Plus Markets Group Share Discussion Threads

[pjw1956] 29/10/2012 15:56

harry, I don't know if you are like me (without going into detail) I am starting to see a few red flags? I would rather not put any of my thoughts on here at the moment, do you get the same impression? I think you must have a good idea of how I would answer the questions in post 4047.

[old thumper] 29/10/2012 11:20

squirrel,

It's the 31st then, lets see what Icap is up to with SX. Hopefully it won't be up to expectations and I'll probably drop a line to the PM to remind him how he's been let down.

If the Hurricane Sandy actually sweeps the NYSE away this afternoon this will make the Euro crisis look like chicken feed.

Considering what could happen the markets are remarkability quiet. It also shows a complete lack of backup procedures, if you think the amount of money to be lost today and perhaps other days questions must be raised.

[harry f] 29/10/2012 11:08

good, i thought you might....

can i make a suggestion to you and others? while icap are involved in the process i view them as being perhaps "remote" (to be established) from core events. as such i get the feeling we're trying to run before we can walk. my view is to build this up gradually "from the centre" from available historical information, see where that gets us, and then derive explanations/ rationales from there.

we can speculate when the historical facts are fully appreciated. but before then does not help us.

in a roundabout way i will now attempt to illustrate this, in order to give us a clearer picture. summarising some of what i feel are the major irregularities in what occurred here: (there are more)

statements:

1) non disclosure of major asset transfers from SX to TS post balance sheet date which only came to light on june 6th when the accounts were published, and then appear to breach accounting standards by not signifying a value.

2) the proposed sale of sx, recommended by the directors twice before the events mentioned above in 1) came to light. the directors knew when they made these recommendations that shareholders didnt know what they were selling.

3) the sx sale to icap was constructed (intentionally or not at the case may be?) in a way that i feel that the only choice available was for major shareholders "on aggregate" to agree to the sale, otherwise the rie licence would be lost and we would have £1m of wind down fees depleting most if not all residual shareholder funds. a beneficiary of agreement to this sale was FORUM with their contract with icap.

4) non disclosure prior to sale of ts of the value of the icap - ts contract, or the fact it even existed.

5) not reopening the fsp for ts when apparently there was a profound change to the status of ts (icap contract); to ensure the best deal for shareholders was realised on the open market i believe this was necessary.

6) it must be questioned if any real intent was made to secure additional funding in the summer of 2011 when the cash pile was depleted and approaching critical levels.

7) it appears to me in the absence of any alternative proposals to raise funds beyond the summer of 2011 that effectively the "going concern" status of the company was heavily exposed considering the main (and it appears only) way of derisking this was by generating new revenue streams through a strategic review which was already (approx) 12 months old, had not generated revenues, and indeed did not do.

now what i want to do is for readers to consider the 7 points above. as mentioned before they are irregularities in the process which ensued and i believe legitimate/ accurate as they are largely derived from historical evidence.

then for each i want readers to assess each individually againsts the interests of 2 stakeholders in the process and 2 only (forget about icap/ directors, etc). the only 2 stakeholders i would like to consider are.

a) shareholders.
b) forum.

......and then judge the irregularities for each party a) and b) for each question on the following scale.

(1) highly beneficial to this stakeholder.
(2) beneficial to this stakeholder to some degree.
(3) neutral
(4) detrimental to this stakeholder to some degree.
(5) highly detrimental to this stakeholder.

....this might sound complicated so i will illustrate...... for statement 1) above if i think ultimately the action was neutral to both parties then i would answer....

1) (3)/(3)

im sure you get it.....

all im asking is go down the list of statements, and grade each as above...... in your own opinion please.

.... and when you have i think you will establish something.

[pjw1956] 29/10/2012 09:52

harry, hope you had a good weekend. I did find your post in my absence enlightening.

[squirrel888] 29/10/2012 09:32

31st Oct?

Should be interesting.

OT - agree totally with you on parties.......etc.

pjw - libor - pandoras box....not sure the papers FULLY understand the ramifications of the whole scandal. HOW are people like Spencer still operating - can't last surely?

[harry f] 29/10/2012 09:23

welcome back pjw and i hope you see some value in the postings made in your absence.

i trust you all had a good weekend.

i posted #4034 last friday which with other commentary might have gone above/ below people's heads as "Ophir" is a rare name which one does not see often, if at all.

[old thumper] 29/10/2012 09:01

pjw,

LIBOR will take years to get sorted. Once the FSA start digging the more they'll find :-) Oh, I love a scandle.

Is it this week when Icap do their SX presentation of their plans?

[pjw1956] 29/10/2012 08:57

squirrel, the Libor scandal is from July and the papers have reported it

"The questions over the role of Mr Fallon followed the revelation that one of the Prime Minister's closest advisers, the former Tory party treasurer Michael Spencer, is under scrutiny by the FSA. Mr Spencer's brokerage firm ICAP is one of a number of institutions alleged to have helped to manipulate bank interest rates while he was treasurer of the Conservatives. Mr Cameron said yesterday that he needed to "think this through carefully" whether there should be a judge-led inquiry into the Libor scandal.

[old thumper] 29/10/2012 08:10

squirrel,

The trouble with the Government parties their all just as bad as each other. No, stick Boris in charge, he may be a twit but at least we'll all have a laugh while the country goes pear shaped.

I think pjw's links need to be posted to No10, this could get them thinking.

[squirrel888] 29/10/2012 07:54

pjw - morning and WOW. Those articles say it all. I cannot believe that an investigation isn't going to take place. Clearly the Tories are Toast too.

OT - Plus-gate - let's see what the press will make of this? How badly do we all want to see the Tories OUT because I don't think I have ever known such suffering in our nation for a very long time....and it IS because of the policies being imposed right now. They will not get in again.

[old thumper] 29/10/2012 07:07

Morning pjw,

Makes you wonder how Icap got the RIE pass the FSA?

"Plus-Gate" sounds right to me.

[old thumper] 27/10/2012 10:12

Harry,

Misra knew the potential of TS but he knew it needed money to get it going, after a half hearted try to raise it Icap came into the picture. So the board decided to sell up and go with the Forum plan. Perhaps even Harrop Plus's main techo threatened to resign so CT whould be on his own and that would leave SX to failures with no one to fix them, that's the problem with small companies.

DX was dead without Connors as he and Pipeline had the license on the maths that DX was using. What on earth when on in Dec 2011 when the bid was rejected who knows but perhaps there was a threat to the board's seats who knows?, as we all know the DX and TS bids were all done behind our backs, so much for owning things? I better to go to check the neigbour hasn't sold my car :-)

[harry f] 26/10/2012 16:31

ive just been wondering about #4033 i posted earlier and i think irrespective of the relative merits (or not as the case may be) of points 1) to 5) i think 6) is the one im having most difficulty trying to rationalise.

all directors have a duty to preserve, enhance, and maximise shareholder value. in our case it seems to be that losing the going concern status resulting in a fire sale was the major destruction of shareholder value.

so why did this occur?

now i could understand events more if the strategic review occurred over the same period in 2011 as it actually did in 2010, because then post agm/ amara talks with the board, there would be an opportunity to realise new revenue streams with up to date information.

the problem is however that the review was done back in 2010, completed in august that year, and a year later in mid 2011 there were still no revenues emanating from either one of the ts/ dx sources. so from this we can reasonably conclude either the strategic review outcome was erroneous, or we required another one, or something to that effect.

now the only real reason i can see to continue with plusmarkets as a whole beyond mid 2011 vs selling it at that time would be because there was expectation that these revenue streams would indeed materialise. in the lack of any alternative funding they simply had to work.

in essence there was no point in forfeiting going concern status unless there was a high/ almost certain probability that new revenue streams would commence.

but then, what chance was there of being any new revenue streams arising from dx and ts in h2 2011 and beyond? like i say above the ideas in a fast moving market were already around a year old, had not generated any revenues so far, so was there anything to indicate they would work in h2 2011? i don't think so, and more to the point i don't think it was worth taking a chance losing the going concern status for.

[old thumper] 26/10/2012 16:10

Harry,

Back in 2011 everybody were happy to go for CT's plan to balance the books at around the £3m level and he did do a good job by cutting the expenditure. However clearly someone along with bags of gold causing the plan to go wrong. The company was re-organised so that it could be, unknown to the shareholders, sold off in 3 different businesses easily.

The bid for DX was never disclosed as to who the bidder was, but I always thought it was Connors and the reason for him being sacked. But he did a nice little bid because as we know he got it for £10k albeit he now without Plus's hardware and network and business presence to get it going.

But back to today, will the FSA bang them all up?

[harry f] 26/10/2012 15:47

#4029

i looked at it briefly and noticed that it seems maybe a bit mismatched in strategic terms?

assuming you'd invest on the hope of a global market upturn then im not sure if gold, which seems to be a major part of the portfolio is the thing to invest in. thats because investors "take flight" and move into gold when everything else looks bleak, and out of it when things look positive.

so perhaps it's a good fund for those with a bearish outlook? that said it does appear to be good value at the moment.


after the resignation of nick smith as a non exec from our board back in june. i searched around and noticed he is chairman of this company, which i have followed for a while.



the company seems to have been doing very well with the share price approximately doubling in the last 12 months or so, although recently it's become rocky. now my thoughts are if he has a good track record here in the past, and because he is now not involved with plus he has more time to dedicate to making this company a success.

at the moment i'm just waiting for a signal, a breakout above 640p levels would be what im looking for.

[harry f] 26/10/2012 14:49

i'll cover the possible opportunities that the old directors had to raise additional funds....or in their view the lack of opportunity. this is not the main event/ argument imo but needs clarifying, because like many things i can't quite understand how with what occurred and the explanations given how it all fits together.

bruce at the agm appeared amazed with the route the directors had pursued. he could not understand why when something was for sale there wasnt adequate cash in the coffers to make it anything other than a firesale with the commensurate reduction in value. as he stated even if we had an extra £1m to cover an additional 6 months losses, or even more in the bank at the commencement of the fsp would have have helped shareholder value a lot. i totally agree.

now i think as an experienced investor it was intuitively a correct statement for him to make. to have a business valued operating as going concern vs one which is not (or may cease to be shortly) is profound. the main reason i can think of is a going concern with no immediate rush to sell results in a form of leverage insofar that potential acquirers have to be more realistic in what they offer, the lack of this as we saw often results in what appeared delays/ stalling until things were ultimately acquired at a firesale price.

i don't think there's getting away from the fact that an extra £1m (6 months losses), maybe even £500k (3 months losses) in the coffers would have helped out cause a lot at the time. i doubt if anybody could disagree.

now the explanation provided by the board at the egm for not pursuing a strategy to raise additional funds was loosely as follows: that notably amari as a major shareholders were already at 18%, and there was a limit imposed via the fsa for ownership thresholds of an individual shareholder to be 20% or below.

going back further in time and recollecting events from a year earlier from the agm on 8th june 2011 as mentioned before 2 special resolutions were proposed, one which diluted pre emption rights with no apparent benefit to shareholders the other which would have enabled a 5p RI/ placing. ive pondered the question before were either of these feasible resultions to put to shareholders? anyway history tells us they were "thrown out".

post the agm in 2011 the directors would i feel definitely appreciate something, that being with the resolutions being "thrown out" and in the the absence of any alternatives that the market and it's participants in the future would increasingly value the company not as a going concern. it was still a going concern at the time, but clearly without alternative proposals to raise funds the going concern status would become increasingly doubtful.

at this stage i feel that urgency was the key because uncertainty over going concern status is akin to a "vicious circle", this is because as time goes on, more cash is burned, increasingly questioning going concern status, this feeds through to a reduction in the share price which then reduces the opportunity to raise more funds at or around the prevailing share price.

my feeling of what would have been the best strategy post 2011 agm would have been for the directors asap to liaise with major shareholders, amari in particular to resolve the issue. the directors who's remit is to preserve and enhance shareholder value would obviously need to stress the need for extra funds and the fsa 20% limit. perhaps they could come to some RI agreement that in the event of low takeup that amari would be limited to a max 20% ownership.

it does appear as though some dialogue indeed occurred in summer 2011 as it is mentioned in the open letter amara issued in june 2012, but for what appears to be a variety of reasons the talks broke down:




in the absence of this occuring then i can't see why proposing a RI quickly was out of the question, and why was this overlooked. the share price on the day of the agm was 2.05p and in the preceding 6/12 months had been approx 1.8-2p average.

all of the illustrative examples below are options which at the time, according to my calculations (subject to a minimum %'age of the total subsciption thresholds designated), where amari could apply for their full allocation and still not breach 20% ownership, and still raise £1m (plus or minus £15k)

these are: (allocation as decimal of existing shares/ minimum overall takeup required for amari to stay below 20%/ RI price)

a) 0.22/ 50%/ 2.35p
b) 0.25/ 55%/ 1.88p
c) 0.30/ 61%/ 1.4p
d) 0.33/ 64%/ 1.23p
e) 0.40/ 69%/ 0.94p
f) 0.50/ 73%/ 0.70p

this may appear confusing so i will expand on one, in fact what i believe is probably the most feasible which is option b), i'll explain why.

under this scenario, all existing holders would be eligible for 1 new share for 4 existing shares at 1.88p. now if 55% of this is "taken up" in total across the board with amari subscribing for their full allocation it raises approx £1m and amari stay below 20%, if more than 55% is "taken up" then it raises additional funds in excess of £1m and amari are still below 20%. (if anyone needs workings i'll be happy to provide them)

now one may ask, how do you know 55% would subscribe to the RI. that admittedly is indeterminable and perhaps a more suitable example, or should i say tempting option to shareholders is scenario c) where the RI price is at approx a 30% discount to the prevailing share price at the time and only requires 61% takeup. or perhaps d) or e)?

i think it all depends on how much an individual believes at that time uncertainty over going concern status was "priced" into the share price. for example if instance if a subscription at 1.88p had in the minds of market participants ensured going concern status when they believed this was uncertain before, it could well have had a profound effect on the share price, perhaps lifting it to 3p-4p? one could go as far as saying even on the day a RI was to be proposed the fact that this would indicate firm steps were being made to address the going concern issue that the share price increase to maybe 3-4p immediately, implying even 1.88p would be well discounted.

one may disagree with how much was actaully priced in, but personally my observations are as follows. a number of what appear intelligent and experienced posters on bulletin boards with a negative outlook on the company reiterated the subject (of FSA minimum cash requirements) frequently and often with apparent "indefatigable" effort. obviously "going concern" was near to the forefront of their minds as a reason not to invest, as it must have been with many others.

whichever one wishes to think would "fit best" i strongly believe one of a) to e) above was a viable funding option in mid 2011 yet none was never pursued.

im not deliberately forgetting close brothers here who at 19.69% were perilously near the 20% threshold. i wouldnt expect them as what appears passive shareholders, who apparently wrote off the investment a long time ago to subscribe to the RI.

and then another point is that if amari were strongly opposed to providing any additional funds in the absence of board changes as their open letter suggested then the 20% threshold problem might all but vanish, opening up a far greater array of RI options.


in summary therefore, for the funding issue my thoughts are:

1) resolutions were put forward at the 2011 agm to raise cash but "thrown out" because they did not appear in my opinion to be in the interests of existing shareholders. these were a reduction of pre emption rights without apparent reason/ public explanation, and a request for power to allocate shares without a commensurate reduction in nominal value which was approx 250% of the share price at the time.

2) with the precarious nature of continued "going concern" status post the 2011 agm i would have expected a dialogue between major shareholders and the directors to ensure this was addressed asap, as it was critical to business valuation. whilst this took place between amara and the directors, subsequent talks failed.

3) i believe various RI funding proposals/ options (such as those described in a) - e) ) above were viable in mid 2011 and i believe had one been put to shareholders at the time (summer 2011) in an egm would have obtained the acceptance of shareholders while maintaining the 20% limit on the amari investment that the fsa stipulates.

4) in the months post the 2011 agm/ talks breaking down with amari up until the end of 2011 there appears going off publically available information to be no further efforts made to secure funding via any means.

5) an offer for for 80% of dx was made in december 2011. whilst the rns disclosure relating to this mentions a buyer valuation of £1.25m we cannot assume this to be equal to net proceeds because the rns also stipulates that the buyer was also requesting plus contribute significant resources over a transitional period. this offer was deemed unattractive at a strategic level, clive connors employment was terminated and he was replaced by a consultant, and there was stated intent to revisit it's strategy and a commitment to relaunch in the future. £400k of extra funding was provided to dx in january 2012. by september 2012 a relaunch had not occurred and dx was sold for £10k.

6) with going concern uncertainty having a large effect on shareholder value, and with the "perceived" lack of funding availability from any source it would have made sense for the directors to propose to sell the group 6 months earlier, when the cash balance would be approx £1m higher, and the company was still valued (to some extent) as a going concern. when the decision to sell was disclosed, more than anything it resulted in going concern status being removed resulting in a "fire sale", heavily impacting the amount of residual shareholder cash.

[squirrel888] 26/10/2012 08:49

ok - just had a quick scan as in a rush this am. Should have more time later to read it thoroughly.

[old thumper] 26/10/2012 08:31

squirrel,

I need to read though the doc but I think the div is just from the trust assets but not from income. But the discount of 34% is attractive.

[squirrel888] 26/10/2012 08:11

Mrkt cap of 2.5m and a divi of 0.5p - I could live with that here as pmk grow as an investment company....that would be a nice divi..

[old thumper] 26/10/2012 07:14

Bit of reading before the EGM

Inital comments is to buy when the world is falling apart, but I may change my mind after a good read.

[old thumper] 25/10/2012 18:57

Harry,
I did point to one of the iii users that all the action is over here this afternoon.

Yes I agree I know a lot of people are watching these BB's, one of the reasons why I haven't explained how CT makes out of the deal here. No one sells his company without a carrot, and not a just severence fee.

Time's on our side as a far as I know crimes aren't written off after 12 months, overwise I'd go out more often.

[harry f] 25/10/2012 18:06

thumper

i assume the sfo/ fsa/ directors are already working on it, if not then they should be in my opinion. i remember you once said you thought the iii board was being watched by the new directors so maybe there looking here too, if not then maybe drop them a line on the iii board and divert them here, post #4021 in particular.

bruce from my experience is a bit more passive from my experience, i dont think there is that much value in contacting him.

btw, im with you all the way, i cant see any reason not to pursue this, none at all. its just so clear cut.

one thing though is we do need to be "compassionate" to the other side and appreciate their position, i dont know if thats the actual word but something like that. it's in nobodys interest for this to continue in its current state for any longer than it has to because it's detrimental to us all. even for instance if the veils of incorporation are lifted we might not be adequately compensated. now you'll appreciate why i went off on a wild tangent with the redemption argument last week, it looked wild at the time, but if i didn't think it was relevant i wouldnt have bothered.

i planned a few weeks ago to post something along the lines of #4021 today and the discussion which we've had in the interim period has helped me fill out the argument. thanks to all who helped.

i'll let people digest what's here for a while now but there is more to come in good time, probably next week, including a counterargument/ angle to post #4000.