The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Hits, Yanis did advise that he was using 12 month bundles for his cash flow forecast which would clearly not give him detailed enough info for the cash levels going into Jan23 and the levels throughout the H1 months. I think we can agree we have finally got to the bottom of the matter. Got there in the end, quite a bit of name calling etc but I'll get over it. The main thing is, we can move on.
Hits, there's a huge thread on this where we establish that Yanis was using 12 month buckets for cashflow which was distorting his answer. In the thread I use the Angs 10,800/mscf conversion. September is fine. Q4 is fine but H1 not. That's when we need the 2nd compressor.
Yanis, no I will focus on month to month thank you. Cash flows generate daily so month by month is a wide enough time frame as it is. I am from a finance background and can safely say that no one would use annual cash flows as there are way to many ebbs and flows during a 12 month period especially in a volatile gas market.
The average for Q4 is 5.24 (based on Angs figures), hence why GL states we'll comfortably achieve it with 5.5. The 0.31 excess will generate c300,000 therms in Q4. At £2 that's £600k additional revenue. It's not game changing at this point but will certainly help with paying off our debt.
So heading into Jan23 I don't expect us to be flooded with cash. As GL put it, the goal is to be debt free in Q1 so we'll still have net debt in Jan23.
I calculated earlier that the shortfall for H1 was c 0.9 (6.4 - 5.5) which equates to 1.6m therms. If the gas increases to £4 as countries begin to refil their storage tanks after winter then that's a shortfall over the 6 month period of 1.6m X £4 = £6.4m. The hedged revenue from Sept to June will generate about £8m then take off the cost of 17p/t, that's £3m so your already unable to settle the shortfall in H1 and that's before Admin charges, debt repayments, tax, finance charges.
My whole point the last few days is that we need the 2nd compressor online to comfortably exceed the hedge. No issues. It's coming online. You, Asher, BV and whoever else just need to stop saying 5.5 is sufficient. Maybe using your very misleading annual cash forcasts things look rosey but the hedge peaks in H1, that's where the bottleneck is so you have to use a much shorter time frame.
You may know Gas engineering and will have useful knowledge for the technical stuff but I don't need engineers to tell me how to produce a cash flow forecast
Yanis, you said that 5.5mscf would comfortably exceed the hedge in its entirety. I disagreed and challenged you but you never came back. The maths isn't hard and it shows that unless the Jan-jun23 gas price is £1, we need more than 5.5. That's all I'm saying. I'm not even saying this is a problem as I believe the 2nd compressor will be in this year.
I just don't like false information being represented as truth and everyone believing it like what has happened here.
Someone run the numbers and show me I'm wrong and Ill call it a day. You guys said it not me, so it's only right that you now back it up.
There's certainly a few slow posters on here. Jaffy just joined the clang
Agree 100% with Howey and funnily enough that's always been my stance, hence why I bought in.
Rampers spouting 10-15p by Xmas will definitely see my 4-6p as negative and deramping Jaffy. That's the whole point of ramping.
BV, you basing anything on what people tell you their average is on here is very naïve. It means nothing so stop using it to try and justify your username. You don't give too hoots about the real situation. You're too excited by recent developments. I haven't seen you once step in and try to ground the rampers. If anything you're siding with them.
Jaffy, a little background for you as you appear late to the party.
I believe Angs will be worth close to 7p in the next 12-18 months. There's obviously a lot of variables to that forecast but based on what I know now and expect to happen that's what I believe is possible.
I believe the 2nd compressor will be installed this year allowing us to easily exceed the current hedge and really start benefiting from the high gas prices.
I believe Angs won't have a cash flow issue going forward especially once the 2nd compressor is online.
I believe the future is bright for Angs
I first met the rampers a week or so ago. There were several trying to value the business at 10-20p. Some providing calculations completely ignoring the hedge and some not even providing any substance at all. I think even £2 per share was mentioned. I have a finance background so tried to ground a few by offering a sensible value. This was immediately dismissed.
That then lead onto the debate about the hedge. Does 5.5mscf cover the entirety of the hedge. Yes or No. We had a few attempt to provide the calculations and some arrived at yes and some no. The calculations do require some assumptions so you can appreciate why you would get differing results. I however do my own calculations to see if I agree with what is posted on here. I didn't so I challenged the relevant people. I was met with a barrage of insults and ultimately tagged a deramper who is not invested.
I am invested here. I will call out both trolls and rampers when I don't agree and I will back up why I don't agree.
Having done and shared my calculations, anyone who states we will comfortably exceed the hedge in its entirety based on a 5.5mscf rate are ramping as they now know it is extremely unlikely based on future high gas prices.
BV, asking you to step in was a long shot I'll admit. You strike me as someone who feeds off the BB more than you feed it. You've probably never done the calculations yourself and rely on others for that.
Thanks to Noel I understand the angle that Yanis is coming from although I disagree strongly with his conclusion that 5.5mscf will comfortably get us over the hedge.
As a balanced viewer you should know to read both sides of the argument but like most rampers on here your excitement has got the better of you.
As for averages, does it matter? I hold. That's my business not yours and you sharing your average means absolutely diddly squat to me and probably most others on here. I don't know you. You could be the biggest player on AIM for all I know.
Some valid points.
We do have £7m trade receivables to go at and £1m of stock to cash in soon.
Operating loss was £1.6m but £2m was spent growing the company. We know H2 will most likely produce a positive operating cash flow so £1.1m cash at Jun22 should be a floor. With a sound cash collection system we may survive the £1.5m payments due this year. They have spent more on capex than I had forecast so the 2nd tranche may well be needed but the signs are there that GB knows how to grow this company. Hopefully the next tranche will be the last. Aren't the warrants connected to the tranches for 20p. That's well north of here.
No problem Jaffy, I don't recall you bringing anything material to the table so I doubt many will even notice the misspellings.
DYOR Jaffy, most things stated in here can and should be corroborated by each investors themselves.
Thanks Noel, I understand where you're coming from. The shortfall is about 0.9mscf/D (6.4-5.5).
0.9 x 182 = 146mmscf over the 6 month period
Using Angs 10,800 conversion is about 1.6m therms shortfall. Who knows what the price will be but if it's £5 like Angs will hope then that's a £8m shortfall. 5.5mscf will not cover £8m. It may cover £1/t which would be a shortfall of £1.6m but then it's a big ask and too close for comfort in my view.
5.5mscf/D from SEP to Dec is 671mscf
X 10800 is 7.25m therms
@ 52p thats £3.8m revenue
Costs of 17p/therm = £1.2m
Admin costs of £200k per month
Finance costs etc
Possibly some tax payments.
Let's face it, would any of us be here if we thought the therm price was going to be £1 in Jan23 through to Jun23. Not likely. Most here including GL think £2.50-£7. Well at those prices 5.5mscf isn't going to be enough so if the rampers could stick to a reasonable argument and stop spouting that 5.5mscf is more than enough, that would be great. It may be, but highly likely based on high gas prices that it won't.
But again. It doesn't matter because the 2nd compressor will go live hopefully this year so 5.5mscf will be irrelevant.
Thanks Noel.
Your comment was just misleading Asher, as I said before GL specifically states September and Q4 hedge will be met by current run rate. You didn't specify a date so it can easily be implied as the full 3 years. That's not what GL said. He was careful as he should be to specify a date range. So should you.
That's a shame BV. You could have helped clear it up. I'm happy for people to disagree. Show me why you disagree. Show me where I'm going wrong. It's strange no one can.
I was hoping as a balanced viewer you would do the calculation yourself and provide it on here so once and for all we can put this to bed and move on. I'm happy for anyone to attempt if they can please. If you show me to be wrong then I'll apologize and not mention the matter again. If I'm right then let's just stop stating that "5.5mscf is more than enough to meet the hedge"
Sound like a deal?
I don't filter anyone, derampers and rampers alike I meet with hard facts to dispel their theories. That way everyone who is interested can see them for what they are. BF, has some valid points but some I'm not sure on so rather than resort to abuse and insults I explore their reasoning by asking valid questions and awaiting their response.
BV, as a balanced viewer maybe you could provide the clear answer as to whether the H1 hedge requirements can be met with a stable 5.5mscf flow rate. I've tried, I've been quite detailed with my numbers and only used documents provided by Angs.
I've asked Yanis but he's gone quiet.
The ramp crew won't listen to me but I think they will to you and looking at some comments from some users the inaccurate information being shared is being taken as gospel which isn't right.