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Parallel Media – update at no-one-is-watching o’clock: how do you lose 33% of the company?

By Nigel Somerville, the Deputy Sheriff of AIM | Wednesday 12 July 2017


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.


Last night at no-one-is-watching o’clock AIM-listed Parallel Media (PAA) slipped out a correction to its major shareholders listed in the recent full-year results for 2016. Actually, it was a major correction: 33% of the company!

Now had it been a small mistake it wouldn’t have been worth commenting on, but here is the shareholder list from the FY16 results:

David Ciclitira Concert Party

1,013,275

33.67%

Rathbone Nominees

600,000

19.94%

Hargreaves Lansdown (Nominees) Ltd

 588,230

19.55%

HSBC Global Custody Nominees (UK) Ltd

405,024

13.46%

Ranjit Murugason

180,742

6.01%

Vidacos Nominees Ltd

136,187

4.53%

JIM Nominees

118,158

3.93%

Cantor Fitzgerald Europe

106,769

3.55%

HSDL Nominees Ltd

92,261

3.07%

You will note that the total number of shares held by persons beneficially interested in 3% or more comes to 3,240,646 and we are told this adds up to 107.71% of the stock! Oops.

Last night’s statement read:

In the Group's annual results for the year ended 31 December 2016, distributed to Shareholders on 30 June 2017 and announced via RNS on the same date, a table listing substantial shareholders in the Group was misstated. A correct list of substantial shareholders in the Company is confirmed as follows:

Substantial Shareholders

The following investors have notified the Directors that they hold or are beneficially interested in 3% or more of the Group's ordinary share capital:

 

No.

%

David Ciclitira Concert Party

1,013,275

33.67%

Hargreaves Lansdown (Nominees) Ltd

 588,230

19.55%

Ranjit Murugason

180,742

6.01%

Vidacos Nominees Ltd

136,187

4.53%

JIM Nominees

118,158

3.93%

Cantor Fitzgerald Europe

106,769

3.55%

HSDL Nominees Ltd

92,261

3.07%"

 The Company's issued ordinary share capital comprises 3,009,233 shares.

So Rathbone Nominees and HSBC Global Custody Nominees, previously stated as holding 33.4% of the company between them have disappeared. A third of the company!

Not only that, but there are now only 3,009,233 shares in issue – as against the previous total (of just 3% or greater) of 3,240,646 shares, which apparently represented 107.71%. Oops and double oops.

You will note that last night’s statement simply explained that it was a “misstatement”.

How does that happen? Did nobody notice that a total of 107.71% might be a little too high? Where did Rathbone and HSBC holdings come from? (Hint: it is not a cut and paste error from the FY15 results).

I’m not sure who is to blame. Maybe it is the company, maybe it is one of the advisers – the broker/Nomad or Auditor. But given that the number of shares in issue was wrong as well as the holders, it seems mightily careless to me and gives a poor read to the company’s systems and controls.

I’m not sure I would want to be holding the company’s shares – especially in the light of full year results and BB madness HERE - what else could be “misstated”?


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