Member Info for EG777

Cheers Mogger.

I re-listened to the AGM presentation and it was mentioned that there will be “a month or so” of time allowed after the 13th for follow up.

So I guess we are looking at September best case scenario.

Thanks for the link Mogger.

I noted the closing date for public consultation is 13th Aug. Just wondered if you knew what the process normally is. I.e is it a case that Navitas will be actively updating the EIS throughout the consultation period and expect it to be signed off on or around 13th?

Or would they wait until the consultation period ends and then begin amending (if required) and resubmit etc.

“EG ; So based on 40kbopd @ $80, are you in agreement with SHs calculations that Rockhoppers first year net profit will be £227million ?”

I don’t have any opinion on the calculation and tend not to read into any speculative or opinion based posts. There are so many variables at play that I imagine any forecasts or predictions made by top experts in the field will be incorrect, let alone anything people posting on an online forum could come up with (myself included).

My post was just to point out that it would be incorrect to deduct loan repayments from the P&L because loan repayments make no impact on net profit.

Think of it this way, if Navitas were to loan RKH for example £1bn in year 1. It wouldn’t mean that Rockhopper are suddenly making £1bn extra profit in year 1.

By the same logic when the loan gets repaid it doesn’t affect net profit.

If you google how balance sheets, and P&L statements work you should be able to find plenty of info as this is Accounting 101 really.

No it doesn’t. It’s factually incorrect to say that a loan repayment reduces net profit.

“I think you are blinded and oblivious to anything other than your own opinion as proved with your first year profit forecasts that conveniently ommitted the 85% loan repayment and the fact you now fail to comprehend why there may be difficulties in funding as Rockhopper & these observers mentioned.”

The loan repayments of 85% should be omitted as they make no impact on RKH net profit.

Loans are a balance sheet item. When Navitas provide the loan, the cash will hit the balance sheet as an asset. The loan will also hit the balance sheet as a liability. As the loan gets repaid, it reduces the liability, but does not affect the profit in any way. Saying that the 85% loan repayments reduce rockhoppers profit by £100m’s in the first year of oil, would be the equivalent of saying that when Navitas provide them the loan it instantly increases RKH profit by £100m’s. It doesn’t. A loan is a balance sheet item which has no impact on net profit. Either when it is received, or repaid.

The only aspect of the loan which would hit the profit is the interest of 8%, and any associated fees (if there are any). So it’s correct to exclude the 85% loan repayments from any profit calculations.

You need to have actually sold the stock at a loss to carry forward a loss. If you sold the stock and made a capital loss you can carry forward the loss indefinitely.

If the losses are only paper losses they have no bearing on CGT.

Debt repayments don't effect the P&L. So 85% wouldn't come off profit, would just come off balance sheet.

Similar size buy went through today. Maybe a bed & SIPP - or just coincidence.

Hi Hedge,

I think 33% is reasonably accurate (some models will hold value better, some worse). The concern for me with the rental market is “Rental income” minus “Depreciation” = “profit”. So the depreciation is quite a critical factor.

It’s why I’m not a big fan of the business model. And completely agree with regards to cash generative sales,

My view is that they should keep it simple, and stick to buying the phones in and shifting them ASAP before depreciation has chance to erode any margins significantly.

Hi Hedge,

Could you point me to the time I asked you to take my views over the accountants? I missed that bit.

FYI - it’s not anecdotal, you can find the depreciation data on music magpies own website if you care to look. I have also been in the used mobile industry for circa 20 years.

The fact is, the accountants/auditors are using one method for revaluing their balance sheet. I am not questioning this is correct from an accounting perspective. But When it comes to actually realising the values of those assets, if you believe they have all depreciated by exactly 33% each year, I would question if you have any prior experience with the erratic price movements of the secondary used phone market.

From what I’ve read in the accounts they aren’t constantly subjecting the assets to constant revaluation. They’re just writing 33% off the value per year.

33% depreciation is borderline I’d say. It’s very model dependant.

Apple could well depreciate less than this as they tend to hold value well.

Google, oneplus, oppo etc would likely depreciate more than this.

Fold / flip phones have depreciated A LOT more than 33% in the past year.

One of the biggest risk factors in used handsets is price volatility, and I think there’s a danger in using a broad brush calculation of 33% to measure something which is very variable and has a significant impact on the P&L.

Personally I’d prefer to see them focus on getting stock in and shifting it ASAP. So was glad to read that they seem to be focusing less on the rental space based on their EOY report.

I’d say it’s swapping out for past revenue, not future revenue.

They buy an asset. Rent it out for a year. After that year, the rental income hits the P&L, and the depreciation (33%) also hits the P&L at the same time.

As you say, the value of the rental income should exceed the depreciation (or they will be making a loss). But it wouldn’t be in exchange for future revenue. Because as the asset continues to generate revenue (assuming it continues to be rented out), it would also continue to depreciate.

Personally I’m not sure I agree with the 33% depreciation figure. It would be interesting to see the split of models out for rent, but if they are newer models that’s quite ambitious I’d say.

I’d have to disagree when it comes to the depreciation of the rental assets.

Used smartphones do depreciate, so those losses to equate to a reduction of capital within the company and are genuine losses unfortunately.

The majority of those buys were mine. Nothing fancy I’m afraid, just bed & ISA. Sold roughly the same amount a few days prior.

I was told at beginning of year that the EIS would be submitted in Feb/March, after which there would be a 42 day period for public consultation.

In terms of when an announcement would be released it would be if and when it was adopted by FIG.

That's great thank you very much. Are they normally fairly prompt with the e-mails?

Hi All,

Just wondered if anyone knew of an app or service which provides a notification as and when an RNS comes in?

It was only by pure luck I wasn't caught out by the 12PM arbitration RNS, as I know a lot of people were. So would be great if there was a way to get real time notifications to avoid that happening in future. Any info much appreciated.

Cheers

"Why would a Canadian investment company comes all the way to the

Falklands ? What is there to making them to have this commitment?

Why didn't they go for Bor ? Or, Rkh ?"

RKH Market Cap = ~£83m

BOR Market Cap = £17m

JHI have around £15m cash, so clearly could not afford BOR or RKH even at current market cap let alone the premium they'd need to pay to buy them out.

I would imagine the main reason for them choosing Argos, is because it cost them bugger all, because Argos are being wound up as a company. That is about as bad as it gets. It's not a great prospect, or an exciting share. It's a company that has gone bust and is being bought for next to nothing because they can no longer afford to operate.

Everyone can already vote if they hold shares. Anyone's votes you managed to pool together would be trivial because they wouldn't have a large enough combined shareholding to have any influence over the company. So what are you aiming to achieve?

There's no impending take over. And even if there was, people are already able to vote on it if they hold shares. .