Mercantile Ports & Logis... Share Discussion Threads

[mount teide] 27/9/2017 00:42

MRF - 'forensicly examine the accounts' - indeed, suggested that to one of the largest II's who has the clout to throw his weight around - he simply did not want to rock the boat.

There was little interest whatsoever to do anything to hold the management to account - even though they knew the management had been caught out lying well before the £37m cash raise.

Sadly, it probably says more about them, as its behaviour that smacks of putting the protection of their professional reputation above all else including the investors cash they have been entrusted to look after.


We suggested to the SFO that this should be a relatively straightforward case to investigate and the place to start would be find out where most of the circa £44m that was 'spent' before any on-site land reclamation work began.

In particular where the circa £17m of bank debt that was quietly drawn down and 'spent' in H2/2014 with no reference in the Interims at the time other than an interest payment liability falling within 12 months buried away deep within the Accounts. The reality is that only a small fraction of that circa £44m should have been spent up to Nov 2014. So, checking who were the recipients of all the major payments made prior to November 2014, would likely prove an Aladdin's Cave in terms of the riches it unearthed.

The Interim Finance Director loaned to SPl from sister company SKIL for a few month pre and post Admission but who incredibly went on to stay in an interim capacity for another 7 years, would have been in office at the time.

Admission Document;
'Jigar Shah (Interim Finance Director, 33). Jigar is a qualified chartered accountant and an Indian resident. Jigar is the President of Finance of SKIL and has overall responsibility for a number of core matters, including fundraising for the SKIL Group, planning equity issues, regulatory matters and shareholder relations. Jigar has been directly involved with a number of SKIL’s major infrastructure projects, including Pipavav Port, Pipavav Railway and Pipavav Shipyard. He has been with the SKIL Group since 1998. Prior to that, Jigar was employed by a firm of chartered accountants in India.

In the months following Admission, as the Company moves towards its operational phase, it is intended that the Company will appoint a suitably qualified successor to Mr Shah.'


AIOHO/DYOR

[my retirement fund] 26/9/2017 22:19

MT wouldn't it be something to be able to forensicly examine the accounts ? Wouldn't it be fantastic to be able to see just where an earth and how they have managed to drain away all of the millions ?

[mount teide] 26/9/2017 20:51

It has taken two years but two former bosses of Afren (AFR) will tomorrow be charged with fraud.

Well done the Serious Fraud Office!





The boss of the SFO said in September 2016:

By statute I can only open a criminal investigation if I have reasonable grounds to suspect an offence of serious or complex fraud or bribery. In all cases, our intelligence section (comprising lawyers, investigators and analysts, in which we have made significant investment) will take the necessary time to dig into the facts and produce an evaluation. This pre-investigation phase is vital, and we don’t supply running commentaries.

We do not announce new investigations unless a company, for instance, has to inform the market or there is some other good reason, such as encouraging witnesses to come forward. Those we have announced include Airbus, Soma Oil, UnaOil and Quindell.

[mount teide] 26/9/2017 16:33

'You can always hire a Pilot lol'

Best and funniest comment on here for months!

[mount teide] 26/9/2017 16:31

Scam Ports and Logistics Plc.

On reflection why did this venal management in our opinion blatantly commit fraud by false representation with the Shareholders Circular to raise £37m? - by claiming that construction work was progressing apace and the first berths would be complete by the end of 2016 and another 65 acres of land reclaimed by the end of Jan 2017; when in fact they probably spent most of it sitting around with their feet up for much of the 6 months since no Land Reclamation or Berth Piling was going on whatsoever throughout H2/2016.

With the benefit of hindsight that's now easy to answer. If they had continued with the land reclamation and berth piling they would, as stated in the Shareholders Circular, run out of money by the end of Q1/2017. So if they failed to raise the £37m (hence the use of desperate, utterly preposterous construction progress targets in the Shareholders Circular), the game would be up and the seven year shareholder funded luxury lifestyle for the executive management and the huge Nomad fees would come to an abrupt end.

By stopping all Land reclamation work and berth piling shortly after mid June 2016, it meant the best part of £19m of cash and £21m headroom in the bank loan was still available to 'spend' thereby allowing the 7 year gravy train to extend well beyond Q1/2017, by dramatically reducing the jetty length, total land reclamation and channel dredging as a result of a lack of funds but, retaining sufficient to keep plundering, err sorry the gravy train rolling for another 18 months or so.


AIOHO/DYOR

Edit - the fall back position was so financially attractive to this venal management, they decided to implement it anyway despite raising the £37m from clueless II's who carried out no due diligence worthy of the name.

[pj 1] 26/9/2017 16:17

You can always hire a Pilot lol

[dave4545] 26/9/2017 16:15

Yes I agree.

Guess what though. When I sell I might have a parting shot and say why or say things have changed but I do not post it 500 times a year. Time to move on. If it gets suspended you can all return and pat yourselves on the back.

This is not the easiest stocks to research and it's not down the road to pay a visit.

[my retirement fund] 26/9/2017 16:12

Dave 4535Actually if you really wanted to do your research rather than making flippant remarks, you will see that I began to have serious reservations about this company 6 months after it IPO'd and began warning investors of a unfruitful ending then.This company, at least in its present AIM listed IOM registered get up has a limited life span. However it is a long term charade. They can just run off with 150 million pounds post IPO. It has to be done in a very gradual and slow process otherwise they would be going to jail.They really are very clever but not that clever because similar schemes have also come and gone over the years on AIM.

[igoe104] 26/9/2017 15:47

Totally agree, PJ1.
A good company and become a bad company overnight and visa versa.

[pj 1] 26/9/2017 15:30

dave4545

You will find the facts changed, dramatically, and as the facts changed so did lots of (previous) Investors summary of the Company.

Isn't that how it should be?

[dave4545] 26/9/2017 15:17

MRF

Nobody says MT is wrong but you lot post the same thing over and over again week in week out.
Strange a few years back you were all posting none stop telling people to buy this
at 50-100p prices.

zero respect for any holders

[mount teide] 26/9/2017 13:19

OP - detailed research carried out by us and others at considerable personal cost has shown that we know very well 'what is really happening' - that is why we have submitted a formal complaint to the AIM Regulator and SFO.

With respect the people who totally destroyed shareholder value in MPL are where you should AIM your diatribe.

Yes, the people responsible for crashing the share-price by an almost unbelievable 98% from IPO for a straightforward real estate asset development; necessitating a huge emergency placing at a horrendous 96% discount to the IPO price to keep the lights on and, extend their 7 year and counting 7 £figure salaries and £25k+ a month travelling and luxury hotel lifestyle at shareholders expense - with 4-6 months holiday every year thrown in during the monsoon season on full salaries and expense account.

Indeed, some MPL executives have had so little to do 'overseeing'(that word should be taken in its loosest possible sense) shareholders investments here, they were able to start new financial services businesses and manage other existing businesses at the same time!

AIMHO/DYOR

[old punter] 26/9/2017 12:42

hello all,i like most of you are losing money.however MT TEDIOUS,WHILE I CONCEDE YOU HAVE BEENVERY RIGHT UNTIL NOW IS IT NOT TIME YOU TOOK A BREAK FROM YOUR RELENTLESS PERSUIT AND WAITED FOR SAY 3-6 MONTHS TO SEE WHAT IS REALLY HAPPENING.
I HOPE YOU ARE SUED FOR LIBEL WHICH YOU CAN ONLY WIN IF THE COMPANY GOES BUST.
DO YOU HAVE NOTHING ELSE IN YOUR BORING LIFE.

[mount teide] 26/9/2017 10:43

PJ1 - i'd report your stalker to ADVFN - tell them you're looking to raise a formal complaint against the individual under the Government's new tougher on-line stalking and harassment laws! Lol !

There is one very simple solution to this AIM investment disaster - shareholders should crowd fund an independent marine civil engineering consultancy to carry out a review of the port development project, and generate a cost estimate for work completed to date against the totally ludicrous £116m carrying value that management claim.

This was suggested to a major II on a number of occasions, before and after the £37m cash raise - amazingly, they thought it might be counterproductive since it could upset management and open a can of worms!

Clueless, totally clueless!




The most important aspect to consider is what can the terminal be reasonably expected to generate in annual profit in the years ahead. I'll refer to the figures used in Arden's 2013 note on this as the industry assumptions used are largely reasonable:

They forecast in the early years on a turnover of £15.4m a PBT of a loss of (£4.7m), if we take out £6.3m debt interest(loan extended and interest capitalised), that becomes a PBT of £1.6m - which is around what i would expect for such an operation.

Even after 3 - 4 years , if they were to double the turnover to a highly implausible £30m, it would probably only increase the PBT from £1.6m to £4m max - still way short of the pace that the rolled up interest will be adding to the debt capital, which by then would be well north of £85m.

With the risk of sounding a little patronising, a port professional would look at the basic financial numbers of this heavily revised prospective business, type and size of vessel/cargo to be handled, potential revenue generation and using an industry rule of thumb of 50% of revenue as op exps - and within 5 minutes, come to the conclusion the port terminal is simply not commercially viable.

As to a trade sale - chances are slim to none - we estimate the current market value of the terminal as certainly no more than £25m - £30m, which is less than the bank debt drawn down to date to part finance it. In the highly unlikely circumstances that a port operator could be found today to buy the terminal for £30m, with say, lets be generous, £15m of cash left in the kitty, and £35m of debt drawndown - that would currently value the equity at circa £10m or 2.2p a share !


AIOHO/DYOR

[pj 1] 26/9/2017 10:16

Jay must also have taken a salary for years with little being done on Site.

How on earth did that qualify him to be promoted to Board level?

[pj 1] 26/9/2017 09:51

I think this needs to be looked at very simply and logically.

What has the cash been spent on, is the spend justifiable and has it generated tangible assets? Why were they considering a ship repair facility when they clearly did not have funds to complete a working Port (of any size)never mind additional projects?

Until those simple questions are answered its totally uninvestible IMO

KISS

[kramch] 26/9/2017 09:35

I am not a ports expert and not going to speculate on how they manage their liquidity.

I happened to be in Mumbai and as a (small) shareholder asked to see the site. Jay Mehta (COO) was very open to my questions (you can read my report on the thread (May 17).
I suspect the new directors are not stupid and wouldn't put their own money into something they see no hope for.

I know inflation has been falling recently but not long ago it was well over 5%, and a friend who has a tea plantation has just increased wages by 20% following a government instruction to the federation.
K.

[papy02] 25/9/2017 18:01

Kramch,
Inflation in India is around 2% currently according to last (but one) weekend FT

[orinocor] 25/9/2017 17:15

Has anyone pointed out to the new directors that they have no chance of paying the interest on the loan?

kramch, you come across as an intelligent sort of fellow - how do you think they can pay off the debt + interest?

[waterloo01] 25/9/2017 16:46

Not sure anything has changed. Unless they have some wheeze of selling it to another mug (including debt) for a turn, how are shareholders going to get a return?

I posted this on the 15th Sept post interims:

"So for the next 5 years they will have to find around £10m a year (£5m this year) just to pay back loan+ interest. As MT has suggested this will probably be more than the annual turnover in the 1st years, let alone profit.

By all means invest but do it with your eyes WIDE open. Any longer term holders will likely use this to exit."

Interestingly in the Interims they left out the table showing interest due (Go back to full year results and it's there in B&W)

[mount teide] 25/9/2017 16:39

'it looks as if the company will survive'

With respect this comment is clueless, totally clueless!

As stated previously, since we have shown the management no longer has the funds to complete the 200 acres of land reclamation, we fully expect a 90 to 100 acre port to become partially operational next year.

However, even if the cargo throughput were built up to close to full capacity over the next three years at full market rates(should be easy considering the location), the cash flow generated would still fall massively short of that required to make the terminal economically viable and save it from being taken over by the banks.

A port terminal of the current specification completely debt free, targeting low value barge and coaster traffic, could probably make at best a profit of £2m or so a year after making a prudent allowance for ongoing maintenance.

And this port has a jetty offering no weather protection at all to dry and break bulk cargo shippers during the 4 to 6 month monsoon season and an access channel with just 3.0m to 3.5m of available water.

Sometimes you can only lead a horse to water!


AIOHO/DYOR

[kramch] 25/9/2017 15:37

MT has posted a lot of helpful data here, some of which I have used to question management on my visit (just a bit less repetition would be more productive).

The new board seem to be taking steps to improve the management.

Interest rates on loans are high, but so is inflation in India, (so we have to remember how we managed the 70's).
K.