Member Info for Hexam

“It's interesting that you talk about investors attacking Pedro, yet don't mention the pointless attacks he makes on other people, with comments far worse than any directed towards him.”

That last bit is very debatable as for all his faults (especially spamming the board with his negativity) at least Pedro is usually polite, articulate and occasionally funny. Unlike most of the stuff he gets back including repeated references to his age as if that matters.

Certainly prefer his posts to the endless droning about MMs, conspiracy theories and attacks on any poster who dares not to be 100% positive.

Spot on Unhooked and Oke in your comments.

Personally I ignore the lease liability number as it's just a (recently introduced) accounting adjustment that gives some idea of the value of future rents payable on current leases so more a presentation thing (there is also an figure of over £200m shown on the asset side). So it's not real debt as such just an estimate of future payments (albeit fixed and obliged to pay) which should simply be met out of future revenues (just like any other future cost).

It is the actual rent payable each year that is key, however it is presented, and I agree these will drop as businesses are sold and possibly due to renegotiations too as you suggest.

@Trisor - the pre IFRS debt figure of £166m is a net figure i.e. after allowing for cash. The actual amount of money owed to banks etc. is £270m (placement notes and drawn credit facility) plus £86m of overdraft. So they actually 'owe' over £350m but it is the lower £166m allowing for the cash that they also have that is the more important number.

Yes, in short the actual cash proceeds and impact on debt are not in H1 but the goodwill adjustment means that the expected impact on profit (i.e. the loss it creates) is.

"So I guess we are expecting another loss on disposal / goodwill write down to affect the H2 reported profit."

This should already be in the H1 results as it was part of the £35.3m goodwill write-off that included the Travel businesses and was calculated allowing for the expected sale proceeds etc. so any further adjustment should be very small and only reflect how much those calculations were out. In other words if they got their sums right then they've already taken the hit. See below extract from H1 report:

"The disposal of businesses aligned to the Travel and Fera CGUs or group of CGUs in Capita Portfolio were sufficiently advanced that the Board’s judgement was that for impairment testing purposes the value-in-use of these CGUs or groups of CGUs should be determined based on the future cash flows of the CGUs or groups of CGUs from continuing use, up to the estimated date of disposal, plus an estimate of the sale proceeds less cost of disposal. At 30 June 2023, a goodwill impairment of £35.3m was recognised in respect of these CGUs or groups of CGUs in Capita Portfolio. The impairments arose primarily due to the expectation of acquirers factoring in additional investment and costs required to run the businesses outside of the Group, and general macroeconomic conditions."

Someone please tell him it’s €9.12. And irrelevant now anyway.

Agree, people should forget about the TERP now - that’s a theoretical number that wasn’t close to being met and is history. What matters now is the profits they report going forward with the number of shares they now have in issue.

Agree also that Q4 will be key but I’m hopeful they will hit the $1bn figure and what will be even better is a bullish outlook that actually has some numbers in it!

The TERP was €9.12 NOT £9.12 and EVERYBODY has suffered because of the RI (assuming they were invested at the time) as the current sp is still much lower than that TERP.

Hi Mike,

Agree with your sentiments, particularly about TUI not setting firmer expectations. Well spotted too on the Q4 EBIT number for last year. As you say you can't get at the Q4 numbers directly, only by deducting the first three quarters from the full year number. Doing that for net earnings (i.e. overall profit after tax) last year gives €826m for last Q4 and is why I think they could hit as much as a €1bn this Q4 (with the 'significant increase') which would mean over €0.5bn for the full year.

As I said earlier I think this would make the current mcap look very low and if they can continue those improvements into next year then the sp should rise very nicely indeed.

Hi Chumba,

The TERP used by TUI was a statement of fact, it is just the theoretical value the share will be IF the mcap increases by exactly the same amount as the amount of the new money that was raised.

This is how TERPs are always calculated so there is nothing dodgy going on and certainly no fraud.

However, though it does indeed give an indication of fair value after the issue, as I mentioned earlier this fair value assumes that the new money raised does really add that same value to the company (in straight, immediate cash terms it obviously does but longer term it depends on how well it uses that cash). That value it derives in the long run is hard to guess and clearly the market hasn’t thought it is that much (so far anyway).

I’m optimistic that the sp will reach the TERP (and more) but it is likely to be years rather than months - but it all depends on how the company performs going forward and it will almost certainly need to show much greater profitability than pre-covid (given the much larger number of shares those profits are now spread over).

Hi Savage,

I agree with your sentiment on travel and observation that TUI hasn't benefitted sp wise compared to some others. I don't think TUI do themselves any favours though by being so vague about their outlook. This uncertainty itself doesn't help the sp but if they do indeed hit €1bn profit for Q4 that might just be enough to wake the market and the sp up!

I certainly believe there is value here and I think they just need to deliver consistently now and/or be clearer themselves about the good things that may lie ahead.

You clearly don't understand how markets work if you feel today's results, which were not unexpected, should somehow lift the sp significantly - or that a company's sp should automatically be expected to hit the TERP after an RI.

As for the insult aimed at me and your boasts of your successes they prove nothing about your understanding of the market - but they do say a lot about you.

I believe in TUI - just not in your rampy nonsense.

"Respectfully disagree Hexam - I think these results are slightly better than it may at first appear."

Fair enough but look at the end of the main headline: "we are on track to deliver on FY 2023 expectations."

So TUI themselves are saying they expect to hit expectations - no more or no less (though admittedly they have been very vague as to what those expectations are exactly). Perhaps the market was expecting them to be more bullish or at least put some more flesh onto those expectations.

So I'm not sure why you read great things in the year end results beyond what TUI themselves have already previously said (which included a strong increase in revenue and a significant increase in underlying EBIT)?

It's great that they are delivering against expectations as that is reassuring but more is needed to raise the sp significantly and personally I'm confident that will happen in time. I was just not expecting any fireworks from looking at today's results as there are no surprises there.

For goodness sake OSG please try to understand how the markets work. They are forward looking. Today's results were expected so no reason for the market to respond in a big way positively. Next quarter's profit will be much, much higher (maybe close to €1bn!!) but are you expecting a huge sp rise then? In the following two quarters they will likely swing back to a loss again - are you expecting a massive drop in sp then?? It's an extremely seasonal business and unless profits come in much more or less than expected the sp won't move that much either way when those results are released.

As for your repetitive comments on the TERP they just show that you don't understand how that works either. All you've done is attach how the TERP is actually calculated. Of course the debt reduction wasn't there before the TERP calculation as it was the rights issue itself that (largely) caused the debt reduction! So it wasn't there but it was certainly known about. For the price to get back to the TERP the business must IMPROVE by enough to offset the impact of the increased number of shares (not by just the reduction in debt). That's the implicit assumption in the TERP calculation but it is only an assumption - It doesn't just happen automatically, it has to be earned. TUI haven't earned it yet - but I'm very hopeful that they will.

Yes, the press is reporting a swing back to profit which is great but it is no more than what TUI or the market was expecting so it was already priced in. Share prices are based on forward looking views and what was released today had largely already been seen ahead. No big surprises (good or bad) and so no great movement in price - it's just bouncing around a little like it has done for the last few weeks. Nothing to get excited about or worried about or disappointed about in my view.

"Has to be a true worth somewhere in the middle"

Why exactly?

@iParsnip - we haven't had RR movement as the results were pretty much as expected whereas with RR they were far better. So no surprise really that there has not been much movement today. I do believe the stock is undervalued as they look on track for close to €500m full year earnings which makes the current mcap look light to me but today hasn't changed anything really other than showing that they are at least delivering against expectations.

When it comes down to it though profit and cash are the really the same thing - it’s just the timing that differs - and cash becomes more important at the extremes i.e. if the company is struggling to survive or, at the to opposite end, trying to expand significantly.

If one is out of the step with the other then at some point they will come together again.

I think just one poster mentioned 6p so not sure who else is in the ‘those’. Agree with Chuz though that a much lower sp seems inevitable longer term UNLESS BTC climbs rapidly. In the meantime though there will, as he says, be trading opportunities and those that sidestepped the placing have at least been able to get in at lower than 10p since.

Interesting but note that they are not quite 'all-in' costs as they exclude depreciation (so no allowance for the cost of machines) and share based compensation. Should though give a very good idea of the cash costs - if they are accurate (which the ARB ones don't look to be e.g. Q3 and Q4 22 too high and Q1 23 too low.