Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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2x until the share price moves.
Debt is way above market cap ! Bankers have a problem
Highest price a year ago this coming Sunday. Next Monday onwards will see the prev. annual high dropping until it reaches c. 25p. Would like to see some movement towards a bid around that price.
That trade today wasn't me.
Found it.
Page 39 of of Annual Report 2022:
https://www.musicmagpieplc.com/sites/musicmagpie/files/2023-04/musicMagpie-plc-Annual-Report-and-Accounts-2022.pdf
Page 47 of Annual Report 2023:
https://www.musicmagpieplc.com/sites/musicmagpie/files/April%2024%20Documents/musicMagpie%20plc%20Annual%20Report%20and%20Accounts%202023.pdf
Anyone know/recall what the objectives relating to the financial results to the year ending 30 November 2024 are for the exercise of these options?
https://www.lse.co.uk/rns/grant-of-options-nqy3sz35kol5o6o.html
J agree with the figures and indeed rent for a year and just returned the item as you cannot buy it even with all my stuff on needs to be transferred which gor me is a hassle
Also do not forget I feel they have a high default rate and it is vostly to issue a ccj with little chance of getting more than a £1 a monthss the courts do not consider a 2nd hand phone an essential payment ie against rent it etc and admin costs to collect huge
I like it Robswire :-)
Ironic that the share price has also depreciated by 33% per annum over last 3 years
Our family AND FRIENDS HAVE had a few phones from here .A LWAYS GREAT SERVICE AND PRODUCT CANT FAULT
I like numbers and had to do them myself based on a user:
[USER SELLS] iPhone 14 256mb | Excellent | £426
[USER BUYS] iPhone 14 256mb | Excellent | £675
[DIFF] +£249 instant (MMAG)
[USER RENTS] iPhone 14 256mb | Excellent | £37/month | £444/annual (+£18 and MMAG still own the phone after 12 months)
[USER BUYS] iPhone 14 256mb | Good | £449 (alternative goes on rent for a further 12 months)
[DIFF] +£468 over 24 months (MMAG)
The concept looks to me to smooth the peaks and troughs of the buying and selling cycle/periods whilst having more control over inventory. For the same phone they look to 2x their revenue at the expensive of interest payments. The flip side they could have just flipped two phones rather than just one.
We did do the Maths on Rental a few months ago - It did look like it improved the ROI on a device
The caveats were being abe to control bad debt and funding the working capital
Hi Hedge,
I think 33% is reasonably accurate (some models will hold value better, some worse). The concern for me with the rental market is “Rental income” minus “Depreciation” = “profit”. So the depreciation is quite a critical factor.
It’s why I’m not a big fan of the business model. And completely agree with regards to cash generative sales,
My view is that they should keep it simple, and stick to buying the phones in and shifting them ASAP before depreciation has chance to erode any margins significantly.
As Josey says
What we want to see from MMAG is improvement in Cash and EBITDA generation - back to pre pandemic levels.
Their most recent update suggested that the numbers are moving in the right direction
EG - I was not trying to be rude as I say. Sorry if he post came across badly. Tbh - it's a bit of a non-story. Believe it or not, accountants do like to keep things simple where they can. It would be crazy to think they would depreciate on a unit by unit basis.
You are correct - it is reasonable easy to gauge the depreciation from the MusicMagpie Website. (33% seems about right)
Two popular examples : (80% if their business will be on iPhone and high end Samsungs)
Samsung S23 (entry level SKU) 128GB 'very good condition'
£440
Samsung S22 (entry Level SKU) 128GB 'good condition'
£290
35% Depreciation (S23 to S22 is 1 year different and I have compared a Very Good condition with a Good condition)
iPhone 14 (entry level SKU) 128GB 'very good condition'
£520
iPhone 13 (entry Level SKU) 128GB 'good condition'
£370
29% Depreciation (iP14 to iP13 is 1 year different and I have compared a Very Good condition with a Good condition)
Hi Hedge,
Could you point me to the time I asked you to take my views over the accountants? I missed that bit.
FYI - it’s not anecdotal, you can find the depreciation data on music magpies own website if you care to look. I have also been in the used mobile industry for circa 20 years.
The fact is, the accountants/auditors are using one method for revaluing their balance sheet. I am not questioning this is correct from an accounting perspective. But When it comes to actually realising the values of those assets, if you believe they have all depreciated by exactly 33% each year, I would question if you have any prior experience with the erratic price movements of the secondary used phone market.
EG777
I'm not being rude - but if I had to choose between an anecdotal comment on how devices depreciate from you VS trust that the company accountants in conjunction with the auditors are doing the right things I know where my oney would go
You have to rememebre that their stock is not brand new in the first place. Like cars, a new phone will depreciate significantly when unboxed and used; 33% feels reasonable for 1 years worth of normal wear and tear on a device that will already have depreciated from new.
From what I’ve read in the accounts they aren’t constantly subjecting the assets to constant revaluation. They’re just writing 33% off the value per year.
This is all managed with a price intelligence file which takes into account historic trends etc. Already mentioned this but all the main trade in houses have their systems pulling on ai and business intelligence. Really it’s the least of concerns as long as assets in field are constantly subject to revaluation on BS. If not, it’s a non cash impact but as rightly pointed out, affects the balance sheet value.
Cash generative is the key here. Park the rest for the minute…the company needs to show cash heading in right direction.
Just as well banking covenants are not linked to market cap!
33% depreciation is borderline I’d say. It’s very model dependant.
Apple could well depreciate less than this as they tend to hold value well.
Google, oneplus, oppo etc would likely depreciate more than this.
Fold / flip phones have depreciated A LOT more than 33% in the past year.
One of the biggest risk factors in used handsets is price volatility, and I think there’s a danger in using a broad brush calculation of 33% to measure something which is very variable and has a significant impact on the P&L.
Personally I’d prefer to see them focus on getting stock in and shifting it ASAP. So was glad to read that they seem to be focusing less on the rental space based on their EOY report.
33% is very fair as theyre only renting devices they have purchased. So the depreciation is on the buy price of a second hand device.
Id imagine they have much more accurate figures, but i can only see it being lower than 1/3
I’d say it’s swapping out for past revenue, not future revenue.
They buy an asset. Rent it out for a year. After that year, the rental income hits the P&L, and the depreciation (33%) also hits the P&L at the same time.
As you say, the value of the rental income should exceed the depreciation (or they will be making a loss). But it wouldn’t be in exchange for future revenue. Because as the asset continues to generate revenue (assuming it continues to be rented out), it would also continue to depreciate.
Personally I’m not sure I agree with the 33% depreciation figure. It would be interesting to see the split of models out for rent, but if they are newer models that’s quite ambitious I’d say.
@Redh3rring Going back to your post 12 Mar 2024 12:37 about directors options grant. Is your inference that they will want 45p+. Or, that they just don't exercise their options?
EG
I agree but the rental income should be greater than the depreciation (otherwise what’s the point?) so it’s just swapping out for future revenue IMV
You ok Rob?