Member Info for Senator1

At Adj ebitda level it is 18/19p a share at the net profit level it will be about 9p a share with FY about 25p based on their current guidance which is at the Adj ebitda level. At 6.6x it is still cheap for co. doing a return of 15% after tax on its current valuation. But the headline eps wont be 18p!

Somebody is spending money allowing them to guide to £470M for FY 26. I think that is more important than whether they are using an app or not. If the cash inflow stops then they have a problem. while that is positive (more in than out after lease payments), everything is fixable and so far the co. is guiding this excess is still very substantial. Less than before because they let the LfL sales slip which obviously has a higher margin than new store growth. New guy knows this and so expect him to talk a lot about driving the LfL as his priority and getting the margin back up, gross and operating. Would also be nice if he could kick a few more old cronies off the Board as this co. needs a real freshen up from Board to senior management as part of building trust and it was this Board that signed off on the £150M special DVD last year presumably knowing they were moving to Jersey so would be able to do buybacks. That has to go down as one of the worst Board level decesions for this company. Really, they should all resign.

Even in a bad year cash operating profit of £191M guided for the half year and £470M for the full year. Thats a lot of surplus cash after lease payments. And because they lease most of the property it produces a 15% after tax return on the market cap. How many companies in the UK do that? and thats in a bad year when they let margins slip. You go bust from lack of cash not from the accounting P&L, this still produces a lot of excess cash because it doesnt spend it on buying properties. It leases them and then just spends a couple of hundred K fitting them out and so they get quick payback. This is an easy fix.

"with the expected cash build up commencing in H2 and expected to continue in 2026.....we continue to evaluate acquisitions" Really? There's your answer on the share performance. Would have been much better to give details on the cash build that is about to commence as it was anything but in H1. There is a serious risk of overtrading if this CEO does not have a strong CFO to counter his ambitions or at minimum explain in detail why they are not concerned about the low cash levels from the large outflow in H1

The issue with Spectra is the cash position. For the first 6 months the cash decreased by $10.8M to a closing balance of $2.5M (every category of the cashflow was negative). $2.5M cash just isnt enough to support a business with contracts that can easily be delayed and with all the R&D they are doing. They have stretched themselvesright to the brink and yes this year might have record profitability but they are definitely cash strapped. They need that $5M restricted cash lifted. These guys are walking a very thin line on overtrading/doing too much R&D. There is no update in the 6 month results on their available bank lines or anything on how the cash position will be improved. I can only see this drift down until this major uncertainty is lifted. This has to be the new guy's prioririty or this co. could get in serious cashflow trouble if the banks get scared and are not supportive.

This is now Causeway versus a bunch of hedge funds? I know where the smart money is.

If you take Mgmt guidance for FY 25 to August, Adj PBT is circa £110M, non -underlying (again) is 70M thats pre IFRS 16 PBT of £41M and call it £31M after tax or 24p a share. At that level the PE is 26x. If you exclude the non underlying (which is now repetitive in WH Smith accounts) you get 80p a share or PE of 7.95x. If you leave aside the accounting issue, you are still left in the horrible position of having to decide whether to base value on ecluding non-underlying or including it. The issue with WH Smith is there is always something and they were £57m last year as well. So the non-underlying are becoming a regular feature and now the accounting mess. At 26 PE WH Smith is exorbitantly expensive and it could go to £3. If you believe the non-underlyings are one off, then at 7.95 PE you can argue its cheap. There is something here for bulls and bears and that is 100% management's fault. i am so surprised that nobody has been required to take responsibility. If I was Causeway, I would be demanding a tighter ship and someone's head. When did the impairment of non current assets become a non-underlying, like it was someone elses's responsibility. This nonsense has to stop. The accounts were a mess before the US issue but there is no blame at WH Smith. Too cozy!

Last year BMe did sales of £5.6bn, not bad for a non-essential business and had an after tax net margin of 5.7%. The year before, 6.2% net margin so Russo was far too focused on growing sales and not really caring about LfL and you can see the result in margins. I have been harsh with my numbers and penciled in £240M net for FY 26 and 2% sales growth giving £5.7bn, which is a net margin of 4.2% which is a 26% reduction in margin, so I think I have been realistic to harsh. I think this will be the bottom as the new guy is definitely LfL focused, so my bet is 4.2% will be the low point and his challenge is to get this back to at least 5% by FY 27. So if you say sales up another modest 2% thats £5.8bn with a conservative net at 5% thats £290M net profit, multiply this by a conservative 8x and you get £2.3bn market value, 43% higher than where we are or £2.35 a share. None of what I suggested above is hard to achieve, 2% sales growth and bringing the net margin to 5% or for every £ of sales they make a net 5p. Of course it should be 6p in the medium term and that adds another £500m of value. This discount retailing mallarky is a tough business as the margins are razor thin and when you make a mistake (which Russo definitely did and the most positive thing I can say is he is gone) it gets amplified as you run down the P&L. The new guy is focused on LfL sales as that reduces the overhead % cost and the gross margin which he can control with his buyers by being much tougher with suppliers. The £ is up 2% against the yuan year to date and that will help next year for sure. A 2% move will allow them to buy better but also pass some of it on in price declines for his customers. he only needs to retain less than half of it to get back to the 5% net margin and maybe even much more. This will start to be the focus once they announce the accounting issue is behind them. As they havent deferred their interims, like WH Smith did, my guess is its contained. The fact that Capital Group or GIC havent sold shares supports this view, I think. The new CEO has one of the best jobs in the UK as the fix is easy (operationally hard, but coneptually easy). As I said, the most positive thing about this stock over the past year or so is the fact Russo and his CFO are gone. The new CEO is going to make a lot of money out of his 1M free shares and even the shares he bought at £2.4 odd, mostly because of sterling strength against the yuan and weakness against the euro which adds 4% to the results from France.

I agree they need to sharpen their focus and definitely slim down the range but if you take the current FY guidance of 470M to 520M and run that to what that means for FY net profit you get about £240M net after tax at the low end. The current market cap is £1.6bn so that is an after tax return on market cap of 15%. There are not many listed UK cos doing this type of return in a so called bad year. If they come in at the top of their range it is 17.4% return. Even with that type of return the Uk market gives BME a forward FY 26 PE of 6.5x . WH Smith which has a similar accounting issue overhang trades at 9.7x PE and that has a pro-forma 10% return on market cap. Market doesn't trust BME for some reason and clearly doesnt trust the revised, revised guidance. so I dont think they can do anything radical like ditching DVDs in favour of buybacks, even though, i agree, buying back their own shares is the best trade they can do at current levels. The special DVD last year was such a waste as they have lost far more in market cal than the value of the £150M special. For that reason I dont think the exiting CFO should be involved on Wed/thursday next week and the CEO should just be accompanied by the Financial controller for any finance related questions he cant answer. This stock is cheap but it can stay cheap a long time when the City doesnt trust you and thats definitely the case with BME as the comparison with WH Smith shows.

The interim dvd only has a cost of c.£53M, its not in itself important and that being re-affirmed wont in itself be enough as the market already knows the first half performance and has already factored the DVD in. 5p odd on £1.64, its an interim yield of 3%. it needs more news than that to get this back to £2, £3 is unrealistic as that would be 12x earnings & it wont get there not on FY 26 current guidance.

Delays at airports, suit WH Smith. More people, nothing to do but read, eat & drink!

Based on guidance we know the half year will be ugly. EPS my est is 9p compared to 14.7p same period last year. None of that matters as it is enough to cover the 5.3p interim. The only things that will matter are:

1.) The accounting issue is closed and is limited to their guidance

2.) They up the range of FY guidance of Adj EBITDA from the 470-520 to c.500-550m based on current trading

3.) They announce the interim at 5.3p

and most important

4.) Announce a £75M buyback as hopefully the Jersey redomicile is complete

Even though the 1H numbers should be known the 40% eps reduction will make a headline on the day but really everything should rest on how they revise guidance and whether they back it up by maintaining interim and announcing buyback, at c.5% of current market cap with a footnote this will be reviewed again after the christmas results. The sp is down 51% so it has already discounted the 40% reduction in eps so its all about the commentary and whether that is backed up. words without the back up will be treated harshly, we have had enough words from BME execs over last 12 months and it has been unreliable. Lets see if this new guy is an action man or all just hot air. Jury, for now, is out!

2026-2028 is about investment for the longer term and as a result the P&L in same period will suffer. You can see it in their guidance for 2026 which at top end was halved from 3-10% to 3-5%. At 2026 concensus this now trades about 17x or a PEG of 4x, if I take 4% growth (middle of range). Thats not cheap given the investment phase for the next few years. Early sellers were on the ball. 5.34 is 5 year PoC and then most Longs will be losing money and the real pressure starts. Whoever put their press release together needed to play the game a lot better. very clumsy!

First, the £300MDVD was, 150 regular and 150M special. They wont pay a special in 2026, only ordinary. THATS WHY THEY ARE MOVING TO JERSEY. To replace special with buybacks. So to maintain the ordinary they have to cover £150M.

So far co. is guiding to £470M ADJ EBITDA. Take off £130M PPE, take off inerest on non leases (£50) and assume w/c is neutral (it should be positive but ignore that), that leaves £290M for a £150M DVD, thats only 1.93x covered, leaving £140M excess for debt reduction or buyback whatever they decide. This will be even more if they come in at top end of their guidance & even more if they slow PPE by £25-30M (still leaving £100M spend) and more if they generate surplus cash from their working capital management and then you add the opening cash of £217M. So there is no issue on the DVDs, none whatsover, on their current guidance. ANYONE WHO HAS ANY BASIC ACCOUNTING KNOWLEDGE CAN WORK THIS OUT, IT TAKES 2 minutes. The special will be replaced and it was only ever done because Lux law didnt allow them to do a buyback because of the accounting reserve issue they have, so they did a special instead. You are just talking total rubbish on the DVD issue. ABSOLUTE RUBBISH!

Drivel, lol

"The proof that you are totally clueless about all of this is that you claim, wrongly, that group adjusted EBITDA (pre IFRS 16) includes rent!!! "

You wrote this quote above, YOU.

Im afraid to break it to you but indeed pre IFRS 16 EBITDA DID INDEED take off lease payments because there was no concept of capitalising operating leases unlike financial leases. That is why BME give you the ADJ EBITDA (they cant call it EBITDA because under IFRS 16 you dont take off lease payments) to put you back in the pre IFRS 16 world when the actual lease payment was the charge in accounts. I AM 1 MILION PERCENT TELLING YOU, YOU ARE WRONG & IN ADDITION TOTALLY CLUELESS (FRANKLY, TO AN EMBARRASSING LEVEL) AND ANY NUMBER YOU QUOTE I WOULD NEVER EVER BELIEVE. You original post was an embarrasment and in fact every time you write something you dig a deeper hole for yourself.

They are very confident on $3bn FCF (£2.3bn), that is a 5.8% yield on the current market cap. The DVD costs $2.3bn so there is no issue there, allowing for meaningful debt reduction. If they could get all parts of this firing at the same time, this could get very interesting. At moment Europe, Africa and LAC being offset by US and Asia Pac. Market needs to see evidence that those 2 can be fixed. The US has the world cup in 2026, that could be a very significant trigger to improvement in the US, Mexico and Canada. The FCF yield should put a floor on this sp until we see how that goes.

Christ you are an idiot, yes AFTER £300M of DVDs, 150M regular and roughly £150M special and AFTER moving £150M to a money market account. You were talking about the ability to pay DVDs and then you reference a surplus AFTER £300M DVD paid AND AFTER £150M moved to a money market account. YOU ARE CLUELESS! If you are critiquing ability to pay a DVD at least use a cashflow before the DVD is paid and before they move cash from a current account to a money market account. Its only a £450M difference! Do you think the £150M moved to a money market account isnt cash? You are digging a bigger hole for yourself!

You are so far out of your depth, you dont know what you are talking about. YOU referenced post tax accounting net profit as the reason they couldnt pay the DVD (your beloved note 3), NOT ME, because I know it is a rubbish reference. You now have referenced EBITDA, wrong again (you are only out by £250M !! I referenced the guided ADJUSTED EBITDA pre ifrs 16 which takes account of the cash lease payments which IFRS 16 EBITDA does not . I dont have time to engage in this village idiot conversation. You have been told by the Co. that the ADJUSTED EBITDA figure will be min £470M to £510M ish. Your calculations are wrong on every level, just total rubbish. From this ADJ EBITDA figures I used last years PPE as an estimate for this year to give gross free cashflow available for non lease interest (c.£50M) payments and payments to equity & debt if they want to make principal debt payments on this bank debt (the lease p&I is already accounted for in ADJ EBITDA). it is clear to me you do not understand IFRS 16, what it means and the difference between the guided Adj EBITDA pre ifrs 16, EBITDA, accounting net profit and free cashflow after tax paid (not tax accrued, which your reference includes). Anyone that even references EBITDA in relation to BME's available cash for DVDs has not even a basic understanding of what they are talking about. And I never said anything about maintenance capex I questioned whether a gross £130M was really necessary, after last years £130M, and that given the environment the expansion could be slowed which was part of that £130M PPE investment last year as they fit out the assets they lease.

For the last time, note 3's £337M (your ref to justify the difficulty of DVD payments in your original post, most definitely not mine) is the FY 25 ACCOUNTING net profit which has loads of non cash items and IS NOT the figure that you use to critique the ability to pay a DVD. Note 3 which you love so much gives you the FY 25 ADJ EBITDA number of £620M pre ifrs 16 . As you love note 3 so much have a look at that, but I suspect you will be totally lost and not understand a word of what i am talking about.

and finally EBITDA is nowhere "near" cash as your * note suggests, adj EBITDA pre ifrs 16 isnt either (but its £250M closer!!! than your EBITDA number which should never be used for BME). More generally EBITDA also excludes working capital management which is really really significant for a retailer, fundamental really. learn the basics of accounting before you pontificate on the ability of BME to pay a DVD.

Your analysis is fundamentally wrong in so many different ways. Im not responding to any further rubbish you come out with. i just hope nobody listens to your rubbish. if they do, their loss.

For gods sake read p.105, the £675m is after the £109M tax paid. Read the bloody cashflow statement. You are the one creating a fudge that doesnt understand the difference between cashflow and accounting net profit, that is 101! and particularly where there are significant operating leases involved. You clearly have very limited understanding of this equity