Member Info for Hexam

FP - I missed the word 'mostly'. I don't think the data centres come into it, especially as I believe they already have mortgages on them.

"So as thought, the loan wasn't secured against the unbuilt 600MW of transformers?"

Not so sure - PW did indeed seem to imply that (by word and gesture) but on the other hand have they really already installed $26m+ of 'electrical equipment' to secure the loan against fully? Seems improbable but personally it's a bit too much detail for me - we know the loan and we know the interest and presumably its secured against something of value whatever that is.

@eatstocks - to be fair they are just getting payback for the idiots from this board that have trolled BOO shares over on their board. In a world where real wars are going on it's all a bit pathetic really.

Actually just looked at the slides and these confirm that the repayment in deferred VAT does not contribute to the net debt figure:

"Net debt reduction, total disposal proceeds (£483m) including ESS and AXELOS, offset by pension deficit payments (£156m) and repayment of deferred VAT (£104m)"

So in a nutshell the reason why net debt hasn't reduced by as much as the disposals would have suggested is that they have used some of it for one-off payments that don't feature in the net debt number.

@voli.zh - Capita actually do exclude lease liabilities for their adjusted net debt figures but as I mentioned, they add back cash that is restricted i.e. not immediately available to meet debt repayments plus there is another small adjustment.

The full rec is:

Net debt £879.8m
Cash, net of overdrafts, included in disposal group assets and liabilities held for sale £15.8m
Restricted cash £54.8m
Less: IFRS 16 impact (£448.4m)
Adjusted net debt (excluding IFRS 16) £502.0m

CT:

A couple of things:

- The £300m hasn't vanished. They have used some of it to reduce the pension deficit (£155m) which does not appear in net debt calculations i.e. hasn't reduced the figure. I don't think the repayment of deferred VAT (£104m) does either. In addition there have been restructuring costs to be met.

- The net debt figure includes lease liabilities. I don't think these should be considered net debt in the same way as bank loans etc. Yes, they represent commitments to pay rents going forward but such payments form part of normal operating costs plus a corresponding asset is also held which is not included in net debt (and before IFRS-16 remaining payments on leases weren't counted as debt as all - the actual rent payments just flowed through the profit line like other expenses). These account for about half the net debt. Taking out these (but adding back some cash that is restricted) then the figure is about £500m.

This is still lumpy but with further disposals, improving profitability and the much lower impact of one-off items like those in the first point above, I think it is not as bad as it appears - but just my view.

Kevin,

No problem. The easiest way to find the actual tables is probably just to search on the word "bridge" if you want to see the detail.

I agree, these aren't the easiest accounts to follow, what with the company's complex nature, compounded by how they have presented some things or not presented others (it seems less clear on net debt for example). So it's hard to tell the true picture, but underneath it all I would tend to agree the business seems to be in reasonable shape and to me anyway they look, if not spectacular, then at least very encouraging.

Kevin,

There are actually 'bridges' in the accounts. For example the main reason for the adjusted profit being different to the operating loss is the restructuring costs which have understandably been removed to give a fairer picture of ongoing profitability. The reported profit is even higher but this is mainly because it includes the profit from disposals which are neither operational or recurring. See "Adjusted1 to reported profit bridge".

I wouldn't be put off by the snide responses you got - unfortunately some just get defensive when anybody asks a question and just assume it's a troll being sneaky.

Perhaps I should go with a "beach of cove and tents" as my tie-breaker then?

On seconds thoughts I'll just go with "cash" (was going to go for "the" but doubt that would be admissible)

So you're out for a quick buck, fair enough - explains the non-stop ramping.

As to - "if long term holders and the other don't want to get burned with a sell out at 30 then they need to start buying up shares and move the price north" that's got to be one of the dumbest investment strategies I've ever heard - and these boards are full of them.

"If an offer of 30 a share drops I will be very happy."

I think you may be in the minority there and not sure why you would be so pleased at only getting 30p for your shares if you think the company is worth a lot more than that.

Think I'll go for "breach"

@mountainous - yes, there is always the possibility of a rabbit being pulled from the hat but personally I can't see anything happening regarding a US listing when the court case is still ongoing or whilst the sp is so low (certainly if it's via an IPO and I can't see why they would go through the considerable hassle of a US listing if they didn't want to raise funds).

Sorry - I was sailing away on a tide of enthusiasm :)

I agree - BODs always try to spin the results - especially when looking forward, but usually the market sees through this. So even though I reckon there is a lot they could wax lyrical on, including upbeat projections they could give, I think the current box office figures will still act as too much of a drag.

I just feel that in six months time we'll be in a whole lot better place but that they/we have just got to weather the storm, court case and all, in the meantime. Speaking of which, how they've allowed for this in the liabilities will be interesting and could affect sentiment either way, and so is another thing to look out for.

Fair enough FP - I understand a bit more where you're coming from but hopefully the market won't wait until Q4 mining figures before reacting so if there is a boat to catch the longer you wait the more chance there is of missing it.

That sounds dangerously close to a ramp, for me anyway, so to balance that would add that there is still the uncertainty over the funding for getting that boat moving and of course plenty of other potential icebergs along the way. Besides I don't think the market is as forward looking as some like to think so you can probably stay on the dockside a while longer at least.

Apologies for the extended metaphor :)

"Massive resistance at 36.95 - hope this gets smashed when the results come through"

Why? It's hard to see what might be in the results that could propel the sp. The results themselves will reflect the performance up to the end of 2021 and we know that wasn't great (apart from October) whilst any comment on Q1 is unlikely to be much better. Even with Batman the attendance figures are nowhere near the levels they were looking for in their base case scenario. This isn't because Batman isn't a big success - it is - it's just that there isn't the depth of other films yet to get box office revenues close to 2019 levels let alone 90%. That looks to be changing though in the coming months.

So whilst I'm very confident in CINE over the medium and long term I think these results will be more of a hurdle to get over than a springboard - I think we'll just have to be a bit more patient for that.

Hopefully they'll be some good news on getting waivers on the covenants and maybe a favourable update on the court case but at best I think the rest of it will be a mixed bag.

"350 or 400 btc a month than will be reflected in the Sp at that time, not in feb / March when its 135 btc a month, so who cares"

Me for starters. FP - Must admit I'm a bit puzzled by your statement as surely the idea is to invest in a share where you think the sp is going to go up so it is all about what the sp might be in the future. And to me for argo that definitely involves taking a view on what they might be mining in the future compared to now. I accept it is all guesswork but that's what all investing is. I know my numbers will be wrong (they were just one scenario in response to AB) so I agree estimating an exact number is pretty pointless - but it is enough for me that I'm confident mining numbers will grow by a significant amount and I believe they will on most reasonable assumptions. If I didn't believe this then I'd quickly find a new home for the money I have tied up here.

I just don't think mining numbers will grow quite as quickly as AB is suggesting that's all, but hopefully he's right and I'm wrong as that would be much better for argo and hence for the sp come Q4.

If you turn out to be correct it will be more than enough for me too!

AB - I think worst case would include the machines not all being installed (along with other more pessimistic assumptions like lower impact of immersion or others achieving just as much).

As you say though we'll have to revisit later this year. I would suggest a bet but the history on paying up on this board is not great ;-)

AB - if you want some actual numbers then here is one set of assumptions:

- Machines are all delivered and we reach 3.6EH fully installed by end of Q3 (not 3.7EH as I've given up on the missing 80PH ever turning up)

- Overclocking adds 20% across the whole fleet

- Global hashrate rises to 300 EH by October (7 months time) which is in line with historic trends (i.e. typically it doubles every year)

- 10% uplift on global hashrate to reflect others dabbling in immersion or whatever to improve their efficiency (so only half as effective in getting improvements as argo).

- Assume actual argo hashrate runs at 90% of potential (not dissimilar to past although last couple of months a lot lower but for known reasons)

This gives expected btc mined in October of 900 x 31 x 3.6 / (300 x 1.1) x 1.2 x 0.9 = 329

The only think I can be reasonably confident of is that all these numbers will be wrong. They are just guesses - but I think they provide a reasonable, middle ground set of assumptions (if I make each assumption more aggressive I can easily come up with 500 BTC but equally I could be pessimistic and readily get to under 200).

As I said I would see anything over 300 as good and certainly not a 'let down'.