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Details of AGM in the rns of 28th June 2024.
Does anyone know the date of the AGM and the address where it will be held? I'm planning on attending this year.
As expected the share price is a slave to investor emotion, post results. The material sales uncertainty is fully expected but changes nothing commercially. Having led two successful start ups, I would be surprised if the suppliers weren't insisting on proforma terms (ie cash before delivery) as credit insurance would be at best a nominal value. Having qualified accounts won't therefore change anything in this respect.
I was reassured that the Board's expectation of 2024 and 2025 financial performance are unchanged from those described in the May fund raising (which were were the low case from the April RNS):
Quarterly Sales/Effective capacity revenue
Q2-24 - £4m / £7m
Q3-24 - £4.8m / £7m
Q4-24 - £5.8m (EBITDA breakeven on a quarterly basis) / £9m
Q1-25 - £7m (cash flow neutrality on a quarterly basis) / £10m
Manufacturing Yield
Q2-24 - 83%
Q3-24 - 85%
Q4-24 - 86%
According to my workings, cash headroom on this basis would be £2m in Q1-25, which would be the low point (assuming invoice discounting financed 2025 sales growth) and normal 30 days terms with all suppliers were negotiated.
In this game of building businesses, success breeds success as new arrangements that positively affect cash flow can be negotiated eg change of terms of trade with supply base, invoice financing to facilitate aggressive sales growth etc.
I believe that management have all the tools/staff and facilities they need to turn this into a profitable business using existing funds. Despite calls otherwise, they should also let the COO crack on with his job, without the distraction of being given a board position for the next year.
I look forward to tracking the quarterly updates vs the OO document KPIs by way of a scorecard on progress, starting with the H2 update pre-AGM. If they hit these then the share price will re-rate significantly.
I remember that however there's been little update since other than the comment that "it is expected to be installed by the end of 2024". I would infer that there are other issues which have still not been resolved, otherwise we'd have had a "the installation and commissioning of Furnace X is progressing to schedule" update - perhaps with a comment on the stage of the program (I've no idea what's involved, but you get the picture).
We haven't had that, as a result we need something concrete from the board about the installation progress of the furnace, especially given that the last one took a full year longer than expected.
Having clarity of precisely when this furnace will not only be installed, but will be adding to production is absolutely essential if the board wants to build confidence in their investor base that break even, then profitability and finally regular cash generation is coming soon, otherwise the cash in the bank won't last until Christmas and this thing either goes pop, or gets picked up by Brembo for a song.
This was in the the April 9th RNS.............
"The issue with the last furnace relates to our site expansion rather than the machine itself. The protracted negotiations regarding the site expansion have now been concluded enabling the last furnace to progress"
I not only have a positive case for this share to return to 2p, but to go back to 3p or 4p in relatively short order. We all knew these 2023 numbers were going to be a bit of a horror show (the non-cash impairments aside) given the raise then the panic emergency raise that followed. My case comes from a single paragraph in the update, and it's where I'm pinning my hopes for the future of SCE.
1) The claim that "The Phase 2 £50m sales capacity was progressively installed during the year and into 2024. With one exception, the £50m notional capacity has been achieved in the first half of 2024".
I know that the board will be reading these posts (and I also know their NOMAD / Broker will be telling them not to) and I hope they see this. Please make sure you draw out the production improvements and show them on an ARR basis, smoothed using 2 or 3 month rolling averages if needs be, but SHOW US that you are getting to the £50m capacity, and what proportion of that capacity you're actually able to output. The COO made the case that scrap rates were down significantly in Q2 when they did the webinar on 9th May - I'd implore the board to focus on this, after all there's little point in spending money on investing in capacity if the furnace then either malfunctions and is written down (like the old one) or if scrap rates negate the capacity altogether.
2) The follow up that "The outstanding item from this £50m programme is one furnace that is now expected to be installed at the end of the year."
Time for some clarity as to what the delays are (we've had scant little detail from what I can see) and how they will be overcome, I'd like to hear about exactly what has stopped them installing the last furnace, and how long it's been on site awaiting installation (note there have been no comments about delays to delivery, just installation). It was ordered in 2021, presumably has already been paid for (with interest running on the financing) and as such every additional week that goes by is not only wasted potential, but it's burning cash. I have my own theory as to what has held this up, and if it's not clarified by the AGM, I'll be attending in person to put that theory to them and get an answer there.
We are constantly told that the £50m capacity will be fully installed by the end of 2024, as such all of the blockers to that need to have been cleared before the AGM, or it won't happen in that timeframe.
£50m turnover at consistent 50-55% margin gives £25-27.5m gross profit, overheads in 2023 were £15m even with the massive R&D spend (but excluding the non-cash impairment) which would give £10m+ Operating Profit. From that I'd infer that the Break Even level of production is £30m, so the allowable scrap rate / shortfall allowable is 40%, well above the 25% mentioned in the webinar. I see break even in H2 (depending on the 2024Q2 run rate) and profitability and cash flow generation in 2025 - 4p here we come!
Does anyone have a positive case for this going back to 2p? Or is this now in terminal decline and destined for the bin with the massive increases in research costs, scrappage, decrease in margin due to sub-contracting and the inability scale production? I did have a large investment in this and have switched off, should have sold out ages ago
Glad I was out of the stock for all this. This company always seems to disappoint.
Time to get back in soon I think. I’d like to see it bottom though…
Biggest insider tho is still bloody CEO and will not accept personal responsibility for the failovers
Too bloody right .
Theme One: Bundred and Johnson’s lack of transparency has been the culture based on (1) Operational Incompetence hence the endless surprises (2) paranoid management style that delivers half truths and deliberate obfuscation.
Theme 2 : Collective management, NED and advisers failure. Seems clear to me that Bonzo Bundred ‘s version of events was taken as gospel by the 3 other NEDs, whilst the advisers either gave up dealing with Johnson whose ego clearly won’t brook questions or queries that raise uncomfortable issues.
They took on far too much without a COO... ridiculously stretched and with a inexperienced team ...and totally unaware of the problems that they were walking straight into..... Easton has indeed woken them up almost straight away ...and at least they appear to have taken a number of necessary actions ......but ..a lot of self inflicted pain
" As the Company scaled production, technical (and some tooling) issues emerged with the capital equipment that were not apparent during the development phase resulting in excessive down time and scrap. Running furnaces 24/7 is a different challenge to running them occasionally producing prototype volumes."........well , you don't say ...
"issues that were not apparent "..is a common theme ...
" Isabelle Maddock, CFD and Stephen Easton COO have made further appointments in their own departments. In particular, over the last few months, operations have been significantly re-organised, at all levels, involving both new and existing personnel, with, for example a fundamentally different approach to the type of furnace technicians and maintenance personnel we needed."
They needed outsiders to come in and get themselves sorted out ...
One thing though..... is...what were all the NEDs doing during all of this ?
What support /advise/ was there from that area ?
The effective use of NEDs is always somewhat questionable within these AIM companies
Still a long way to go
I did think the auditors may have said something.
SCE now teetering on the unthinkable.
Shocking indeed. Most shocking was the statement hat they're not sure they can meet bottom end of range given at time of OO. Easton appears to be the only competent person on the Exec team, and he's not on the bloody board.
The question to ask Johnson at AGM: "In light of the disasters of last 18 months,and continuing failure to deliver on expectations made to shareholders, can you explain why you think you are the right person to lead the company?"
Yes , I was wrong on this. Didn't expect the results today at all. I actually didn't think the esults were too bad and liked the following :
Customer highlights
· Increased order book by £100m (lifetime value) to £390m at the end of the year
· Further demonstrated the ability to win "carry over" business with existing customer OEM 10
· 5 contracts in multi-year revenue generation phase
· Customers have been critical but supportive in response to our production difficulties
However as Bridgedogg1 stated re. Going concern qualification was a bit of a surprise. I guess the auditors Grant Thornton just being very cautious given some og the management skills demonstated by the board are sadly lacking.
I still stand by my posting on this board of the 19th June "in my view the time to buy this share will be a couple of days after the results are released as it should also coincide with the final churnings and flush of the last raise." ... so I guess late Monday or Tuesday of next week for me.
Shocking
Going Concern
The continued operation of the Company as a going concern is dependent on our ability to successfully navigate the upcoming scale-up phase. Two key areas of material uncertainty have been identified:
1. Scaling Up Production: Successfully ramping up production to meet the demands of our major OEM contracts is essential to our financial viability. This process presents inherent risks, and any unforeseen challenges could delay our ability to deliver on these contracts. Such delays could necessitate additional cash injections to bridge any funding gaps.
2. Maintaining Financial Flexibility: Our current cash reserves provide us with a runway to achieve our goals. However, there is a risk that we may exhaust this cash headroom before achieving profitability. This scenario could lead to a breach of our loan covenants, potentially jeopardising our access to future funding.
RNS released with the results this morning, I should have had a fiver on it with you Andy! The impairment at £9m was larger than I thought, time for some morning reading over a cup of tea.
"I suspect we'll either get the figures tomorrow, or they'll shorten the year end to buy another 3 months."
We definitely won't get the figures tomorrow nor will they go down the route of getting another 3 months. This can be inferred when reading between the lines of all the communications.
I would imagine the results will be filed on 5th July Friday. Bizarrely last year they were filed late - but on a Saturday which is rare as Companies house would usually wait till Monday.
There is no going concern issue as net assets look sufficient even with a far large write down that has been talked about. - They will get funding somewhere!
At that price I'll increase my holding to above 3%
As a former auditor I don't see this as a GC risk at all, especially with the potential to raise cash in the market, and also the support from the Liverpool City region - those funds can always be re-focused in an emergency, especially to safeguard existing Capex spend which would otherwise risk being written off. I suspect we'll either get the figures tomorrow, or they'll shorten the year end to buy another 3 months.
I still think going concern isn’t a simple sign-off. If the cash urn and material wastage isn’t showing improvement…
Any inkling of doubt from the auditors will see this dive to 0.3/0.4p a share
Yeah.
I took my profit a while ago and am completely out for the moment for that very reason.
I still think this is a viable long term play, and if we do get the accounts signed off over the next day or so I’ll miss a big spike up. But the risk reward doesn’t work for me any more. Like to see the accounting issue settled once and for all.
Maybe I’ve just got old? I’d have had no problem holding here back in the day…
Looming threat of suspension isn’t helping matters here
Says unknown, would be interesting to know as that’s not a small sum of cash
Should be the start of a turnaround, you’d expect it to be just dotting the i’s and crossing the t’s now
Money mule, decent amount of buying going on. Looking good for a move.