Member Info for Hexam

"Why would they be another raise around the corner? What has changed from the update 6 weeks ago stating funds were there for 12 months work?"

What's changed is that they are admitting they have failed in porting and are effectively starting again. The numbers in their accounts clearly show that on current run rates of expense they do NOT have enough cash to get to the end of the year. The maths was done here to demonstrate that by another poster (and they were correct) but if you don't believe it then just do the sums yourself. The only ways they can go beyond Christmas without a raise is to:

1) Generate significant revenue in next the 4 months (seems impossible now with this update), or

2) Access court case money - certainly possible but no update, or

3) Reduce expenses - but this is at odds with them still trying to make it work and seemingly having to start again and working as hard as ever to do so

I had been saying there was no need to raise money before Christmas but to me it now seems very likely there will be one in the next few months UNLESS the court money comes through.

I've read it three times now and still can't decide whether they have done any live testing at all i.e. used their methods on the live network to try to mine actual bitcoin. It appears their definition of live mining is somewhat different and may still be a simulation of sorts?

I'm not sure it is possible to go further back than square one but if it is then they seem to have achieved it with this update.

"Italy pretty much shuts down work wise in August, it is well documented."

Indeed. As does France (which I have first hand experience of having worked for a French company for several years). A simple bit of research would confirm the holiday habits of the Italians (and French), particularly those in more senior positions, rather than just call it 'rubbish'.

That doesn't mean to say that FG will be doing as many others do but it seems to have earned Brew £10 as I think the bet with KK ends today? Certainly the most excitement on this board recently whilst we remain in this news vacuum.

You say a lot of daft things Aim but that is just about the daftest.

Not sure why Oxford is getting so much grief as his views seem quite sensible and not particularly negative.

Also not sure when this board descended down the conspiracy theory rabbit hole as it used to be quite decent and you were able to post reasonably balanced views without being accused of being a multi-ID shorter. Shame.

"Did this calculation last week, still stick by it."

Indeed you did and I replied and I stick by that. So whilst I agree with your numbers they should be able to cut back spend significantly if they have to so could possibly last the full twelve months without any court money or revenue. That's the only explanation I can think of for them saying what they did in the going concern statement (and the auditors letting them) given the numbers.

Yes, massive risk, massive reward, the two inevitably go together. Unless they've upped their spending significantly they should have enough cash for at least a few months, probably much longer if they cut back. In the meantime news is what will really move this (good or bad) - not individual trades which are about as interesting as watching paint grow or grass dry (unless you're a daytrader). The wait goes on...

Certainly don’t need to be an expert to understand the perilous state ARB are in (and many on this board have articulated it well) which makes the investment Armistice made all the more baffling.

There have been many invitations made on this board for any ARB supporter to make a credible, numbers based investment case for ARB rather than just dismiss or snipe at those of us who are bearish - but nobody has ever risen to that challenge. Tells its own story really.

“Reading the few posts here regarding Argo, you would think they were in a worse position that they were under 'Swimming Pool Wally”

That’s because they are. Then they had their prize asset (Helios) and spanking new machines. They sold off both at knockdown prices to stave off bankruptcy.

They do have much better financial discipline now but it looks like too little too late as no amount of financial discipline can stop the monthly losses and they have no worthwhile assets left to sell off when run out of money this time.

Unless BTC goes ballistic or an unlikely white knight shows up then the end seems inevitable and not too far away. If someone can come up with a plausible scenario though in which they survive (let alone thrive) without either of those two things happening then would be very interested to hear it…

I'm sure there are better prospects out there, I'm not sure there are many worse.

Take a closer look at their financials, the $1m+ they are losing in cash every month, the age of their machines (with their exceptionally poor efficiency) with no money to buy more or better ones, the way other miners are expanding while ARB stand still/go backwards, the favourable leasing agreement with Galaxy which runs out soon, the $40m of bonds due to mature in 2026 with no cash available (or assets left to sell) to repay them with etc. etc. and perhaps have a rethink?

Your money, your choice but, although there is always the chance of a short-term rally with a surge in BTC, of all the bitcoin miners out there you'd be very hard pressed to find one with poorer financials or bleaker prospects.

I don't think there is necessarily an issue here.

Debt is repaid from cash NOT profits (though any covenants are likely to be profit related) so the question is are they generating enough cash to deal with the debt? By cash I mean total cash generated NOT FCF which is about £30-40m higher as it doesn't include interest, lease payments or EBT share purchases.

As you suggest cash could be positive when profit is not, so suppose the consensus profits forecasts are true (actually I think they are very optimistic for FY25 and pessimistic thereafter but that's another debate). Given the expected low capex a £30m loss followed by breakeven could generate about £50m and £80m of cash in the next two years. These could be much higher or lower depending on things like changes in working capital and whether any one-offs like impairments are included in the profit forecasts but assume these are neutral in total.

So that's £130m of extra cash over two years plus if they enact the sale and leaseback transaction this could be pushed towards £200m.

So added to the £230m cash they started with then on THESE net profit forecasts I don't see managing debt being an issue (they could just repay it all as an extreme if need be!) especially as they have other options to raise cash (sell RevB stake, sell parts of business, an equity raise etc.) or simply renegotiate the remaining £250m debt, after the £75m not extended is repaid next year, so that they don't have to repay the rest.

This leaves the issue of any debt covenant. I don't know what these are but if based on profit are probably based on EBITDA which will be higher than net profit so they may be ok anyway. If not then again these can form part of any debt negotiation including perhaps a partial payback.

All this assumes the profit forecasts are accurate and personally I can't see how they will only make a £30m loss in FY25 plus there are other risks that could make cashflow worse than I've estimated above but with the options at their disposal (including the sale and leaseback) they SHOULD be able to manage debt in the short term so long as performance is not much worse then expected - and that I think is the key issue i.e. sticking to guidance.

Hi Analyst. The tax treatment should be the same between rental cost, depreciation of the property (the way the office purchase goes through annual costs) and interest (if cash proceeds are used to reduce that). So no advantage. Building insurance etc. won’t disappear as one way or another the cost effectively ends up with the tenant. They pay SONIA for the RCF so around 5%.

In any event whether or not the annual cost is a bit more or less (will be less than £5m either way) it won’t be part of the annualised costs savings.

Sale and leaseback is done to increase short term cash - no other reason and certainly not to reduce costs. What we don’t know though is WHY they want the upfront cash.

As mentioned earlier any sale and leaseback on its own increases annual costs, not reduce them. Even if it is used to pay debt and reduce interest the net impact is still likely to be negative. There will be one-off benefit on cash (and probably a small, additional one-off negative impact on profit) but it definitely won’t be part of the £125m annual savings (as it isn’t a saving).

BOO is about halfway down the list by market cap but in any case that shouldn't be the main factor in deciding comparability and their lowly position just says more about the sorry state of their current sp than anything else. Would comfortably be top based on past sp and always though it odd they are AIM listed rather than main market.

To say it is the most appropriate index to compare to is just barmy (just look at the companies on it!) and reflects more your determination to have an argument and be seen to be right rather than any logic. Call me odd but I would choose an index that had at least some of the companies like ASOS, Next, Frasers, M&S etc. in? I don't think the FTSE 100 is the most appropriate index either but it's far better than the AIM 100 (it even has three of those I listed on it).

Anyway, really fed up with another pointless discussion so if you really think comparing with the likes of Restore, Cohort, Tristel, Yellow Cake...and Jet2 is most appropriate then knock yourself out. I only interjected here as I already thought it was a needlessly long debate on a meaningless issue with each person using a bad example and so was trying to shut it down - but just made it worse - my bad and apologies to everybody else!

Still it got me excited a bit looking into it as I saw 'Yellow Cake' which interested me as I'm very partial to a slice of lemon drizzle but then I found out what they actually do and it rather lost its appeal!

"look at Jet2 as an example."

Jet2, a few other household names and about 90 companies that most people would never have heard of and with precious little in common with BOO.

They commented an awful lot on RevB last year and I believe have responded to questions put to IR before. Anything like refuting the rumours though would be responded to via an RNS even if the question was raised by shareholders to IR.

Like you though I'm not expecting anything as ordinarily they are not exactly known for their open style of communication.

How dare you speculate Brew, no-one's allowed to do that on a chat board. Nobody else does!

Personally I wouldn't compare BOO performance with FTSE 100 or AIM as little in common with companies on either index.

Better perhaps if going to judge against market to look at FTSE 250 or all-share as although they are not in either they have more in common with those companies than the top 100 in the UK or the rag tag bunch on AIM. Also of course there is the retailers index - which is more of a direct comparison and that they are in of course.

Having said that I'm much more concerned with company performance than with daily comparisons of sp - whatever index is chosen.

Well, if there was no truth to the rumours of debt negotiation or to selling the head office then could come out and say so and stop the speculation - even though they don't have to.

As to guidance they are quiet on this too but it doesn't necessarily mean they are on track (as opposed to ahead or behind) as they didn't change the guidance until the interims last year at which point they then reduced it significantly. Also they haven't provided as much by way of guidance compared to previous years so a lot less to comment against anyway. So given we are already in August wouldn't expect any update on guidance now until the interims (and I think they said as much?) and that could be anything (good or bad).

Cheers LD. I haven't seen anybody having a go at me (today anyway!) but then again I have a few green boxes. No matter either way - sticks and stones and all that.

BOO's poor results confirm they are struggling so not sure why you think they aren't or why you think such a business will be the 'jewel in the crown' of Frasers profitable empire? I'm not sure if he is interested in BOO but if he is I suspect he is after bits of BOO (like Debs, online IP, a brand or two) to integrate into his business rather than running BOO as it is now.