Member Info for Hexam

BFT - the outlook is hard to judge as although BOO have given their own view they have got into the habit lately of missing targets and the decline in revenue doesn't seem to be slowing up much, if at all. The rate in decline in GMV HAS slowed because of the impressive growth of Debenhams but my focus is more on profits and the GMV has much less impact on this and in particular their own forecast for profit from Debs is in my view concerning.

They say are looking for Debs to be £1.5bn GMV in the medium term and double digit EBITDA margin but a 10% margin (which is on revenue - not GMV) gives by my reckoning less than £25m EBITDA and even less net income. Of course their 'double digit' may be much higher than 10% but I'm sure they would have made a thing of it if it was. So lots of GMV but relatively little profit to get excited about - even if they hit their targets this time.

It is also noteworthy that they have also dropped their positive FCF prediction for FY25 and so even with the recent raise net debt may still get worse before it gets better.

For me big changes are needed and neither BOO nor Frasers have detailed what those changes are and for me it is disappointing that BOO have only just started their strategic review (and still may not have started it at all had it not been for the noise Frasers have been making). This, and the continued decline in both revenue and profits, makes me sceptical that the existing BOD can turn things around and that the FY numbers will be worse than BOO are currently indicating.

So personally I would like to see big changes at the top rather than more of the same from the existing BOD (they have moved a few deckchairs but it is essentially the same team and I suspect Mahmud is still calling the shots whatever title he now has).

Therefore I'll be voting with Frasers.

I think a drop in gross margin and a swing from profit to loss are hardly things to shout about. And even though the change in treatment in US numbers distorts the revenue figures the non-US revenue is still down nearly 10%. But if you think that isn't grim then fair enough.

'Accounts aren't showing yet.'

Yes they are. Were filed on Nov 17. Grim reading.

It’s true we don’t know what Ashley’s plans are but then we don’t know what the existing BODs plans are either.

All I know is that the existing BOD have failed spectacularly over the last few years so I’m inclined to have more hope in the plans of someone new.

So Frasers will get my vote.

CINE had broken its loan covenant and couldn’t raise any more from lenders without them exercising their right and taking cover the business - which they did via Chapter 11.

The business was losing tons of money as the audiences did not come back quickly enough or strongly enough after Covid - and still haven’t.

BOO have not defaulted on anything and they have just secured new funding (though not all on great terms). They have also got plenty of assets they could sell including Soho - CINE had very little (nearly all their property was leased).

At this stage they are simply not comparable. If the losses continue though for another year or two then they might just be…

*huge debt AND was losing

“Cineworld, which was and is essentially a cash cow”

That’s nonsense. CINE had huge debts as was losing money hand over fist every month. Fortunately although BOO is doing badly at the moment it is nowhere near the dire position CINE were in (yet) so talking about a CVA is pure scaremongering at this stage.

I’m not sure if they had to do one or not but in any event whether they raised £0.4m or £4m it makes no difference to the amount raised in total.

If they wanted to attract small investors they would have had to price it lower than what we are able to buy it for on the open market - not higher.

To be fair they didn’t want nor expect any take up from the retail offer. It was not priced to attract retail investors and makes absolutely no difference to the overall amount raised because of the clawback mechanism.

I’m surprised it was as much as £0.4m as I don’t understand the logic of anybody buying anything that price.

No - the placing does not change their %.

Funny Bowlers that you were the most anti-ARB poster deriding anybody for investing in such a donkey as ARB but now that you are back in you are now claiming it is the best miner of them all! Shameful behaviour - lacking any integrity whatsoever. And don't tell me you're just being ironic...

"Retail offer should have been at 27p. Fools for thinking 31p would attract the masses."

But they won't care as they have their £39m already. Even if they raised the full amount from retail it would just reduce what Kamani, Frasers et al get by the same amount - that's what the clawback is all about.

Besides, I'm not sure if they could offer a different price to retail (especially with the clawback there).

*facts here not views.

Thanks PP but it is question of facts here views.

You are right in that it is a fact that interest payments are coming down.

You are wrong though to claim the terms have improved as the interest rate they are now paying is 4% higher than it was. That is also a fact.

For goodness sake PP - yes they are reducing interest payments but that's because they are reducing the amount of the loans it is NOT as you claimed because they have got better terms. They are demonstrably much worse terms. Stop misleading people with false information just to ramp.

Yes PP but that's only because the loan amount is a lot lower. The previous loan was just SONIA so they have ADDED a 4% margin. So much more expensive but applied to a much reduced amount.

"They have just improved the balance sheet by an injection of £39.3 million with further cash to come in from the R/O"

There have improved the balance but there is no more money to come from the Retail Offer as any amount raised from it will be clawed back from the money already raised so the £39m is all there is.

"That improvement is yet to be reflected in the SP with the market cap only up around 3% vs 10% of the market cap being injected as cash."

No as there is a corresponding increase in the number of shares so would not expect any increase in sp from this alone. The mcap might be expected to go up 10% but not the sp. Of course there are a lot of others going on affecting sentiment so the raise is not happening on its own.

"The banks have just IMPROVED their loan terms"

No - they are a lot worse. A lower amount, for a shorter term and at much higher interest rates.

All this points to a business struggling for cash (they lost another £48m in the last six months on top of the £100m they lost last year) and taking desperate measures to shore things up and fend off MA - they are not building any kind of 'war chest'.

"The US expansion was ambushed by a once-in-a-generation unforeseeable crisis, which destroyed many businesses."

Not sure what you are getting at here as the US expansion (and in particular the opening of the short-lived distribution centre) happened AFTER (or even because of) the pandemic? The US expansion certainly wasn't 'ambushed' by it.

"One of the interesting things from the results was the GMV from young fashion brands. At £833m it is way higher than the revenue figure yet i didn't think there was significant market place activity in H1."

Surely that has much more to do with the fact that the £833m is a pre-returns GMV figure and the revenue number is obviously post returns. Unfortunately they don't break all the numbers down between pre-returns GMV, post-returns GMV and revenue but the overall difference between pre-returns GMV and post-returns GMV is over 30% and will obviously be much more that for just the youth brands.

For reasons already given though we can’t be sure either way.