are, no news on the corporate rental side, probably no growth here meaning a lot of the capital development expenses to build out new systems and website soly for corporate customers has been wasted.
Ebitda up but not from them selling more stuff, or improving profits but from cutting costs aka headcount and salaries.
Buying stuff in American then shipping it to the uk with huge shipping fees will somehow be more profitable then selling the products in the USA????? ( don’t know if anyone has bought stuff from American but the shipping costs and additional import fees are expensive)
Similar empty statements from management about “improving profits by buying and selling stuff but doing it better this time” said a similar things the start of last year and we have seen the results they also haven’t really said how they are going to do that exactly, just pumped some buzz words like AI to make them look smarter. They need to focus on being traders and trader make profits on volume not per unit. They need to sell more stuff but for cheaper not less stuff but for a higher price. Going about it the complete wrong way imo.
Impairments were up from 0.8 to 1.5 ( rental revenue 8.3m) impairments are almost 20% of rental revenues nowhere near the stated 10%.
We also saw a huge decline in net assets from 19.5 to 12.3m (note her is that good will is 4.4m or a 3rd of net assets)
Didn’t give us any updated numbers for the corporate rental, ebitda only went up because they cut costs by basically reducing salary. No growth in rental this year, decline in net assets. Increase in impairments. What exactly is there to be positive about here. All they have said is we are gonna try and sell less stuff but for more money without explaining how exactly they will do that.
What are you guys on about, in 2022 the results came out on the 2nd of March, 2023 it came out the 8th of March. The day the results are published is never consistent but the month is. I wouldn’t over think it. possibly be published tomorrow or Thursday. As they seem to prefer Tuesdays and Thursdays but imo the date they are published on is irrelevant and can be affect by a number of different reasons that have nothing to do with the underlying business.
I post pretty much every month about number of website visits. Gives a good pulse on the business. Didn’t post an opinion just the estimated numbers so everyone can interpret them how they like. February is naturally a slow month like you have stated, everyone’s always abit broke from the Christmas and new years spending, and January has a naturally uptick from promotional discount sale. My post wasn’t fear monger or trying to flag anything just a copy and past from similar web. so jump off that high horse xoxo
dhnot, it seems like your just trying to help.
it also seems like you dont have a great feeling about the company and you dont believe people should invest in it. may i ask why you are on this chat if you dont own the shares. basically everyone here owns the shares and has a bias, of course were not gonna **** talk the company and of course we are going to look for all the small positives. why wouldnt we want a 40p shares price or 200p. a differing a opinion is not bad but the way you are coming across is passive aggressive. everyone should chill out.
Are management allowed to buy shares during the buyout period ?
I know a lot of you guys think this is cheap and I have to agree, seems underpriced for the position they have.
Hope to see management step back into the market and show some confidence in the business(if they can) .They’ll have a much better understanding of the underlying value of the business than us.
Https://channelx.world/2024/02/ebays-mark-monte-colombo-on-the-refurbished-tech-opportunity/
Nice video of one of eBay management talking about the refurbished tech sector and even references musicmagpie during the discussion. This sector is very on trend and as peoples pockets get tighter they become more savvy and look for opportunities to save themselves money. Tech is only becoming a greater part of our lives, I’ll reference the iPad kids, you go to restaurants and kids are glued to the screens, but things like phones have becoming an extension of ourselves. People talking about crypto, AI, google, amazon, Uber etc but we need phones, iPad etc to actually use these platforms. Pick and shovels is how I like to think about it.
Stopped by Trafford Asda before and luckily the kiosks was being emptied by one of the employees. I was
Able go explain to the guy who I am, that I’m invested in the company etc etc and he was nice enough to show me how the internals of the kiosk work, how many devices it can hold and how the collection process work, the machine was full of phone I believe we counted 15, he was saying how this kiosk and the one in Trafford centre across the road have to get emptied every couple days because they are some of the most popular locations. He explained how he’s employed by a third party company who is then in contract with musicmagpie, he also explained that he himself drops the phones to musicmagpie head quarters but other workers in other areas essentially box up the devices and post them to musicmagpie for processing. Just thought I’d share this little anecdotal experience
Another thing to note here is Damian has bought £150,000 worth of musicmagpie shares with an average price of around 10p. He’s not exactly Elon musk so that amount of money is not peanuts to him, he also doesn’t strike me as the kind of individual to gamble on things. If he’s buying it’s because he believes in the value and prospects of the business. it wouldnt surprise me to see another RNS of him acquire more shares, someone has clearly been loading up recently. December has 1.4 million website visits, January had 1.5 million website visits so that’s stable and in line with previous years. we have had all the investment in kiosks, website and IT improvements, corporate and domestic rental assets. these investments are well above the current market cap and that’s without all the pre existing infrastructure. They have the musicmagpie brand, Asda partnership ( Asda has also been buying up local co-ops and petrol stations and converting them into mini Asda stores, could be great locations for another kiosk roll out) these have intangible value to them. 10m mcap is pricing the business for failure and severely underestimating the true value of the business . Refurbished tech is very on trend, consumer technology is only becoming a greater part of our lives, phones are essential an extension of ourselves. idk I don’t want to convince myself or you guys that this is all sunshine’s and rainbows because it isn’t, the business has a lot of work to do and the environment is tough and is only getting tougher. time will tell.
JD.com has also enter an offer for curry’s. Looks like many players see the fact that a lot of uk businesses are undervalued at the moment. This could improve sentiment around musicmagpie and encourage other payers to look around and make offers for other uk businesses like msuicmagpie.