Member Info for Washerupper

Re the RNS notes from the 15th and 18th, I’m still wondering what has happened with the circa 457m (6.5% of the company) that Harwood didn’t buy. I will resist guesswork, but the answer to that will be interesting as it becomes clearer.

My last post meant to say $30m not $39m.

Thanks for flagging up the Hardman update. A bit more detailed and (I assume) knowledge based around gross margin expansion that my ‘back of a fag packet’ numbers, so great to see and gives added confidence. The half year figures with detail around margins, costs and cash is something to look forward to, with the comfort of today’s update a significant bonus. Only questions I still have hovering are (a) what are the capital costs of further capacity expansion (because if the 2021 accounts are correct that they have capacity to support to circa 39m to then that issue will arise soon) and (b) what has happened to the 6.5% of the combined premier Miton sale that Harwood didn’t buy?

Just reflecting on the results RNS. Nothing in the update which is anything other than positive news, but we do need to take care not to get too carried away i think. Keep in mind that the year end 2021 accounts showed a loss before tax of 5.1m after gross margins of 43%. Can’t see how break even can possibly be achieved this year given those numbers. The half year report will give an update on margins, overhead costs and losses, but in very rough terms, if we assumed that they manage to improve gross margins a little to 44% from 43% and overheads increased by say 6% (which is probably optimistic given inflation) then admin costs would increase by circa 776k this year. If we add this to the pre-tax loss of 5142k = 5918k loss. Then take off the non cash depreciation and amortisation costs (I haven’t got too forensic) = cash loss from trading of circa 4918k before capital requirements. At a 44% gross margin this needs nearly 11.2m of additional income v the 19.7m in 2021 to break even. So break even not going to be achieved this year and the inflationary environment adds to the risk , which is the Premier Miton argument I guess. Also, the last account suggested that current capacity will support turnover up to 30m, which is break even based on my quick assessment. So I think that there is a very high likelihood that they will need more cash at some stage (the RNS confirms that they think they have enough funding for ‘current plans’). Now if they get to circa 30m turnover with strong growth momentum and near break even, it will be a lot more valuable than it is today, so I don’t mean to sound gloomy, just adding some ‘reality check’. Harwood will have their own perspective and assessment, which will recognise that if they take it private and provide funding to help accelerate growth plans then they should be able to ipo a much more valuable business. This will continue to need patience from PIs

Also worth looking at the RNS today for Miton UK Micro cap Trust which I think offers some insight into the rationale for the sale by premier Miton group (ie a need to fund 13% redemption requests allied to a decision to move away from businesses with negative cash flows - hopefully the later won’t apply long here).

The plot thickens given that Diverse Income Trust has also now sold its full 4% holding.

Interesting, but not surprising, that Harwood has added 4%. That still leaves about 245m (circa 3.5% of the Co) of the Premier Miton sale unaccounted for. I wonder if we will see another RNS shortly. I think my instinct was right and this will develop in to an offer. We shall see.

And yet the share price remains relatively subdued and no RNS / TR1 from the large trades on Tuesday (which I think need to be reported within 48 hrs if reportable). Left wondering whether these are all trades within the same corporate group ownership, e.g. Harwood Capital buying the shares owned by Oryx, which would still be a very significant development I think. Anyone know whether that would still need to be reported?

I don’t know anything. Purely using the platform to share a view that i was forming having noticed the changing share ownership over the last 12-16 months and an understanding of those buying (based on public information about other companies). I was looking to sense check my thoughts with others who follow the company, so thanks for related comments. The timing of those large trades today is just a coincidence, but an interesting one and the rns that I assume will follow tomorrow might tell us more. I would rather there wasn’t an offer in the short term (next 2-3 years) but we shall see.

There is a more pessimistic scenario in which the company does need more funding and that is provided via an additional share issue to Harwood and Griffiths (as happened with Circassia in 2020). The share price falls and any subsequent transaction is at lower levels closer to the current price. I’m hoping that none of that happens, that the company provides a positive update in September and that this time next year the share price is 1.5p. Time will tell and I’m sitting tight.

I’m guided by the mandatory offer guidelines (when holding 30%+), which suggest that any offer should be at least the highest price paid by the buyer in the 12 months to when they first exceeded 30%. So timing is everything given how much the shares have fallen in the last 12 months. The price was .68 when Harwood acquired more in August 21 and was about .67 when they increased in Oct. More recent buy was lower (.42 I think). So I would say .68 max if it were to happen any time soon, which would be a 58% premium to today’s price. So not to be sniffed at, but my hopes were / are much higher if they don’t have to raise further cash. This is obviously pure speculation, albeit with some logic supporting it. If there is no move prior to the sept trading update (and it gives further comfort around profitability and self funding) then the price should rally, but by the same token the maximum price paid by the bidder in the previous 12 months will fall if it moves beyond Oct. A long winded way of saying about .68

Just don’t think they would have to pay anywhere near as much as it will become worth over the next couple of years.

First time poster (on any investment forum) but do follow the posts by others. I have been a shareholder for a while and currently in loss (average .51). I take an interest in what Harwood do, which often involves Richard Griffiths. Together they now have over 25% and I sense that their plan here is to take this private via Harwood and ipo in a few years at a much higher value. I hope I'm wrong but the size and circumstances work well for them. Any thoughts?