Tom Winnifrith Bearcast - 24 April: Sefton shares should be suspended

Comments

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   shezza

   24 April 2015, 08:21

   Tom,

   With respect to totally, you say it was expecting cash break even months and months ago but it just hasn’t happened. Didn’t the last trading statement say “During November 2014 and December 2014 the Company made a small profit and was cash generative.” Have you heard otherwise since January to suggest they are burning cash?

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   DUCK AND DIVE

   24 April 2015, 08:36

   Wow! Three Sefton podcast warnings in the space of 24 hours! Do you carry on at that rate until SER news comes and the SP settles down – because if so, it might get a bit boring. It’s not as if you are adding anything new each time – other than your outrage that the SP continues to rise in defiance of your warnings.

   I only hope that this isn’t a case of sour grapes/green-eyed god from someone who turned down the offer to get in at 0.05p.

   No-one disputes that the fundamentals of Sefton value it at a fraction of the SP. But when you have hundreds/thousands of shareholders burnt by the ousted regime seeing a slim chance to get their money back, it’s human nature to pile in. It’s a case of sentiment being worth a lot more than the fundamentals.

   And it’s an RNS’d fact that Sefton is making good progress on its renaissance plan so it looks likely that the company will have some value over and above its current assets. And who are we to pre-judge it? The real presence of people like Jim Mellon, Clem and possibly Big Dave (love him or loathe him) in the background gives them a chance of pulling a rabbit out of the hat — especially if, as rumoured, they have been able to acquire some dirt cheap assets in Cuba.

   There’s also a real possibility that some PIs will lose a chunk a money there, but t’was ever thus with AIM penny hopefuls. So, your warning is warranted – at least, one of them is – but this certainly isn’t a scam. Something positive is happening. And PIs are gambling – partly because they believe that Dan Levi is honest, or at least, a lot more honest than his predecessor.

   Vive la révolution!

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   Steve

   24 April 2015, 10:11

   Tom,

   To also pick up on Totally…

   I look at the HotStockRockets tips – I can’t analyse all the stocks so I find it a useful filter so I can then take a look at and see whether it is something that interests me. Totally was one of these – its clearly high risk but the it is also potentially high reward.

   The HotStockRockets analysis was correct that individual contracts are very high margin, but what it didn’t factor in was that almost all the revenue for 2013 was from a low margin IT implementation of the NHS Shared decision making programme. So effectively in 2014 the business was starting virtually from scratch. Additionally once the contract is announced it takes some months to actually begin and revenue to be received – so HotStockRockets was effectively correct in its reasons for tipping, but its timing was off.

   As stated by the company it was (marginally) cashflow positive in November and December and I expect that to have last through Q1. It won around 12 new contracts last year from a number of CCGs which is fairly impressive for a tiddler trying to work with the NHS. Additionally in its favour I find the BOD transparent in that revenue is clearly announced with every contract and the options package this year was fully aligned with shareholders with an exercise price well over the share price and dependent on acheiving £1million net profit this year.

   With the company valued at £1million currently it is only valuing the company at around £100k profit (and profit is pretty much cashflow) which is no excessive and wildly out of reach.

   On the downside, it is a private company dealing with the politically charged NHS, the contracts won have so far been shorter term pilots and the flow has slowed since last summer and it is likely that it currently has current net assets at zero or slightly below.

   However, if it can win a contract every month or so and most importantly renew and extend some of the pilots it is running, because of the high margin it should be able to stave off the need for a placing (which looks to be priced in) and generate cash that makes its current market cap look fairly cheap.

   Not for Orphans and widows and clearly no reason for the share price rise today (other than it being highly illiquid) but I don’t think it is a dog either. If it succeeds it will be very lucrative for shareholders and if it fails it won’t be because of excessive directors salaries or incompetence, it will simply because its bloody hard doing business with the NHS even if the service is worthwhile.

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   Mhin

   24 April 2015, 10:28

   You sound good today. I should have listened to you about sefton in the past. Havent bought any new shares-perhaps I should have, but I seem as if I am getting something back…I had written it off, so anything is welcome. Re horse hill, lets hope there is a farm in…but I am running free shares on UKOG, and half free shares in solo. But UKOG is either farm-in/JV or issue of equity (lets hope its not latter, I like the US connections, and other assets). Whats your view on Cap-ex? Have a good weekend

   Mhin

   PS time you had a go at Andrew Bell

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   catempire

   24 April 2015, 11:30

   Fair shout Tom.. I guess luckily for those buying SER & UKOG sensible people don’t value the companies the market does!

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   Mizzie

   25 April 2015, 05:46

   ROSSLYN
   Tom
   Just to ensure you get your facts correct on Rosslyn
   You can download the AIM Admission document from Rosslyn’s site

   The ‘‘Selling Shareholder’’ is James Courtis-Pond, a former director of RAL, whose business address is courtesy of Pinsent Masons LLP at 30 Crown Place, Earl Street, London EC2A 4ES

   If you search for the term ‘‘Selling Shareholder’’ in the AIM Admission document there are loads of references to “James”. It is clearly suspicious that his address is listed as a lawyers address when he clearly has a home address easily discoverable from Companies House down near Brighton if one downloads the directors for AnyData Solutions Ltd

   You may also want to note that the “Selling Shareholder Agreement” tied James into retaining his ~2.5m shares for a year until 25/4/15 so technically he could sell them on Monday. I’m sure he wants to but that would put even more pressure on RAL’s shares

   Shareholders before listing James Courtis-Pond 3,305,392
   Shareholders after listing James Courtis-Pond 2,547,816

   James still is the largest individual shareholder after directors and it is not explained why he left Rosslyn and there is little mention of Steve’s involvement

   I understand there was a falling out and James wanted all his money back he had lent Rosslyn about a year prior to the listing and the compromise was he selling ~750,000 shares at the placing and having to retain the rest. Who knows what he paid for the 3.3m shares he had prior to the listing but they have fallen in value by 2/3

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   wildrides

   26 April 2015, 03:18

   Blimey …………. that was a big yawn about halfway through …………. I had to hold onto my desk to avoid being sucked down the lappy speakers and down the pipe to your place.

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   DUCK AND DIVE

   26 April 2015, 16:55

   http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11564806/Clock-is-ticking-for-Lenigas-and-his-Gatwick-oil-rush-dream.html