Small Cap Value Report (Weds 26 Oct 2022) - MADE, MEAL

Good morning from Paul amp; Graham.

A couple of long-running problems (MADE and MEAL) look to be reaching the end game, so I typed up some thoughts last night (Paul). Happy to discuss, so please do add your thoughts in the comments.

0.7p (down 90% yesterday afternoon)

Market cap £3m

Update on Formal Sale Process amp; Strategic Review

Key points -

• Interested parties asked to make firm offers by end October (next week)
• All parties have said they are not able to meet this deadline.
• Hence discussions have been terminated.
• MADE is no longer in possession of funding proposals, or possible offers.
• FSP is still technically ongoing, but in reality I think it’s effectively over now.
• Board is considering the position.
• Will preserve value for creditors (not shareholders!) if it can’t raise further funding, or receive a firm offer before existing cash runs out (no figures or timing is given for this).
• Suspension of listing – might be appropriate.

My opinion – as regulars here will know, I’ve been emphatically ringing the alarm bells about insolvency here for a few months. I get no pleasure at all from seeing people lose money, so am not going to crow about this imminent failure. See our archive here for the warning signs.

Remember this only floated in June 2021, and now looks almost certain to go bust imminently. A total, unmitigated, disaster.

Is it worth a gamble at sub-1p? I would say no, but if it’s like betting on the Grand National for 100:1 for fun money, then that’s up to you. It’s usually not a good idea to throw good money after bad.

As mentioned before, someone is likely to buy it out of administration, so I expect the brand name (and concept) to continue in some form, but with existing shareholders wiped out.  A sorry tale.

4.0p (down 58% yesterday)

Market cap £3m

Update

This has been an absolute crock since day 1 – another disastrous 2021 IPO, that we’ve regularly torn to shreds here at the SCVRs, with good reason. Terrible product (I mystery shopped it several times), terrible management, and awful numbers, and horrific cash burn.  

I mystery shopped it again here, very disappointing, awful product.  Basic principle of retailing – if you appal and disgust your customers with terrible product, you won’t have many future customers!

Key points from the latest update -

2022 trading “remains in line with market guidance” (i.e. heavy losses amp; cash burn)

Cash reserves down to £3.5m

Assessing sources of capital – so it needs more cash, and it sounds like the stock market isn’t interested in pouring more cash down the plughole.

Considering whether to de-list from the stock market.

Mentions the “wider stakeholders” – which is one of the biggest red flags you can get, as this word often indicates existing equity is likely to be worth little to nothing.

My opinion - we’ve made it abundantly clear here at the SCVR previously that MEAL is not likely to succeed, based on the poor figures and high cash burn. To be fair, Directors did stump up a lot of the last fundraise in March 2022 from their own personal funds.

Surely even they must now be realising that the game’s up, hence why they’re thinking about de-listing?

I know it’s easy to be disparaging about companies that are failing, but at least they tried. We wouldn’t get anywhere as a society, if we didn’t have entrepreneurs, prepared to be bold, and try out new ideas, and investors to back them. In the case of MEAL, I think they executed badly, very badly. Bottom line for me, the products were generally awful, just terrible. Meat dishes only had tiny specks of meat, they were more like soup, not casseroles.

The top 9 shareholders at MEAL control almost ¾ of the company, so it looks likely to me they’ll probably just take it private, which would mean saving a lot of costs (listing fees, advisers, unnecessary NEDs, PRs, etc).

.The interesting thing here, is that in the last fundraise, the Directors were actually quite kind to minority shareholders, and paid a generous price for their new shares (20p). Whereas more hard-nosed types could have screwed private investors. So with only about a quarter of the shares in public hands, worth under £1m, there’s a possibility that the Directors might take it private for around the current share price. Or, investors could just accept the de-listing (if it happens), and continue to hold the shares in a private company, if possible.

Personally, I just like to draw a line under failed investments like this, and move on. Why waste time monitoring some lousy public business, that then becomes a lousy private business?

Bad luck to holders, but it hasn’t worked out, and is never likely to work out. Walk away, and find something better to engage your energy, is my view. Holding on to bad investments just saps your life force, as we’ve all experienced.

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