Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
At a Group Level (this is reported values, so Foreign Exc and disposal haven't been adjusted)
Qtr £M Seq % YoY
Q1 22 11,101
Q2 22 11,388 2.6%
Q3 22 11,684 2.6%
Q4 22 11,407 -2.4%
Q1 23 11,278 -1.1% 1.6%
Q2 23 11,652 3.3% 2.3%
Q3 23 11,638 -0.1% -0.4%
Q4 23 11,138 -4.3% -2.4%
Q1 24 10,740 -3.6% -4.8%
Q2 24 11,197 4.3% -3.9%
Q3 24 11,372 1.6% -2.3%
Considering the disposal's during this timeframe. Ghana / Hungary / Towers Etc. then at 11.4b vs our peak of 11.7b, actually shows underlying growth across the continuing operations. as I'm sure those 3 entities were more than 0.3b a quarter. I agree volume vs Yield is at play here, we have lost numbers but our ARPU is up.
So as you can see Q4 comparatives should be favourable. LY they dropped 5.2% Sequentially in Germany, so when we report on Q4 assuming we are still at 3,343 then we would see a YoY growth of circa 5%. In fact the last 2 quarters have seen the largest sequential growth in the timeframe i have listed
There not down in Germany? The rate of growth is down, but it still grew YoY
In fact,
Q1 3,147
Q2 3,258 (3.5% Sequential)
Q3 3,343 (2.6% Sequential)
The problem is we are still chasing a tailwind. EG we lost business Q4 LY and Q1 CY which means the comparative are effected by that, but Germany is growing again, both on a YoY (small) and sequentially
Agreed, Illiad are trying to capitalise on the scrutiny Vodafone have been under have been very aggressive in their approach. It was them that leaked the proposal, they offered terms that heavily favoured them in the merger, EBIT multiple on there element of x17. I'm glad she isn't pandering to fretful shareholders and is actually trying to maximise shareholder wealth
What changes has she made?
Progressed the UK Merger to the competition authorities (timelines are now out of her hands to some degree)
Agreed sale of Spanish Business, Any company purchasing this will also need to carry out due diligence and regulatory approval - again some of this timescale is out of her hands
Proceeded with large scale job cuts - which have started and continue but the results of which we wont see until results are declared (not just updates as they typically focus on the revenue)
So there are 3 very large strategic actions she has taken since taking the job (not including the other tie ups [eg microsoft etc]). Its disingenuous at best to suggest she has done zero in her time. Is it enough? not to get to an SP that many think, but definitely to get beyond £1 IMO
The Broker downgrade today is not the main driver for the SP drop. It will be the collapse of any potential deal on Italy in the immediate future.
And for me if the broker previously said we are worth £5b less in market Cap than they previously thought then yes I see that as a downgrade.
IMO
VOD would have weighed up the perceived "under valuation cost" (made that phrase up), EG say they value the Business £Xb more than the offer. Then they would see how much capital they are destroying in Italy by staying in, EG £Yb per year x Z years. What other factors might improve Y, what the real time value of money X is. Bear in mind as well for the merger years, VOD would still be contributing CapEx that is below WACC, so still destroying shareholder value, with probably years of future value given to Illiad. EG they spent £XB on investment expecting to get £YB of cash on that over say 5 to 10 years, but if the Put options mean vodafone are now not getting the cash back on that investment, therefor a hidden cost of disposal, further reducing the actual overall consideration. They would be looking to work all this out, and see if it was actually worth it.
I'm just stating facts. The overall enterprise value attached to Italy was lower than their previous offer. The time over which we would receive the full value in cash in bank was a longer timeframe (I stand to be corrected here, as I know the previous offer was a purchase not a merger leading to the purchase, but I don't know how much was debt vs cash)
As to why VOD didn't dismiss it out of hand, I cant answer that, obviously the market see's any exit of Italy to be accretive to the SP, but for any business the cost of customer acquisition is high, so to turn off Xm subscribers in 1 country won't be easily recovered by the rest of the group. So VOD would have weighed it all up and determined in their view that the benefits didn't outweigh the Cons?
To be fair it wasn't a great offer. Lower than last time when it was a full buy out. This time the overall consideration was lower (I get the multiple was higher) and essentially 50% of the value was trapped in put options, thus making it a payment plan, which with time value of money meant the overall consideration was materially lower than last time. I actually respect VOD more not just selling the family silver for any price. Yes, there was benefits to be had to just exit Italy but Illiad were trying to get this on the cheap IMO
No offence, but i think your wide of the mark. Barc P/E ratio is already the lowest out of there peers. They don't need to reduce this further by reducing shares! The issue they have that whilst the investment side provides diversification in earnings, the amount of capital they have to set aside is disproportionate thus reducing there Return on Tangible Equity against them same peers. The buybacks have to some extent shored up the SP and we could keep window dressing the SP by doing more of this, but it isn't the reason for the poor SP performance IMO
Me personally, Yes
Pro's
Q2 showed growth in the headline numbers, albeit on fewer customers.
Lower Net Assets was a cyclical thing. H2 will show this and show a material YoY reduction
UK Merger should improve ROIC - thus improving FCF
Spain Disposal should improve group ROIC - At the moment this is below cost of capital - thus a drag on the FCF. Removing it, whilst reducing our EBITDAaL will improve our FCF, as at the moment for every £1 we spend on capital we are returning less than this in FCF
Italy disposal / merger - exactly as per Spain.
Reducing the cost base - still in motion here.
CONS
High Inflation - cost base continues to rise, whilst we can capture this in Yield - it will impact our subscriber numbers
Dividend cover, whilst I believe FCF improves, with all the above, the impact on our EPS will reduce (as some of the cost of capital is equity which is after EPS). so therefor our Dividend cover reduces. with Dividend cover already close to x1 this does scream out dividend cut which could hurt the SP. But hopefully economies of scale via UK merger / Italy merger will mitigate to some extent
So yes i think there is more Upside that downside at this point in time.
For me, the drag on today's SP looks Vodacom related IMO. Down nearly 4% and considering we are the majority interest there and any drop in the Market value means a drop in the value of our Asset its got to have some impact.
You do know, that the physical payment of the dividend shouldn't effect the SP. Its the Ex Div date that creates the liability. EG the point it goes as a credit on the VOD balance sheet in the current liabilities. The payment just credits bank and debits this already created liability. In fact the payment could theoretically increase the payment as a decent amount of people will buy more shares.
The point is. ITV reported a decline in Advertising revenue last results. Since then our nearest like for like competitor in the UK has reported they have seen further declines in their business. So in the absence of anything to the contrary the market has determined that ITV advertising is also likely to have deteriorated further.
How did that link get so mess up :-)
https://www.proactiveinvestors.com/companies/news/1039560/itv-shares-fall-as-channel-4-axes-jobs-and-ad-revenue-dries-up-1039560.html
Yes, looks like we are guilty by association
https://www.proactiveinvestors.com/companies/news/1039532/chill-brands-comments-on-uk-disposable-vape-ban-1039532.html