Member Info for Hexam

@Wellington - I'm afraid in this instance you are (unusually) incorrect. It used to be the case that they were deducted before EBITDA but the accounting rules were changed a few years ago. CINE even made a big thing of it in their 2020 accounts reconciling the before and after and explaining why the EBITDA now looked so much higher.

Actual rent payments don't even go through overall profit and loss any more. A different figure which is the sum of the interest and depreciation that I described earlier does and of course neither of these impact EBITDA as that is before both interest and depreciation by definition.

He did spot the current assets v current liability issue though. I didn't even get as far as the balance sheet though as I'd already made up my mind there were enough red flags already! I've found his videos hit and miss but this one seemed quite good to me and thoughts to DS as it does indeed look grim. Fingers crossed ARB's liquidity looks somewhat better tomorrow!

Sorry b4 but it doesn't include rent. The impact of leases now goes through profit and loss as Interest (unwinding on the lease liability) and Depreciation (of the lease asset) - both of which of course are excluded from EBITDA.

The actual lease payments only impact cash flow.

Cheers AB. Yeah, the trust issue did for me too - so wasn't tempted after that to look at the numbers any deeper to see if they might seem better than they first appeared.

Think I'm happy just holding the two (ARB and HUT8) that have different strategies/strengths so not really looking for a third - though something else may always leap out I suppose.

"If you could please explain why Cineworld should have the same market capitalisation as AMC"

Well the companies have similar levels of profitability and debt. However, the crucial difference is that AMC appear to have greater liquidity and presumably haven't failed any debt covenant tests like CINE (or have had then waived). So we are where we are.

Having said that AMC are trying to raise more money currently via the backdoor (through the APEs they've just issued).

EBITDA ignores rent so quite meaningless really in this context.

"The underlying business has margins in excess of 20% in 2021 even in a COVID restricted year."

I'm not sure what exactly you mean by 'underlying margins' but that looks way too high to me - even in 2019. I presume you are ignoring depreciation on capex (fair enough as they can pare capex right down) but are you ignoring rents too - and other costs?

Yes, we know the profits are going to be bad - it's more about the liquidity, how much they might need to get all the intel machines in (and what they might do about any shortfall - delay or raise?), any update on immersion plus any other goodies (or baddies). It would be good to have an update on Pluto and argo labs but I suspect we may not get much on either beyond the numbers.

Results out tomorrow night and a call 1pm Thursday. Should be interesting what they have to say...

"Chapter 11 also means dilution of stock account which is layman terms that stock holders get left with nothing." Actually, if it comes to that, dilution means less not nothing.

"This will be my final comment in this lse Cine forum."

Best news all day.

SP - They failed a covenant test and I think that has triggered all this as it appears they have been unable to obtain a waiver and haven't been able to pay down the loan in question with available cash, or via refinancing, to avoid the test. They may also have immediate cash flow issues in terms of meeting outgoings especially with the thin film slate over the next few months but we don't know that for sure.

It's frustrating as looking beyond the next few months (and the court case which is the other major headache) the future looks ok - it should be profitable and be able to gradually sort its debt mountain. Unfortunately though the failing of the covenant test, possible short-term cash issues and the impending court case have created a more immediate crisis with lenders.

Although I have hope that the longer term prospects should help in thrashing out a deal with lenders that won't be too penal for shareholders the gravity of the current situation shouldn't be underestimated. How much of this situation is in the control of CINE and how much is with the lenders we just don't know - despite the certainties expressed by many new posters who clearly know so little about the business they are commenting upon.

It's a case of wait and see and in the meantime any decision is pretty much a straight gamble in my view.

AB - Don't know them really but had a look at their Q2 results and three things leapt out. First they don't HODL (as DS said) so they didn't suffer the huge losses others have done because of the depreciation of their BTC. The converse of this is of course they won't benefit if it goes back up.

It also means they are using their BTC to pay for costs (like CLSK but more so) but the second thing that struck me was how small their margins were compared to other miners. In Q2 their gross profit was only $5.4m on $19.8m revenue. This is before depreciation and overheads but this low number could be explained by their mix of operations (they are not just a miner) or other factors. However, once you add in the depreciation and overheads the loss in Q2 is over $20m. If I was thinking of investing I'd want to understand more about what is behind these losses and so how things may look going forward (e.g. is simply because they are still very much in start up mode)?

The final thing is they actually talk about an EBITDA for Q2 of $13.7m but what they fail to mention (from what I can see) is that this includes over $17m from a "Change in fair value of derivative asset" which looks to be a one-off related to a power supply agreement - again I'd look into further if I was interested. Unless I've missed it I'm amazed they haven't highlighted this and so are spinning the numbers so much. The $17m is also the main reason why they show an overall net loss of a few million rather than the $20m I mention above.

So for me the HODL approach is a consideration (not necessarily a red flag) but the current low margins and losses are a concern and the lack of disclosure (unless I missed it) on the $17m a definite red flag.

I've only focused on the financial position and even then I would do more digging to see if my concerns were well founded or red herrings or something in between - as well as looking into other things like strategy etc. Of course this is just my thinking and your own research is more important and relevant but as you asked the question I hope the above helps at least a little.

calamari - that's because the number of films released has still to catch up - still way behind. In 2023 it should (or if it doesn't by then we know it probably never will).

Forgot - there is also the possible uplift from immersion - but again another ‘if’.

Sorry, I probably haven’t explained myself very well.

At the end of June the stated EH was 2.2 EH. However if, as FP has suggested, the 460PH that was ditched in July has not been online for several months then the actual EH available was 1.76EH. They announced the EH at the end of July was 2.23 EH. So the average in July was actually around 2EH.

If they add 300PH in August then the average for August will be around midway between 2.23 and 2.53 so around 2.38 EH.

Therefore an increase of about 19% - not 13%.

On top of this there is probably less downtime as has been suggested because of less curtailment and no more machine swapping.

There is also a 2% drop in average difficulty.

In short the numbers COULD be much better than the 240 to 250 I suggested and even the 260 but there are too many ‘ifs’. What we can say is that it should be a better month than July and not by just a few coins.

Yes, I allowed for 0.3EH addition too. The end month EH may be up 13% in that case but assuming new machines are added evenly during the month the average EH is up 20% - assuming none of the ditched machines were operating in June or July.

By who's running it I don't mean another company I mean the management within the new look CINE including the influence from lenders. Some sites may be sold as part of any restructuring to competitors but I think a CINE of some description will probably continue - it's that 'description' we don't know and in particular what share of the ownership (if any) we retain as shareholders.

FP - If they've been off for some months then they've been naughty including them in published EH for so long.

If it was really was around 1.75EH at the end of June (rather than 2.2 EH) then the increase in average EH would be closer to 20% rather 13%. If they've got some immersion benefit and there was no curtailment maybe they could get close to Jamesy's 300! A lot of 'ifs' though. Let's just see.

I'm not being naive - I'm being realistic. They may not like it but what an earth can they do to stop it?

In any event I agree with Wellington so it's a moot point i.e. I don't think CW sites will close (apart from any deemed unsustainable as part of any restructuring agreement) and CW will continue to operate - Xmas and all. It's just a question who's running it and what it all means for existing shareholders.