Member Info for Hexam

None of the brokers are "declaring a company needs to do a RI in order to survive" when referring to IAG. Indeed the view from the latest (and most relevant as it is after the announcement of US opening) is:

'Berenberg said IAG's shares have benefited from positive sentiment over the past month as governments continue to ease restrictions and near-term equity dilution risk dissipates. Despite this, booking data is yet to confirm a strong recovery in the all-important corporate segment, while we think equity may still need to be raised next year.'

So they are worried (not surprisingly) about the ongoing debt position, not any short term cash issue, and are clear that a RI 'may be required' some time next year which is somewhat different to declaring it is needed for survival now.

Whether they will need to do a RI or not depends on how quickly than can reduce losses and return to profit and Berenberg have rightly highlighted the corporate sector as key to this. Time will tell of course and the Q3 results plus any update on booking trends will be helpful in assessing whether the risk of a future RI is increasing or receding.

This seems very good news. I don't think they have released quarterly financial results before (just half-year and yearly) and I believe they are doing so now because of NASDAQ (as seem to remember quarterly reporting being mentioned there).

Whatever the reason though it means ARB will be releasing an update on full profit numbers and these should be very healthy even though they will not include the impact from the rapid rise of BTC in October.

Based on the monthly numbers they've already released, and a prudent view of other expenses, then would expect an overall profit before tax of at least £15m for Q3 and so YTD profits of at least £25m.

I'm not convinced the timing is linked deliberately to the end of the quiet period (after all it is exactly the sort of time you'd expect Q3 results to be released) but whether deliberate or not it should give impressive financials that give a good springboard to any other news that they may then release.

Would have thought having the opening date for the US does equate to having cash in the bank if the tickets are selling out anywhere near as fast as Teddy100's post from earlier suggests. Such advanced ticket sales won't help the bottom line until the planes actually fly but they should have an immediate impact on the cash position.

"With that in mind what is the point of the quiet period of the company can release promotional videos, give operational updates and notify the market of future acquisitions. What is left that can't be said?"

Good question - my own guess would be that it is anything that wasn't trailed in the prospectus (texas, aims for expansion etc. are all there so as these actually develop I see no reason why they can't talk about them - and they already have).

Something that wasn't in the Prospectus at all (e.g. new JV?) would have to wait and I suspect they have to keep things very factual at the moment rather than wax lyrical. Only my thoughts though.

"For me it has to be a rig purchase rns and a solid update on currently installed rigs."

Agree Chuz - but both these things don't have to wait until the end of the quiet period as a rigs purchase has already been announced within the quiet period and an update on rig installation has also been given (admittedly not very solid).

More detailed plans for Texas would also be good but again don't see why this would have to wait for the end of the quiet period.

I suspect the main thing that will change on Nov 2nd is that they will be able to do a lot more promotional stuff including more freedom in talking up the operational updates etc.

Like Flowerpot though I can't think what good news people are expecting that is prevented by the quiet period and no one else responded with ideas. For me though just news on installation and any more purchasing of rigs would be plenty enough for now.

"Income for the group is much more complicated than simple measures."

And all you have to do is look at the accounts to see what the total is both in terms of revenue (for profit and loss) and cash (for how much it needs to draw on reserves). I agree that projecting forward is difficult as there are so many moving parts but seeing what revenue and cash inflow have been is not - they are matters of fact and readily available - if you bother to look.

"There is undoubtedly income offsetting cash burn, but the to the extent Hexam is making out I find very difficult to believe"

All you have to do is look at the accounts. The figures are there and perhaps one reason you don't believe them despite being in black and white is that maybe your focus is on BA passengers and current flying. Only about 20% of their revenue and less than 15% of their cash inflow for the first half of the year comprised of people actually flying BA in that time. In fact they got more revenue from people flying Iberia and from Cargo on BA.

So I don't care if anybody believes my numbers or not as they are not my numbers. If anybody wants to see the numbers for themselves all they have to do is look at the accounts. Lots of good info there and it is a lot better than guessing.

The costs? They are the numbers you gave. I'm not disputing those - 190m euros per week for Q2 and 175m euros per week for Q1. They are the numbers the company gave. Not sure what your point is. I am saying the the net figure should be used (both the costs and revenue) as that is what the impact on cash reserves will be driven by - not just the costs and not just the revenues.

...and to save you looking - breakdown (m euros) for H1:

Passenger revenue 1,141
Cargo revenue 769
Other revenue 302
Sale of property, plant and equipment and intangible assets 188
Increase in Deferred Revenue on Ticket Sales 906

= 3.3bn or 127m euros per week

For goodness sake Blue, I told you where my proof was - the accounts. What more do I need? You can see the figures for yourself if you bother to look - either on the IAG site or the RNS for the interim results.

All my numbers came directly from the accounts - they were not estimates (just rounded).

No, what they are reporting is cash spend or as the RNS reported it "Cash operating costs". Are you saying the company is lying?

Whatever Fugazi. The accounts back me up. I don't need your blessing. Just content to keep pointing out your lies.

In case anybody is actually worried by the figure of €195m cash burn each week that is being repeated this is actually the weekly cash spend (and it's actually €190m pw for Q2). If this was actually the amount which they were drawing down their cash reserves by each week then I'd be joining the (small) group saying a RI was likely as this amounts to about €10bn per year.

However, IAG also have cash coming through the door in terms of revenue and this offsets most of the spend so during the first half of the year they were only needing to draw on around €50m of cash per week. Still a big number but much more manageable in terms of the cash reserves they have plus with the skies now opening up more the situation should improve. It doesn't remove the risk of a RI completely but to me it seems unlikely.

“€195m per week cash burn“

And still you repeat this lie?

"where is the 150mil a week being generated"

- Total Revenue H1 = 2.2bn euros (about half from passenger sales)
- Additional cash from advance ticket sales not included in revenue = just under 1bn euros
- Sale of properties = 0.2bn euros

This gives most of what you are looking for (only 'need' €140m per week)

I am not confusing the terms. It's simple.

You spend cash, you receive cash and the difference means you either add to, or need to draw from, cash reserves. You are quoting a figure with only spending cash in, I'm quoting one that includes receiving cash too. At the moment IAG is spending more than it is receiving by around €50m per week (over whole of H1).

But don't take my word for it, just look in the accounts. It's all there including the figures from tickets sales.

As you have just posted the FT quoted the €190m pw cash operating cost figure but said "The company is burning through €190m in cash a week, a figure that does not take incoming revenue into account."

So your latest cash burn figure is NOT €190m per week as you state as you have also admitted it is the cash burn figure that doesn't take into account revenue. If you take into account revenue you get the figures reported in the accounts which are less than 50m euros per week as previously stated and easily verifiable.

Overall the cash reserves actually increased in H1 but this was down to net new borrowings.

I don't know what Q3 will bring but see no reason why it should be a multiple of Q1 or Q2.

So you are repeating the same false number that Fugazi is except for Q1 rather than Q2 i.e. 175 million euros which got reported erroneously as cash burn in the press (whereas it is in fact 'Cash operating costs') though at least the FT got it right when they reported it for Q2.

The accounts that I pointed you to are up to date as at 30 Jun and clearly give the net cash burn but you chose to ignore that and did a 'deep dive' rather than just look up a number.

The accounts show clearly that for the first half of 2021:

"Net cash flows from operating activities" = -€1.13bn and
"Net cash flows from investing activities" (which includes net capex) = -€0.032bn

Together these give the cash burn BEFORE new loans or repaid loans etc. of under €1.2bn for 6 months.

This is less than 50m euros per week.

So unless you think IAG are guilty of false accounting (in which you're welcome to take it up with the relevant authorities) please can we stick to actual, verified numbers.

K3,

Yes you are probably wasting your time and yes I don't have any explanation for the situation you mentioned and to be blunt I don't care. I invested in this share because I believed in the company and though that has been shaken a little lately I still believe the fundamentals are strong and if the great plans ARB have are executed I am confident the sp will go much higher.

What I don't care about is the day to day share price movement as far as my LTH is concerned and even less what trades are taking place on any day or what the position is with shorts etc. All this is just noise that at most may affect the sp today or possibly tomorrow - but not next month or quarter or year.

People focus on different things though so if they want to obsess about trades and shorts then fine but I'll focus on actual company news which hopefully will be very positive, very soon.

Cash burn is not €195pw the RNS clearly states "Cash operating costs for quarter 2 of €190 million per week".

My business experience that you refer to extends enough to know that costs and revenues are different. It also means I can read accounts and these show overall cash burn was less than €50m pw for the first half of 2021 before allowing for any loan movements.

I'm pretty sure you are employed to flood the board with your negative views but please at least make sure your 'facts' are accurate.