Member Info for fleccy

"Remember too that Convertible doesn't mean VOD can always repay the loan with shares. The agreement will state a conversion price. Lenders will choose to convert when the conversion price is less than the SP. That way they make their profit. If the SP is less than the conversion price as the repayment date approaches, lenders will want cash on the barrel-head, not shares."

Vodafone's recent Bonds are Hybrid securities, or MCB's (Mandatory Convertible Bonds). MCB Bondholders don't have a choice, and have to accept shares and not cash, hence the share buybacks.

https://www.lse.co.uk/rns/VOD/mandatory-convertible-bond-assocd-share-buyback-bgn8tesvf3fde4o.html

https://www.lse.co.uk/rns/VOD/conversion-price-of-mandatory-convertible-bonds-cm9v3nip151au7l.html

"there can't be any bad news left let's up for"

The only thing, I can think of, is the Le Patourel v BT Group PLC class action, which is still pending Judgement on the CPO Application.

You should post the name of your company Eccles, so we know to avoid them lol

"should be at least £1.5m per annum after tax. 2. They are far too highly geared."

After re-reading your post Eccles, I'm left wondering if you posted against the correct company. For a start, Vodafone reports in Euro's, and they make considerably more annual profit than €1.75 Million

"Accountant here: Forget all that blah blah about deprecation and deferred tax assets, the major issues are 1. They have not made any useful profits recently - should be at least £1.5m per annum after tax. 2. They are far too highly geared."

Well I'll be buying more next month, lets see where Vodafone is in a year from now.

Tidied up a bit:

"Recognition of deferred tax assets
Significant items on which the Group has exercised accounting estimation and judgement include the recognition of deferred tax assets in respect of losses in Luxembourg, Germany and Spain as well as capital allowances in the United Kingdom. The recognition of deferred tax assets, particularly in respect of tax losses, is based upon whether management judge that it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. The Group assesses the availability of future taxable profits using the same undiscounted five year forecasts for the Group’s operations as are used in the Group’s value in use
calculations(see note 4 “Impairment losses”).
Where tax losses are forecast to be recovered beyond the five year period, the availability of taxable profits is assessed using the cash flows and long-term growth rates used for the value in use calculations.
The estimated cash flows inherent in these forecasts include the unsystematic risks of operating in the telecommunications business including the potential impacts of changes in the market structure, trends in customer pricing, the costs associated with the acquisition and retention of customers, future technological evolutions and potential regulatory changes, such as our ability to acquire and/or renew spectrum licences.
Changes in the estimates which underpin the Group’s forecasts could have an impact on the amount of future taxable profits and could have a significant impact on the period over which the deferred tax asset would be recovered.
The Group only considers substantively enacted tax laws when assessing the amount and availability of tax losses to offset against the future taxable profits. See note 6 “Taxation” to the consolidated financial statements"

"Lol fleccy, I think you know very little about business. Like the value of cars, apart from goodwill, most assets do depreciate every year. I was a small business man before retired. "

Lots of lol's in your comment, seen_it_never_done_it. A company can choose the amount depreciation it wants on the value of an asset. Are you comparing 5G cell equipment to a used car?
You're correct, I've never run my own business, and only ever worked for others. Since you're an expert, am I right in thinking that writing down the value of an asset doesn't affect its ability to generate revenue, but does enable the company to claim a ‘capital allowance on the cost of the equipment, just asking? Since Vodafone employ an army of accountants, I'm sure whatever they do is in the interests of the company.
Vodafone say:
"Recognition of deferred tax assets
Significant items on which the Group has exercised accounting estimation and judgement include the recognition of deferred tax assetsin
respect of lossesin Luxembourg, Germany and Spain as well as capital allowancesin the United Kingdom. The recognition of deferred tax
assets, particularly in respect of taxlosses, is based upon whether management judge that it is probable that there will be sufficient and suitable
taxable profitsin the relevant legal entity or tax group against which to utilise the assetsin the future. The Group assessesthe availability of
future taxable profits using the same undiscounted five year forecastsfor the Group’s operations as are used in the Group’s value in use
calculations(see note 4 “Impairment losses”).
Where taxlosses are forecast to be recovered beyond the five year period, the availability of taxable profitsis assessed using the cash flows and
long-term growth rates used for the value in use calculations.
The estimated cash flowsinherent in these forecastsinclude the unsystematic risks of operating in the telecommunications businessincluding
the potential impacts of changesin the marketstructure, trendsin customer pricing, the costs associated with the acquisition and retention of
customers, future technological evolutions and potential regulatory changes,such as our ability to acquire and/or renew spectrum licences.
Changesin the estimates which underpin the Group’sforecasts could have an impact on the amount of future taxable profits and could have a
significant impact on the period over which the deferred tax asset would be recovered.
The Group only considerssubstantively enacted taxlaws when assessing the amount and availability of taxlossesto offset against the future
taxable profits. See note 6 “Taxation” to the consolidated financialstatements"

"Unlike a mine or property company who may have a big write-down and then it is done with, VOD will be adding to the capital accont every year with upgrades, new sites, 5g spectrum etc, which then need to get written down."

Why would they write down in-service equipment, or assets, apart from tax reduction reasons? Writing down the value of an asset might show on the yearly accounts as a loss, but it doesn't mean a reduction in cash earned during the tax year. Am I right in thinking, that even though Vodafone might write down €10 Billion in asset values, which reduces the bottom line, they still have the €10 Billion in cash available for other uses? It isn't like the cash just disappears, as the assets are devalued, they still have the cash even though it doesn't show on the bottom line.

https://investors.vodafone.com/sites/vodafone-ir/files/2021-05/vodafone-annual-report-2021.pdf

"From FY21 accounts, on which the current PE is based, profit/loss for the year was €536m, but only €112m was attributable to 'owners of the parent', the shareholders. This give the PE of over 350 for the €111m that is yours."

It's too simple to quote the P/E and FY profit in Vodafone's case. You have to look at the revenue of €43.809 Billion, and the EBITDA of €14.386 Billion. Vodafone has written off over €10 Billion in depreciation and amortisation on owned assets for the last two years running, which is voluntary and unlikely to continue in years ahead.
I'm willing to bet Vodafone's figures start to look much better going forward, once the write offs are completed and they start improving their debt profile.
It looks as though they paid out €1.027 Billion in financing costs, which "decreased by €2.6 billion, primarily due to mark-to market gains of €1.1 billion (compared to losses of €1.1 billion in FY20). This was driven by a higher share price, causing a gain on options held relating to €3.8 billion of mandatory convertible bonds. Adjusted net financing costs decreased reflecting net favourable interest movements on borrowings in relation to foreign operations".
They also showed a loss of €3.864 Billion in income tax, which "increased by €2.6 billion, primarily due to a non-cash charge of €2.8 billion following a decrease in the carrying value of deferred tax assets".
There's a lot more to Vodafone's figures, than the current bottom line net profit figure suggests, I'm betting the bottom line will steadily improve going forward.

The recent moves, up and down, have been on really low volumes, with daily trade values of 2 to 3 million Euros, the drop on the 16th July recorded the highest volume with full day trade value of 5.59 million Euros. I suspect volumes will pick up after the summer, at which point we'll get a clearer picture of what the market really thinks.

"what's far more significant is where passenger numbers are in 12 months time."

Not forgetting load factors, per seat profit, margin, operating costs, debt repayment, etc.

"Almost 1% of the company. "

I didn't look back at the trade, but 9.4 million is just under 0.1%. Around 99 million would be approximately 1% of BT stock.

"It's only Drahi topping up Fleccy. Lol"

Probably, before we know it he'll, all of a sudden, announce he's bought another 12% in the space of two days. It amazes me how someone can build a 12% stake in a company, like BT, under the market radar.

Off book trade at 11:56, £6 million higher traded value than the UT. Probably nothing, but stands out.

Date............Time .............£.......Price....Volume.....Trade Value...Type
2021-07-19 11:56:47.000 GBX 183.95 11105411 20428403.53 Off-Book
2021-07-19 15:35:13.573 GBX 178.15 7920915 14111110.07 UT

"Fleccy, this is not a BT issue. It's worldwide wave of bearishness."

I get that, it seems to be predicated on fears that an upsurge in Covid cases will have economic effects, but I don't see what the market's basing the fear on. BT as an individual stock, is probably one of the least Covid affected companies affected on the planet, yet it's down more than 3.5%

Q1 FY22 Ryanair Holdings plc Earnings Release next Monday. Should make for interesting reading.

"Market doesn’t think too much of freedom day."

Personally I've lost trust in the independence of the market. I'm deeply suspicious of moves affecting markets, sectors, and individual stocks. The excuse for the latest falls is that covid isn't done, and the house is at high risk of tumbling down apparently, but the UK stats show a different picture. We all saw the images during the EUFA final, with social distancing thrown out of the window, and various experts are saying doom and gloom is around the corner, but the stats show a different picture.
Googling Covid UK brings up graphs, and the UK has seen an exponential rise in cases from around a 7 day average of 2000 on the 23rd May, increasing to the current 7 day average of around 43000. The deaths tell a different story, on the 23rd May there was a 7 day average of 6 deaths, with the current 7 day average around 40. Hospitalisation 7 day average on the 23rd May was 913 hospitalisations, with 123 in intensive care, the current 7 day average for hospitalisation is 3409, with 491 in intensive care.
Looking at the above, cases have gone up by 21 times, but hospitalisations have only increased by around 7 times, intensive care 4 times , and deaths have only increased around 7.5 times.
I actually agree with the Government on opening things up now, since by the end of the summer enough herd immunity will likely have been built up to reduce the risk of further lockdowns in the autumn, when other issue like flu become an issue. There could also be booster shots for the vulnerable, like the elderly, to avoid further winter lockdowns.
The current market falls make no sense to me, and could be considered an opportunity to top up undervalued stocks imo.

"I think it very unlikely that Drahi will launch a takeover bid and even less likely that it will be allowed by Gov."

Well he isn't showing signs of being a passive investor, and although his 12% is significant, it isn't enough on its own to influence the BOD. I agree that his primary goal isn't likely a takeover, but more likely a spin off of Openreach. It may be that he's building a case to present to other shareholders, to influence change. His moves indicate he's an activist investor, and we'll likely hear a lot from him in the future imo.

Mr Drahi met unions, Melanie Dawes at Ofcom, and it's now reported that he's retained the services of Flint Global. Flint state their expertise is:

"We support companies who face the challenges of regulatory, policy and political change at national, European and international levels.

This includes navigating major political developments affecting business in Europe; the political and economic management of mergers, acquisitions and other transactions; the design and delivery of efficient regulatory regimes; and how to maximise the value of investor assets.

Drawing on deep understanding of the issues, we craft evidence-based arguments, concrete policy proposals, practical engagement plans and targeted guidance on strategic communications."

https://flint-global.com/expertise/

So they do offer services associated with "the political and economic management of mergers, acquisitions and other transactions"