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I don’t see the debt as an issue, it’s the interest when it has to be refinanced. If the finance costs double, causing an extra billion in costs, that 400 million profit become a 600m loss.

Firstgroup has more cash on its balance sheet than our current market cap, so they are in a good position to get additional funding to make a bid. I think we can at least expect a low take over offer of 10x profit which equates to about £1.85 per share- funnily enough the amount at which directors get their full bonus.

The most recent accounts also show 37bn debt.

Source:
https://uk.finance.yahoo.com/quote/IAG.L/balance-sheet?p=IAG.L

£37 billion debt on the balance sheet. Finance costs already more than twice the profit. Isn’t anyone concerned about rising interest rates?

We would still make a profit albeit a smaller one.

Peaky, I thought you had more common sense.
Watch what happens to the SP if goodwill gets added back on to the profit next year. People will think we can pay down the debt with it. Haha

* more like £75m profit after interest and tax, because the extra finance cost would reduce the tax bill.

LW, the BOE base rate has ballooned, the cost of borrowing (bond yields) not so much. Worst case scenario, if rates don’t come down as they’re expected to, the finance costs will increase by c.£50m from 2028 onwards. We’d still make £65m profit after interest, and that’s assuming no growth in operating profit.

Thanks Noggers, you’ve confirmed my point. People simply don’t understand the accounts. People look at the headline 200m loss and think how on earth can we survive, refinance debt etc. Look at IAG; got 13x the debt we’ve got and yet only 4x our NORMALISED profit to service it. Yet nobody bats an eyelid out their £37b debt. Their SP is up over the last 6 months, ours is down.

The fact is goodwill can be massaged either way for tax purposes. The normalised profit is what really matters.
They might choose to add goodwill back on to the profit next year, when interest rates/discount rates reduce, people would then think “wow!” And the SP goes back to £5.

As for our debt, even if the finance costs tripled (they won’t), and we had no growth to profit (again, won’t happen, see the TU’s) we would still make a profit of c.£40m.

LG, it amazes me how many people have misunderstood the figures here. Yahoo and the like present the figures wrong (I made a thread yesterday about it). I suspect this is why the SP is so low.

Operating profit £197.3m, minus £51m net finance costs, minus £30.3m tax, leaving £115.6m profit for the year.

Page 183
https://www.nationalexpressgroup.com/media/rclbqxjq/national-express-annual-report-and-accounts-2022.pdf

Noggers. What are you talking about? Not making any profit? £115m after tax & interest etc. At the current market cap that’s a P/E ratio of about 6! Demand is now back to 2019 levels and is outstripping supply, new routes are being added, diesel costs reduced, government now chipping in on fares. Profits will continue to rise.

Please do your homework before spouting such nonsense.

And yet they don’t star bell end out. Haha

Lesson learnt. I’ve immediately dismissed so many stocks based on data shown on yahoo, but I wonder how many people/institutions have dismissed nex upon seeing “£221m loss” and then thinking how will they manage to refinance the debts as a “loss making business”?

And then we get automated articles like this which are factually incorrect:
https://stocks.apple.com/A2IKcVumzQ9W9ki3hUT7tFw

It looks on yahoo as if it made a £221m loss, when the accounts show we actually made £115m after all taxes, interest etc. it was just written off for tax purposes.

Just checked the income statement on yahoo finance and the operating profit it shows is incorrect (other data collectors probably show it the same). Could this be what is putting people off investing? I wouldn’t invest here if that’s all I saw. It shows the operating profit at £144.5m, with the interest deducted below it, but the £144.5 is after finance costs. Operating profit was 197.3m.

Mr coco will feel confident to invest once the horse has bolted and the price is £2.50, but at £1.17 he’s not interested.

*5 year chart

JG, there were no signals to suggest 170, 140, 127 were buying opportunities.
if you look at a year chart, 116.7 is where it bottomed out in covid (yes, some major panic days that had lower intraday trading, but it didn’t last long enough to make the chart). From 116.7 it went up 170% in 8 months.