Member Info for Hexam

@LTHcine - I think I was probably a bit unclear in what I was trying to say. It's not that easy to explain but I'll try:

It's not clear to me how much they are trying to raise from shareholders but let's suppose it is as you suggest - £300m.

First, whether they do this as a 2/1 offer or a 20/1 makes absolutely no difference in terms of the amount of 'dilution' if the rights are taken up - so doing a 2/1 offer for this amount has benefit for the shareholder. For example if a shareholder currently holds £1,000 worth of shares at today's sp of 3p (so 33k shares) then in each case they will be asked for a further £20,000 to maintain their share of the company (roughly 67k new shares at 30p or 667k new shares at 3p). And afterwards (all else being equal) their shares will be worth £21k (either 100k shares at around 21p each or 700k shares at 3p each). So it does nothing to help the affordability of the take up and in each case you end up with the same share of the company (just a different number of shares at a different price but the same value).

Second though, a 30p office price is simply impossible anyway with the sp where it currently is. No existing or new investor would take the new shares at this price as when combined with the existing shares the value of shares would fall down to about 21p (as above). Who would invest in a share knowing they would have to get nearly a 50% return just to get back to where they started? Better to wait and invest at 21p rather than 30p. This is especially true for existing shareholders as all they have to do is sit on their hands and see their existing shares go up from 3p to 21p. Lovely if that could happen but it won't. If they offered new shares at 30p whilst existing shares were at 3p then no investor with any clue would invest anything and they would raise nothing.

In short it is NOT the 19/1 that is the issue but simply the amount being raised that determines how much existing shareholders will be asked for in order to maintain their share of the company. Put another way the 19/1 does NOT on its own imply 95% dilution which is why I agree with you that we need to see more detail of the actual amounts being raised first and the terms including whether or not there will be an option to sell the rights (which the wording also does not make clear and is only possible anyway if the offer price is lower than the sp - otherwise the rights have zero or negative value).

Apologies a very long explanation but the headlines:

1) An offer price of 30p is impossible and in any case doesn't help affordability if the amount to be raised is unchanged
2) We need more details of the amount raised and the terms before being able to judge the merits or otherwise - the 19/1 on its own means little

"a fairer scheme would maybe be a 2/1 dilution at 30p+"

I'm afraid this doesn't make sense.

This would mean each existing shareholder would be asked to put in 20x the value of their existing holding (assuming current sp of 3p) and it would raise in total nearly £300m in new equity.

This is EXACTLY the same as with a 20/1 dilution at 3p.

In both cases there would be no option to sell the rights. The only difference is that with a 2/1 dilution with offer price at 30p the obvious thing to do is nothing as your existing shares would simply increase in value (to around 21p) without you having to put any money in. Crazy and which is why this can't and won't be an option - sadly! The offer price will be the same or less than the current (at the time) sp.

"So I would not be atall surprised to see Argo announcing a similar financing arrangement in the near future and thereby take away the ongoing paranoia being broadcast by some on here about imminent dilutive funding….."

Agree that it is a viable source of funding for ARB but the amounts involved would be relatively small (and the interest high) and so could only be part of the solution. Unless there is some kind of JV (which is very possible) I think the heavy lifting will have to be done by more shares or selling BTC.

"So you can clarify Hex, the RNS does not state the the company thinks revenue will cover significant operating loss in Q1, it is your own independent ideas."

I think you are confused about the term revenue. The revenue is part of the operating loss. Operating revenues less operating costs = operating loss. So saying revenue won't cover losses makes no sense. I agree though there will be a loss and so such revenues will NOT cover costs which I think is what you meant to say.

All I am saying is that additional cash income from advanced ticket sales in Q1 (that is not included in the operating revenue and so won't help with the loss) may be sufficient to mean actual cash flow is positive, or at least a lot less negative. You are right that is my speculation not the company's but it is really an argument about nothing as what matters is that liquidity is sufficient - which it is. If the company is cash flow positive in Q1 then it would simply be sufficient by more that's all.

Try as you might to twist my words and make silly, childish statement like my 'reputation is in tatters and you are seen now as nothing but a ramping troll' I think most people understand the following:

- The RNS clearly states Q1 will show a significant loss which means the revenues of the business will NOT cover the costs
- Cash Flow though is obviously NOT the same as revenue less costs and this is what is key for liquidity
- All I'm saying is that this quarter (just like the last one) COULD see cash flow as actually being positive as further advance bookings for easter and summer will help cash flow but won't impact revenue and so won't help with expected losses for Q1
- I do not EXPECT them to though - it is just a possibility but it doesn't matter much if they don't as they have 8bn in cash anyway so agree that regardless of whether they do or they don't liquidity is more than sufficient to get through Q1

I can't put it any more simply and there is no need to ramp. Must admit though that's the first time I've been accused of being a ramping troll so that amused me. Thanks for the chuckle.

You really like to have the last word don't you. For Heaven's sake I'm only saying something is possible and giving reasons for it. Just like you when you were banging on about a possible RI when the CEO had not only not mentioned it but had all but ruled it out explicitly. It seems you are allowed to give opinions and to speculate (a lot) but nobody else is (at all).

What's wrong with using the word might? It is perfectly possible with further advanced bookings for easter and summer and indeed was the case in the second half of 2021 despite the losses:

"Significantly improved operating cash flow of €1.0bn in the second half of 2021, driven by positive EBITDA in quarter 4, strong forward bookings and favourable working capital"

Oh, and I have no mates on this board - that's just YOUR 'speculation'. So nothing I have got involved in to be ashamed of - not here anyway :)

I don't have a problem with it at all. I was merely pointing out that whilst, I agree, they have said they expect a significant operating loss in Q1 that this, with continued advance bookings, doesn't necessarily mean the cash flow will be negative as well and therefore their ability to 'cover' Q1 may be impacted much less and possibly not at all.

Blue - For the record I don't care whether any stranger on an obscure forum thinks I'm 'man or mouse' or anything else come to that. I'm not as thin-skinned as some. But yes, you did post what you said but in this context:

"Still have cash in bank and credit to draw down on. However, what will major shareholders want? Draw more credit to get through Q1, or fund Q1 raising money from markets? There is a black hole warning although there are stress tests. There is no explicit reference to raising money which can be good but also bad as not ruled out. Raising new money is now a lower probability, perhaps 10% depending on what the board decides for funding the debt. Revenue is not going to cover Q1."

So hardly dripping with positives, nor was what went before it. And your last line of 'Revenue is not going to cover Q1' is misleading as cash flow very well might.

Sorry, I try not to respond to abusive posts so will just ignore. Though fair point, most already have you on filter anyway so not sure why I bothered in the first place.

Yes, I read every word. Bottom line is that the new debt and 2021 losses are not news and with 8bn of cash there seems little need to raise money to get through one bad quarter (where there may be losses but advance bookings for easter and summer could still mean it is cash positive anyway).

Really Blue that was a pitiful attempt to twist the narrative.

There may be €11bn in net debt but €9bn of that represents lease liabilities. With the positive recent cash flow, and even better outlook on cash, this shouldn't be a real concern now. And really hard to see any prospect of an RI in the near future.

"Get away from the MSM hyperbole and look at things objectively."

No - I'd rather get away from your tedious anti-establishment rhetoric that seems stalk these boards and this one in particular. I'm no big fan of governments and think our current PM is a clown of epic proportions but the sort of self-righteous people screaming for a new world order have no better clue. In the meantime as AB said - thoughts with those really suffering.

So now you're actually blaming it on the people of Ukraine whilst bemoaning having to pay a bit more for oil. Poor us.

"Not sure about anyone else but I'm somewhat relieved that we finally have some clarity. This 'will they / won't they' invade was getting very tedious."

I'm not sure the people of Ukraine will feel the same. Speechless.

Why is it game over? Have I missed the sp doubling or halving - or BTC rocketing or crashing - or some news?

@beta - yes I do think it would be great to understand what the revenues might means in terms of profitability but my whole point was that you won’t necessarily get that from others’ results and in fact they can be very misleading due to different strategies that affect expenses, interest etc. The thing that will move most closely in line is revenue and we already know most of that for CINE.

So personally I won’t be paying that much attention to them but obviously you feel different and that’s fair enough.

CINE and CARD and that was without looking. Both have their own problems (debt, covid related losses in 2021 etc.) which is why, like Arb, their sp is so depressed at the moment but they have mcaps either side of Arb and both are likely to pull in much more income in 2022 (and at least comparable profits).

Plenty of companies around with low looking forward P/E ratios at the moment - each with its own reasons - and usually good ones.

North - The results are actually for the whole year and for Oct, Nov and Dec in particular (Jan falls in the next financial year although they may comment on it) but I get what you mean and largely agree - though there could be some surprises and any forward looking statements could be good.