Member Info for baronbog

So just to remind everyone and keep our feet on the ground,

1) 16 x SMRs are over 28 years (excluding overseas sales)so maybe UK sales of £1b a year starting in 8 years, based on 50% for manufacturing the modules etc.
2) SMRs on land are completely new, still under development, using an untested onsite construction method, still to receive regulatory approval (not due for 2 years) and the manufacturing site locations have yet to be finalised (as well as the actual generating sites), need planning permission and have to be built. And we will all be praying there are no radiation leaks, terrorist attacks, or natural disasters which sway public opinion. Game over if there is.
3) Highly likely something so new will experience delays, cost overruns, changes is design, and/or design flaws, once in operation.
4) Phil111 - NuScale modules, though much smaller in size, they are designed to be grouped in 4s, 8s, and 12s, in one building so comparable is size to RR output.
5) Selfsufficient - FX losses - correct me if I’m wrong but the losses are closer to £4B … (£1.7B 2020 & £2.2B H1, 2022) and still rising. Let’s all hope the dollar doesn’t get stronger … for longer!
6) Rr are not the only player in SMRs (unlike wide body engines) and given the huge sums of money involved, the French, Americans, Chinese etc will fight tooth and nail for every overseas order. Lots of politics involved too.
7) the new CEO, as per usual practice, will want to clear out or over-provide for, any losses or skeletons, so we may well have only a small profit (or loss) for the full year.

I am a strong buy on Rr but we all need to understand it is a long term play (3 years+) and given the risks, you shouldn’t have more that 20% of your total portfolio is them.

I know the above is all very boring and not what people want to hear, but please take it into consideration.

Lol, Dazpink, I have read it in full. I suggest you do.

I know some may not be used to reading accounts but what flashed up for me were the margins dropping over 50% and the FX hedging.

The department head of hedging needs to be sacked. Taking FX contracts at avg of $1.50 out to 2026, unbelievable … first $1.50 is historically at the upper end of the range, second with the incoming recession, the dollar is only going to strengthen from here as a safe haven (and even higher losses on the hedging!) and third, after the Brexit vote years ago, who thought $1.50 was a good price!
They need to try poach the Ryanair guy who does their hedging. I’ve been a shareholder for years and they have a very impressive track record on hedging.

‘What a load of rubbish
They need to get the SMR on the move on ! What’s happening there ?
They seem to be taking there time.’

At this rate, RR will not be able to borrow the huge sums of money, at a reasonable interest rate, to build the manufacturing plants to produce SMRs. Nuclear projects are notorious for being massive loss makers and we won’t know if RR can deliver them profitable for 10 years! And the v-280 contract, if we win it, is about the only good news we can expect in the short term. If RR report a full year loss, then it’s either a RI or we have to flog one of the divisions… defence is probably worth more that the total capitalisation of rr atm!

Ppl here need to understand what they are getting into … this is not some capital light software company that’s scalable, … it’s an old fashioned, capital intensive, R&D intensive, engineering multinational subject to the vagaries of multiple powerful governments.

And btw while it’s a British registered company, the majority of its shareholders are American, who will be ruthless if the sh*t hits the fan.

My strategy is to load up if it gets into the 70s and wait 3 years+. But it is still a gamble.

‘ WTF, seriously it is funny, analysts reckon RR is a broken business, most definitely NOT, who employs these muppets’

Ffs …. are you living in cloud cuckoo land? Rr just posted a H1 £1.6b loss!!! Greater than the total proceeds from the IPT sale!

Hi convb
I think you may have missed my point. We will transition much quicker to SMRs and renewables because Russia invaded Ukraine. Do you disagree?

Not sure American have invaded anyone recently for a land grab.

As I posted before, oil demand is what it is. Russia will divert its supplies to China/India etc and those countries currently supplying there will divert their supplies to the EU at a vastly higher price. The readjustment is happening with the main delay being the Middle East trying to scr*w the highest possible price from us while deliberately keeping supply tight. Lots of angst is the short term but amazing how quickly businesses adapt. This won’t be a problem winter 2023.

‘Time to cut a deal with Putin is long overdue’

Convb, an alternative view.

1. The longer gas & oil prices are elevated, the quicker we will transition to SMRs and renewables. And the better Rr does.
2. With electricity costs so high, the quicker we invest in substantial reducing the kWh we use and the better for the environment. A business I invest in where I am a shareholder and director, they have managed to permanently reduce their electricity consumption by 30%+.
3. Capitulating to the Russians will be a disaster. Give in to a bully and he will come back for more.

Botbot, you seem like a decent guy. Really admire your self deprecating posts today is the face of all the abuse. No hiding. You told us your trades in advance, got it wrong this time .. and held your hands up. It’s happened to us all, albeit on a smaller scale.
I am interested, if you don’t mind me asking, will you hold or will you take the hit?

Is Mike1234567 ok?

Anybody got an idea why we were up to 211 today and fell back to 204 for the close?

Thanks for the link Barnyrubble.
While the article could be viewed positively, I hadn’t realised they have a number of projects it has taken massive write downs over the last 5 years. While any professional services company can get it completely wrong on a particular project, you wonder if there is something fundamentally wrong when it’s more than one project. My average is 174p but the sp is indicating either the sale of the BE unit isn’t going to happen at the current price or there are massive further write downs coming down the pike.

“I’m sure Turfan will be best chef at the Kebab shop but when it comes to Fish and chips will he be available to fry the fish before he burns it .”

Metom, your post @ 15.26 made me laugh. Lightened the mood today.

Igor
Great explanation, you have explained it much more simply than I could.
The smoke and mirrors come part comes from, how, so desperate they were to show a profit last year they took a FX profit of £280m and this year they are taking taking a paper loss of £1.6b on FX. It will all be legal of course. That’s why the city traders have the edge over PIs with the time & knowledge to read the accounts in huge detail and figure this stuff out.

They are doing a real ‘smoke & mirrors’ job on their accounts.
Looks like all last years profits came from the sale of old spare parts in Defence generating a £45M profit and a one off FX revaluation giving a £270M profit. This time we a H1 loss of £1.6B … equivalent to the full proceeds of the IPT!! While it’s currently a non cash item relating to marking FX contracts to market price, the actual losses will drop on to cash flow as these contracts expire, unless FX rates move back in their favour. If so then net debt remains close to current levels and that probably means another Rights Issue.

It’s a great company but just goes to show how risky/difficult it is to run a big, complicated engineering business.

Love the star track reference ….
On a beach?? … more likely he’s got a promotion at the Russian troll farm
And all those ppl who were recommending his posts, amazing
Well at least the Russians are keeping rr defence division (and MTU) in serious profits!!

Where’s Mike today???

Dazpink, free cash flow is £587m not £1.1b, and increased orders are meaningless if they can’t turn a profit on them. Underlining revenues are only up marginally which means that H1 2021 must have had the kitchen sink thrown in and last years profit massaged to calm the markets at the time. I’m shocked by the results. Looks like JPM were right.

Be interesting if we could check where MRLOLOL IP address is? In Russia? At a known troll farm? Would be good if LSE could restrict posters to IP addresses in UK & EU.

It is surprising so many people are obsessing over the IPT monies. The deal is done, the money is coming at some point, an adjustment will be done for any additional IPT profits in the interim and as per usual, we are just awaiting the bureaucrats (Spanish national & regional, no doubt working from beach, who make our lot seem super efficient!). But in reality the proceeds (after converting from euro to sterling) may not have much impact on the Balance Sheet as we could have burnt through loads of cash gearing up for SRMs. Taking on a 1,000 engineers and building new factories doesn’t come cheap. So what? Unless you are trading the short term peaks and troughs. Don’t stress about the short term, it’s a great company. It could drop to 50p in the autumn if these is a market crash but, for me that’s an opportunity to top up on the cheap. Red_inky has got it consistently spot on for me. Don’t get depressed over the sp if it don’t rocket after the results, we are in a bear market, an uncertain world but be delighted you have shares in a thoroughbred!

cw1966, no need to get so excited. It is just an alternative view to your own.
As you may be aware, the UK (recent unprecedented FBI & MI5 joint press conference warning on China being the greatest longterm threat to our economies and security) also are very weary of the Chinese. The visit is a prod and pushback against them. They have broken their agreement on HK with the UK, are making outrageous territorial claims in the South China Sea, are supporting Russia in their land grab in Ukraine, are 're-educating' millions of Uyghurs and suppressing free speech. Unfortunitely I am not one for appeasement and believe you have to stand up to them, no matter the near term economic cost. And this visit is certainly getting their attention. IMV they will not escalate it to any military confrontation. Not sure how it helps Putin? It may weaken China's support for Russia, if the West negotiate a new view on Taiwan. I suspect this is the plan all along.

It is interesting ... White House hasn't publicly told Pelosi not to go! The visit was originally planned in the spring but she caught covid so postponed. China's rhetoric wasn't as aggressive then. Yes I agree, at 82 this is her's last hurrah but then what a perfect person to send. And she is getting great support from both republicans and democrats for her visit. I think the WH have given her tacit support while publicly saying the US military don't advise a trip at this time. She'll take the blame if anything goes wrong (and has nothing to lose) while winding up the Chinese. As I say I think it is a clever move.