Member Info for Gerry65

Hazzy - in answer to your question to TF, "what's the problem coming down the line" - unfortunately it's the timings of known liabilities, they will land on specific dates, and even at 1.5 m tonnes, any positive Energy Division cash inflows, will be very unlikely to cover the Aviation Division cash outflows, particularly, when LSA comes out of mothball, and is operating at sub optimal passenger no's.

The BOD have confirmed this in the going concern section of the latest report.

ESKN has £90.5 m of liquidity back in Aug.
£19.7m is ring fenced to support LSA's development, and protect Carlyle's asset. ( I read this to mean capital infrastructure investing not day to day running costs. Others may have a different take ).

So that's £50.8m in cash before it's back eating into the much reduced RCF of £20m.

Unless it offloads the leased Airplanes, which seems very unlikely, it has 3 further lease Gtee payments to cover.
2021 - 2022 payment
2022 - 2023 payment
Early exit escape payment due Spring 2023.
( break downs of the splits of these payments were provided in previous RNS when under its previous name STOB (-doomsters like me, previously generally positive, did the math ).
Total of these payments is 55.4m

The BOD have confirmed going concern through to Aug 2023 based on a number of operational assumptions ( so best case ).

The Bond matures May 2024 @ £53m. It's best for each PI to read the ongoing concern section for themselves, and draw their own conclusions.

The BOD states further funding will be required.

That said there will be trading opportunities, some will make money, others will lose money.

For me the lease liabilities and Covid have proved such a challenge to ESKN who have two Divisions that still have great potential, but regrettably will not generate sufficient free positive cash flow, to meet liabilities when they fall due.

I'm not saying I won't take a trade or two on any news or significant changes. I just won't be holding, when the cash runs out.

gla

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Morning Hazzy, yep it will be interesting to see how the Energy Division performs through to the Company' year end end at Feb end 2022.

It's one of the reasons I've suggested matters will be clearer by May / June.

Gives those looking to buy in a chance to review, the Annual accounts, for both Divisions.

By that time the impact of any new Airline contracts at LSA and potential passenger no's will be clear.

Hopefully when the Airport comes out of mothball some management figures may be available on potential Summer passenger no's, and the impact of staffing costs, on the bottom line following the removal of furlough payments.

gla

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Hi Hazzy - in several previous rns when STOB the BOD stated they were targeting £10 average revenue per passenger, though i recall it turned out quite a bit lower in reality for the 2.1m passengers in 2019 - 2020.

As part of the Carlyle deal, Carlyle now have representatives on the Airports operating board.

Carlyle will not be worried about the cash bleed from the Lease Gtees or the Bond repayment, and I suspect, the ring fenced monies, are earmarked for capital spend. ESKN will likely have to take up the slack, in cash flow terms whilst the airport is running at sub optimal passenger numbers.

When ESKN runs short of cash, be it 6 months 12 months or 18 months, It will have to sell assets or raise more cash from shareholders. It's other option is release a further chunk of the Airport to Carlyle.

Further RCF borrowing seems a bit of a stretch, the Banks won't want to be in behind Carlyle with their debentures.

Carlyle is in the box seat.

gla

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Hazzy - I recall 2/3 years ago, that the BOD were aiming for £10 ph but i seem to recall from the 2019 - 2020 LSA annuals that the 2.1m passengers achieved a somewhat lower figure, hence the need to grow passenger numbers to B/E levels.

What we don't want to see here is the BOD agreeing to a "PR" deal with any Airline, just to gain some level of flights in and out of the Airport.

Its worth mentioning that during July / Aug 2019 total arrival and departures averaged between 50- 80 on the 5 most active days of the week.

I suspect Carlyle will not allow a low ball deal, they need to protect their investment, they won't want to see LSA tied into any long term "low cost" deal, if it doesn't deliver the required passenger numbers over the medium term.

Surely the worse any deal, the lower the return in £'s per passenger, which would require higher annual no's of passenger to reach break even. Emmm a tricky one for the BOD to navigate.

This £19.7m that Carlyle have ring fenced to LSA is to "support its development to YR24" My take on this is that its ear
marked for infrastructure expenditure and not to cover operational cash burn, from the running of the airport, under B/E passenger numbers, does anyone have a handle on this.

Never a dull day hete.

Gla

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Hi Locky - holding here at an average of 15.5p isn't too bad. There are many deep under water here with much worse averages than you.

For you 17p = 10% profit, 18.5p = 20% profit and 20p = 30% profit as I'm sure you know.

Interesting that you've set your exit at 30p. With 1025m shares in place that creates a Mcap of £307.5m.

Be interesting to see if Mr Market wears that based on any possible airline sign ups at LSA in the Spring.

That would be some premium to the NAV which Supercharger mentioned in his post on 5th Nov, though he mis quoted the figure at £100m when in fact its only £91.3m. Its worth taking into account every £ here as ESKN is going to bleed cash over the coming 30 months, ( kiv the lease Gtee and the Bond )

He seemed impressed by the improvement in the NAV position, but its worth recalling it didn't come from any organic growth. it came from the Carlyle deal and BOD tapping shareholders for a further £55.2m in the Summer capital raise. Cash on account for the printing of 394.4m new shares. That = dilution, which is why the SP is down at present levels.

It's so easy to purely look at SP movements, and as Supercharger mentions there is likely to be some positive sentiment on the back of any Airport news. I'll tackle any news when that comes to pass, and am sure there may be a collective groan lol.

It's just a fact of life that the sp x shares in issue = Mcap. Many things can influence a company SP, that's a given, when setting your exit figure it is worth considering what exit price others are looking for. You may find that SP gains are seen by others as an escape opportunity, and it may be that others are setting their exits lower than you. Anyhow it's great fun here.

gla

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Locky - the only advice I can give you is to go back and read the major rns with a fine toothcomb.

Don't rely on any posts here either those from "blue sky" enthusiasts or the "doomsters"

A major chunk of the funds raised from the two sources this summer, went to clearing the 2 RCF's . Carlyle have quite rightly sought to protect their investment with the ring fencing of £20M at LSA.

ESKN has 2 major assets in the Energy Division and the remaining 70% of LSA. The issue over coming months is free cashflow.

The BOD has confirmed further funding will be required to meet liabilities coming down the line. It's in black and white in the latest report.

Perhaps another useful source of info for you would be the actual Annual reports solely for LSA, check out say the last 4 years accounts. Maybe study the 2019 - 2020 accounts for the airport, when Southend achieved its best passenger numbers and consider free cashflow achieved.

Previously When under its original name the BOD provided LSA break even annual passenger numbers. I'm not sure these have been published or reviewed recently.

Like most here I have no handle on where the SP will go in the short term, there may be trading profits available. As Supercharger mentions sentiment could count for a lot here, but it works both ways.

For any one considering holding for the long term, its worth remembering there are now 1025M shares in issue, huge amounts of confetti have been issued over the last 2 years, so moving forward any comparisons with past SP' figures are pointless.

In addition, in order to pay off the RCF's and gain survival cash the BOD had to give up 30% of LSA.

If ESKN could find a home for those leased planes, and mitigate the lease gtees, then cash requirements could be eased, but it doesn't look good - does it ?

Ask yourself another question - do you know how many passengers need to use Southend from March 2022 - Feb 2023 to achieve positive free cash flow ?

gla

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Suoercharger - hopefully that's not your reasoned cogent reply to the question I put to the bb around how and where ESKN will find sufficient free cashflow over the next 30 months.

Remember in the latest report the BOD have acknowledged they can't see ESKN creating anywhere near the cash required and have confirmed that further funding will be required. So we can gain a small amount of consensus, could you confirm you have read the report and understand what the BOD is saying in this update.

I'm taking it you've got some money on the table here, i've no interest in knowing your average, nor where you see your exit price. I'd venture to suggest that most are under water here , and most will or should understand the headwinds.

That being the case many will be looking for an escape share price. Should the sp rise, many will be looking to offload. To do so they'll need to find buyers. If you are looking for a profit, you'll need to hope your exit price is lower than theirs

I'm certainly not shorting ESKN, I don't hold here either atm, i've never shorted any share. I've debated ESKN with TF and Birddog and i doubt they are holding, if they were shorting I suspect they would have cashed in their profits months ago.

This is just a friendly debate, nothing said here by a few posters will have any effect on how ESKN manages the challenges ahead of it. We are merely playing word tennis, but are on opposite sides of the net.

gla

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Deep in the depths of the latest update, the BOD cover two of the major elephants in the Room, under the section where they provide an update to the "going concern" position.

The remaining £55.4M lease and maintenance obligations relating to Propius which fall due in tranches between now and August 23.. Then the £50M bond, maturing in May 24.

They have stated more funding will be required.

Can anyone who is glass half full here explain to the "doomsters" where ESKN will find free cashflow to meet these liabilities over the next 30 months ? hat would indeed create a useful debate.

Gla

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Hi TF - yes the lost two years to Covid has damaged the LSA project. If there had been two further Summer's of growth in passenger numbers in 2020 & 2021 then ESKN could have been looking forward to hitting its passenger break even numbers by now. But that's just not the case.

I still feel LSA has a bright future but the project has probably been set back 3 - 5 years. As you know it was the failure to secure the renewal of the airline contract, leaving ESKN with the lease liabilities that did it for me. I handed back many of my free shares, to Mr Market back in the spring. I can't see the SP / Mcap increasing X3 from here.

looks like another year of lease gtee payments then the exit fee in the Spring of 2023 . unless they can find a buyer.

The bond £50M bond then requires payment in May 2024.

Its a shame but circumstances change. It difficult to place a value on the group atm.

gla

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Aviation -emm

Eskn is still shackled with those Airplane lease liabilities, and without any movement, a decent chunk of the latest cash raised this summer will be paid away between now and the early escape date in early 2023.

The £50M 5 year bond is coming down the line. Covid has really impacted here for ESKN 30 months have drifted by and there are only 30 months till it's maturity.

It's worth reading the ongoing concern paragraphs, not once but maybe two or three times. Note the timing of the ongoing concern assessment period. Which has not been extended to cover the bond maturity in May 2024. It looks likely that additional funding will be required to settle the bond at maturity.

Eskn may find buyers for some of it's non core assets which will help cashflow.

A chunk of Southend airport, had to be sold to gain a cash lifeline this year. Carlyle quite rightly ensured that £20m of the convertible debt instrument funding was "ring fenced" to LSA. Which supports and protects their investment. Not sure Carlyle are too worried if the remainder of the bail out monies are whittled away, as they probably hope to pick up further chunks of the airport possibly all of it for a low ball figure, over the coming years.

I still believe in the long term future of Southend, though Covid has derailed the project. It's already been set back by 2 years and it may take 2/3 years to recover to 2019 /2020 passenger numbers and maybe 5 years to achieve decent profits.

I may be proved wrong but I suspect it will take 1 -3 summer's for London's other airports to return to peak passenger numbers. Hopefully passenger numbers at LSA will begin to grow from April. Much depends on any conversations the BOD suggests are ongoing with the three key carriers.

As we approach this winter, without any new positives, I think I'll sit on the sidelines.

There maybe some day trading opportunities for the brave, hey nothing ventured nothing gained. Some may make some money from here. I'll probably wait till May / June 2022.

Gla

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Hazzy01 - thanks for those two posts earlier, explaining one or issues here. I was planning to put in my twopenny worth for this bb, but your helpful posts, covered a number of areas where there seem to have been some confusion. Much appreciated.

Energy Division - for those posting here that are a little confused as to how it works, the latest trading update explains it clearly.

There is good news - the Energy Division has completed the majority of its capital expenditure on its infrastructure,. This has been a long hard slog over a number of years. It now needs to maintain its leased fleet and retain HGV drivers.

As I read the report, the availability of waste wood during the busier summer period has allowed it to stockpile, sufficient wood which should cover the winter period, and the BOD are indicating that all things being equal it should be able to meet its supply contracts

It expects to maintain a supply run rate of 1.5m tonnes.

It's important to understand where and how the Energy Division receives it's revenue. It's not about rising rising energy prices as has been suggested on this bb recently.

It does need to deliver on it's biomass supply contracts, to receive those contract revenues and avoid penalties.

All in all as I read it the Energy side is recovering well, though it is worth bearing in mind any potential headwinds.

Gla.

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TF - i remember all those chats we've had on the £50m bond, it was my view in the past that Southend would have had the full 5 years to grow and cover it. However Covid has ripped away a minimum of 2 of those 5 years.

At least in the report the BOD have indicated how it may be tackled when it matures, there's no hiding from it tbh.

Those continued lease liabilities will eat into cash.

Anyone want to throw in any likely passenger number figures for 2022 - 2023 ?

Think there maybe quick in and out trading opportunities in the short term, though it could go either way. Dip in and out maybe.

Many less risky plays out there.

gla

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Supercharger - yep, interims due this week, as usual. Am guessing everyone interested here, either invested or on the sidelines have had the half year report in their diaries since the previous trading statement.

An update on gate receipts is important for the Energy Division. Any positive news on lease liabilities would be handy. Direct info at Southend will be studied carefully.

What news are you expecting in these areas that will lead to positive sentiment at this point in time, that will encourage new investors.

Additionally for any who are holdings with low averages, perhaps timing their buy in's for a recovery play,, more recently, where would you anticipate their exit price to be ?

To me a little trade now could go either way, the sp might have found its bottom. Though there is a long hard winter coming on the Aviation side info on cashflow between now and say April would be useful, as would management figures for Sept and Oct for the Energy Division.

Best wishes to those trading this now, I suspect things will be much clearer by May / June 2022.

gla

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Jarule - there are many posters on this site on many different bb's who are invested and uncomfortable about glass half empty posters.

I'd suggest a balanced debate, where both points of views are offered up for consideration is the sensible way forward.

I say this as someone who has traded this one over many years.

Trading with ones eyes shut and hands over ones ears - i'd suggest could lead to financial misery. ( "in the land of the blind the one eyed man is King" ).

Surely anyone who feels the share is under priced, should welcome the less than positive posts at the moment if they believe in any way that they have an effect on the share price ( which i don't ) and simply top up and wait .

For me i'm trading elsewhere at present, i'll read the interims with interest, there are a number of headwinds here, for me i'll probably sit on the side lines. By May / June or following the 2021/02022 trading figures the situation will be clearer.

Hey its not for me to suggest you should not have a little top here at this time. Go for it - fortune favours the brave, any sp rise of 1.5p gives you a 10% profit, that said a drop of 1.5p represents a similar loss.

Never a dull day here.

gla

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Moni - Many safer places to throw money at than here at present, imv.

Think it's going to be a difficult winter for ESKN. There has to be further cash bleed.

The impact of the ending of Furlough will need to be considered.

As to where the SP moves short term, I'd not venture a view, there may be short term trades for the brave, maybe safer to wait till May / June next year and see how things pan out.

G

Hi Moni - yep on the outside looking in.

Not traded this at all this year. In full and open disclosure I posted on this bb, back in Feb. When I cashed in a chunk of shares for 38 p ish.

Shareholders have now lost 30% of the airport, and the last 2 summers has seen a trunkload of confetti printed. EsKN still have the lease liabilities and bybthe Spring they'll be only 2 years away from the £50m bond maturity.

Interims won't make great reading. Very week rns - ko surprise that they have shut the airport down for passenger flights for the next few months. Had to be losing money, cheaper to stay shut.

No real figures on the gate money fees for the Energy Divisioon

GLA

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Supercharger - what's your thoughts on total 2021 - 2022 passenger numbers.

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Hi TF can't see any real uplift in passenger nos. Until next Spring and then only if a lot of good things fall into place.

Next stop the interims in Nov. Sp could go in either direction short term. Still lots of headwinds here.

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Morning TF - its a bit of a tale of woe atm.

As you mention the effect on sentiment is important here.

We need to let the dust settle, then look for our day trades.

Not yet though, plenty of time to trade in and out, over coming months, whilst hoping to avoid another grim RNS.

A future trade for me, but not a long term hold atm.

G

Ryanair to close London Southend Airport base from 1st Nov 2021.

Another cracking after hours announcement - lol Kong - bit of an understatement.

Ouch !!

G