We would love to hear your thoughts about our site and services, please take our survey here.
The profit for the year is represents an unrealised profit on its holding in RAP. At the year end date the price for RAP was 36 cents. Today it is 13 cents. We know they have sold some shares in RAP since the year end but it is likely the net asset value has fallen materially since the year end.
Spikeyj, I think it is 2.0m shares i.e. an issue price of 12 Euro cents (10.2p). The recent announcement stated that, on conversion, there would be 36,374,674 shares in issue. On 23 July, in an announcement the company stated there were 34,374,674 shares in issue following conversion of the outstanding loan notes. T
Spikeyj, the key is the statement: "Calculation of the value for the business and equity were prepared on a Discounted Cash Flows basis". This means "discounted cash flow analysis rests on the principle that an investment now is worth an amount equal to the sum of all the future cash flows it will produce, with each of those cash flows being discounted to their present value". In other words, the party doing the valuation is given profit/cash flow forecasts by the company (say Motivate Health Technologies") being valued, assesses what the company would be worth if it achieved those forecasts, probably applies some sensitivity analysis, and then discounts that value by say 6% a year to get what the value would be today. Therefore the value is totally dependent on the validity of the forecasts made which are often pie in the sky.
Squido, I have no idea what might make you change your view regarding the quality of the team you feel is so hard done by. I fear you are not living in the real world.
It is hard to know where to start pulling apart what I have always viewed as a fantasy but I will use some personal experience. As someone who has been on the board of many quoted shell companies and knows many of the other players in the shell game, I know all of us find it hard to find a good deal, let alone ten at the same time. The best connected players in the serious corporate world struggle to find good deals. Furthermore, the proposition that good deals would hang around for years waiting for WRN to get its act together is risible – they would be snapped up by parties that are able to put cash on the table. Do you have any evidence of any ability of WRN/WHET to raise money?
Then there is the problem of being able to issue ludicrously overvalued shares. Squido, let’s assume your house is worth £1m and WHET bought your house for shares at being valued at 30p each. You go from owning 100% of your house to owning under 6% of a company whose only asset is your house. Sounds like a good deal? Do you think your wife would think so? I can tell you from experience that principals of businesses they have built up over years are very reluctant to value a shell at much of a premium to cash. If it is a good business being valued at a sensible price, the (institutional) investors who are putting up the money in the inevitable placing that will be needed (yes, Squido, a bit of a shock but you do need money to do deals) will query why there is any need to use a shell – and make their investment conditional on dropping the shell, or slashing the premium being paid.
Then one might question the ten deals lined up by WRN. Doing deals involves serious costs relating to the due diligence: legal due diligence; financial due diligence (Long Form Report); review of adequacy of working capital; competent person’s report/ technical report. All this is could easily cost £250k per deal, so it doesn’t seem very clear as to how WRN would have paid for this. Worse still, in the case of the market WRN was trading on due diligence is deemed to be out of date after 6 months so all that money WRN didn’t seem to have would have been needed again for the same exercise.
By the way, I have first hand experience of some of the merry men (not Doug or Biggar) and nothing I saw made me think these were the guys to build a £2b conglomerate, quite the reverse.
That’s enough for now as no more space.
Picto, are you agreeing that WRN has as much chance of getting its suspension lifted as Carillion? One thing WRN would need to do is produce at least 5 years' audited accounts, let alone addressing various other hurdles. .
Manifesto, I (and I am sure others) don't want to see investors lose money. What we do want to see is the management team that has lost investors so much money in other situations get their just desserts. I am sure all those investors in Merchant House Group and its various investment vehicles don't think they invested on a very level playing field.