XPS – Expansis implodes

XPS (Expansis ) is down 4% today, taking its share price losses down 65% YTD. XPS is a specialty retailer selling tech on online and via tele-sales. Their website explains that they help “mobile networks and technology brands acquire and develop direct customer relationships and experiences worldwide, using out unique footprint, infrastructure and experience”. Tele-sales. Sounds dreadful.

In Sep 2010, the company had 178m shares in issue. On Sep 2011, it 1156m in issue. Aye aye, what’s been going on there, then? A scan through the RNSs reveals that on 6 Jul 2010, the company proposed and placing for DSNS (Data Select Network Solutions) and PJ Media for a combined consideration of £38m. “Each of the Acquisitions constitutes a related party transaction for the purposes of AIM Rule 13.” One member of the party was Peter Jones, of Dragon’s Den fame.

Given that the market cap of XPS is now worth £4m, I think it’s safe to say that the purchase has been a colossal destruction of shareholder value. I note that, according to Digital Look, Peter Jones CBE is still a director of XPS.

There are clearly grave corporate governance issues with this company. Peter Jones has a lot to answer for.

I love this bit: “The Independent Directors, having consulted with Cenkos, consider the terms of the Acquisitions to be fair and reasonable in so far as Shareholders as a whole are concerned.” This has not been borne out by subsequent events.

An RNS was released today announcing the preliminary results for y/e 30 April 2013. Turnover, adjusted pre-tax profits and unrestricted cash at the year end were all down. They spent £1.1m on restructuring costs, and additional money on aborted acquisitions and settlement of a supplier claim. The also wrote down some goodwill.

Disgraceful.

“We predict further short-term challenges in FY14”. Yip.

I notice that the major shareholders include Legal & General, and Newton Investment Management. The value of their holdings is not large, presumably they were subject to heavy dilution due to the placing.

The shares have lost 96% of their value over a 5-year period.

Thanks go to @bigbigdave for suggesting this as a “penny dreadful”.

For a Penny Dreadful it surely is.

Happy and prosperous investing to you all.

About mcturra2000

Computer programmer living in Scotland.
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