Member Info for Hexam

It actually looks like the overall loss will now be in the region of £250m, maybe a little more. Eek!

The cash loss is much lower and appears to be about £80m (up from £48m at the half-year - the circa £90m outflow at half-year you mention SCB includes £50m of loan repayment which is not a 'loss'). If this is the case then at least it is a slight improvement on last year.

“Losses for FY25 will be in the region of £100m. Not all of these will be cash costs, so that's something (at least).”

They will be far North of £200m. They were already over £100m at half-year. But agree, that really is something!

The sp seems to be holding up well so the tactic of smothering the appalling numbers with upbeat messages about Debenhams and the move towards that model and name for the whole group appears to have worked!

GMV growth guidance missed - down 10% instead

Revenue down 16%

Adjusted EBITDA down around 30%

More one-offs so that overall loss now looking much higher than £200m for the year

Net debt of £82.7m despite the £89m of new funds from equity raise and HO sale so cash still an issue

Despite all this the sp is flat/up so it is encouraging that the market seems to share at least some of the optimism of the board. It's early days though and the full results may be more difficult to distract from and going forward there needs to start to be improvement in the overall numbers to back up the optimism. Interesting times though.

“That's where we disagree Hexam.

With February being such a quiet month, if GMV hadnt grown I'd have expected the update by now”

Well, now you’ve got it Bfd. Still disagree?

*throw in the towel

Yes, I'm mildly positive (and hence still holding) but there have been too many false dawns, regularly occurring negative adjustments that have held the numbers back and too much reliance on assets sales to shore up the balance sheet and profits for me to be anything more than that.

The greater focus on profitability rather than chasing every contract plus reducing the cost base are good but for me they need to start translating that, and all the other positive talk, into the overall performance. In short in the jam tomorrow world they've been talking about for the last few years the jam needs to actually start arriving.

I keep giving them one more chance after each set of mediocre results but this time if they don't deliver the positive cash flow by the end of the year as they promise then I probably will finally throw the towel.

Agree Trisor but that is already recognised in the accounts with the assets including the value of those tax losses (and all the other tax relief that they have not yet been able to use against profits). So yes, it means more cash from those profits can be kept and that would have been allowed for in Capita's own projections of a free cash flow outflow of £45-£65m this year and turning FCF positive from the end of the year.

I don't know what you mean by a 'net before tax figure'? If you mean 'profit before tax' then whether tax is paid or not makes no difference to that figure as it is always, by definition, before tax anyway. It is only the profit AFTER tax figure (also referred to as 'net income' figure that will be affected.

As I said, I think the profit before tax figure this year should be higher than £50m (the adjusted figure for 2024) assuming there are no further one-off adjustments but there is likely to be some more big adjustments (as there always seems to be for Capita) and these could go either way. So the actual PBT figure is very hard to predict.

Not really sure of the points you are making Trisor but yes there is sizeable deferred tax asset of £111m which can potentially be used to reduce any actual future tax bills by that estimated amount (though only £30m of that relates to previous years' tax losses). So the profit after tax figures will reflect this.

As to the pension contributions I presume you are talking about the pension deficit contributions which have now ceased with the final payment being made? This will result in better cash flow next year but does not impact profits.

*£184m not £186m

Actually Cap I would expect them to make a profit in 2025 so long as there were no further one-offs. The best figure to look at is the adjusted PBT (although CPI have the really annoying habit of changing what exactly they adjust for each year and so keep making backdated changes to previous years' figures)! This was £50m (similar to the previous year) and would expect this to be better in 2025. However, as well as the £186m contribution from the business sales in 2024 there were impairments of £75m that hit the result and if those for example are repeated this year then the profit could indeed go negative again. Of course there could also be positive one-offs - like there were last year.

As I said, there was nothing really bad in the underlying results and their outlook hasn't changed. If they deliver on that outlook of positive FCF by end 2025 then profits should also improve - and the sp! It's just that they can't seem to ever deliver a set of 'clean' results - there is always something, and usually more than one thing, and big things at that, to distort the results.

I'm hopeful they can finally turn this beast around - just that it will require a bit more patience (again) and no more nasty shocks in the numbers!

"The only real piece of guidance was that GMV was expected to grow in H2. The FY is now complete, so it would be odd if this hasn't happened"

As I said, if there is no update before close then would expect them to be on track more or less (including the growth in GMV) but if there is a pre-close update then that is when I expect they will cover any miss (or confirm explicitly that they have hit it).

The profit will come from the sale proceeds being higher than any value of assets (less liabilities) already included in the balance sheet. The impact on cash was indeed even higher!

The profit from the sales was referenced several times in the report including this bit:

"Reported profit before tax of £116.6m (2023 loss: £106.6m) boosted by the disposal of Capita One and Fera"...

...and the £184.6m impact itself can be seen in various places as "Gain/(loss) on disposal of businesses" including the profit and loss summary ('Consolidated Income Statement') and in the detailed breakdown of it in Note 9 of the financials.

Bottom line is that unless similar sales occur this year then we can expect a much lower overall reported profit in 2025 than last year and maybe even negative again if there are more write-offs like there were in 2024. They haven't guided on profit though so don't know what their expectations are.

It does smack of desperation a bit, but changing the look whilst increasing prices is certainly a 'credible plan'. We'll just have to see whether it actually works or not and what this might then mean for other brands?

I too suspect that things are worse than expected but I presume a pre-close trading update will confirm one way or the other (if there isn't an update at all before close then that would suggest they are more or less on track - not that there was much guidance to compare to of course)!

It looks like they've gone from cheap, brightly coloured, cheerful clothes to a more sophisticated, expensive and much less colourful offering. The prices apparently have shot up but not the quality so much so I presume this is a move to increase margins, by way of a revamp, with the hope that they don't lose too much of their old followers (and maybe gain a few new ones) so that those extra margins aren't all eroded by lower volumes.

It seems a bold strategy, changing the very identity of the brand overnight. Could it work? Well, I'm not a 20 or 30 anything so whether I think the clothes are boring now or not is neither here nor there and so have no idea how many customers they will lose but if the margin improvement is high enough then they can afford to lose quite a few and still benefit. Time will tell no doubt.

Good analysis Cap, though I'm afraid I disagree a bit with your upbeat assessment - particularly around profit.

The big turnaround on reported profit (and therefore ROCE) was entirely down to the sales of Capita One and Fera which together contributed a whopping £184m to profits. Stripping away these, and all the other one-offs, and the profit was actually flat against last year. As was the FCF once the impact of business exits are removed (over and above the sales proceeds themselves which are not included anyway). What's more, both profit and cash were worse in the second-half of the year so the trend is downwards though that may include seasonal impacts?

To me the results were underwhelming with the underlying actuals pretty flat and the outlook much the same as it was. So not much by way of good news (though the margin improvement is welcome) - but equally not really any bad news either.

So as always seems to be the case with CPI the one-offs have dominated the results (just favourably this year compared to unfavourably last year) and until they actually turn FCF positive (still expected at the end of 2025) and underlying profit starts going up (sadly no guidance on this) then I think the sp will hover around this sort of level in the absence of any other big, surprise news.

Figure shown here is correct so 27.52 (closing price is always set by the closing UT so look at that if ever unsure).

For someone who complains incessantly about supposedly misleading posts by others, and frequently reports them on that basis, Mikey doesn’t half make a lot of nonsense up. Thankfully all I see are green boxes now so I no longer get to see most of it.

If anybody is 'fooled' by whatever is said here then they really shouldn't be investing. Even if some are it will never be enough to have a meaningful impact on the sp for any length of time. Why do people ramp or bash? Maybe they think it does have an impact on the sp and so have an inflated view of their own importance - or simply, like on many other types of site, they just enjoy it. Just look at a site for any football team, band, celebrity, blogger etc.

"Does it really matter if people bash any share? It’s solely down to the company if it succeeds or not."

Spot on.

And nobody gains financially from posting whether invested or not. Just like any other social medium platform (unless you're selling something or benefitting from ads etc.). Strange question being asked.