Freesteel

In January 2006 the ownership of Edgecam and its 3-axis kernel passed to Planit with its acquisition of Pathtrace Limited (02485210). (Pathtrace is now a “dormant company”, according to its listings at Companies House [the accounts]).

Here is its extraordinary chain of ownership, worthy of Enron or Tony Blair, pieced together from around 20 documents purchased from Companies House.

Planit Software Limited (02093062)

Directors: Bryan Pryce and Jonathan Lee, Employees: 130

Planit Holdings Limited (01731539)

Directors: Jonathan Lee and Bryan Pryce, Employees: 30

Velocity Acquisitions Limited (05943914)

Directors: Ian Grant, Richard Green, Richard Moon, Jonathan Lee and Bryan Pryce

Velocity Investco Limited (05943898)

Directors: Ian Grant, Richard Green, Richard Moon, Jonathan Lee and Bryan Pryce

Velocity Holdings Limited (05943865)

Directors: Ian Grant, Richard Green, Richard Moon, Jonathan Lee and Bryan Pryce

It also says that August Equity Partners 1 GP Limited holds 1,825,000 ‘A’ Ordinary shares which leaves 400,000 shares unaccounted for after subtracting the 250,000 directly held by 3 of the directors — until correct this by doing the calculations in the Annual Return

August Equity Partners 1 GP Limited (04141155)

Directors: T J Clarke and R J Green

But there’s more:

That is to say this company is simultaneously a member of the following two partnerships:

August Equity Partners 1 (LP007896)

Type: Limited Partnership, Previous name: August Equity Partners IV
No other membership information disclosed

August Equity Co-Investment Fund 1 (LP012301)

Type: Limited Partnership, Registered: July 2007
No other membership information disclosed

August Equity LLP (OC313101)

Members: R J Green, T J Clarke, I D Grant, P M Rattle, A Hassan, August Equity Management Limited

One of those partners isn’t a human being…

Directors: T J Clarke and August Equity LLP

So, August Equity Management Limited is owned by, is directed by and is a partner in August Equity LLP.

Is this normal?

No wonder these financial management types don’t have any time to get to know anything about the stuff which they actually own!

As it says:

Vero Software and Planit Holdings Merge, form Third-Largest CADCAM Vendor

The Planit Group offers its software products globally under the Edgecam, Alphacam, Cabinet Vision, CabnetWare, Javelin and Radan brands.

Vero focuses on plastic injection moulds, sheet metal stamping dies, multi-axis milling, laser cutting and wire EDM, offering its software products globally under the VISI, PEPS, Machining Strategist and SMIRT brands.

The combination of Vero and Planit creates the third largest CADCAM vendor — only behind Dassault Systèmes and Siemens PLM, according to the companies. The merger of the two organisations will provide the platform to build stronger products through significantly enhanced development capabilities and further extend a growing influence on the global market, according to the company.

The merger has been funded by Battery Ventures (Boston, USA) who have been investing for more than 25 years in technology-driven companies and work hard with management to build their presence into global market leaders.

Never mind the branding, what will become of the software? I believe that Edgecam still has its own home-grown 3-axis kernal, as does Vero (from the NCGraphics Machining Strategist kernel).

Will one of them be discontinued and replaced by the other, or will there be an effort to merge the code (impossible) or at least salvage something by linking one on to the other as a library?

Like everyone else, Edgecam buys its 5-axis kernel from moduleworks, so no change there.

All that’s left is the user interface and other gubbins (eg post-processors). Very difficult to discontinue them and force users onto the other one.

It’s expensive and pointless (except in the very long term) to merge software products that have never been together. The expense was lost in duplicating the effort in the first place.

So, although what you can do with the software is all that should matter, this is going to be ruled by the finance guys, who work to a completely different model where one programmer is interchangeable with another.

Hopefully lots of financial statements will be disclosed in the process which may illustrate the curious extent of disconnect between the software development and the management that is usually present in these sort of businesses.

Planit Holdings Company No. 01731539
Previous Names:
Date of change Previous Name
01/12/2006 PLANIT HOLDINGS PLC
08/03/1989 MEMCOM INTERNATIONAL HOLDINGS PLC
04/03/1991 TELFORD GROUP PLC
30/10/1998 BRITISH THORNTON HOLDINGS PLC

I appeared to have made a fundamental error in mistaking a document published in March 2009 by Capital for Enterprise Limited entitled “guidance for Enterprise Capital Funds” as having anything to do with the Capital for Enterprise Fund (which bailed out Vero Software in December 2009).

Oh well.

Nevertheless, following my FOI request about the information they received, they supplied me with what appears to be a close approximation of an Investee Summary Sheet for that particular transaction, and disclosed that there were 38 of them in total.

These funds tend to keep their operations as secret as possible, and provided the following explanation for this confidentiality in my last Decision Notice

33. BIS has also provided the Commissioner with evidence of similar prejudice occurring in a comparable situation. BIS explained that a named Capital for Enterprise Fund portfolio company, suffered adverse publicity as a result of voluntary disclosure of information that related to the company by a Fund Manager. This is another fund similar to the ECF programme which receives some investment from the government. It explained that the disclosure resulted in damage to the fund and the investee company. In the aftermath of the press coverage, it stated that there was significant disruption to the business and diversion of management resources to reassure customers and other stakeholders as to the businesses viability. In addition following press scrutiny surrounding this investment there was a noticeable aversion by investee companies for it to be a matter of public record that they had received funding from the Capital for Enterprise Fund as they wanted to avoid similar scrutiny of their business and because there was clear reputational risk of undergoing such scrutiny. The Commissioner considers that whilst this relates to a different funding programme and different information was disclosed, this example provides some evidence as to the nature of the prejudice claimed occuring in this case. This is because the SMEs which apply for ECF investment are private companies which may not wish to come under public scrutiny and therefore may be detracted from applying for such funding programmes.

And what was the “named Capital for Enterprise Fund portfolio company” I had to ask? It was KeTech.

Creditors to Mandelson-backed KeTech face losses
A private company that received £2.75m from a Government-funded scheme set up by Lord Mandelson less than a year ago is to file for protection from its creditors.

Mandelson faces embarrassment over KeTech’s pension black hole
The Government’s investment arm has begun investigating how a taxpayer-funded scheme rescued a company without noticing that one of its subsidiaries had failed to pass on thousands of pounds of its employees’ pension contributions.

Oh, so the Capital for Enterprise Fund managers or related government operatives apparently failed in their diligence, which was only found out when the company entered into a sort of bankruptcy process in which creditors lost money.

…And that is your cited example to justify zero disclosure about these venture capital funds?

Come on.

I mean, the press scrutiny was primarily about the shortcomings in the official scrutiny by the financial professionals hired to oversee this case.

And that press scrutiny is then described to the Information Commissioner as a case of unwelcome outside disruption and reputational risk — which he accepted as reasonable!

Only in the financial sector can an administrative failure get converted into an intangible asset with such ease.

Why do these cock-ups keep morphing into successful conspiracies?

Further to the Vero Sellout, I have been trying to make the figures add up.

According to the 30 page document:

The value [of £7.19million] attributed to the existing issued and to be issued share capital of Vero is based upon the 37,261,166 Vero Shares in issue on 17 May 2010, the 2,600,000 Vero Shares which are the subject of options granted under the Vero Share Option Schemes and the 1,232,820 Vero Shares which are the subject of the Warrant [all at 17.5 pence].

This adds up, because (37261166+2600000+1232820)*0.175 = 7191447.55

But what’s this Warrant?

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I’m unlikely to do justice to the published machinations and financial jiggery-pokery going on with the fictional entity known as Vero Software Plc.

Let’s be clear, I am not referring to the their software, history, products, officework, and daily commutes and screen computer work that a number of human beings do to earn a living, which undoubtedly do exist.

This is a question of the impenetrable corporate legal incantations and gameplay done among absentee owners and fincancial wizards that merely determins who sits in the boss’s seat and directs the workers in the coming months and years.

As they say on 17 May 2010 in a 30 page document:

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The week began with a few days getting ScraperWiki more into shape, and then I had to go to Cheltenham on Wednesday morning (following a business breakfast) to help my old programming pals in Vero with their desperate constant scallop stepover bug that had been in the code since I left them with it in NC Graphics back in 2002 (eight years ago) in a set of undocumented functions nobody understood, that just worked — except when it didn’t.

It really did take two days of the three of us (me and the two fellows in Vero) of hard going at it to finally identify the problem, helped by various recollections of the way the algorithm worked that came to my mind during the hours of grind. The code was nowhere near as rough as I thought I’d left it, which was interesting. It was very educational because we chased the bug back through almost every stage of the algorithm from the point of the crash to the source where it joined a six-way cell in an invalid manner that was almost impossible to notice due the encoding of vertical segments using duplicate coordinates. Now they know everything about the algorithm they can extend it properly to various N-way cells to get rid of many of the remaining glitches caused by a design that originally intended only to handle 4-way cells because I mistakenly guessed that every case could be simplified by subdividing it tighter.

Now, according to the rules of corporate capitalism, I should never have been there in the first place, because it is in my interests for a competitor’s software to be unnecessarily buggy, with their programmers frustrated and unproductive, in order that their customers suffer enough costly consequences to consider switching to a rival system like the one I now work on. But this is just another of those specific bitter consequences ingrained into the system of institutionalized selfishness that seems to go unrecognized by our ideologically bent scholars. In actual fact I wasn’t losing anything because, (a) I know that CADCAM systems don’t actually compete on toolpath quality and innovation (because if they did I’d now be rich and in demand), and (b) I am trying to set an example that programmers should be on good terms with programmers in competitive companies because that’s where the jobs are.

Anyways, on Thursday night I caught the train back to Birmingham — using part of my Liverpool to Cheltenham return ticket — and bought another return ticket from Birmingham to London for the Hacks & Hackers Hack Day (sponsored by ScraperWiki). Francis joined me on Friday, and we spent the night with Earl, another friend in London, getting back to Euston station at around 13:30 on Saturday. Francis required a dosa, and I humoured him with a curry buffet, and we got back at 14:15 whereupon he bought a train ticket to Liverpool because he had no return ticket.

Francis’s ticket from London to Liverpool cost £65 if it was a single, and £66 if it was a return. So he bought the return and will once again wind up out-of-phase back in London without a ticket to Liverpool sometime in the next month.

This pricing has always pissed me off. All I can find to acknowledge it is this note in the Delivering a Sustainable Railway – 2007 White Paper CM 7176:

10.32 The Government has also reviewed the case for changing the regulation of ‘Saver’ return fares. These fares were regulated at privatisation, even though there was no particular justification on grounds of competition. The consequence is that passengers can be faced with a ‘Saver’ single fare of £69 and a ‘Saver’ return of £70, neither of which is actually the ideal fare for the journey they want to make. Focus groups show that most long-distance passengers would prefer an approach more in line with airlines’ practice of quoting ‘single-leg’ fares for the outward and return legs of a journey.

So that explains it: The rail monopoly prices on unregulated tickets are the highest they logically can be, which means that single tickets are basically the same price as regulated return tickets.

If, instead, they had chosen to regulate the cost of a single ticket, then return tickets would be exactly double the price of a single ticket, and the system would function as part of an integrated service where people who were able to take the opportunity of a lift on another form of transport one way could do the other way on the train without getting totally screwed for a price that was the same as having used the train both ways.

And that’s why I was attempting to optimize my ticketing by buying a return train ticket from Liverpool to Cheltenham (via Birmingham) for £60.50, going back to Birmingham, and then taking a return ticket from Birmingham to London for £41.90, which meant that I would have to return to Liverpool via Birmingham rather than take the direct train and use fewer train resources overall.

Francis didn’t believe me, and we parted company so we could both get some work done.

I got busted by the ticket inspector on the Birmingham to London train because the stamp on my ticket from the Cheltenham to Birmingham part of the journey was two days old.

I had been told in an earlier incident that while I could not break the outward train journey, I could break the return journey, and this was what I did. The ticket inspector said, Not for longer than 24 hours. I said, How am I supposed to know that limitation when all I was told was that I could break the journey? He said it’s perfectly clear in the rules, and you have to enforce a line to stop people using the same ticket over and over again for the whole month. I said, Do you have a copy of these rules? No he didn’t, but it says on every ticket:

Travel is subject to National Rail Conditions of Carriage (NRCoc) and to the conditions of carriage of other operators on whose services this ticket is valid. Copies of the NRCoC can be obtained from any staffed national rail station of from website: www.nationalrail.co.uk

As a consequence, he would now have to sell me a single ticket from Birmingham to Liverpool. This is always the policy gleefully announced on all train services because they know that single tickets are such an awesome rip-off they don’t need to complicate the situation with a further penalty fine.

I refused and bailed out onto the platform in Wolverhampton. I tried to get a bus, but they were all local. Eventually I had to go back into the train station to buy a single ticket from Wolverhampton to Liverpool. It was the only way home. “Are you sure you want a single? You are not coming coming back?” the lady asked. “No,” I said calmly as I handed over £25.50. She didn’t have a copy of the National Rail Conditions of Carriage, and it didn’t exist among all the crappy leaflets and fliers dotted around the station where it could have served to warn anyone attempting to optimize their triangular journeys in the way that I had.

Now… can anyone guess what document is not linked from the front page of the www.nationalrail.co.uk website in spite of being mentioned on every single one of billions of tickets, when they could have made it accessible on a domain such as www.nrcoc.co.uk?

On the front page there is one link to something known as Terms and conditions, which begins:

Terms and Conditions for using the National Rail Enquiries website (the “Web Site”) . For the purposes of these Terms & Conditions the term Web Site also includes the web services, XML and any other data source supplying the Web Site

The Conditions of Carriage page is number 3 when you search for conditions of carriage.

From the front page, this important document is available by clicking on Train times & tickets, followed by Tickets & fares, followed by the 16th link in the column of links where it is positioned as though it is a subset of “Traveling around London”, from where you can download the 30 page 450kB NRCOC pdf document in handy clear-as-mud legalese, where it explains:

16. Starting, breaking or ending a journey at intermediate stations

You may start, or break and resume, a journey (in either direction in the case of a return ticket) at any intermediate station, as long as the ticket you hold is valid for the trains you want to use. You may also end your journey (in either direction in the case of a return ticket) before the destination shown on the ticket. However, these rights may not apply to some types of tickets for which a break of journey is prohibited, in which case the relevant Train Companies will make this clear in their notices and other publications.

…

For the purposes of this Condition and Condition 11, you will be treated as breaking your journey if you leave a Train Company’s or Rail Service Company’s stations after you start your journey other than:
(i) to join a train at another station, or
(ii) to stay in overnight accommodation when you cannot reasonably complete your journey within one day, or
(iii) to follow any instructions given by a member of a Train Company’s staff.

So what gives? There are absolutely no further “notices and publications” available on the London Midland train website.

To London Midlands
Dear sir,

This week I used the train to travel Liverpool->Cheltenham, and Cheltenham->London (where I stayed for two nights), and then London->Liverpool.

Unfortunately, it is evidently the policy to price (unregulated) single fares at around the same cost as a (regulated) return fare, so I chose to purchase a Liverpool->Cheltenham return, and a Birmingham->London return, which required me to travel back from London via Birmingham.

However, this broke the rules and I was put off from the Birmingham->Liverpool train by the inspector due to my ticket having a stamp from two days before (when I used it to travel from Cheltenham->Birmingham on my way to London). He told me that the limit was 24 hours.

Having obtained a copy of the National Rail Conditions of Carriage, I note that Condition 16 says:

“You may start, or break and resume, a journey (in either direction in the case of a return ticket) at any intermediate station, as long as the ticket you hold is valid for the trains you want to use.”

There is no reference to any time limit in these Conditions, and my return ticket was valid on both trains. Nor can I find any statement of any further rules on the London Midlands website.

Can you point me to a clear statement of the rules for which I was put off the train, so that I (and others) can ensure that I do not again get caught out by them when attempting to complete a non-standard journey at a reasonable price?

To National Rail feedback:

This is a question about website design. Every single ticket issued states that “Copies of the NRCoC can be obtained… from the website www.nationalrail.co.uk”

In view of this, do you think it would be reasonable to have a link to it from the front page, rather than buried four deep among the navigation toolbars?

Is it possible I have found something the millions of train nerds in this country have failed to scrutinize?

PS For all you guys using the NCG source code what I wrote, but which made some other people millionaires:

The error is in PSsubcell.cpp, line 869:
bool SetLinksAsBestLinkData(const PSCpairboundparams& pscparams, PSsubcell& scell)
where near the bottom in the loop following the comment
// Set the pointers to make the connections.
setting the back-pointers across the cell according to the best connection, we found that it was able in a 6-way cell to connect 0->3, 2->5, 4->1 because the function (using this Link Data) didn’t take account of whether the connections crossed one another.

The function is irreparable. The quick fix is to detect when there is a crossing condition, and return false if there is so it drops back into the less sophisticated PSsubcell::SetLinksAsBest() function which will give you a result that doesn’t have self-crossing. Then in the medium term you need to code the 4-way and 6-way cells independently and properly considering all the alternatives. It’s not possible to get the right answer by picking the single “best” connection first, because it’s the the gaps between the connecting passes that make it good or bad.

Drop me a line of this helped.

Vero reported the conclusion of its 2 November 2009 General Meeting thus:

The The[sic] Board of Vero Software plc (AIM: VERO) announces that following a General Meeting of the Company held today at 10:00 a.m. at the Company’s offices, the Resolution set out in the Circular sent to Shareholders on 15 October 2009, has been duly passed.

What? They don’t even say how many people showed up? Did they have a debate? Was the vote unanimous? How about the minutes of the previous meeting? Were they read and agreed to?

What was their last General Meeting?
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More entertaining financial farting going on at Vero which, in my opinion, is socially and productively useless — as is practically everything that is currently part of our godforsaken corporate financial structure.

Let’s start with some tedious biased history gleaned from 5 years of company annual reports…

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This is a follow-on from Financial nonsense at Vero.

The line Noble Enterprise VCT has dropped out of the table. Searching for this name on google returns a Foresight VCT webpage, which says:

In the late 1990′s, during the Technology “Bubble”,[sic] Foresight significantly outperformed the wider technology market and generated returns that made it the leading VCT Manager. It has continued to prove itself more recently by having been awarded three existing VCT mandates from other managers. It is testament to Foresight’s standing within the industry that in 2004 it was offered the mandate to take over the management of two Advent VCT funds, subsequently rebranded Foresight 3 and Foresight 4 VCT and the Noble/Enterprise VCT, subsequently rebranded Foresight 3 ‘C’.

So it appears that some paper is being shuffled around.

But what the heck are these VCT’s anyway?

According to this 2004 BBC article, VCT investments receive an almost matching tax-payer subsidy:

In order to encourage investment in these companies, VCTs were designed with generous tax breaks.

Investors receive an upfront 40% tax relief.

In other words if you put £10,000 in, this could only cost you £6,000 by the time you have had your tax rebate.

And the tax free boost doesn’t stop there.

Any capital gain or dividend paid from the VCT is also completely free of tax.

A 2005 article published by everyinvestor decrying the reduction of this tax break to 30%, explains the money-making potentials:

How a loser can still be profitable … [S]ince a £1 share actually costs you 60p, the managers can make a lot of mistakes before they lose 40% of your money. In other words, you only need a very modest rate of return on the investments to come out with a healthy return thanks to the tax break. Say the £1 share is still only worth £1 after five years. Since it cost you 60p, you have actually made an annual return of 10%, which is of course net of tax. Even if the shares were worth under £1 you could still be making a reasonable profit on your real net investment.

The same article adds at the bottom:

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The Freesteel blog has a history of being interested in the Vero Software company, among others.

Here is an unusually interesting Vero Software 17 September 2009 press release:

The Board of Vero notes the recent movement in the Company’s share price. The Company has received a provisional approach from a financial institution that may or may not lead to an offer being made for the Company. Discussions are at a very early stage and there can be no certainty that an offer will be forthcoming.

In accordance with Rule 2.10 of the City Code on Takeovers and Mergers, the Company confirms that it has 37,261,166 Ordinary Shares of 0.5p each in issue and admitted to trading on the London Stock Exchange under UK ISIN code GB0002678273

Here’s what that looks like:

The daily breakdown in volume is 173,907 at £14.50 on 15 September, 366,264 at £20.50 on 16 September, and 164,969 at £18.25 on 17 September from the News Analysis tab on the London Stock Market page linked to from here.

I don’t know exactly what the numbers mean (being a mere software engineer), but it looks like a blip, particularly in light of the following press release:

NOTIFICATION OF MAJOR INTERESTS IN SHARES

Full name of person(s) subject to the notification obligation (iii): Foresight 3 VCT plc
Date of the transaction: 16 September 2009
Date on which issuer notified: 17 September 2009
Threshold(s) that is/are crossed or reached: 3%

This information hasn’t yet been entered into the table here:

Shareholder	Ordinary 0.5 pence shares	% of issued share capital
P. Gyllenhammar	8,253,722	22.2
D. A. Babbs	4,903,380	13.2
E. Galardo	3,440,474	9.2
Artemis AIM VCT plc	2,325,582	6.2
Baronsmead VCT 2 plc	2,325,582	6.2
Baronsmead VCT plc	1,600,000	4.3
Baronsmead VCT 3 plc	1,395,349	3.7
Noble Enterprise VCT	1,330,233	3.6
M. Cignetti	1,259,866	3.4

Now that I have archived it, when they update the webpage it’ll be possible to infer who sold the shares to Foresight. Later in the year, if I stay on this story, Foresight may disclose how much they paid for Vero stock in one of their brochures.

Speaking as a mere Software Engineer, I know that the further you get away from the coal face, as it were, the less you know. The Vero management — according to their website materials — lead you to believe that they have an extremely limited interest in the software engineering (all they ever talk about is financial engineering).

The VCT investors, being even further from the centre of activity, almost certainly know nothing about the state of the software development of the company. And there’s nowhere they’ll find the information out because the financial structuring is entirely walled off from the actuality.

When you know nothing, all you can do is follow others. A good lot to track are the company directors, as they ought to know a thing or two about the value:

As you can see, the company poured a load of shares into the pockets of the directors in 2004, and they haven’t sold them yet. Either they have confidence in the company, or they are not selling to prevent others losing confidence.

If I had time to go through all their Annual Accounts again, I’d be able to tell whether any of the programmers have been given shares. (I don’t think so.)

The programmers are going to know if they are being beaten on features by their competitors, or whether they have just thought of a brilliant killer feature, so they buy some shares in advance because they know their work is going to make the company a lot more valuable, they hope.

Somehow I don’t find that story very convincing, even as an idealistic argument.

As has been demonstrated conclusively over the last few years, the whole financial engineering methodology in the western world is bunk. It has resulted in a severely damaging misallocation of wealth away from places where it could result in a lot of value being created, and towards socially useless activities.

In the Vero company, the distinction between such activities is stark. Value (for everyone concerned) is created by the debugging and improving of the software which they sell and is widely used, whilst farting around with share dealings and corporate technicalities (though probably much harder to do), is arguably totally useless.

Unfortunately, you can get a lot more power and money by focussing all your efforts on the latter while virtually ignoring the former.

There hasn’t been a much public debate as to why the financial system doesn’t work — according to the way it diverts resources away from where it is useful. I am not interested in moralistic ideological arguments about ownership rights, freely entered into contracts, capitalist libertarian theory and related bollocks. The question is, does it actually perform well? Can we introduce rules and regulation so that the results are not so self-evidently poor?

Often the diagnosis of the problem centres on the presence of conflicts of interest. Brutal transparency is the current prescription, tried only when the corporate-owned government is broke and can no longer treat the symptoms with bail-out money.

But I don’t think that’s the full story.

I think the root cause of the problem is that those who disburse the money have no knowledge and no information about the businesses they are investing in. This makes their decisions easy to cheat on the one hand. And on the other — when they are not being cheated — likely to be based on bollocks. They may as well be picking lottery numbers.

But, you say, people don’t have time to check out every company they invest in to the detail necessary. It’s too complicated and fast moving. And they have no right to speak to the employees directly.

And I say, Exactly.

Perhaps it’s a consequence of the extreme concentration of wealth today. The few who have control of most of the wealth don’t have any time to consider where they are putting the money. So it gets done poorly and with little concern for the effect.

And the people who do know how stuff work — for example, the employees in the businesses — are not at any time represented in the market place.

So why is anyone surprised when there is so much systematic misallocation of wealth?