Member Info for Velo

Net Profit = £1,526m Bingo! Right on the nose for what the consensus market expectations were. On the nose!!!

So touch and go whether net profit and for that matter pre tax profit can be prevented from closing the year down on the previous year for the first time since the 2016 retrace began, but the good news is some of the figures look in line with the downbeat forecasts - so no dirty surprises.

It's all supposed to be baked into the price so not expecting the SP to drop on sight but no one knows till the handle gets pulled @ 8am.

Will read the rest of the results more slowly now - but net profit bang on analysts forecasts!!!

Right, foreget the request Tony, can see all now. Think LSE blinked as says 7am released but only above in past few minutes on my computer.

Laters . . . .

Tony - R U seeing the full trading report? All I can see on BT's site is an initial summary. Have you got a link if you have the full accounts?

LOL! The revenue is bang on the figures I distrusted.

Summary figures are all down on comparative to last year but was expected;
So down - but in line with forecast expectations is the question I still can't answer until the full accounts are made availble.

Just been trying to get some 9 months Q3 consensus forecasts for the majority of the other metrics, as the market could applaud one single heading but downgrade on all the others - but I dislike the results I've come up with.

Don't trust them.

For instance Pre tax Profit is reported by BT as Pre tax profits ADJUSTED and just Pre tax profits.
Adjusted pre tax profits are 50% higher than pre tax profits. Just don't trust what I've come up with at this early hour. Same goes for normalised cash flow
- and revenue (two headings for revenue).

BT likes the "reported" revenue which is higher than plain old revenue. What's that saying again? - there's statistics and damn statistics :)

Whatever, the results are due inside the next 30 minutes or so. Left it too late for other metrics. Got them all for Q3 in isolation but BT reports the full 9 months as you would want to see anyway.

I think if the results are in line, but bearish media analysts want to look on the downside, then net debt will be the fly in the ointment.

Well observed points there, B/Raider.

Avro, you've still made your point, just not as dramatically by inadvertently using the '99 pre tax profit of £4B to compare to last year's and this year's NET profit.

Your point is still valid in that 1999, in isolation, produced a far greater net profit (and pre tax profit) than either last year's, or this year's net profit, is likely to be.

And finally, a word about the SP this week - so far.

It's performance leading up to Monday suggested lack lustre performance up to the door of the Q3 reveal tomorrow morning; certainly there were no bullish media reports to suggest otherwise.

Monday 27th the SP opened at 170p and closed the day at 171p About par for the course but sneaking up behind you was volume - it was noticeably higher than the longer term averages for BT.

Tuesday 28th the SP GAPPED UP on opening at 173p and closed the day at 174p. And intraday dived down to touch 167p! Volume again was also, well up above the average. And as oversolds react to fast sudden movements to detect either fear or greed (overbought) - in one jump the SP freed itself from the oversold imprisonment. Candlesticks suggested the SP is about to go on a roll.
Eh? But the trading update is due - is the market mad?

Today Wed 29th And yes the question is answered, the market is mad; volume for the third day is well up - that's 3 days in a row - higher than average volumes. Opening at 173p the SP closed tonight at 175p.

Only the big beasts can do that. They're moving in. You and I make no effect whatsoever on a FTSE100 company.

So, what kind of big beasts move in before the results are known? Gamblers? Surely they can't be taking their lead from the reports as anyone can see all the bearish media reports floating about these past few weeks.

I just can't answer that question. The stock market is the stock market. Candlesticks have turned bullish. Extra short term trend lines are kissing each other tonight, as if hinting they're about to turn to the upside.

I suggest nothing for tomorrow, nor imply anything. Just plain old reporting.

Wow! Look at that. At last I got it all said in one post :)

Duh . . . now I've gone and made it cover two posts.

A word about Pre tax profits V Net Profit in advance of tomorrow mornings results, although Avro has kindly provided the point I want to make if not clear about the two - There's IS a massive difference between the two.

All the media analysts both here and in the US are Pre-tax nuts. That's ALL they're interested in. I doubt they even know the net profit without saying - back in a tick.

ONLY NET PROFIT YOU GET TO KEEP. It's from Net Profit, dividends are paid from, and if you're feeling generous pay more than the net profits can provide to dividends, by raiding the Free Cash Flow account

Warren Buffet and Charlie Munger walk out of presentations where board members talk about EBITA - Earnings BEFORE Interest, Tax, depreciation and amortisation. You can't pocket EBITDA. The tax man has his snout in the trough first, for starters. Then legally you can claim some of it tax free, but you can't display it in net profit - it ends up over there in FCF - and that's where all the arguments start as if FCF is an endless Aladdin's cave.

Why the world and his dog swoon over EBITDA escapes me. As Buffet and Munger say in reference to it: You can't book profit in twice! And I say just show me the money - and that's Net Profit - the amount left on the table when every last person has been paid off including the tax man and you can scoop the lot up and sit down on the sofa and start counting it, stuff it in your pockets if you like - it's yours. Corporation tax, bills - everything paid off. Not so with Pre tax profit. You've still got people waiting for their cut of the action. Why kid yourself?

Example - Last years Q3 Pre Tax Profit was £2,093m. So it's likely to be still be in the region of £2,000m or near in tomorrow's update. Net profit is probably going to be £500m less. So don't over enthuse if you see a high 'Profit before Tax' figure. Usually BT will write up Net Profit as "Profit After Tax".

Pre tax profit has been down when compared to previous years as has Earnings per share. So Net Profit increasing year after year is a nice little tickler for the analysts to pontificate over.

Tomorrow may, should, achieve the analysts forecast and that's circa £1,500m+

(If £1,600m+ [my it-beats-last-year figure] is not achieved it's no biggie - I wait for the May finals as that £1,600m+ is derived from the TTM (Google it) the 12 Month Trailing forecast, a legitimate method of determing the full year results less the jam tomorrow promises. Often as not it's less than Analysts forecasts. For BT it's greater, but it's meant for the year-end (£2.1B) and I've pro rata'd it down to Q3, so no biggie if that number is not achieved in Q3.

But the analysts £1500m+ must be achieved (or within low and high around that).

Got it! Results for y/ending March 31st 1999 =

Pre Tax profits = £4.295B

So it was pre tax profits all along!

Net Profit
(after minority interests) = £2.983B

1999 represented the ultimate year before the dot.com bubble, as the preceeding year '98 showed £3.3B pre tax profit, and only £1.7B Net Profit.

So '99 was a truly exceptional year. But net profit was not £4B - that was pre-tax. It was £2.9B Net Profit for '99. (£3B with minority interests added back in).

A third more than currently then, (not double) but it was for one year only, in isolation, and totally unrepresentarive of the years leading up to it.

Found 96,97 & 98 results (from BT's site accidentally)but will turn the big computer on later to see if I can find the 99 report, as got these from Googling on the phone.

I'm absolutely certain now, from the 96-98 results you've mistakenly posted the Pre tax profits instead of the net profits for comparison purposes. Look:

'96 Net Profit = £1.9B........ Pretax Profit = £3.0B
'97 Net Profit = £2.1B........ Pretax Profit = £3.2B
'98 Net Profit = £1.7B........ Pretax Profit = £3.2B

Laters....

" in 1999 it was making nearly £4 billion" Avro, I understand the point you're making, I really do, put pretty sure the £4b profits in 1999 was PRE TAX profits and not what you're comparing to NET Profit. Intend doing 2 posts later on about Pre tax profits v net profits (mega huge difference) with regards to tomorrow and the 3 day positive momentum in the SP this week.

For clarity can you provide a link as to where you got the £4b figure from so I can check the same source you're looking at to determine the Pre tax profit V the Net profit difference for 1999?

Just as it kissed 176p my screen went made (not here on the LSE site) and jumped to 180p with a yellow banner beneath it stating "possible extreme volatilty".

Can't read anything into it and only checking live prices to fatrhom out the madness of offerring the high160's on Monday but right now they want 176p off you. And still without sight of the trading update!

The ground we walk on is made of bouncy rubber. And the trees are marshnallows.

Posts of DB below caused me to check if they're still listed as in-house brokers for BT as regards analysts forecasts and sure enough they are, which confuses me as I thought the retail arm of DB was closing down? I was certain they were off the list as instead of 21 brokers listed this morning I seer only 19 listed, but they listed as still active.

Anyway here are the buy/sell ratings of all those in-house brokers for BT:

Strong Sell - 0
Sell . . . . . - 5
-----------------
Hold . . . . - 4
-----------------
Buy . . . . . - 6
Strong Buy - 5

So 5 for sell and 11 for buy.
Hmm, I dunno, can you trust 'em? Just look at their SP forecasts :)

(Concludes ...)

To sate the demands of the market they've kicked the can down the road to next year and only promised to "review" the divi, not cut it.

Would be surprised if the first announcement trading update in the new financial year is them saying a review will commence before the next update, and when that uodate arrives then say the review is ongoing, and incomplete and by the next trading update saying they hope to finalise the review before the final trading update, and when that arrives say yes we're going to cut the divi with the first cut commencing the following trading year.

From what I read, BT's board don't want the cut (Jansen does) but aware of their expanding debt which you'll hear plenty about in Q3 (it's at record highs already, I estimate £19b by the end of the financial year in March) and the need to keep banks on-side they will have to show some willingness to trim further. Should the divi be cut it will signal the reduction of DuPlessy's political authority and the rise of Jansen's, IMO.

(Part 1 of 2)

Diviends paid out last year amounted to £1,504m. So if the media are suggesting a 4/5p cut that's about a 1/3rd deducted from the divis which would result in roughly a £500m saving each year onwards, for the company. And reduce the yield from circa 7% to say 4.6% yield. - roughly, approx.
A company is either growing or mature. An established, mature company, has no option but to offer a better than average dividend as an inducement, and usually is well capable of offering such, it's not a burden.
Hence the screaming and dragging of feet of old established mature companies when backed up into a corner as it's the one thing they're good at. It's their crowning glory. Pension funds and trusts depend on them. Hence the battle within BT's boardroom (which I'll come back to later).

It appears to me that talk of a dividend cut as if it's imminent is premature. That's not my understanding of the statement made by the board. Tried to get the actual statement but just can't find it, If memory serves me right it goes something like this: The dividend will NOT be cut this current financial year. So come the end of March, and publication of the finals a few months later there can not be a cut to the final dividend announcement. Secondly it was announced that "a review" would be allowed in the next year after. That might be doublespeak for there will be a cut but taken at face value that's presupposing that the review will support a divi cut, it might not, as on fundamentals the divi comes under a clear demonstration of good housekeeping. The company can afford the high 7% yield. It's only a high yield because of the y-o-y battering the SP has been under. The yield has risen, yes, but the cash payments are well affordable and are covered adequately at 1.4 and forecast to look even better over the next 2 years at 1.54 and get this 2.0 the year after!

So - the company is not nilly willy paying out dividends as if it's lost it's head. It's just that their are some big structural expenses due in the coming years. The mid '20's in a few year's time is where debt will come seriously to the fore.

Saw in October last year one big finance house boss criticising Jansen saying "he's missed his chance" by not insisting on a cut. So, the market is snapping at his heels to do something about the divi, as his reputation is on the line. Conversely, strong willed Du Plessy's reputation is on the line too - head butting up against Jansen's.
He is adamant, on behalf of the majority of the board, that a divi cut is UNECCESARY and vehemently opposed to it. It's mooted in media finance circles that his reputation will take a hit if there IS a dividend cut. So there are opposing views at the top in BT and it's unwilling to cut the divi, but fighting against being "forced" to do so.

To sate the demands of the market they've kicked the can down the road to next year and only promised to "review" the divi, not cut it.

Continues > > >

Don't know if this will be clickable to view, but anyway it's BT's chart on Google Finance. (Couldn't get the charts above to function without writing too many instructions for those who are non-chart interested, so they can see at a glance).

I'm posing an open question that's been growing steadily in my mind for some months and despite this recent retracement in the SP my question is still valid. First off, the SP has been retracing for 4 solid years, yes? And has just entered the 5th year with almost one month gone of the 5th year, and BT still in a disappointing retracement with it's SP.

But is it - still retracing?

All my long term trend lines and indicators still firmly pointing downwards. But I want to make a giant leap. The down trend was unmistakeable from the beginning of 2016 up until May 2018.

It is my contention that from May to 2018 onwards, a case can be built that no one can say with the same conviction as 2016 to 5/2018 that it's the same down trend. It's looking more and more like an SP "hunting" for a floor. When it becomes obvious, the whole world and his dog will be on to it. I ask you to look at the Google chart below (if it opens) and see what I'm proposing that you can see unmistakably, the giant retrace from 2016 to mid 2018.

But then - my big question is, do you see that from May 2018 to present? Do you agree, that IS NOT THE SAME DOWN TREND that was in play in the first 2.5 years to May 2018? Since mid 2018 it has NOT been retracing at the same ferocious rate. The breakouts are stronger, but overall, the downtrend does not have the same strength.

There's not a chartist in the world that would support that idea but I'm becoming more and more adamant that this last year and half, is not the same down trend that has become standard shorthand to describe BT's SP lacklustre performance.

Just another couple of months and if that shape continues, forming, including any more visits to bottoms like yesterday, then I will become more assertive that it's slowly, ever so slowly - v slowly - hunting for a floor.

Do you see it? The shape? This is an off-beat personal view. Even if you agree, no one else in the professional world will, so it's just an open forum question at the moment.

https://www.google.co.uk/search?tbm=fin&sxsrf=ACYBGNQOx3bcdztRHgGPXZRjFL1fDqc4nQ:1580242351843&q=LON:+BT.A&stick=H4sIAAAAAAAAAONgecRoyi3w8sc9YSmdSWtOXmNU4-IKzsgvd80rySypFJLgYoOy-KR4uLj0c_UNknOMio0MeRaxcvr4-1kpOIXoOQIACRJj90YAAAA&sa=X&ved=2ahUKEwja5KbAjafnAhVvURUIHYBCBL8Qlq4CMAB6BAgAEAU&biw=1024&bih=625&dpr=1#scso=_uJUwXq73CaWd1fAP9KmL4AU7:0

It won't open on 5 years so click the '5 years view' above the chart. The pattern can only be seen when all of 2016 is included in the chart.

Oh I have a plan. But it is/was concomitant on the SP staying in panic mode until the trading update was out of the way and NOT coming out of oversold beforehand tsk!
10% profits done 10 times over the whole year double your money. The average occasions of o/solds for BT is under half that, but then there's overboughts to make up the shortfall :)

Besides whilst the SP is in an overall longer downtrend there's no way I can hang about when it's in an upswing because you know what's waitng round the corner with a flick knife at the ready. In and out; or rather attempt out only when the signal rules say so.

You wouldn't think 2 days of smallish positive momentum would impact the Oversold condition too greatly but it has.
The SP is out of oversold condition as of tonight. I feared this might happen before the results. Techically the "panic" selling is over.

(Technically :) :) :)

Last August it lifted out of oversold and almost immediately went straight back under and back into oversold and 157/158 -ish intraday (not 154p as that article stated). So a bit early for me to take a position yet.

Ordinarily I'd take a first tranche on clearing oversold, another with a further confirmation by close tomorrow, and then see if no further retracement.

But I'm buggered! Rules based strategies are meant to test your discipline.

I. Have. To. Wait. For. The Trading. Update - Have To!

Cannot jump the gun. But it would appear other big people in the market are moving in ahead of the update. Each to their own.

"...It doesn't change the fact that BT/Openreach still own those ducts and poles and there will be a rental cost for use of the infrastructure, including POP's, if the relevant parties don't build their own. BT/Openreach will make money no matter what..."

Hmm... Goes some way to offer an explanation that despite years and years of declining revenue, net profit simply refuses to do likewise and roll over. To date it's done the direct opposite and increased y-o-y, right through this last 4 years of non-stop revenue decline.

Some debate whether by the time this year's final's complete in the summer whether this will be the first small decline in net profit, but it will be close, either way.

Main point is; net profit has yet to show a decline and is forecast to increase for the next couple of years - that's the current position. It can't all be coming from just cost savings alone.