Member Info for Hexam

@CaneToad - "The damn annoying thing is that it's not just ARB. WTF is going on with miners? If not for the tax advantages of the shares in an ISA/SIPP which double your effective returns, it wouldn't *currently* make sense to be in the miners. BTC/ETH is where the action is."

The problem with all miners (that BTC doesn't have) is that, as you know, they are in a race. ARB is projected to have 3.7EH next year but there is no guarantee they will be mining more with that power than they do today given how fast the global hashrate has historically tended to increase (China blip aside). Profits should still increase for ARB (and other miners) assuming BTC rises enough to compensate for reduced efficiency of mining - but can see an argument that going direct to BTC is a 'safer' option especially as a fast rising BTC makes that race even tougher as more try to join and all try harder to take advantage.

I'm backing ARB as I think it will be one of the winners in the race and mining BTC is not the only race it is, or certainly will be, running in - but miners carry more risk than just BTC does and there will be losers.

Mary - I think you meant 'not 15%' not 'now 15%'?

iParsnip - Your holding HASN'T dropped 15% overnight.

At the current sp It should be similar in total to the amount last night - just in two bits now.

Peru, Ecuador, Colombia, Panama, the Dominican Republic, Haiti and Venezuela

Cheers Ash.

Scott - the example Ash refers to is long with lots of numbers but the bottom line is simple. You are just being asked to invest more in TUI at a fixed price but you can choose not to. If you choose not to then you sell the rights and get a bit of money paid into your account.

The key point is that one option is not immediately better than the other. It just comes down to whether or not you want to (and can ) invest more and that is up to you based on your view on how TUI will perform going forward

Hopefully carrying out your choice should be easy and explained clearly by your broker.

I don't like predicting sp short term but if it stays at the current sp of 354p then this would mean approximately:

Ex-Rights shares = 299p
Value of Rights = 116p (get ten of these for each 21 shares you own)

Calculation is current sp = ex-Rights Price + value of rights:

So 354 = 299 + 10/21 * (299 - 183) where 183 is the fixed price of the new shares and 299-183 is therefore the value of the rights per share.

So as long as the sp doesn't move the rights will sell at about 116p and you should be able to get the same number of new shares which either option you choose (I think). Of course the sp will move but which way is anybody's guess. If you sell now you're better off should the price fall before you buy back, if it rises you'd end up better off choosing the cashless option.

Tomorrow - though if you are currently a holder don't worry, the value of your investment shouldn't drop it is just splitting into two and you should see both parts clearly online when you look at your portfolio (though be patient as different brokers have different speeds of doing things).

@beatrootjuice - wouldn't another option for you to be to do a cashless take up? That is to sell enough of the rights from tomorrow to enable you to take up the rest? That way you keep the existing value of your holding and save a bit on charges - though of course whether you think that is better than doing what you said depends on how you feel the 'real' sp will move in the meantime.

"Looking at 7.74m, treble usual daily volume. Is this people buying in for the rights issue for a quick cash-out afterwards?"

Possibly as they may think they are getting the rights to bargain shares at 2.15 euros - but they are only getting what they are paying for, no more, no less. So if they are looking for a quick-cash out afterwards they are likely to be disappointed as not only are they unlikely to get back more than they put in but if lots of people are doing the same thing then this will create downward pressure on the shares (and hence sp) when they all try to sell - in which case they'll probably end up at a loss.

Agree Beat - think this from the RNS confirms:

"Existing shareholders, other than Unifirm, can exercise their Subscription Rights to the New Shares during the subscription period from and including 8 October 2021 up to and including 26 October 2021 (the "Subscription Period") through their respective depositary bank. Investors are recommended to follow the respective guidelines of their depositary banks."

Rodney - One thing to add to beat's reply is that the discount quoted is to the TERP and NOT the current, full share price.

The 280p was simply obtained by taking E2.15 and dividing by 0.65 then applying the exchange rate - as indeed you did but this answer is the (original) TERP not the full sp at the time.

Agreed beatrootjuice although I think if you do nothing they will automatically (try to) sell the rights so nobody should lose out - but I wouldn't want to take that chance personally, so yes would agree that everybody should do something.

Hi C.Trader. Must admit not sure what you mean. EZJ was very different if you are using that as a comparison. The price dropped immediately after the RI was announced whereas with TUI it has actually increased - and going up so fast my example numbers are already out of date!

In both cases though there is a mathematical drop that happens when the shares go ex-rights (which I believe for TUI is tomorrow). This can cause alarm but it only reflects that the share is being effectively split into two as I described earlier. So the price you see tomorrow is only the bit that relates to the ex-rights shares whereas the rights themselves will have a separate value which you should be able to see on your statement. The two together should add up to what you had before.

If you have the funds then you can take up those rights by investing more or you can sell the value of those rights. Financially there is no difference except obviously you are either deciding to invest more or to sell a bit.

Not sure that helps?

Yes

C.Trader - Just to repeat, selling today and buying back after the rights issue does NOT necessarily lead to any benefit. All options are financially neutral whether buy more now, sell now, sell now and buy back later, sell the rights, take up the rights.

The only profit or loss comes from the normal movement in sp after you decide what to do and NOT from the movements in sp from the RI as these are just mathematical and reflect the same total value before and after.

Darkcloud - that's correct if we close higher than 335p today we should open higher than 286p tomorrow though not guaranteed as closing prices and opening prices are not necessarily the same anyway.

The key thing to get across is that this is just the maths working through and the drop is nothing to worry about. If it is a bigger drop though then this means sentiment has turned negative and if it is a lesser drop then it has turned more positive.

@Nath89 - Sorry if my reply was a bit confusing - in particular if the price drops to 280p (now 286p) it is NOT a no-brainer to sell now and buy back later - you will not necessarily be better off. Maybe this will help:

You currently have 2000 shares with a value at 335p of £6,700. So you could pocket that now.

From tomorrow these shares will effectively split into two bits.

1) Ex-Rights Part - You will still retain 2000 shares but the price will be lower (about 286p now based on current share price)

2) Rights to Buy More Shares - The rights offer is 183p per new share but you only have rights to 10 new shares for every 21 you hold. This means you have 2000*10/21 = 952 rights. The value of these rights is the difference between the ex-rights price above and the fixed price of the new shares i.e. 286-183 = 103p

The value of the two parts is then:

Ex-Rights = 2000x286p = £5,720
Rights = 952x103p = £980
Total = £6,700 the SAME as if you sold now.

So suppose you did sell now at £6,700. If you buy back after tomorrow then you can but 2,342 shares at 286p (assuming this price holds) but you have only been able to buy more shares as you no longer have the rights. You are no better off. You had £6,700 and you still have £6,700. You have more shares but the value of 286p is equivalent to the value of 335p previously. Maybe easier to think of it as selling a whole share but buying back only part of one (the missing bit is the rights you don't now have).

If instead you hold and the sell the rights you will still have £5,720 in ex-rights shares but will pocket £980 directly from selling the rights - so again this equals £6,700.

Now suppose you hold and take up the rights. This means you will need to invest an additional 952x183p = £1,740.

In this case once the offer ends you will hold 2000+952 = 2,952 shares at 286p (assuming this price holds) = £8,440

This simply equals the £6,700 you originally had plus the £1,740 you have just invested. So again no better or worse off.

All the above are estimated from exchange rates so don't don't take as exact and just to emphasise all the numbers will change as the sp changes EXCEPT the 2.15 EUR (183p) as this is the fixed price of the new shares you are able to buy under the RI.

The story remains the same though and is the key point:

Whatever you decide to do it is financially neutral. The only profit or loss you will get from your choice is from the normal subsequent movement in sp (and NOT for example from the movement from 335p to 286p or from the new shares purchased going from 183p to 286p).

It can be very confusing and I know the explanation above is long but I hope it makes sense? And if anybody spots any slip ups please point them out!

I suspect are September gross profit numbers won't be unfavourable to other companies especially those with higher HODL (so would have suffered more from the fall in BTC last month) and higher expenses - which is most/all of them.

One thing that may put investors off though is that the profit went from £10m in August to practically zero in September simply because of the capricious nature of BTC. So investors are not just putting their faith in the company they will be putting their faith in BTC and however much we believe in BTC that confidence is not universal. Plus for those that are already true believers in BTC I suspect many will just invest directly in it. So perhaps we're caught between two stools a bit?

@Trelawny - Apologies. I missed the missing digit on the table so the number looks silly (I just saw what I expected to see). I agree that is sloppy but to be fair that could have happened after it had been proof read as it could be a formatting issue after the numbers were signed off). The footnote is also wrong though and there's no excuse for that.

So agree leaves a lot to be desired but I think harsh going to a final warning!

Thanks Mac - The grid is a reconciliation between the mining profit and what they call the gross profit. It is confusing though as the reconciliation is actually done the other way around. Looking at September:

Mining profit is £4.63m (84% of revenue which was £5.5m)

They made £0.30m of revenue from managing other companies mining (nice source of additional revenue)
They lost £4.13m-£0.07m = £4.06m from the fall in BTC over the month
The machines cost £0.77m in the month (via depreciation)

So 'Gross Profit' = £(4.63+0.3-4.06-0.77)m = £0.1m

Note overall they made a loss for September as the above does not include salaries and other non-mining expenses - but for July and August they made a thumping profit and made more in Q3 than the whole of the first half of the year!