Member Info for Beo1

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)

Of Course its Jam tomorrow, what do you expect from a big PLC.

E& = Increasing Stake (has to go through regulatory approval)

Sale of Spain = will take time to flush out and then show the ROC improving

UK Merger = Has to go through regulatory approval

Job Cuts = the initial redundancy costs will outweigh the current savings, once that flushed through it will improve EPS

All of the above take time, and although messaged to the street we haven't seen the SP move materially, thats not her fault

I'll go for 73.5p

Yes, for the full year. But some people seem to think H1 FCF is 50% of the full year value and therefor implying the dividend isn't covered by free cash flow. Whereas people with half a brain can see the accounts show the FCF doesn't generate cash in a linear way throughout the year.

Its all context isn't it. The SP is low because these are the type of results vodafone has been delivering for sometime.

Are the results worse than what is already priced into the SP? Who really knows, but if you can actually read accounts, you can see the loss is driven by one of tax rate of 128% due to tax on disposal of business, on a normal tax rate its still profitable, does the earnings cover the dividend? No but it hasn't for some time so that is priced into the SP. And the FCF reduction appears to be partly cyclical with a negative working capital value that has historically return to £0 by the full year results. all things being equal H2 would £(2)b (H1) + £6.8b working capital (eg +£3.4b for no negative working capital in H2, +£3.4b to take the full year position back to £0 , making £4.8b of FCF vs Dividend of £1.2b. will the company suddenly be worth the SP in H2? Honestly if you can't read accounts then don't abstain from commenting

Not quite as simple as that.

Of the £2b of free cash outflow the working capital was negative £2.4b (eg the accounts payable reduced more than the account receivable). It looks to be a cyclical thing to some extent. EG last year H1 the working capital was negative £3.4b but by the full year results it was £0.3b positive, so H2 was £3.7b positive.

If you exclude this timing* issue, then the FCF before dividend would have been £1.4b positive vs £1.2b dividends. So its not the dividends per say that added to the net debt, but the working capital movement of £3.4b, the other cashflow items net off. Its all in the messaging I guess and I would have positioned it was above rather than the way they did.

* Im assuming its just timing as thats what last years accounts indicate. If its not timing then thats a worry as it means we are still paying our suppliers on time but our customers are taking longer to pay us. Which would be a separate worry

Ever heard of cost of capital? Cost of capital is made up (cost of debt x % debt) + (cost of equity x % equity)

Even in today's interest rate environment cost of debt is materialy cheaper than the cost of equity. So a 0 geared company would then be looking at double digits cost of capital, and our return on capital is single digits. Not to mention the tax shield that debt gives. So no, zero debt isn't the way.

You know that's not how it works right?

The current market value = assets - liabilities +/- market sentiment

The sale value agreed = asset value

We aren't getting 5b for asset value less the debt associated for that part of the business, we keep the debt element

78.2p for me. Sorry >£1 still a bit iff

I'd like to dedicate this momentous occasion to Porsche. Without you non of this would be possible, keep on being you and helping the SP to rise.

Sorry should clarify. The absolute margin £ doubles in my example, the NIM spread would stay the same. still making an excess of 3% between deposits and loans

There is a slight distinction between NIM and profit. so NIM spread of 3% doesn't appear to change drastically in periods of low rates or high rates. But if its high rates then say 2% to 4% then income doubles, outgoings doubles but the "margin" doubles. yet admin costs and other costs shouldn't so, therefor you leverage your overheads better and create more profit

There not saying Barclays has any capital deficit. There actually saying the opposite. They are saying that at this SP the market is pricing in a capital deficit but on the CTE% they are achieving they don't believe this to be the case.

If your looking at google finance the value they show is the last trade and looks like all the up and downs were delayed trades coming through

Yes, a company with a PE of just over x2, of course that would be a good buy in price. Not sure the logic of it ever hitting it. I'm going to buy-in at 1p, think of the multi bagger it could be from that buy-in. I mean if your going to throw out really low entry prices where do you stop!

75.9p for me please

Another day another tanking in the SP. Really hope we find a bottom soon.