Member Info for baronbog

Completely agree Red. You have always be straight and consistant about your views and your own holding / buy-in price.
Time and time again you have called it right yet received derision and abuse on here from multiple posters.
Well done mate especially not bowing to the haters!!

Pokerchips
I enjoy your posts on here, PFC and WG. Always sensible.
Bigger mortgage payments are due to higher interest rates, which is worldwide. Would you have preferred higher mortgage payments coupled with higher electricity bills and no tax reduction instead?
And we were warned time and time again interest rates were artificially low and would go back up. So the sensible ones payed down their mortgages and saved while profligate ones bought new cars and went on expensive holidays.

We need to restore some balance to the left wing drivel propagated on this board.
I'm not a fan of Liz Truss or the Tories but will give credit where credit is due.
1. It's only a few weeks ago that our national papers were stirring the sh*t with headlines trying to out do each other ... average electricity bills will be £4k next year, no £5k, no £6k ... the mini budget has introduced a cap of £2.5k. Is that a good thing or not? Its massive help to the average person.
2. The mini budget will reduced the average person's tax bill. The 20% to 19% tax rate, the reversal of the NI increase (including on our dividend income) and lastly abandoning the corporation tax rise. That's a big help to us and many others.
3. But oh no, that's all irrelevent to the left wing wingers. They drown all that good news out because they are obsessed with 'distribution of wealth' and their poisonous politics. So what if the rich are getting richer. What should concern us is, can we pay our bills, put food on our table, have a roof over our heads, set some money aside for our retirement and whether we are happy and content, and then, are people starving in this country and is there peace in the world. I am not interested is comparing how much money I have to a multi millionaire, or how big their house is, or how many exotic holidays they have. They already pay vastly more tax than we do, both quantitively and in % terms. And if the tax rate is reduced from 45% to 40% to attract bankers from New York, Scotland, Europe and the reduction brings in more tax overall, as a result, I think that's a good idea. I am not going to be enviously. I'm not going to rant and rave how unfair it is.
All that said, the execution of the chancellor's plan has been very poor. Still we should give it time to see what the impact is.

A lot of ppl getting carried away this morning and panicking.
First, the drop in RR. is a worldwide market issue not a RR. issue
2nd, £ $ cable has recovered from the ~1.03 on Monday to ~1.06 now.
3rd, a lot of the UK markets over-reaction is traders using it as an excuse trying to cause huge volatility to make money
4th, IMF is straying into politics, disgraceful. They did the same thing in 2013 with George Osborne and a few years later had to admit they got it totally wrong. Then GO did the opposite of what most other countries were doing and was proved right
5th, Liz Truss now wants to do the opposite of what other countries are doing. It's a huge gamble but needs time. She could well be right and we could see other countries following suits in 6 months time. The main c**kup for me was not having the OBR costing the plans at the time of the announcement.
6th, a weaker £ is good for a lot of FT100 companies as a big chunk of their sales are in $ (except for RR. who have massively over hedged at 1.53!!)

Apologies, my earlier estimate based the FX rate on results day 4th August, … I should have used 30th June exchange rate (accounts close off date) which was 1.2165

Zimboman, it’s complicated. First these possible FX losses are set against their profits from u/l operations so could still show a small profit. And RR. have provided limited detail on the hedging. (and some smoke and mirrors like ‘transactional -v- translational exposure to fx, ie one they took a loss on and the other, they took a profit on, at different times, when it suited them). Also its not clear how much of the addition possible loss could impact cash flow (which is the important thing) and how much can be rolled forward in the hope STG will strengthen. Anyway it’s a massive c**kup, nobody was sacked, and they claimed most hedges were opened before Brexit, so not their fault!
You are absolutely correct saying we must be close to the time to start hedging at the current exchange rate but the implications of that are all to complicated for me to understand or work out. We just have to grin and bear it until they work their way through the £21b of hedges

Mike, please stop your lies.

From RR. 2022 half year results presentation.

$21 billion GBP:USD hedge book
Hedge book average rate is £/$1.53
Each 1$ cent change in the £/US$ hedge rate impacts u/lop profit and cash by £25-30m

Back of envelope
On the 4th August (results day) cable FX was 1.2115, its now 1.0820 so approx 13¢ cents lower. If my guesstimate is correct and the rate is at this level by year end, then additional losses/provisions on FX are £325m to £390m.

Here's the link. Look at page 5

https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/2022-hy-results-appendices.pdf

Rumours going around that Xi Jinping is under house arrest after an army coup … probably rubbish but WOW if it’s true. That would be the end of Putin!!

Great post Conger2.
Roll on the new CEO
Tufan is looking to make a name for himself after being passed over for the top job a BP a few years back. He’s old for a new CEO though so guessing he will only be there 2/3 years but he has a track record for getting results fast.

Thanks for the warning MC866, sounds like Mike1234567 is back with a new name.

I agree … so stop posting information that is clearly wrong!!

Surely after couchman’s post that makes two analysts that rate Rr. below your 90-£1.40 range?

As the dollar has strengthened significantly against STG since the half year results, and given their huge forward hedge on FX, I expect further large loss provisions in the next financial update. Any dollar orders for equipment are probably loss making if the dollar remains at these elevated levels. We have never had a full explanation from RR. about the FX forward contracts on this massive c**k up nor someone’s head (which probably means the c suite/bod approved the positions).
A tough operator like the new CEO starting January will want all dirty linen out in their yearend results so I’m expecting a loss for this year after exceptionals.
Despite all the rampers on here explaining the difference between the IPT deal being signed and how the sp would spike to £1 when the cash arrived, you look pretty foolish now.
More and more the new CEO looks like a great choice but it will be a year+ before we see the impact.

LiquidSky
Thank you for your well reasoned and considered response. I don’t necessarily disagree with anything you say. I am glad of our exchanges and would hope the forum is the better for it.
If you read back over a few of my posts, you may get a ‘feel’ for where I am coming from. I believe in Rr and I like (and am proud of) it as a company. I am a strong buy and hoping to increase my holdings.
It is the relentless, unrealistic ramping on here (£1.50 by August etc, etc) that causes me concern especially for people who get sucked in and I want to counter that by outlining some of the potential risks.
If I were to say ‘there could be a war between the West and Russia (or China invades Taiwan) in the next 6 months’, that does not mean, (a) I want a war, or (b) I expect one. Nor does it mean I must be shorting the market.
With Rolls, there are parts of their accounts that irritate me like taking a loss on hedging in 2020, booking a profit on FX in 2021 and then taking another massive loss on hedging in H1, 2020, as an example. This smacks of massaging and an indicator of how desperate they were in 2021. But things have improved enormously since then and overall I believe Warren East has done an excellent job saving the company during the pandemic. Also I am hopeful in Tufan , the new ceo, as (a) he has something to prove being passed over for the ceo position at BP, (b) he is required to hold a higher number of shares in rr than his predecessors, (c) he is taking a gamble accepting so many shares in compensation for the loss of awards at GIP and (d) he has a reputation for cutting costs/restructuring and getting results quickly. (And with a Scottish chairperson known for being good with money!)
In summary I am hoping for £1.50 end of 2023 or early 2024, I think the sp will jump after completion of IPT sale and any DOD contract award, to around £1 (maybe £1.20) but then drift back down till the results in early 2023. That’s all a guess, and I won’t be upset if it hits early 70s or, heaven forbid the 60s, … all that is just a topping up opportunity.
People may not like what I say (or prefer I didn’t say it) but at least they’re getting an honest, unvarnished personal opinions.

Hi Liquid,
So the reasoning is as follows - H1 includes a hedging loss of £2.2B which at the moment is a) only on paper and b) assumes a particular exchange rate to calculate the loss.
These hedging contracts start to expire over time and when they do those hedging losses turn from paper losses (already provided for so not an issue) into cash losses.
Second, as the dollar is a haven asset in times of uncertainty and recession, if we head into recession the dollar is expected to strengthen from here, so causing both further paper losses and cash losses.
In addition you have to upfront cash expenses of building the manufacturing facilities to produce the SMRs. These have to be built quickly if the timetable of 2030 is to be met. This is investment but requires cash or borrowing to fund. Lastly you may have further inventory build up due to supply chain issues and further capital investment needed to ramp up production for all the orders in both power systems and defence.
If civil aero flying hours continue to increase and provide positive c/f then rr can cope with the other cash requirements but if there is a another lockdown in China, US etc this winter, war or deep recession then that’s where the risks arise.
One other point is the American activist investor who knows rr is worth more in the short term if broken up, so may apply pressure after year end results, if they are poor.
As it say it’s a worst case scenario to all the super positive posts on here.

BDC
Are we not talking semantics here? Rr SMR generate electricity at a frequency of 50Hz and this can not be adapted easily or efficiently for the US distribution network hence the need to redesign their SMR to generate electricity at 60 Hz.

The important point is that Rr will not be initially selling their SMRs in American. Do you disagree with that?

BDC

I can only tell what the nuclear RR people said at their exhibition in Whitehall a few months back. I am not an electrical engineer but he explained something about the electricity being generated at different Hz frequencies in the Europe and US and would need a redesign/readjustment of their SMR product.

As such that’s why I suspect they are supporting NuScale in the US with their different designed SMR and not pushing their own.

If you think I am wrong, (and I could be) why don’t you email investor relations and ask?

I can only reiterate I am a strong buy on Rr, have a significant shareholding holding and am not hedging or shorting.

There are lots of upsides with Rr but I am posting some of the risks, to add balance the desperate, blinkered, over exuberant posters on here.

BouncyDeadCat

I agree with you completely. China, as outlined in the recent unprecedented FBI & MI5 joint press conference, are the greatest longterm threat to our economies and security.

It is orders in Turkey, Africa, ME and the Far East, that could be the issue.

Btw RR are not currently planning to sell their SMRs in the US because the Electrical Distribution Systems are different between the US and Europe.

Convb

Sorry to burst your bubble.

Still waiting for the ‘inaccuracies’ to be highlighted and for them to be ‘corrected’ by you? I will bow down to the excellent ‘in your research and conviction’.

Perhaps if you spent more time welcoming alternative views to your own, that might be more helpful than incoherently attacking posts and throwing insults. It would encourage other responsible posts and this board might be a better place?

Or perhaps you prefer posts from Mike1234567?

Oh golly convb, you are such a fool. Do try and keep up!

First if you re-read my post in relation to NuScale you will see I was responding to Phill111 in his comparison of the power output of the Rr design v the NuScale design. Everybody on here is aware Rr and NuScale are working together, especially if they were reading the links posted.

Secondly, and here is where you really made a fool of yourself, the 2nd link you posted is to a completely different Rr nuclear technology and has nothing to do with SMRs. Not sure how you got that one wrong?