Member Info for Hexam

Don’t ask me - I didn’t make up the expression.

The serious point though is that no miners are making a profit at the moment at these BTC levels least of all ARB with its low efficiency and high costs.

Things may have improved with the hosting agreement - but not nearly enough to turn it profitable.

“so should be a great profit for the month.”

Nope, not even if the month was full of Sundays.

As I said, you lead yourself and others down blind alleys.

So I think it’s best to ignore you now as your pigeon accounting (and my replies) are clogging up the board and potentially getting in the way of more interesting and relevant discussion.

Elvis - you clearly have at least some knowledge of accounts but not it seems day to day experience. So you appear to understand bits and pieces but not how they fit together and when things are and are not relevant depending on the circumstances.

Consequently you keep mixing things up, tying yourself up in knots and leading yourself (and this board) down blind alleys. You did it on goodwill (despite bizarrely posting articles yourself which actually showed clearly you were wrong) and are now doing the same with leases.

The big picture is that any potential buyer will look at future cash flows - which incidentally for future rents (in NPV terms) will be way bigger than £500m (several billion). The value of the business they end up with may be $2bn, $5bn, $8bn - who knows - but it won’t be based on, or linclude, the current book value of goodwill or right of use assets (or liabilities).

The one thing I do agree on is that once sold the assets and any liabilities relating to these will no longer exist in whatever remains of CINE’s accounts.

Yes, I can. A lease is a lease.

The purchaser's balance sheet would NOT be $4bn out to start off with. I think you are confused or are simply misunderstanding what I am saying.

To put it as simply as possible the balance sheet of any buyer will include the leases BOTH as an asset and as a liability. So the net impact will be relatively small. It could even be zero (if all the leases are revalued from scratch).

In other words I am saying what you are saying that BOTH the assets and liabilities will be 'transferred' (though in reality the leases are moved and revalued). However, this is an issue for the purchaser's balance sheet. In terms of the price they pay this ('net zero') impact will not play a part in the price they come up with - it will be the expected future rents which are just another cash flow like all the others they will make assumptions on (future ticket sales, advertising revenue, staff costs, concession sales, concession costs etc.).

"the leased asset becomes Cines owned asset."

No, they don't. They still belong to the landlord and the lease would need to be re-negotiated.

Yes, the leases will likely be transferred on any sale (so the leases are moved across along with the accounting assets and liabilities related to it - all subject to re-negotiation and re-evaluation) but their value (as a cost) in the NPV calculations will be based simply on the future rents payable. There will be no allowance for the accounting asset or liability values.

On a break-up though (and which to my reference was made) the assets have no value as they belong to the landlord.

Only the moon???

The right of use assets are NOT 'in other words' CINE's fixture and fittings (by definition right of use assets are owned by the landlords). CINE's fixtures and fittings (including those in any right of use i.e. leased properties) are of course saleable although as we have seen in the recent lease rejections they have generally be abandoned and left in those leased properties.

Yes, the NPV basis valuations will be done over at least 10 years, probably longer, and will be based on cash flows.

There are various answers to that question depending on why you are asking it.

The total assets reported at half-year were approaching $10bn. However if you are looking at the value from the prospective of a liquidation then the value is considerably less than this as various assets have no value in that context (goodwill, right-of-use assets, deferred tax assets etc). Strip all those things out and you have saleable assets of probably under $2bn.

However if the company, or parts of the company, are sold as ongoing businesses the value of assets becomes far less important and it is the potential generation of future profits that becomes the key element in any valuation. Even though CINE is not making money at the moment the (very subjective) valuation of these is likely to be much higher than $2bn though whether enough to lead to a price that covers existing debt and leave something for current shareholders is questionable.

It is not as simple though as a choice between sale and breakup and it is more likely to be something in between (sale of some subsidiaries, a D4E, a combination of things) and guessing what the impact for existing shareholders will be in each of these is much harder than for a straight sell or break-up.

Because they only have 7.3 EH energised.

"having just looked at note 12 goodwill to the accounts, “other intangibles” are defined within “goodwill” as “customer and studio relationships”, in the former case read across as “customer lists”"

Sorry Elvis but that's not what it says - section 12 is the INTANGIBLES section and goodwill is just one of these which is listed separately, and line you refer to actually reads "Included within other intangible assets is customer and studio relationships" so clearly saying they are part of 'other intangible assets' and NOT 'goodwill'.

If you look at the table in the intangibles section it has 5 columns: Goodwill, Brand, Distribution Rights and Other Intangibles (under which are customer and studio relationships) plus a column that adds these up to give the total intangibles.

This is turning into the most boring thread ever - so please, no more! :-)

“Otherwise why would the creditors ask the questions they have today, why bother if not”

Having been that “unlucky chap” as you put it earlier (at least as far as the financials go) I know all sorts of questions get asked without those asking necessarily knowing why - they sometimes just think of every possible question and ask it just in case. Sometimes the questions don’t even make sense so who knows what they want to do with all this.

The very examples you give though are explicitly dealt with in the accounts as intangibles and won’t be part of the $4bn goodwill. I don’t know why they make any reference to ‘goodwill’ and bargaining power in the same sentence but if someone can explain it then great otherwise to me there are far more important things to either get excited about or worry about.

Indeed - Intangibles are not a type of goodwill - but goodwill is a type of intangible :)

Elvis - Goodwill is as described by Wolf. The examples you list are other intangibles, they are not 'goodwill' at all. For example the Regal brand is actually given a separate value in the latest accounts of $365m. Customer relationships meanwhile are included under the catch-all label of 'other intangibles' and so form part of the $164m included under this heading in balance sheet.

So you are right, the sort of things you list can have a value and CINE have indeed included a value for some of these which the creditors are trying to determine BUT none of them are included under the $4bn of 'goodwill'.

Yes Ted that does appear to be the case as Augustus 2 Limited is included in the list of debtors and in the accounts, in which case I presume 'IC' stands for Intercompany Charge? If that's so then to me it doesn't look like a debt payment but other than that I've no idea what the charge relates to - but given the size it's not surprising the creditors want to know more about it.

Of course I could be joining the dots incorrectly and getting a giraffe instead of a zebra but that's what it looks like to me.

"Hopefully the new CFO can remedy that."

They've got to find one first! Hopefully it won't take as long as their search for a new 'rock-star' chairman - are they even looking still?

To be fair some of the delay is caused by the additional financial information they now include (and that nobody else does). Although it is quite interesting the most useful bit is the mining margin which was always included anyway. So maybe if they went back to the old format they could get back to releasing the updates much earlier.

For clarity - I am still invested in ARB. I just have more now in other miners. I hope they all do well, I just have more confidence in some than in others.

Which bit is inaccurate?

One bit you could probably argue is that it is not always the most efficient miner EVERY month. Sometimes it isn’t and I’m only including the top 10 or so miners but it’s easily proveable that they are generally in the bottom two (and often last) in that list.

They also have about $20m cash, which is not negligible but is still relatively small and probably not sufficient to keep operations going another year unless BTC keeps growing or the PPA comes into effect soon.

Apart from those potential minor quibbles I stand by everything unless proven otherwise.

I’m also not nursing losses - far from it, I’m trying to do something about them. So far it’s working.

Anyway I’ll leave you to your evasion and your obsession with lolling…

I said an articulate and persuasive bull case, not one of yours. It was really a question for one of the wiser heads on this board. Anybody?

A couple of things that could give an immediate lift to the ARB sp is positive news on the intel deal or an indication of the hosting agreement being very advantageous (including benefitting from a PPA). I have doubts over both of these though, although the PPA element at least will hopefully come through, and besides neither are likely to allow them to make up most of the ground they've already lost especially regarding further growth potential.

And yes, I expect if CLSK and BITF do treble then it will be before ARB but fully accept it is just my opinion and could well be wrong. So GLA whichever horse you back - hopefully they all win at least something for everybody.

No sour grapes at all. I take full responsibility for my losses - I chose to invest in ARB, nobody's fault but my own, not even PW's.

I just don't see how ARB's sp can be expected to grow faster from today's levels than the other miners who all seem to be in a much better position to take advantage of any bull run. MARA and CLSK (growth), HUT8 (HODL), BITF (efficiency) etc.

What does ARB have better than the others? They did have probably the best facilities - but Galaxy now have those and ARB have stated that they now plan "to refocus its efforts on growing and optimizing operations at its two data centers in Quebec". It is the most inefficient miner, has little cash, even less HODL, a relatively old suite of machines (having flogged a lot of the new ones), high debt in relation to assets and, most crucially (as a consequence of all these things), very little growth potential.

It will of course still do well if BTC keeps rising but would love to see an articulate and persuasive bull case for ARB relative to other miners though in case I'm missing something?

It's a while since I sat a probability exam but here's my answers:

What is the probability of BITF becoming 3 bucks in the next 3 months? - 10%
What is the probability of clsk becoming 10 bucks in the next 3 months? - 15%
What is the probability of mara becoming 25 bucks in the next 3 months? - 10%

What is the probability of ARB getting to 45p in the next 3 months? - 2%