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Fishing Republic – more confetti to come as 18-month just not an issue

By Nigel Somerville, the Deputy Sheriff of AIM | Sunday 7 August 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.

AIM-listed Fishing Republic (FISH) only came to the Casino on 4 June 2015. Apparently newly listed companies are supposed to come to the world’s most successful growth market with 18 months’ working capital in the bag. But on Friday it was announced that Fishing Republic is calling a General Meeting in order to seek shareholder authorities to allow it to issue yet more confetti.

Heck, never mind the rules of the game – let’s just say that we want to expand faster than previously envisaged. That’ll do it!

Of course, AIM Regulation has been shown to be a tad docile in the regulation department. We know this because it still has not booted ShareProphets AIM-China Filthy Forty play LED International Holdings (LED) into touch, despite the company being suspended from trading since 22 Dec 2015 and AIM Rule 41 stating that six months suspension leads to expulsion. Mind you, at least in that case the Nomad has had the decency to resign and force the issue.

Then there is another ShareProphets AIM-China Filthy Forty outfit called Global Market Group (GMC) which the Oxymorons were somewhat tardy in calling to the execution chamber over a month after its Nomad walked. Hey, that doesn’t matter: oh, and didn’t you know that the then Chancellor George Osborne was in China promoting the virtues of increased ties between the Chinese and London markets? Just pure coincidence, you understand.

But as for our FISHy friends, since joining AIM 14 months ago it has turned on the printing press three times already: £0.5 million announced on 18 Dec 2015 in order to fund expansion (oh, and a new FD),  £335,625 on 10 May 2016 from the exercise of options by its Nomad/Broker, Northland, and a rather more substantial £3.75 million on 27 June 2016 in order to support its expansion plans.

All that, and the company had no idea that it was going to undertake such a substantial expansion when it listed only in June of last year, raising £1.5 million of new capital?

Now I’m sure that the funding rounds thus far had nothing to do with the £0.92 million operating cash outflow in the year to Dec 2015 – a period which ended just a few days after it announced intention suddenly to go for such a major expansion that it needed to raised fresh capital of £0.5 million in order to fund ongoing cash outflow (oops) the expansion. And the company posted a net cash inflow of just £0.6 million, despite raising (net of costs) £1.7 million from issues of equity.

Tom Winnifrith has asked some hard questions about the company’s balance sheet regarding the amount of  inventory, wondering why it was not being written down, and pointed to the pre-IPO rent-free existence HERE.

And so now the company wants shareholder authority to issue more confetti on a non-pre-emptive basis. That’ll be placing ahoy, then. A cynic might wonder at this, given that the company only held its AGM in May. Why were those authorities not sought then? What has changed that since May the ability to raise cash has become important enough to warrant an EGM?

So much for the 18-month rule. 

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