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£59.4M according to the accounts at 30 June last year. Of course that's the total of the accounting losses, will almost certainly be different to the tax losses according to the tax computation, but they will be in the same ball-park. So I expect it will be a few years before PHE pay any tax.
Very good point. That's quite a large figure. 49 million pounds?
Just a point to bear in mind - the company shouldn't have to pay tax on annual profits as long as they are carrying forward trading losses.
Telephoneman - I agree with your calculations it is more with the number of units needed to make a revenue of £40m. On additional revenues I think we can expect revenues around the £400k minimum on each site. There is not much information on the other services I thiught I read in the RNS something about build so I think they might receive some kind of payment for the DMG unit.
I forgot to say that you may well be right about needing only 20-30 units in operation to gain a market cap of £400m.
My estimate of 167 units was based on a PE of 10, there is every chance that once the first few units are up and running and investors realise the potential fast growth of profits by a company that has little or no debt, they will rate the company much higher than 10.
Using my estimates of royalty per unit, then to attain a share price of 20p with 25 units in operation the PE would need to be 67, not in the realms of fantasy by any means.
Hi stokey, yes I am basing my calc's on license fees only, it's the only part we can be relatively sure of at the moment.
Thanks for the heads up on the 17% corporation tax from next year.
If we are licensing our tech for others to build and taking 20% royalty from subsequent earnings from those units why would we expect to have a share in the profits of the builder, you could be right, I don't know so I haven't included any.
It's a ball park figure stokey, on the info we have at the moment.
I'd be interested to see what you can come up with, you've already increased my estimate by 3.75%.
Telephoneman in response to your post of 08.36 0f 20 April. Can I respectfully query your calculations. You seem to be basing your calculations of the amount needed to have earnngs of £40m on a corporation tax rate of 20%. From this page https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax it would seem that from next year the cororation tax rate will be 17%. Also you appear to assume the only revenue will be from license fees. I think there will be at least two other sources of income. Income from additional services as we saw from last week's RNS they could be significant. In addition unless the DMG units are being given away then there is potential income from the building and installing of the DMG units. Taking all these into account I would suggest that PHE may only need to sell 20 -30 units to make a revenue of £40m.
The company is exploring a number of opportunities with the potential to role as many as 100 systems from a production line each year. “We can offer a model that companies like Toyata are excited about,” says Allaun.
https://waste-management-world.com/a/video-cracking-the-hydrogen-conundrum-with-wastes
Hi Tetrolite, Listening to Dave Ryan in the last interview he sounds like he has everything under control.
As you say, everything is 'off the shelf'.
Don't forget, when we hit 15p we had a smaller number of shares, but to counter that we were only going to be making electricity from MSW, if memory serves it was about 1MW capacity for a 25t/day unit, the DMG unit is nearly 3X that at 2.8MW capacity in electricity only configuration, so 3X as profitable.
Then when you consider the possible 2 tonnes of hydrogen (with a lower electrical capacity) it makes it 10X more profitable than the original 1MW capacity unit. So who knows, maybe the higher profit DMG unit will counter the greater number of shares.
Assuming FEED is incorporated successfully, are there any possible ‘ bottleneck ‘ within the manufacture process? Would it be the ceramic drum?I think most of the components are ‘off the shelf’
Arron1980
I think 2.7p would be conservative. That would value the company at approx £54m. IMO I think sentiment alone could double that! Imagine the Global interest in this stock. The SP I believe was 15p on sentiment previously, with no commercial product in place.
Hi Tetrolite, yes the numbers are big.
The other question is how will deployment ramp up over the next few years.
PHE will now operate on a license and royalties model, W2T being one of those licensees.
W2T hold licenses to operate in the UK, South Korea and Japan.
In the UK they see the possibilities of 150 DMG units at existing incinerator plants, a further 50 at MBT and AD plants and a further 70 if we stop exporting 600,000 tonnes of waste plastic to 3rd world countries.
So that's a possible 270 units plus a further 55 units for the 70m end of life tyres per year.
W2T state they will implement a rapid roll out to ensure first to market advantage.
The question is how rapid is rapid and over what timescale?
Lets assume that we have the first one up and fully running by early next year to be conservative.
How quickly could W2T move, how many more could they get up and running that year in the UK? Lets say another 3.
The following year? Maybe another 10.
Could they ramp up to 20 the following year, 2022?
Could they be doing the same in South Korea (population 51.5M) and Japan (population 126m) at the same time?
If so they could have 100 installed within 3 years.
Then we have to consider the other potential partners and licensees that Dave Ryan talked about in his recent Justin Waite interview.
Some of those licensees might well have deep pockets and be able to roll out much faster than W2T.
I assume that these partners will be seeking licences in places like the EU (population 445m without the UK), Australia and the USA to name but a few regions of the world.
It's just impossible to predict how fast this will roll out across the world but once that first one is proven there appears to be little to stop it and I for one can see many hundreds in operation around the world in just the next three or four years.
Hi telephoneman. Many thanks for your comprehensive calcs. Mind blowing really! Can’t wait for the commissioning and results from the first 25tpd DMG.
https://waste-management-world.com/a/video-cracking-the-hydrogen-conundrum-with-wastes
telephoneman
So if PHE produce say ball park one every 4 days we're looking at great future growth IMHO
A real cash cow in the making................DYOR
The company is exploring a number of opportunities with the potential to role as many as 100 systems from a production line each year. “We can offer a model that companies like Toyata are excited about,” says Allaun.
Hi Tetrolite, if we break your post down a bit further and consider the earnings that would generate a market cap of £400m then at a PE of 10 it would be £40m.
How many DMG units would it take to generate $40m?
If we take electricity only DMG's generating 65MWh per day and selling that at £60/MWh, £80/tonne gate fee, £300,000/year for waste heat sales and £850,000 opex costs then the annual royalty payment would be £300,000.
If we take into account tax then earnings would have to be £50m to be left with profits of £40m and as we have no idea what the cost will be for running the offices I'm going to assume that the fees charged for planning and design for each unit will cover running costs.
To generate £50m earnings would require 167 electricity only DMG units on a royalty only basis.
Another thing to consider is that PHE will have little or no debt and will be fast growing and might well have a PE ratio higher than 10.
Profit after tax on royalties of 167 electricity only DMG units are £40m, rounding the shares in issue up to 2 billion gives earnings of 2p per share, at a PE of 10 that gives a share price of 20p.
A PE of 15 would give a sp of 30p.
A PE of 20 would give a sp of 40p.
This is just a best guess and there are many variables but it does illustrate the potential.
At the other end of the scale is the hydrogen producing DMG producing 48MWh of electricity and 2 tonnes of hydrogen per day.
At some point in the future it is feasible that every one of the original 167 electricity only DMG units will be converted to producing and selling H2.
If that H2 was sold at £5/kg then the royalty on each unit would be £0.85m and annual earnings would rise to £142m, or £113m after tax, 5.65p per share.
PE of 10 gives a sp of 56p
PE of 15 gives a sp of 85p.
PE of 20 gives a sp of 113p.
All IMHO.
Looking st the current market Cap of approx £10m and the future potential in PHE, a 20p per share value would give a of Mcap of £400m. Given a successful 25tpd DMG and a rollout worldwide, then this is plausible IMO.
Jgbb123 - considering AFC reached around 60 pence I would have thought at least around that figure. Who knows - time will tell.