Member Info for rob295

Do we get paid royalties by SEVUS? That might help the cash position, because royalties are all profit.

If the core business isn't using up cash, does anyone have any idea what all this cash is going to be used for? If our net cash position from operations changes by nothing over the next two years then we'll be sitting on £13.6m by my counts! Hopefully they'd pay a proportion of that sum out.

I imagine they'll just up the controls on the use of derivatives. As for the trading update. We had: "net cash at 31 December 2010 was £3.6 million". The deal for the $15m was not until after this date so none of that cash is paid into this amount (and this is worth $15m present value). So I get a business summary of: Cash: £13.6m Worth of Core of Tanfield: £10m Total: £23.6m Going for £10m on the basis that it is recovering, but not recovered and this is a typical valuation. So with a market cap of £26.8m we are valuing 49% of the successful SEVUS group at £3.2m making it worth £6.4m. Something tell me people have underestimated the sums of cash involved and the potential value of SEVUS.

http://www.slaughterandmay.com/media/1501266/the-mifid-review-tough-but-necessary-change-or-death-by-a-thousand-rules.pdf Read the more detailed version. It changes large parts.

Any costing ideas in terms of running and setting up. At the moment I'm thinking $10-20m to set up and $4m to run each ignoring global fixed costs which I estimated at $10m for the whole group. I've no real idea so what do you think and is that ball part or off the field. As for cash - great to see it grow especially with all we are due from SEVUS. Puts us in a strong position going forward now. Taken all my potential worries out as well.

So far I'm thinking labour costs $40k * 50 = $2m per plant for the first shift of staff. With admin centralised you don't have much else in fixed costs per plant. At most it's $4m per plant and that's surely got to be conservative. So fixed costs across the new 20 plants if they happen of $80m. So we'd need gross profits of $3,333 per bus and anything above that as profit. Make $5k per bus and you've got profits of about $40m and if you make $10k per bus you have profits of $160m. Definite upside if they can make a good margin, but we'll need at least 5% gross profit margin so costings need to be spot on. If it was all we owned it would be valued at $83m as a business so if the expansion is successful and we can cut costs using the new production system to make $5k gross profit per truck then profits would be pretty good against current buy in cost. The beauty of the plan is that to add a second shift increases fixed costs by $2m*0.8=$1.6m (only 40 staff), without adding other fixed costs of running a factory as you use the same factory. So full fixed costs of $5.6m, making 48,000 buses a year (twice as much), so you'd need to make $2,333 per bus and if you made $5k per bus you would make $128m, whilst if you made $10k per bus you would make $368m. It's a nice model once you scale up. The big question is: can orders be met and can it be successful when it is not scaled up. If both are yes, it's a bit of a no brainer.

Well if BH is right we're looking at a gross profit of potentially 24,000*x (24,000=100*12*20). So I guess what matters is how much is costs to run a factory. For a gross profit of about 1% ($1,000 per sale) you need it to cost at most $1m to run a factory to make a small profit. For a gross profit of 5% ($5,000 per sale) you need it to cost at most $6m to run a factory to break even. For 10% you need it to cost less than $12m. I think some work on factory costs is in order and I shall be back with a rough figure.

I doubt the UK side is comparible. The interview gives expected volume so the margin is the key to the plans. There must be one else they wouldn't be doing it.

Does anyone have any idea on the margin that is made on the SEV trucks (gross profits)?

http://www.businessweek.com/technology/content/jan2011/tc20110120_063762.htm

I feel sorry for everyone holding. I'd been holding out until this autumn to decide based on the results and if it matched last years trends and got £1.5m profit I'd have been in, but at £500k it was too much of a risk. If you can hold out and weather the storm you deserve every bit of profit you get. At a P/E of 40, but with so much potential its a tough one to call.

Any opinions on when this fall might bottom out?

I've been on the edge for a while and seeing 5,000 sells a day so that's quite a difference. 9p is the top end of my buy in point and I was hoping for about 8, but that might change things. Can't work out what the news actually is other than submitting, anything other than that? Seems to just be a pharm company increasing their stake, but bth I've no idea. Given the rise, I'd expect it to be a buy. You'd get a big fall on a sale like that and you'd struggle to do that volume.

A bit further and this could become a good buy.

It's the fundamentals you have to consider. My buy in point is a good way down of where we are. Sure there was first half profits, but if you factor in the second half slowdown then the years profits aren't that impressive. Knock out a spreadsheet showing the first half and keep last years ratios between first half and second half and it doesn't make for the best reading. It's a profit, but by no means an impressive one. It's still overvalued in my eyes, but the company has good management so it has potential. Ignore the price targets though, they said it should have reached 300p. Still a good company in my eyes.

I don't think it will go up much yet, its overpriced based on projections for the year. Current projections put it at a current P/E of 20 so unless something spectacular happens this is going nowhere.