Member Info for Hexam

Thanks pp1 - and I agree about EBITDA, to me it's just a rather arbitrary measure that includes some things and not others (and makes the profit look better). I prefer to look at overall profit and cash flow and understand what is driving them both.

I'm not so concerned about the RCF as you appear to be though, just as I say curious as to why it's all be drawn. I agree though it would be useful to know the terms of it are.

I agree, the cash position isn't as bad as some are making out but equally it isn't as healthy as some others are making out either (as the cash flow has only been positive due to inventory reductions and in total they are expecting to have a net cash outflow of approaching £100m in FY24).

All I was questioning is why they felt the need to draw all the £325m down now and if nobody has an answer for that then fine. I'm not particularly worried about it - more curious.

Overall a better than expected set of results I thought and plenty of encouragement going forward - but nothing really seismic in my view. So I think it'll be a while before my 57p average is reached but at least the business seems to be heading in the right direction now.

The report clearly states that some of the RCF was used to fund capex. So that's not in question - but we don't know how much. It's a bit odd that the full amount has been drawn down when there doesn't seem an obvious, imminent need for it with only £80m-£90m of capex expected this year. Indeed, although overall they expect to burn cash in the next year (with net debt forecast at around £75m, so burning around £80m) this doesn't seem enough to justify drawing down the whole amount. Maybe it is because their working capital requirements fluctuate so much and so they want to be better safe than sorry but they should be able to draw on the facility quick enough anyway?

(The FCF was £30m positive over the last year but this is before interest, lease payment and other finance costs. Allowing for these the business was broadly cash breakeven (after Capex) and this was due mainly to the reduction in inventory which can only be run down so much.)

"Then today we find out none of it has been used."

Some of it has been used - we just don't know how much:

"There has been a substantial investment in property and distribution centres to facilitate our next phase of growth,

funded out of cash resources and partly from the £325m revolving credit facility (which is fully drawn)."

They haven't been buying machines but it appears the intel order is still live but we don't know how much cash might be outstanding on this, if any - or do we?

"They've got 20mil that they can do something with"

But we don't know if any of that is needed for the intel machines?

You're missing the point of depreciation. It spreads the capital expenditure over the USEFUL LIFE of the asset purchased so by definition it is expected to need replacing after the depreciation ends - and so it is expected to start all over again i.e. 'recur'. Here is the actual note in the accounts:

"The cost of each item of property, plant and equipment is written off evenly over its estimated remaining useful life. Assets under construction are held at cost until they are brought into use, whereupon depreciation is charged. Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, as follows: short leasehold alterations over the life of the lease or 2% if it is likely the lease is extended; buildings 2%; motor vehicles and computer equipment 33%; and fixtures and fittings 33%, 20%, 10% or 7%. The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting date."

"T4G - they should be depreciating an office building over more than three years - I'd say 50 years as a guide."

Spot on Wolf - they depreciate property over 50 years so the example does not make sense at all. When one poster is claiming another poster is making themselves look stupid it's best not to then say something stupid themselves :-)

"...or they will go private and pay off the current shareholders at the current share price"

The only way that could happen is if a third party buys the shares of the company but (so far) nobody has been willing to do that as it means taking on the $6bn+ of debts so the purchase price is then over $6bn. There is no other scenario that I can think of where the current share price is at all relevant.

I'm afraid what you describe as 'impossible' is exactly what is happening at the moment (under the current proposals) and as Wolf says is not uncommon at all. The only think is, as Tegop has said, is they don't need to cancel the old shares first. These are shares in the top holding company and this is not being taken on by the lenders. The question then is whether the company is then just a shell and so would the shares that we are left with be worth anything.

“If Cineworld decides to go private they will obviously have to pay off the shareholders”

No. They are not paying off existing shareholders - this is not a share sale at all. New shares created for new company and as Tegop says we’re left with the old shares, for now anyway.

If these 'test results' translate into reality then the sp will be in the pounds not the pennies so clearly the market thinks it's a longshot. Certainly seems like there are some good trading opportunities on QBT but have to say I agree with the market in terms of long term value. Never been impressed by how they phrase their findings or the (lack of) evidence supporting them.

However, you never know so good luck and you can come back and gloat if it turns out to be true.

160%?

Chae - Yes I included all those things. As I said the only differences with your numbers were the ones I mentioned - the interest cost which I added and the share-compensation which I deducted (as you were quoting cash costs and these aren't cash costs).

I'm invested in both and they both look pretty positive to me, both on the numbers and beyond them. So I'm happy and not interested in playing one off against the other - I was just clarifying the figures. I suspect for Q2 that Mara's cost numbers will improve again, and by more than CLSK's will, but we'll see.

Chae,

I agree with your numbers but personally I would include interest payments as well as these have to be met out of profit/cash too. This obviously favours CLSK who had $799k of interest compared to Mara's $3.76m.

Also if you're looking just at cash you need to deduct share-based compensation. This I think was $3.945m for Mara and $5.743m for CLSK.

Making these adjustments brings ongoing cash costs for Mara to $48.536m and CLSK to $34.967m (or $22,112 per BTC mined for Mara and $18,689 for CLSK).

So the gap is wider than what you have but both are comfortably generating cash (before capex) and Mara in particular is improving rapidly (were over $30k per BTC mined in the last quarter on the same basis).

So looking pretty good really for both companies.

The main reason that Mara ran close to a profit was what we mentioned before i.e. the profit they got from the selling of some of their BTC - this added over $17m to their result (though they also lost $6m from the drop in value assigned to HODL).

Operationally (i.e. without these items) they were still behind CLSK including on direct costs per BTC mined where electricity/hosting etc. was at $15k per BTC mined for Mara and $12k for CLSK.

So operationally CLSK is closer to running a profit but Mara’s HODL can help boost their numbers (or act as a drag on them) depending on how BTC moves.

Hi Marcinkus,

I'm afraid that's got me completely baffled. I'm not sure what the 'counter value of rights' element is or why it is included at all. I thought it might be what you could have got for your rights if you had sold them instead so it is treated as an additional cost (i.e. one you've given up by taking up the rights). I'm not convinced it is appropriate to include this element though for this purpose and besides the value looks far too high even if the sp and the price for selling the rights had been consistent with the TERP (in reality the rights price only fluctuated between roughly 0.20 and 1.50). So no idea what the 5.401171 is???

I'm also confused now as to what the 19.94 is. I thought it was the price that you bought the original 2000 shares for (was it?) but it appears from the description to be a value derived somehow using the RI adjustment factor - which if it is then I can't think why.

Hopefully Mary or somebody else has some better ideas but, as I said before, the important thing is not what the average is displayed as but what you have actually paid for the shares. If this is £26161.7 plus 2,000 times whatever the price was when you bought the original shares then you haven't lost out (other than through the poor performance of the share of course)!

Sorry I couldn't help - and haven't earned those pints :(

Those assets will include RoW so not sure how it is a 'stripdown' other than some downsizing due to the leases that have been rejected so far.

@masaimara - Like you I wasn't that impressed with the report but I disagree that the big issue is servicing the debt. The company was making over €1bn profit before interest pre-covid and servicing the loan debt (post RI) is now costing around €150m or so a year - a fraction of that. The problem for me is that the nice soundbites on revenue, load factors , ASP etc. aren't translating much yet in profits because costs are higher in general (not just interest payments to service loans). This includes lease payments where more of the cost now shows up in interest (and less elsewhere) distorting how it appears.

I'm not expecting profits to return to pre-covid levels yet but it would have been good to see more evidence of progress towards that. As it is PBT in Q2 was €130m behind 2019 and €200m behind 2018 - a similar picture to last quarter so no improvement.

Hopefully the good vibes they are sending out about the summer closes that gap a bit.

Bit underwhelmed by the results. Profit (PBT) continues to improve against last year but still way behind pre-pandemic levels and not closing the gap any faster. Reduction in interest from having used the RI proceeds to pay off some debt will help a little but am hoping their optimism around the numbers this summer translates into getting profit levels much closer to 2018/19.

One good thing to note though is that as profit is obviously seasonal it is better to look at the rolling 12 month numbers and for the last 12 months the Profit Before Tax is now positive (+€76m). So it's turned a corner in terms of profitability albeit a long way below pre-Covid levels.

I think the lukewarm market reaction is just reflecting the lukewarm results. Roll on summer!

Hi Marcinkus,

I'm a little confused as to what the problem actually is, in particular how it leads to any loss?

You say you have 7,300 shares (presumably 7,333 unrounded) which is correct if you had 2k shares before the RI and took up all your rights. These should now be worth 7,333 x £5.62 = £41,200 which is hopefully about the value shown in your account.

If that is indeed what is showing in your account then you haven't lost anything (assuming the cost of the shares from the RI were as the broker said i.e. 5,333 x £4.90 = £26,100 (which again you should be able to check easily).

So although the average displayed of your purchases may be wrong it doesn't affect what you actually did pay for the shares or what they are now worth - so long as the numbers above agree with what your account is saying?

One thought though as to why the average looks high/wrong is if you have sold some TUI shares previously (i.e. you used to hold more than 2k but sold some before the RI). This could explain the odd looking number depending on how they allow for this - especially if you have done multiple trades previously. Another thing that could be messing it up could be the consolidation. Bottom line is the average doesn't matter - it is what you actually paid for the shares and what they are now worth that does and IF you can agree those then you can ignore the average shown (though it would be more helpful if the average was correct as in theory this should tell you the price you need to get back to in order to breakeven).

Hope this helps a little rather than confuses even more?