Member Info for baronbog

Is the presentation on their new strategy next week?

Onthecoast
Thanks for the link. Depressing reading if their projections are right but I remain very positive about our new CEO. Never mind China opening up or other geopolitical matters, let them squeeze and squeeze as much profit & cash flow from their existing order book and their current level of engine servicing … then all the other stuff is cream on top!! Unfortunately that means taking a big knife (again) to costs which will be very unpleasant for some of their people. If they don’t take that approach they will not be a financially strong enough company to complete.

Marbles
I agree with Music & JTT.
R&D spend - Unfortunately not. Apparently the nuclear technology to be used is decades old and is one of the reasons they will get it approved so fast (we’re not changing much so there’s nothing to approve) but competitors are planning more efficient, newer technologies. So we’ll get the SMRs, based on existing tech, built & sold and then spend all the profits from that designing the next generation of SMRs. I honestly don’t see much profits from SMRs for a long long time especially if they only sell them, but I now think their true strategy is to sell/float a chunk of RR SMR for which I think they’ll get a pretty penny. This does two things, (1) brings in lots of cash from the sale and (2) establishes a value on their remaining holding so they can put as an asset on their b/s. That’s really where I think RR shareholders will make some good gains. Many here old enough to remember Racal and their startup subsidiary Vodafone?

Hi Phyl
I generally agree with your 13.25 post though I would add some further comments about high inflation. High inflation/energy costs may lead to increased business for rr as some forward thinking firms do invest in capital spending, to help cut their costs. Ie buy new planes/engines cause they save a fortune using more frugal engines, they install MTU as protection against rolling power cuts, they buy early because they know they could be paying 20%+ more in 2 years time, and there have got to be some huge energy consuming companies that are seriously considering buying an SMR for their own use.
Another posted earlier querying why the share is so low given all the good news about rr over the last few months. Well that news was generally about new orders (they already have an enormous order book anyway) and new technologies they are developing but they still struggle to make a decent profit from the business they have. Thats why the culture needs to change there from being a brilliant engineering company to being obsessed with profitability and allocation of capital (ie which technologies to invest their limited capital in to get the absolute best returns, rather than which technologies gets them in the scientific journals!)

I see Mike/RRI managed to evade my filters by adding a 3rd account, Mike123467.

As this rate my screen will be filled with green filter boxes. Is he still predicting £1.50 by August 2022?
My bad…note to self, don’t get sucked in!

Not long now (7 weeks) ... getting really excited about Tufan (Turkish engineer), our new CEO and what he will bring. He has a reputation for cost cutting and getting quick results. And he has a point to prove not getting the top job at BP a few years back. He's a quirky pick and pretty old (62) to join as CEO but he's opted to have shares as a big part of his package (salary £1.25m, 30% of which is shares deferred two years, plus £3.75m in shares as a golden hello being “compensation he will forgo as a result of leaving GIP”. The shares vest in two tranches in 2027 and 2028.)
I think his efforts could have the greatest impact on the sp in 2023 because he will squeeze more profits & c/f out of the day to day trading. We can have all the orders we want for engin maintanance, FLRAA, SMR and even China opening up but the bottom line is (pun intended) how much money can we make from it all.

Phyl
I think someone posted a link before that said a decent FLRAA award for us would mean a 5p increase in the sp from a fundamentals point of view. In reality the headline contract award amount seems so big, some gambling PI will no doubt bid the price up 20p for a few weeks followed by a 25p drop when they realise it’s spread over decades. Still for rr to part of the consortium that wins the biggest ever awarded military contract in US history, must be prestigious. With the Mid-terms over now hopefully they can get on with it.

Phyl
Bear in mind Solway are a community startup company and from reading between the lines, it may be they are trying to be the customer for a SMR. Now they just have to find the £2B to pay for it!!
Looks like they have ‘first mover’ advantage though and being community lead, should be able to speed through planning etc.
Great news and if it’s a success, a brilliant way to roll out SMRs with local communities funding, running and benefiting.

Hi Svend
I agree, some east European countries would love to get on and build a RR SMR quickly (to get away from Russian energy) but It would be a very brave leader that would gamble building one before the UK gov approves the designs. I do expect them to order some and book their slots in the factory, pending official approval though.
The risks are enormous… just look at EDF, who are a world leader in nuclear power stations, they find a design flaw in their plants (including the new one coming at Hinckley, now being rectified), and now the plants in France were only operating at 50% … and they have to be nationalised by their government because of the costs involved to sort the problems.
So everybody will be proceeding very cautiously. Last thing anybody wants is 16 x RR SMRs built (UK then is wholly reliant on them) and there’s a problem. JTT - another reason for having SMRs in a subsidiary.
While RR have long experience doing nuclear for the submarines, land based SMRs, while based on the same old, reliable technology, could be compared to combining 2 x brilliant V6 car engines together to make a V12. Doesn’t mean you are going to get a brilliant V12. And you still have to lots of design work and testing.

Great article Svend, but have you actually read it?

Paul Foster, the chairman and the company formed to deliver, Solway Community Power Company says it “may take up to 10 years” for the final product (2032!)

I still stand by my opinion (and the reasons given), we won’t see an operational SMR by 2028.

On announcement of the first orders the SP will get a bounce but then it’s along slog to get them up and running. No doubt they’ll be a great engineering marvel from RR and a world class product helping the UK become energy independent but it’s a long way off.

Ah, so my original post is correct is all aspects.

Svend
Thanks for the link but it just confirms my point 2.
A shortlist is NOT a finalised location…. Or am I missing something

Winstanley
There is no way we’ll see any SMRs operational by 2028.
1. The designs haven’t been approved. While the technology is tried & tested, the size and output in not.
2. The sites for the factories haven’t been finalised, planning permission applied for (don’t underestimate the NIMBYs to slow things down) or tooling ordered
3. The locations for the SMRs hasn’t been finalised nor planning, or government consent received
4. They don’t have an order

We’ll be doing very well if we manage 2030.

This is the UK remember, once bureaucrats and politicians are involved, nothing happens quickly. Despite long expected, they haven’t even given a RR SMR the go ahead yet!

davejm
“Previous debt of £(6-2)B

New debt £(4-2)B

The -£2B is RR’s cash. In that sense it’s halved?”

Lol I think that’s the kind of accounting Truss & Kwarteng were using … now back to the real world ..

Manz12/mike12344567/RRinvestor

Please tell us how you calculate the RR debt has halved.

Music, your country pub sounds lovely. In central London in reasonably priced restaurants, it’s becoming rarer and rarer to find main courses under £30 and 80% of their wine lists are all over £30+. And that’s before the service charge on top. A Sunday roast in a decent pub recently for 4 ppl with one of their cheapest wines, + 3 drinks, no starter, no desert just some coffees, was over £200!!

Rr update
It didn’t say much. There is always a positive spin on these type of updates.
Ppl should realise that while it says their trading is in line with expectations, that does not preclude them shoving in a load of exceptional items (like fx hedging losses etc) at year end results. I wouldn’t be surprised if they still show a loss for 2022 especially if they get a decent award from the FLRAA contract. (A good time to bury bad news after a big order!!)

The BOE highlights for me are:-

1. We are now in recession and we are expecting it to last 8 x quarters ie beginning 2025
2. Interest rates will not peak as much as the markets expected ie 5.25%

And all this before the tax rises and spending cuts expected on the 17th?

Musicalshares8
Where can you get a meal these days for £50 unless you are teetotal, vegetarian and single?

Apologies ATAT your calculations are correct.