Member Info for TheTrotsky

Croatia and Poland have a combined population of c41.65m (c74% the size of England's c56m). Population-wise, Croatia has only added c3.9m people (albeit that toursists will add to that number in the summer); so I'd question the assertion that DPP is "... a much bigger org now ...". Also, apart from perhaps head office and back office costs, I'm not sure that the combination provides for many, if any, opportunities for economies of scale - the two countries don't share a border, are about 1,000km apart and don't share a common first language. On paper, there seems to still remain significant scope to expand the number of stores in Poland but it remains to be seen whether Poland (and Croatia) can ever achieve the type of store density (stores per head of population) that Domino's has in the UK (culture and disposable incomes will play a large part). A generation (25-30 years) is, frankly, a long time to wait ;-)

DPP needs to grow its franchise operation in Poland (the key to Domino's past astronomical growth in the UK) and, to date, franchise growth is Poland has been pretty anaemic (too often it's required DPP to initially open fully-owned stores before passing them into the hands of franchisees at a later date - this incurs a lot more upfont cost and slows growth). The lack of franchisee interest to date might be down to several possible factors; the "take-away" culture in Poland is still "embryonic", food preferences in Poland (pizza may not be as popular as some other countries), lack of individuals with capital to invest, population density (Poland is 2.4x larger than England but only has c74% of the population), the degree of urbanisation (only c60% of Poland's population live in urban areas, as opposed to c84% in England).

Domino's has c1,200 stores in the UK currently (about one store for every 56,000 people). Poland has c13.7m people living in towns and cities with populations over 50,000. On that basis, the maximum number of stores DPP is likely to ever have in Poland is going to be c250 +/- 50. At the interims in September, DPP already operated "over" 120 stores in Croatia and Poland, which suggests that, realistically, it may only be possible to expand the number of stores to 2x-3x before the two markets reach full saturation. Personally, I'd like to see continued, strong double digit growth in LFL sales in their existing stores; there still appears to be significant scope to grow their carry-out and delivery businesses. In turn, the stronger their existing business becomes, the easier it will become to attract new franchisees.

I'm a long-term holder and have become a realist about DPP's growth prospects. It's nice to see a rise in the share price but I'm not going to get carried away by any hype. Provided DPP can continue to meaningfully increase the utilisation of its existing stores in the next 12 months then a share price of 16p doesn't appear to be totally beyond the realms of possibility but it won't be easy.

CC, As I understand, a standard football pitch is c2 acres, so 2.25 hectares (c5.5 acres) would be c2.75 football pitches or 22,500 square metres (150m by 150m). Apparently, if you squeeze them in, you can theoretcially build c30 houses per acre (that would make c165 houses!). ukred's figures don't look unreasonable - it would suggest c150-200 personnel (if all single storey buildings; more if double or triple storey - prefabs of several storeys are feasible but might not be suitable for a zone prone to regular earthquakes)

2007 would be better ;-)

This article in today's Times (text below) is interesting: https://www.thetimes.co.uk/article/natural-hydrogen-could-clean-up-industries-w6h8s2bnk

"Hydrogen has been billed as a fuel that could help curb climate change. It is clean and gives off no carbon when it is burnt, but it is largely made from fossil fuels, which are dirty, expensive and defeat hydrogen’s climate-friendly credentials. Far cleaner is making hydrogen by splitting water using electricity from renewable energy, but that also uses a lot of energy.

But hydrogen can also be created naturally underground. In 1888, Dmitri Mendeleev — who invented the periodic table of the elements — reported hydrogen seeping from cracks in a coal mine in Ukraine. Hundreds of natural hydrogen seeps have been documented worldwide. They may even explain a widespread and mysterious phenomenon — shallow, circular depressions in the land, tens or hundreds of metres across, called fairy circles. These have been found to leak hydrogen, possibly by dissolving minerals in underground rocks.

It is now thought that at high temperatures, water reacts with iron-rich rocks to make hydrogen. These reactions are fast and with a constant supply of water generate renewable hydrogen.

Exploratory drilling for natural hydrogen is under way at several sites. Perhaps most promising for prospecting is Mali. In 1987, a well dug at the village of Bourakébougou reached 108m down but it was dry. However, a strange wind rose up from the borehole and when one of the diggers looked down into the hole smoking a cigarette, it blew up in a fire burning with a clear blue flame; the digger was burnt but survived. The fire was created by almost pure hydrogen, which the villagers used by adapting an engine to burn hydrogen and give them their first ever electricity supply.

If natural hydrogen proves viable, it still faces hurdles to store and distribute it and is unlikely to find domestic uses. The most promising uses are likely to be for trucks, ships or planes, as well as heavy industries that use a lot of energy, such as steel-making and ammonia fertiliser plants that need hydrogen supplies."

One is left to wonder what temperatures and minerals might cause this (would this be a more energy efficient process than electrolysis; what are the by-products of the reactions). I would assume that the reactions are occurring much deeper than 108m (that's just wher the hydorgen seeping up the surface met the well be drilled down) because the temperatures at that depth would not be that high.

No, Kheldar's calculations are correct.

What blather! Are you now suggesting that analysts are more competent than the board? Analysts apparently didn't like the fact that NWG are only projecting a NIM of 3.2%; oblivious to the political pressures that all high street banks are currently under to raise their savings rates, the fact that, if the BoE interest rate remains at 4-4.5% for the remander of the year, banks are likely to have to offer better savings rates to stem cash outflows (they had surplus cash but that will not last indefinitely) and that long term mortgage rates are plateauing. The high street banks benefit from fiscal drag as BofE rates rise but if BoE rates are forecast to plateau then only idiotic analysts could think that they could screw out even more benefit.

Shevek, I did say "both" i.e. an "and". To achieve a market price of $0.8bn the share price would currently need to be c30p i.e. > 17.23p. So until the share price hits c30p no bounses would currently be payable. In some respects it's perhaps a bit of bummer for them because they are not entiltled to any additional share options whilst the bonus arrangement is in place.

CC, Those figures don't make current sense. They talk about €3m being payable when the market capitalisation $0.8bn but that doesn't equate to 17.23p. Given that they need to attain both the capitalisaton and share prcie targets for the bonuses to be triggered that would currently mean $0.8bn and 30.17p at the current exhcnage rate of c1.2.

It seems that my attempt at a bit of lighthearted humour has backfired.

I was simply implying that 1m shares was a lot of wonga and that most PIs are lucky to have £70k to invest, let alone having £70k to now invest in CASP. I appreciate that a few investors may have taken the opportunity to load up at c2p or below and are now sitting on very sizable, unrealiesd profits, and are also now generating a dividend yield of c27% (or more) on their original investment if they did (I don't begrudge you in the least; at the end of the day we're all here to make a profit).

A dividend of c£450 per month sounds great until you realise that, if you were a new investor, you'd now have to invest £70k to achieve that level of monthly dividend return; in all humility, I was merely suggesting that I might have chosen a slightly lesser figure by way of example. I wasn't trying to be clever or denigrating.

With reference to the points you raised:

1. 4% is prudent. You've also got to factor in that at some point the high street banks may have to increase the rates they pay on their savings products to stem outflows. Uptil now the high street banks have been awash with cash (more prudent lending criteria since 2007 and more recently during Covid have meant that they've had more cash than they can lend and the surplus has been desposited with the BoE) but at some point that will change. A NIM of 3.2% in the current economic climate is good, verging on the excessive.

2. Have a look at the consolidated income statement. The profit from continuing operations (after tax) is up 35%. The profit for the period is down because they made a loss from discontinued operations (net of tax) as compared to a profit the prior year.

3. The payout ratio of 40% only relates to dividends and with the additional commitment to share buy backs would appear prudent. They are still forecasting distributable profits to rise in FY23 so dividend payments should still rise despite the ratio remaining flat.

4. Ah, the economy. Who knows? I'm sure that bad debt provisioning will increase regardless (it's never a bad idea to stash away some profits in the good years to smooth over the profits, or indeed losses, in the bad).

Bo77ock7, As indicated in previous posts in the last month I used to hold back in 2017 and made a bit of money on the sale price surge between October 2017 and September 2018 but missed out (big time) on most of it (sold out in the early 20s in part because I didn't like Ricketts's constant, IMHO, ramping). I've kept a periodic view on the share price ever since with a thought of buying back in below my exit price and riding the wave back up to new heights (at least that's the theory).

The price today VRS is less than a third of my exit price and Ricketts is lot, lot quieter than he used to be. I think a lot of PIs (including one Ian Cowie in the Sunday Times) have been badly burnt by the share price fall since 2018 and it's difficult to see where the share price bottom is until, if and when, VRS's graphene products begin delivering significant sales. In the meantime, VRS is going to continue to clock up losses and likely to be reliant on further placings. So, all in all, even though the share price looks "attractive", IMHO, I still don't think it's reached rock bottom (and that has nothing to do with how VRS accounts for its intangibles).

I'm a big fan of graphene but can't claim to be a fan of graphene development companies; having, in the past, held shares in several companies with (very promising) products in other fields that were pursuing the royalty/licencing model, only to see them go belly up, I've become very pessimistic about the merits of such a business model. You only have to look at NANO (not a share that I own or have owned) to see how easily a large company, such as Samsung, can take advantage in the hope of "picking over the bones". I used to own Indigovison in the past and their prospects took a significant turn for the better when, having got tired of being strung out by the large security company concerns, they gave up on the royalty/licencing model and went out on their own to sell their bespoke IP security solutions (and did so very successfully before they were snapped up by Motorola Solutions back in 2020).

PS. I appreciate that the general market isn't so hot today but I do wonder whether the continuing fall in the share price relates to uncertainty as to whether VRS will be forced to do yet another fundraising shortly if the " ... additional funding options, with a focus on non-dilutive options such as grant funding and strategic partnership opportunities ..." referred to in December's RNS come to nowt. It was clear then that, without the additional funding, the monies raised in the placing would not be sufficient to meet all of VRS's needs. Some positive news on the additional funding front would, no doubt, do the share price a world of good and should, all being well, see the share price back above the placing price: 10p but I'm not about to bet on a positive outcome (it's been 2.5 months without any further update and Ricketts would be clammering to tell all and sundry if additional funding had been secured)

Cont'd ....

In the case of R&D the concept is clear, you are spending today in the hope of generating income tomorrow. Obviously, there is an element of judgement involved and therefore, to avoid abuse, other intangible assets are generally amortised over a fixed timeframe (regardless of whether the anticipated income arises) and, like goodwill, will be reviewed annually and impaired in part or in full if considered appropriate e.g. if a project is curtailed. VRS amortises its other intangibles over a period of 1-12.5 years, again not unusual albeit that you wouldn't normally expect to capitalise costs with just a one year lifespan (costs of an enduring medium or long benefit would normally be in excess of one year). I would imagine that the auditors would only permit costs with a one year lifespan to be capitalised in very limited circumstances (but can't think of any off the top of my head).

Thomas, Don't listen to Moljen, he's clearly not an accountant. Invetsors may like to think that both tangible and intangible assets are "reviewed" annually and their NPV "assessed". That's generally hogwash.

As regards tangible assets, on acquisition, the difference between cost and resale value is supposed to be depreciated over the useful economic life of the asset but accountants aren't mind readers; they don't know what the useful economic life of properply maintained plant, machinery or equipment is (I've known clients in certain industries to have assets still in use 30, 40 or even 50 years after they were originally bought) or what the residual resale value might be. So, most businesses, will plumb for either a straight line or reducing balance method of depreciation (the former will write the asset down to its expected resale value over a fixed period of years whilst the latter is a more collective approach, it never fully writes off the asset but writes off substantially most of the value in the opening years). As for resale value, businesses generally plumb for £nil. VRS depreciates its tangible assets on a straight line basis. Both leasehold and rights of use assets (i.e. rented assets) are being depreciated over the term of the lease whilst plant and equipment are being depreciated over 2-15 years. This all looks fairly standard (assets depreciated over short periods generally tend to be vehicles and computer software). The key point to understand is that the policy is determined at the outset and the carrying value will only subsequently be reviewed in certain limited circumstances e.g. if the asset is damaged, the asset sold, the business is going to be discontinued etc.

As regards, intangible assets, these assets generally fall into two categories - goodwill and other intangibles. The first point to realise is that goodwill, as an asset, is only ever recognised (for accounting purposes) on acquistion. Although VRS is, in theory, creating goodwill through brands, IP, knowhow etc. only cash expenditure is ever recognised - VRS is not permitted, by accounting rules, to recognise the theoretical, additional value of this goodwill if it was ever sold (so for example, VRS is not permitted to recognise the additional value it might choose to attribute to its GSCALE brand over and above the costs it has incurred to create it). Recognising all of these factors, it's not that unusual for purchased goodwill to not be amortised but its carrying value is usually assessed annually and it may be impaired in part, or in full, if management consider that it's no longer worth what was originally paid (in rare instances impaired goodwill may be reinstated if subsequent events mean that management's view changes).

Other intangible assets, on the other hand, generally represent operating costs (particularly R&D but not exclusively) which are considered to have a medium to long term benefit to the business.

Next page ...

CaptainS, I was using the term "screw" in the sense of "nail you down (permanently in your coffin)" ;-) Can't think what you had in mind ;-) Are you suggesting that the "money men" are a bunch of backstreet boys ;-)

If you work on the basis that the "money men" are out to screw you then you won't go far wrong ;-) With most PIs expecting the share price to rise this morning, it was probably to good an opportunity for the "money men" to drop the price, trigger stop losses and rake in the money!

Based on the (ludicrous) response to NWG's good results today, I'd wait until Lloyds results next week. The market seems to take any opportunity to sell off, regardless of whether the results are good (NWG), bad (BARC) or indifferent.

What the F did they expect? This is ludicrous; currently down over 9%! Anybody would have thought they were Barclays! The only negative is the impairment charge and any financial analyst worth their salt would have expected it (you always see an increase in provisions during good years; they tide you over in bad).

... but Lloyds are down c4% at open so perhaps the markets don't like NWG's results (not sure why)

Wasn't expecting NWG to be showing a c8% drop this morning but I then realised that the share price was still in auction!

I think buy back were expected (based on NWG's previous financial announcements) but, unlike dividends, it's not possible to check what the financial analysts's concensus view.

According to Marketscreener the concensus amongst financial analysts for FY22 dividends was 30p, including the special dividend, so at 30.3p NWG is more or less in line. The current concensus views for FY23 and FY24 dividends are 16p and 19p respectively.