Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
My dad is invested in CPX despite my warnings. But yes, they have a high R&D cost that is killing there profit / cash burn, even though they get a government rebate back its still a net drag on performance, and they can't even protect there patents, losing a case in the US (nearly 25% of there demand). So if this guy is in there then we can take his advice with a pinch of salt
Did you read what he wrote, as it doesn't look like you did
He's not advocating investors borrowing money to invest in VOD shares. He's saying the debt VOD has is effectively cheap debt so should keep paying money to investors, but he's wrong in that aspect. VOD cannot achieve a return in excess of there cost of capital, but the debt element of that capital is cheap, whereas the cost of equity would be high (in part due to the higher dividend yield (although some use a government bond yield beta to get to a cost of equity). So the question isn't about trading debt vs dividend, its about using the cash to make a good ROCE or return the money to shareholders, and at the moment they are saying they can't do that.
So we currently have 4.6b euros revenue per annum, vs combined newco of 5.8b, so we are being bought out of market share in italy for 29% (to take us to 50/50 in newco) for 8.5b Euros (for losing 1.7b revenue, approx 0.5b EBITDAaL) so a EBITDA multiple of x18. Seems good value, but will obviously reduce earnings until synergies of a combined business can come in, although not sure how much synergies a newco can get when its a starting 79/21 split?
So this is a business account? I'm the treasurer for the local football team and I've been having the warnings for months, sent them the forms, still had warnings, rang them up got sent more forms, re-sent them, the warnings stopped until last week where it came back up, saying X days until we freeze the activity. Rang them up, gave them the extra information, warnings gone again. Moral of the story is if its the same "we need more info" warning on the business account then someone has been ignoring them. I was getting messages everytime i logged on, emails to the linked email address. All telling me if i don't provide the information they will close it. And yes all the info i gave was in relation to governance, wanting to know who the decision makers were etc
Just noticed the Balance sheet indicates EZJ have already banked £1.5b of next years Turnover. So nearly 20% of the way to last years Sales already. This element will mostly like be the seat fee's, so add on the ancillary revenue associated with those pre-sold seats and your looking at 20% of the years numbers already, before the year has even begun.
Also, if you consider that 4% of the cost base is at £0 revenue, that's an £80m headwind in Q1, and yet despite that they are messaging YoY loss for the Qtr will be flat.
You've got 4% of the EZJ capacity sat effectively doing nothing and yet Profit YoY is flat. Not great but shows underlying strength in the other 96%. Also we got brought down on Jet2 announcement of bookings being down in the new year, so market was expecting a similar thing here I reckon and we aren't, hence the positive SP movement. IMO
I should add Time value of money is very important in appraising a finance CapEx investment. as the out years are normally discounted at nearly 9-10% per year, depending on the companies cost of capital. so being able to bank cash earlier is a huge win for Asset intensive companies.
I wasn't trying to say the tax change wasn't good, but correctly people who think it means the actual tax paid changes. as I said you pay the same tax just pay it later and that is still a big deal for Vodafone
Its time value of money. Paying £1b less in tax now costs a lot less than paying £1b less over an asset life of 10 years
Also, if you are constantly growing (through capital investment) then effectively you keep pushing the tax can down the road so to speak. EG if I spend £10m now I can tax deduct all of that in year 1, as opposed to £1m per year over 10 years, if I then spend £20m in year 2 then i get to tax deduct all of the £20m in year 1 (of 2 years in this example) but I am no longer getting the £1m from the first years £10m so the net change is £19m. if your replacement cycle is linear then once you catch up (eg go through a whole asset life cycle) then effectively it becomes the same amount (EG previously I would expense to years of capex a year at 1m per capex (eg 1/10th of £10m) x 10 years of capex). Now you expense each capex in year 1 for tax purposes, so now I'm get 1/1th of £10m x 1 year) - you see how on a flat capex its the same value?
OMG do you know how tax previously worked?
Previously you able to allocate 18% per year anyway. then when it was disposed you had what is called a pool balancing, which effectively let you claim the tax relief on any remaining NBV that hadn't already been claimed via the 18%
So it doesn't affect the amount or Tax you pay, it only affects the time you pay them
I'm an accountant who run's DCF's on fleet purchases so I know how tax depreciation works thanks
Who knows, as the stock market is a fickle thing. But can't see why the results themselves shift anything, as the Quarter Trading updates have effectively told the market the annual Revenue and Profit, they've already messaged the dividend. What new does the results tell us (the market). The big caveat is if they provide a current trading update, then yes that would swing the SP
You know it always could be used as a tax shield right? The only thing "Full Expensing" does is delay the timing of that tax payment, it doesn't stop it. It will help the DCF calculations mind as the time value of money makes it better. But from a PAT over that assets life, its exactly the same.
I disagree
If Spain is achieving a return on capital below the cost of capital, then its disposal creates incremental wealth for the Equity holders. As effectively at the moment its destroying shareholder wealth not being accretive to it. So yes the EBITDA and NBT drops by disposing of it, but then so does the Investment needed to generate them and in a non linear way. So then you get NewCo which get less profits but invests less, creating a higher return on capital (which in turn creates a higher FCF)