By Tom Winnifrith, The Sheriff of AIM | Friday 27 May 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Avanti Communications (AVN) started its AIM career not as a satellites business but as a provider of screens for pubs and shops, the loss making tin cans in space business came later. At that point uber bombast CEO David Williams decided to "lose" the original business via a demerger. Shareholders in Avanti were given stock in both entitites. Now track what happens next.
In his last results of the combined Avanti group, announced on the same day as the demerger document was published in March 2007, the chairman, John Brackenbury, wrote about the soon to be separate Screenmedia business which David Williams was the CEO of until demerger:
"The Screenmedia business now has the position it needs in the retail sector to flourish. Our retail pipeline is strong and shows that Screenmedia is, albeit later than hoped for, beginning to achieve its objectives in the retail sector and we expect significant contract wins in the future."
Fucking excellent, well done bombast, lets all hang onto the shares in Avanti Screenmedia, you have clearly built a top notch business with great prospects.
15th June 2007, First Profit Warning - 91 days after the demerger doc and 60 days after the demerger:
"Trading Update Following the demerger and flotation of the networks business, Avanti Communications Group plc, on 16 April 2007, trading during the year under review has been challenging as this was the primary focus of senior management for the majority of the year. The Directors believe that certain contracts and agreements that were expected to be included in the financial year to 30 June 2007 will be signed later in the next financial year and, as a result, revenue for the period will be significantly behind market expectations"
Oh dear... maybe the house that bombast built was not quite so brilliant after all...
6th August 2007, First Funding emergency announcement - 143 days after demerger:
"However, the cumulative effect of the lower sales than expected in the period to 30 June 2007 and implementation of the new strategy has had an adverse effect on the Company's cash resources and accordingly the Company is currently reliant on its overdraft facility. As a result the Board is urgently seeking additional funding for the business"
It gets worse... on 6th December 2007 the company publishes its results for the year ended June 30 2007 ( 75 days after demerger)
"The financial position has been exacerbated by the onerous terms of certain client contracts that were previously entered into, geared to delivering critical mass on the back of generating robust advertising revenues."
Oh shite, you mean that the bombast was signing off of deals that pushed up sales but fucked the bottom line? Really? That is really very bad form indeed is it not? Why would a stock promoter allow that to happen?
But at least we are all in this together are we not? The bombast was a big shareholder, indeed he was exercising options at 1p in the Screenmedia business prior to the demerger. Post demerger he was not, of course, involved in the Screenmedia business at all is job was to ramp the satellites story but he did have 1,432,021 shares in Screenmedia
However, an RNS released on 17 December 2007 said that he only had 1,218,521 shares - he had gone below 3%. Thus he had no need to announce when he dumped the remaining shares. The 17 December RNS says that Avanti was told by the bombast of his share sale on 13 December but that it happened on 4 December, that is to say two days BEFORE the disastrous results mentioning the onerous contracts that happened on the watch of Williams.
Clearly Williams cannot have known what was in the crap results as the share dumping would then have been illegal. So, say what you like about David Williams, but it is clear that as a seller of shares he has fecking awesome timing. He bails from the Screenmedia dog two days before its crap numbers. Meanwhile, back in 2010 after nine days which saw FOUR contract wins announced as well as the kaunch of HYLAS 1 and as Mr Williams pushed broker notes with targets of up to £20 towards journalists, he managed to sell £2.8 million of Avanti Communications (AVN) shares at north of £7. Today the shares are 76.5p to sell.
That Williams: as a seller his timing is just perfect. Kudos bombast. Your token buys of Avanti Communications stock have been tokens anyway and really bad calls, but your sells have been awesome. Respect.
Back to Avanti Screenmedia... on 2nd January 2008 (less than 9 months since the demerger) its shares shares were suspended as it couldn't publish it's results and then on 8th Febuary at its AGM, less than 10 months after demerger there was another profits warning. The company staggered on with a series of keep the lights on placings until 2nd November 2009 whren the grim reaper finally calls to end the misery.
Looking at the history of jam tomorrow promises and ultimate failure to deliver at this Avanti, rings a few bells for followers of the still living (just) Avanti, Communications. The share selling by Williams in both companies is pretty shrewd. And the issue of signing contracts which boost sales but screw the bottom line also rings bells as anyone who has looked at the SES transactions in Financial year 2015 (as the FRC is doing right now) will be aware.
Shares in Avanti Communications are now in the flares and winter of discontent decade. The next stop, and it will be soon as the cash crisis intensifies, is the Beatles and West Ham winning the World Cup decade. The ultimate destination is, of course, 0p. The Naughties.
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