Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
That’s ok. Check out accumulated losses on the balance sheet. That is where divi payments get booked. Loss of 122bn and growing. Doesn’t seem sustainable to me.
It’s over €2bn not million, and it’s not safe as they borrow to pay it. New ceo may can it and you have the danger of losing capital value.
“ Fell to my expected price thereabouts....I really don't know where we go from here but suppose we have a dividend which is safe...for the moment!!”
Just a reminder the div is not safe if it comes with a corresponding decline in capital, the Sp.
Investors should consider the safety of total returns, from any investment. Too much risk of greater declines here with Wunderkid Germany now shrinking.
Dan I don’t think VOD have any MBC left. Just 60bn of normal bonds they owe investors one day.
Maybe they issue stock to meet a payment, but that is not a Mandatory Convertible Bond.
A very tricky year.
I’ll go for the opposite on the assumption exponential means at least 2x. 170p next December, no.
The BOD also won’t hire energetic forward thinker. They are after someone to confirm their own theories, and accelerate a strategy that is not working.
If the new CEO cancels the div and buyback, I’ll take them seriously.
It can go north if market sentiment goes north. On that count it’s all still too fragile. Too many potential black swans hiding in the reeds.
Will be a while before markets are convinced all the dangers have passed, or the dangers actually arrive and down it all goes.
Welcome to 2023.
In this environment the buybacks may have a negative effect on the SP. Spending billions to buy stock when you could be paying off debt is clearly not impressing the big money.
Last valued the bonds program on Sept 16th. Just updated the values based on those bonds listed on Vodafone website
16/9/22 FX adjusted to EUR, total €45.95bn
14/12/22 FX adjusted to EUR, total €49.06bn
An increase of €3.11bn. In that period FX rates have gone in Euro favour, so the real increase is larger.
New bonds issued are at higher coupons. In the US shelf for example, the $1bn bond due in sept with a coupon of 2.5% has been replaced by by 3 bonds totaling $3.75bn with coupons of 4.25, 4.875 and 5.125. Maturities for those extend beyond 2049, so high rates are getting locked in long term.
The movements around the $2.3bn of may 28 bond to be bought back is not incuded yet. It has a coupon of 4.375. The total bond value is $3bn, so they have done a bit of can kicking moving a 2028 commitment to 2050.
They haven’t made 2bn profit. They have transferred 2bn of assets from one place to another.
Don’t see any noise about them now selling the 65% of vodacom to pay debt.
The canvas of the mona lisa is a thing and has a value, as with the frame. The goodwill is how much extra you will pay for the painting. The purchase price minus the canvas and the frame.
That goodwill you can see has a value. A good chance to resell the painting and get it back. VOD's goodwill however, who really knows what it contains. As a shareholder you can ring VOD IR and ask them, but I doubt they will tell you. You can only guess it has some resale value, or is it all vapour linked to past purchases gone bad. Have they written everything off from India yet? will the new CEO kitchen sink with a goodwill write-down?
It is safer to do your calculations excluding goodwill, and intangibles, that you have no idea if they even exist.
Hi Fleccy
LSE site defaults to the true meaning of net book so I took the figure from the fundamentals tab. You can see it at the bottom.
I did not bother to download the vod accounts yet again to check the figure there, but am sure it is correct from the last time I did it.
'The book value of a stock is theoretically the amount of money that would be paid to shareholders if the company was liquidated and paid off all of its liabilities. As a result, the book value equals the difference between a company's total assets and total liabilities. Current Book Value/Shr = 166p—173p.'
A common misunderstanding from investors looking for value.
If a company did close and pay off it's debts, it could only do it with real things, so all the goodwill and intangibles should not be considered. Cautious value investors looking for true value will look at net book. VOD's net book is €0.13 per share. It's a goodwill giant.
It's why buffet isn't here buying for pennies on the dollar, because it isn't. VOD can't wind down and pay back investors, so don't consider it a get out.
I am Tarka Dhal
AltmanZ scores are well regarded measure as to an outfits balance of assets liabilities and ability to service liabilities. A score close to zero suggests a company is heading toward bankruptcy. VOD’s is -0.51.
The board actions suggest stresses not being honestly relayed to the market. Why did they buy back that bond last week then borrow more money at higher interest? Bond holders preassuring them to get them out of the bond?
Whilst they could manage their borrowings in the low rate world, this new world is pilling on the pressure of managing the debt.
Careful what you wish for. The next one can’t do much better.
The chairman reveals the boards attitude in congratulating Nick for unlocking value of Towers. Selling a key asset essential to your businesses operation is just desperate. The chairman, the board, and investors are just asset stripping to give themselves a few more divs before there is nothing left. The board is now hunting for someone to strip assets faster.
If the new CEO comes in, cancels divs, buybacks and asset sales, streamlines staffing in uk and Germany and tells those operations to get their heads down and try harder on profitability, I will be impressed and may invest, but I doubt it.
Farewell Nick. Enjoy the gardening.
As it lurches toward all time low, it is mathematically impossible for averaging down to of worked.
Throw in the divs and some holders may of made a few percent per annum return. Is it really worth the heartburn?
The debt is an issue.
First you have to maintain it. Interest payment was 50% of EBIT, so it doesn’t take much of a margin slip for there to be little or nothing for investors.
Second, as they are pretty much at the max the market will let them borrow, and they can’t pay it down, then to raise funds to keep up with capex you have to sell off assets like towers, and shrink market share in uk doing a deal with 3.
The debt removes options and is forcing management to shrink the company. It can’t be ignored just because the bonds don’t have to be refinanced yet.
Aspers is asking if not VOD then what else.
Most companies now have been beaten up and have attractive long term prices. You should first decide what sectors you want to be exposed to for next 5 to 10 years, then find companies in that sector who have grown earnings consistently in the previous 5 years, and have low levels of debt, or preferably no debt.
These strong companies will accelerate ahead faster than the likes of VOD once sentiment in the market turns.
I am in to sustainable energy and the future of transportation, data management, growth leisure oriented stocks and property. Some pay a div, but I couldn't care less about it. In fact, I would prefer they didn't, ecept for REIT's which have to.
Fleccy is asking how is not a safe place to park money. I would suggest the weak balance sheet exposes VOD to financial risks above comfortable levels should we see a protracted period of tough economic conditions.
A negative altman Z score is quite an achievement and suggests financial difficulties ahead.
Selling off essential assets (towers) to raise cash is not a good sign.
Net debt increased 4bn in the half year. They paid out the same in divs and buybacks. VOD borrows to pay a div and buy back shares. It is basically a ponzi.
It works until the funding tap gets turned off.