Good morning!

The list for today is going to be something like this:



J D Wetherspoon (LON:JDW)

Wetherspoon shares are marginally lower after beating H1 forecasts but expressing caution on H2.

LfL sales were up 6.1% in H1, but slower growth and higher costs are anticipated in H2, so the full-year forecasts are unchanged. Here's the half-year report. Relevant for a wide range of companies in the sector.



Conviviality (LON:CVR) (suspended)

Conviviality has confirmed that it is working on "the possibility" of an equity fundraising, to fund its VAT payment.

Given that its existing lenders were already maxed out, and probably unimpressed by the company's ability to make cash flow projections, this has seemed the most likely outcome.

To its credit, it did succeed in cancelling today's dividend payment, saving £8 million. That relieves some of the pressure - I was penciling in a 50p placing price, but that is looking a bit pessimistic now.

Of course, this is purely speculation on my part: it all depends on the hunger of existing shareholders, and the demand for new shares. It's impossible to tell where the demand for more shares will find equilibrium against forthcoming supply (incidentally, this is why dilution is so risky for existing shareholders - you have no idea how bad the dilution is going to be). Funding could happen at almost any level.

The irony is that Conviviality paid out nearly £20 million in dividends last year, and is now scrambling to find £22 million from somewhere.

Even before this VAT débâcle, I thought Conviviality's dividend payments were questionable. Over the last three financial years, including this one, it has raised over £190 million (gross) from shareholders to fund acquisitions, paying significant fees. At the same time, it has distributed £27 million in dividends, triggering tax liabilities for shareholders. Given all the frictional costs involved, why raise funds and return funds at the same time?

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