AML - Stock Market Listing
Discussion
pschlute said:
In the 10 years before the IPO there was only one year (2017 I believe) in which AM made a profit.
Any floatation was madness, but they managed to trump that with lunacy at £19 a share.
Nowhere to run and hide now they are public.
Any floatation was madness, but they managed to trump that with lunacy at £19 a share.
Nowhere to run and hide now they are public.
'Tech' companies seem to be exempt, especially during the 'dotcom bubble', but normally you need to make a profit before a flotation for it to be popular.
I have the historic profit/loss figures on another computer, but from memory I think you are right about the past 10 years.
There were though several consecutive (pre-tax) profitable years, towards the end of the Ford ownership era (Dr. Bez).
No doubt far less than Ford put into the business, but I don't think that has ever been revealed.
They had the three popular design models which sold very well. In one year they set the Gaydon production record of over 7,000. To be fair though, there was perhaps less competition then, because it was before Mclaren and maybe some others.
The offer document by Investindustrial, to purchase 3% of AML shares for £10 cash has been published today.
I am puzzled by this action because as we know, the current share price is well below 1,000p.
Perhaps, as they had announced their proposed offer some time ago, they are committed to proceed.
Very unusual for a business to pay £10, for something which is available at about £5.
Who can explain more?
A further question arises about whether recent purchasers of AML shares, some at 460p, can now sell for 1,000p?
I could not see the date, when holders must be on the share register to be able to partake in the offer.
If that type of arbitrage is possible, then the offer will be considerably oversubscribed, leading to a scaling back in the number of shares being purchased.
As was mentioned earlier in this topic, it has been reported £450 million was raised in the IPO, but about £1 billion value lost since then. This purchase will cost about £68 million.
According to this article (link below) more information has been revealed, about the previously unnamed buyer of the Vanquish IP.
The £20 milion contract value was included in the H1 2018 profits, only a few months before the IPO. As you are aware, AML have recently stated that £19 million will now probably have be reversed in their 2019 accounts.
https://uk.finance.yahoo.com/news/aston-martin-tho...
If the article has any validity, then this tale has become even more bizarre.
Seeking the company’s help in developing a vehicle chassis system.
Former director of Lotus.
The Aston Martin alloy VH chassis was originally made by a supplier, in the same factory as the Lotus chassis.
You would think a 'former director' must have known that. The electric car shown on the website, does have a resemblance to a Lotus.
Edited by Jon39 on Monday 12th August 23:24
I had never heard of the company named in the article.
Then looked up their name on the internet and also at their website.
My brief look left me with the impression of yet another sports car entrepreneur with a dream.
They mentioned a production date. Think it was a few years ago!
Perhaps that was a warning sign.
However, AML were quite open about the non payment in their IPO Prospectus;
'As at the Latest Practicable Date, the first stage payment for the contract of £5.0 million, due 31 August 2018, had not been received. Further stage payments in the same amount are expected 31 December 2018, 30 June 2019 and 31 December 2019.'
The amount is significant though, because it almost equalled the entire pre-tax profit for AML, in the first half of 2018.
Edited by Jon39 on Tuesday 13th August 12:31
KevinBird said:
Thanks for posting the link Kevin,
(even Includes a few good high res. AML photos to borrow, for private use only of course).
The points below are not new, but probably summarise what many of us have been talking about for a long time, some of which is mentioned in the newspaper article.
1. The IPO was never going to benefit a company such as AML, but we think we know where the push for that came from.
Continually being scrutinised is not helpful for some types of business.
If the IPO had not happened, AML would now be quietly progressing their business plan.
They did not raise new money in the IPO, so the only financial beneficiaries would seem to be the existing majority owners (was it about £1 billion) and the outside firms involved in the float (was it about £130 million).
2. (a) Very high capital spending associated with new model development was known at the outset.
(b) The cyclical nature of car manufacturing was also known, so a sales slowdown would arrive at some point.
Perhaps (a) ignored (b) which could risk running out of cash.
3. Spending more than earning will continue for some time, until the income from DBX can reduce, or eliminate the outflow of money.
AML have mentioned new cost controls (no overtime, or recruiting) but perhaps the development costs for so many new models at once is too ambitious. The debt interest payments are fixed commitments and the dates of debt repayment (hopefully refinancing) are getting ever closer. DBX should be the financial saviour, so maybe spend on that and delay some other future models, until cash is flowing in from DBX. The Lagonda electric projects come to mind, because is anyone now making profitable electric cars?
Edited by Jon39 on Saturday 17th August 14:01
Buster73 said:
bignoise said:
Hi
I received a letter offering me £10 per share now im not an expert in share dealing etc and you never get anything for nothing so is there a catch given I would double my money?
Also if I accepted would be allowed to re invest in some more shares?
Sorry if this seems a silly question
A letter from whom ?I received a letter offering me £10 per share now im not an expert in share dealing etc and you never get anything for nothing so is there a catch given I would double my money?
Also if I accepted would be allowed to re invest in some more shares?
Sorry if this seems a silly question
Ask yourself why they’d give you £10 when they can buy them for less than £5 on the market ?
This has been discussed earlier on this topic, but life is to be lived, so don't worry that you missed it. -
The £10 offer is by a subsidiary of Investindustrial, the private equity firm which is one of the main shareholders in AML.
The whole offer still puzzles me.
Investindustrial sold part of their holding at the time of the AML stock market flotation last October at £19 which raised about £450 million for them. Since then, their remaining holding has a value loss of about £1 billion, ouch. I presume they announced their £10 offer to hopefully try to keep the market price up. Since their intended offer announcement, the share price moved down from £10 to about £5. I might be wrong, but I can only assume that Stock Exchange rules make them go ahead with their offer, even though they are paying £10 for £5. No one commented on that question, when raised earlier.
As mentioned above, the applicants will almost certainly be 'scaled back', so don't expect to be able to sell all or any of your shares.
It is an unusual situation.
Edit - you are spot on Minglar. We were typing at the same time, sorry.
Edited by Jon39 on Saturday 17th August 15:43
pschlute said:
One point made in a few of the financial articles about the £10 share offer is why are they not required to launch a full bid for AML. My understanding from those articles alone suggest that under stock market rules their shareholding will take them to a level where a full bid is compulsory ?
I have not checked the figures again but from memory, after they sold some of their shares in the IPO, their remaining total holdings were still above 30%.
The IPO Prospectus has an explanation, about special permission being obtained to be exempt from making a full bid.
Did not read very thoroughly, but they might have also needed further permission for this 3% increase to also be exempt.
That is roughly the explanation, but you are right about 30% normally being the cut off point.
LooneyTunes said:
Does anyone know if AM actually delivered the tooling?
I don't, but contract law would presumably indicate that AML would still own that property, even if it has been delivered.
However, probably of little use now to AML anyway.
Do you think it was a bit cheeky that the default took some time to be announced, particularly because the amount involved almost equaled the total pre-tax profit for H1 2018? Those results were the last before investors bought into the IPO, therefore unaware that there was actually almost no pre-tax profit for H1.
Edited by Jon39 on Tuesday 20th August 22:17
avinalarf said:
...... Another and I believe , correct me if I'm wrong, more apposite factor is that no new money was created at the IPO and it was the management that was able to realise their investment.
A comprehensive post Steven.
You are correct that no new money was raised in the IPO by the Company.
That surprised me at the time, as it is very normal for additional equity capital to be raised in an IPO.
Presumably they must have considered this, but decided no. A strange decision, because developing many new models is very expensive. Equity money does not have to be repaid and no dividends have to be paid either, unlike a loan where there are obligations for both interest and repayment. A further percentage of ownership is obviously handed out, but at £19 it would have been a much smaller percentage compared with now, to raise the same amount of money.
I think some management (and ex-management) did sell in the IPO, but the biggest sellers were the existing two main investors.
Investindustrial sold some of their shareholding and raised (I think) £450 million.
If as was widely thought, the pre-IPO hype created an artificially high flotation share price, then I wonder what Investindustrial think, because they gained £450 million, but their remaining holding now has (I think) a value loss since the IPO of £1 billion. A very significant amount even in the private equity world.
You are quite right Neil, but I did say value loss not actual loss.
Valuing investments can get more complicated the deeper one delves.
I think they might have subscribed further capital, in addition to their initial investment which you described.
One could also consider money value changes during the period of investment. £1 in 2012 is of course not worth £1 now.
( I have mentioned this before, but their significant involvement beginning in 2012, was prior to Andy Palmer becoming CEO. )
Overall though, to own an asset which at one point is worth X, then just 10 months later is worth X minus £1billion, might make sleeping at night slightly tricky for some people. As you say it is only on paper, but they must have concerns, hence the 3% repurchase, which cannot have gone to plan and they have ended up paying 6.8 million times, £10 for £5 (£4.70 today).
The share price now is representing investors anxieties about a possible rights issue to raise additional money. Perhaps the early DBX customers will be asked to pay a significant reservation deposit at the time of order. That would help cashflow in the period before production commences.
Edited by Jon39 on Wednesday 21st August 17:48
RobDown said:
Jon39 said:
Several people on here have wondered this;
Why are Investindustrial paying £10 for shares, which at present cost £4.79?
I entered the question in to a search engine.
There is no answer.
Being serious Rob, might I be correct to say, that once the original proposed offer was announced to the Stock Exchange (AML trading just above £10), that there was then an obligation of some sort (SE rules perhaps) to proceed?
They presumably knew nothing about the imminent profits warning (even as an AML board director), so it was just unfortunate timing for them, that the share price declined so far below their offer price.
pschlute said:
Do a poll on here as to who thought about buying shares when the idea was first floated (pun intended). I imagine like everyone else, I immediately thought oh yes, where do I sign up.
'like everyone else', not necessarily. If you look back to the comments made during the early days of this topic, quite a few people here were fearful about AML entering the 'den of scrutiny', which publicly quoted companies face.
pschlute said:
Do another poll about how many did invest having seen the price and the valuation that implied for the company. Bargepole and touch come to mind.
Yes, at a nearly £5 billion value. That is not said with hindsight, because it was widely discussed here at the time.
Anyway, people (sometimes with their customer's money) did buy all the shares being offered. Everyone was happy and smiling on the stock exchange balcony. That was at the begining of trading on the first day. It was probably more of a fixed grin by 4:30pm.
What seemed to amaze many on here last October, was why the Company did not raise equity capital in the IPO. The numerous new models and factory fitting-out capital requirements were known then to be huge. It is a very common practice in IPOs, so I am mystified why it was not done. Does anyone know what the reasons could have been ?
The 12% interest rate being paid on the new additional borrowing, could have otherwise been zero percent if they had raised equity capital, because the Company are not paying any dividends to shareholders.
At the end of 2018, fixed rate borrowing was £679 million. With the announcement now, that takes the total up to about £800 million, with a further $100 million available. These seem to be enormous figures.
There has been a long held opinion here, about the crucial financial importance of the DBX. This has now become a widespread view amongst financial commentators. I am sure the DBX premium SUV should sell though. I followed a big SUV today thinking it was the usual Audi Q7, 8 or 9, but at a traffic stop I could read Maserati. Perhaps the Audi Qs have become too common and hopefully, some of those customers will be moving up into the premium SUVs.
Edited by Jon39 on Thursday 26th September 08:11
Ken Figenus said:
m33ufo said:
Has anyone here actually provisionally accepted the £10 per share purchase offer?
Yes but I gather it isn't a done deal for us all - and the time is up on it now so it has to be actioned. Has anyone heard anything - will they follow through - as I will gladly take £10 each.As we discussed earlier, an offer of £10 for an asset worth £5 does not happen often, so the uptake was bound to be enormous.
The offer is now closed and there is an announcement you can read on the Aston Martin Lagonda investors page. Look for Regulatory News, then the PDF for Partial Cash Offer.
Often under these circumstances applicants will have their transactions proportioned, but in this case there seems to be a slightly different conclusion, but I could not understand how it is to be done. Perhaps Rob will be kind enough to explain.
A brief visit to AM Sevenoaks.
There appears to be a significant increase in the number of new cars parked on their frontage, including 8 new Vantages.
Hope these are all customer orders cars and not one of the things which chartered accountants lookout for, which I am told is called ‘channel stuffing‘.
The Sunday Times have an Aston Martin article today, but it simply repeats what has already been discussed on this topic during the past year.
DickyC said:
Caution required with this argument. With the possible exception of the transition from the Bamford & Martin to Bertelli eras, every change of direction in AM's history has brought predictions of doom. A new backer arrives in the nick of time and off we go again with the new car or production method and new customers buying cars most of the previous generation of buyers wouldn't have contemplated buying.
Although that has been the pattern historically, there is a major difference now.
All of the numbers are so much bigger. Employee numbers in the thousands, vehicle production numbers need to be higher than ever before. Debt nearly £800 million. ‘A new buyer in the nick of time‘ might not be so easy to find, if (hopefully not) there were to be a ‘next time‘.
Gassing Station | Aston Martin | Top of Page | What's New | My Stuff