Member Info for Hexam

Yes, they do - but that wasn’t the question or has any relevance to what Oke was saying.

Indeed but that was not the context of what Oke was suggesting with those brokers issuing updates.

Oke - I think if they do deliver to guidance then it will give some reassurance to the market and help lift the sp a bit. If they exceed guidance then clearly we could see a more significant rise.

I doubt they have give any actual guidance to brokers in advance of results as if nothing else this would be unlawful and besides I thought recent broker update to targets had been downwards? Also any sniff of good results and the sp will have already moved. The prices they give are almost always higher than current sp (for any stock) so wouldn't read too much into them anyway. Nor do I read too much into the recent downgrades as them being privy to any bad news.

I would read more into the fact that BOO hasn't updated the market that the results are broadly on track.

Thanks Oke. I agree that there are are benefits from the things you suggest but I presume they are included in BOO's own forecast for EBITDA so will be surprised (but pleased) if they have surplus cash, especially in H1 as I think H2 will be better. If they beat their forecast though then obviously they have a better chance. Let's hope you're right!

I see you've addressed the reply to T4G as well so presumably he's contributed too but I can't comment on what he may have said as I can't see it - and not tempted to unfilter to look either.

Hi Oke, FWIW I think there will just be a modest cash burn in the first half of the year, maybe up to £50m, possibly as much as £100m. A lot depends on the timing of capex spend and any increase in working capital (especially to support US DC).

We know they are forecasting around 4% to 4.5% EBITDA which would give around £40m cash for half-year but this would be used up in capital expenditure if they spend half their £80m-£90m forecast for the year. If they can keep working capital at the same level then this suggests around breakeven on cash but I suspect WC will increase quite a bit. So anything below £50m for free cash outflow I think would be OK - depending on the reasons behind it.

As EBITDA margins improve over the next few years (as they hopefully at least meet their own targets) and WC settles down then they should generate more than enough cash to meet future capital spend requirements...with a fair wind.

Sound about right to you?

"On 5th June this traded as high as 35p and I don't really see much change in business metrics since then."

...apart from releasing underwhelming interim results where they undershot expectations?

I can't see this going bust either but, at the moment, it is quite hard to see where a decent level of profitability is going to come from. I think it is going to recover but it's going to be a long hard slog and so whilst patience may indeed pay off in the end other investors are perhaps seeing opportunities for faster growth at lower risk. It's tempting to join them but I do think this is very cheap now and like most people I hate selling shares at a loss.

That's good SCB - it's a shame you didn't lead with this rather than Guess. I would suggest that doesn't imply 'many' though and what relevance they have to BOO in particular this year is debatable (depends how comparable they are) but what we do know is that BOO are forecasting revenue as at best being flat this year and margins well below record years. I know you believe BOO is going to beat its guidance comfortably which is fair enough but I don't see the information of other companies performing well proves it.

As to 'disappearing' I don't spend my life on this board unlike some - it is just not that important to me. If this was my only investment and I had lots riding on it perhaps I'd be more emotionally attached (and probably more biased). I try to look at all my investments objectively and that means looking at the positive and the negative. To me it's silly to be anything else as the best investment choices are surely made on cool sense rather than blind faith. I still believe in BOO but it's on a warts and all basis not because it's where I stuck my money and I can't possibly be wrong so refuse to see the risks.

"Yes I remember you pulling me up recently about companies that had posted record results.... Links were then shared backing up what i had said but you disappeared... Funny that..."

What I remember is that when you claimed 'many companies' were announcing record results and I asked if that meant record profits and to back up your response that it did you posted a link to 'Guess' ....which it was clear from the numbers HAD NOT made record profits at all. So you couldn't back it up at all and just said 'look for yourself' for other companies.

So I'll keep picking you up on your false and misleading statements but don't worry, unlike some trigger happy snitches, I won't report you for it :)

Knowbody - For my part thanks for the link and I agree with what it says. Apologies for clogging the board arguing with someone who doesn't. I will desist - as it really is getting boring!

"You seem to have developed a habit of attacking my posts"

That's because you keep making unfounded statements and presenting them as fact. To me you are a 'troll' too as your one-sided view makes you distort everything in BOO's favour and that is in my opinion potentially much more 'harmful' than the negative trolls. Just my view but it's why the likes of you and T4G annoy me much more than they do. And besides, they're quite funny at times :)

"So you agree that the energy inflation has been understated ove the last 2 years?"

No, but I don't care either way and it's besides the point anyway. Clothing and footwear inflation was 6.6% and this figure is not affected by however energy is recorded. If you don't believe the 6.6% either then fine or if you believe the 6.6% is not appropriate for online fashion in particular then also fine - but it's just conjecture on your part, with no evidence, to say inflation hasn't been as high in BOO's sector. Passing your opinion off as fact is misleading though.

*has been understated

i.e. regardless of the accuracy of the energy numbers it has no impact on the rest.

I'd rather believe those figures than your conjecture which has not exactly been reliable in the past. Besides even if the energy inflation has been overstated then so has the overall inflation figure. All I know for sure is that my own energy bill has recently come down sharply!

Basically you made a statement that the 6.8% inflation doesn't apply to BOO's sector which the data does not support and for which you've provided no alternative for. Instead you doubled down and called me stupid and now that I've provided you with the data you now say you simply don't believe it. Fair enough.

I don’t know, I was just pointing out that your off-the-cuff comment, clearly without bothering to look at any of the numbers, was very misleading.

Unless you’ve got some actual evidence that suggests ‘sales are up in this sector’?

Breakdown of the 6.8%:

https://www.statista.com/statistics/281724/consumer-price-index-cpi-united-kingdom/

“This statement has no relevance when we know that inflation is caused in different sector's like gas/electric etc etc....”

Not true. For example ‘clothing and footwear’ inflation was 6.6%, only marginally lower than the headline 6.8%. Energy was not higher than the average.

Tbf they’ve had a recent history of RI and dilution as they’ve a recent history of needing cash - and lots of it - for obvious reasons. They are now generating their own cash and debt is at a manageable level. So I’ll be gobsmacked if they raise again anytime soon.

Could be wrong but I just don’t see the need.

If they can deliver well over a €1bn profit in Q4 then I think this will lift the sp very nicely. Much under €1bn and I think it will continue to struggle. Most likely though it will be somewhere in between but that may be enough for modest gains - hopefully.

“we know the price does not add up. “

Do we? There may well be an opportunity here but a ‘once in a life one’ - really?

As ramping goes that’s seriously over the top. But thanks for the ‘advice’ anyway.

At half year it had over £500m of goodwill on the balance sheet and over £100m of other intangibles. NAV without these is less than zero.

So it may arguably be trading below NAV as a going concern but that’s not the case in a ‘going bust’ scenario.

"could you expand on which contracts are low profit"

I'm not sure he has to, just look at the overall numbers. The overall adjusted PBT in H1 was £33m on a revenue of over £1.4bn so not exactly screaming high (or even reasonable) profit contracts, and barely enough to cover total (adjusted) costs - and not enough to cover unadjusted costs as unadjusted loss before tax was nearly £68m.

Of course these are past numbers and ongoing the profitability may be better especially if they have, or can, cut costs meaningfully - so we'll wait and see. In the meantime rather than suggest others haven't read the report perhaps you should read it beyond the PR spun headlines and the rosier outlook that is projected (especially given they have fallen short in the latest update). It's pretty grim reading if you read the whole story.

Currently Capita is painting a picture, to me at least, of an outdated, beast of a organisation that is struggling to find a way to turn the ship around and make decent profits. The transformation is almost complete but the promised land has so far turned out to be a land of broken promises.

They've still got a chance though and the full year numbers will decide whether I jump ship or not. So I haven't given up hope but the sp suggests that many others in the market have already done so.