21trader's Ratings

PANIC OUT by 21trader on 27 Jul 2014 14:43

Price at rating: 33.00, now:

There is a new star on Dragon’s Den, Piers Linney. Yesterday I revealed HERE how his Outsourcery (OUT) firm on AIM is in very real danger of going tits up just 14 months after listing. But Piers is no stranger to business failure. The BBC thinks he is a Dragon with the Midas touch. Au contraire. Today I reveal the full extent of his career of business trainwrecks and the sham projections of the Outsourcery IPO.r r Here is what the BBC says about Piers:r r Piers started his first business when he was thirteen and, although he always wanted to be his own boss, began his career in law and finance. Piers is of Barbadian and English descent, growing up in a small mill town in Lancashire where he attended the local comprehensive. r r He went on to read Accounting and Law at the University of Manchester and qualified as a solicitor in the City of London in 1997, specialising in venture capital. He then worked in mergers and acquisitions at Credit Suisse r r Piers left the City in 2000 to start an Internet business and has since been involved in a wide range of businesses across technology, media and telecommunications as a founder, investor and adviser. r r In April 2007, with his business partner, he led the buyout of a mobile voice and data reseller, which became the sector leader. Through four acquisitions, a Cloud hosting company was created and the mobile business was sold in 2011 to focus on the Cloud opportunity. Outsourcery was floated on the Alternative Investment Market in May 2013. r r Piers has been recognised as one of the top 100 most influential black Britons. He lives in central London and supports a range of charities.r r Hmmm let’s start with that life in the Mill Town where he attended the local comprehensive. Not only black but clearly working class to boot, how the BBC must love him. It’s a shame he is not gay as that would tick all the boxes. Er… Piers (his real first name is Jonathan BTW) is the son of Derek (MA Cantab) an export executive and Norma a nurse. They live in a very pleasant edge of town close of detached houses. This is not exactly a grim Northern slum upbringing with communal outside lavatories is it? r r We move on to how Piers left the City in 2000 to start his own internet business. Didn’t everyone in 2000? Quoted in a verbal blow job piece in the Daily Mail last week, Linney stated: “When the internet came along, I saw it as a gold rush, so I had to get involved. I took my bonus in 2000 and walked out the door to set up on my own. My friends and family thought I was bananas.” How very rational. Linney’s venture was called Doctorsworld and owned Doctorsworld.com. It managed to secure initial funding and in 2001 was seeking a second round of £2 million promising that it would be profitable within a year. It did manage to file its accounts for 2001. But that was it. The company was dissolved.r r This was not Linney’s first failure as he hit 30. By then he had already been a director of six companies which had to be dissolved. And the track record has continued in a similar vein.r r Companies House records show that he has been a director of 32 firms that ended up folding. Among the standouts are Interactive Media Developments Ltd which was liquidated in 2007 with debts of £462,000. And he was company secretary of Itchy Media Ltd which was wound up owing £565,000.Others firms folded after six-figure losses. r r But what about the successes? Back to Companies House. Current directorships outside of Outsourcery are listed as The Powerlist Foundation but apparently that is classified as “The Company Not Trading” and Key Real Estate which was set up in October 2006 and is still going. Well done Piers. Its last accounts (2013) show cash nil, current liabilities £3,058 and er that is it. It appears to be worthless.r r So where did Linney make his money? He claims a £100 million fortune. Hmmmmm. Look to Towergate Capital a City corporate finance boutique registered with the FCA from October 2001 and which Piers - according to the FCA register - joined in July 2003. His background was a City boy and he stayed with Towergate full time until 2007 and in some capacity until 2010. I guess being a City boy helped pay the bills while business after business of which he was a director went tits up.r r And that brings us to Outsourcery which started off as a telecoms business bought out of DSG in 2007. A few other acquisitions followed but in 2011 that business was sold for £12 million which was kind of handy as the cloud business that Piers is building up eats cash like there is no tomorrow. But the IPO was meant to solve that. I quote from the prospectus in May 2013:r r As the Group’s revenues scale up, its current loss-making position will narrow towards profitability. The funds from the Placing will enable the Group to further consolidate its market leadership position and benefit from a range of competitive advantages as it exploits the significant market opportunity and grows its recurring revenue base. The Placing comprises the Company raising funds of £10.0 million (net of expenses) to fund it through to cash flow break-even.r r As it happened £13 million was raised. But fuck me the prospectus was just not true was it Piers? Within just seven months Outsourcery had to raise another £4.2 million. Had it not done that then as at the 31st December 2013 year end it would have had NEGATIVE net assets minus debt of c£1 million. In other words it would within seven months of flotation have been heading fast for the fate one associates with almost every other company Piers Linney has set up.r r So what’s the score now? In the next four days Linney will announce plans to refinance. The shares are more than two thirds down on the IPO price at 34p. As things stand cash+ trade receivables minus (trade payables and debt) is almost certainly less than zero. And that number is getting worse by the day. Profitability is three years away IF the company can raise £5 million and hit – much delayed – targets. r r Since it may go tits up and deserves to go tits up, since its prospectus was not true in terms of having enough cash to hit breakeven and since Piers Linney has a CV of business failures par excellence this company is clearly a sell. My target price is 1p.r r But perhaps I have got it wrong and the BBC has identified real talent. I leave you to judge with a couple of quotes from Linney himself. On the share price:r r “The City does not quite grasp the scale of the opportunity… Trying to explain what we do and the scale of opportunity to a generalist investor is very difficult…There is an obsession with what month next year are you going to be profitable.”r r Shucks I am just a generalist investor so I guess things like missing your sales targets, being almost tits up in a cash sense, not having a hope of making a profit for three years (best case scenario) despite what you said in your IPO just 14 months ago are all irrelevancies. Silly me. I just do not understand the genius of Piers.r r But it seems that other folks are waking up to the true genius of this modest man. Piers says:r r “I am now stopped on the street, people do recognise me,’ he says. But I am not at the Tom Cruise level yet.”r r Oh Piers, you are not yet as well-known as Tom Cruise. Not yet at least. How modest you are. Do you think that setting up a company that does NOT go tits up is your very own Mission Impossible?r