London South East | The UK's favourite investor portal.

Well, credit where credit's due. That's a stonking good % increase in the SP in a single day for a big FTSE100 company. Wouldn't be surprised if it ends up near the top of one of those top 10 risers for Monday.

In all the links below you'll notice all media analysts forecasts show revenue with tobacco duties removed so you'll see their forecasts for revenue for circa £8b.
I vehemently disagree with that method of accounting and so does IMB itself, as you will see tomorrow they will report revenue somewhere above or below a figure of circa £30b. So don't go jumping to mad conclusions comparing £8b to a rise of circa £30b.

They are as I've posted below, the same figure; one with all duties included
- whilst the other is stripped of all tobacco duties.
So your key marker (in revenue) for tomorrow is somewhere below or above £30b for revenue. Notice from the links below they've forecast over £2b for net profit. Knowing analysts fondness for EBIT and EBITDA that's probably PRE-TAX net profit. No way, will IMB come in with NET PROFIT over £2b. No way!

If as I've posted below if the co. comes in with just over£1.5b - that will be a cause for considerable celebration in itself. And would make me wonder wether the three areas highlighted in the 26th Sept profit warning were overthought as some sort of clearing the decks for the new CEO.

What is noticeable from today's price action is that it hit both a v low support level and a very high resistance level - both all in one day! Volatility or what? Will get the spreadsheet out and post a couple of pivot points for tomorrow, seeing as the market was in pivot point visiting mood today. But that volatility if it continues, may be suggesting anything goes tomorrow.

(Cue the drumbeat theme tune to that old childrens TV program 'Stingray' from yesteryear with the voiceover announcing:
"Anything can happen in the next heff hour!")

And that's the theme for tomorrow. I intend arranging available time early tomorrow so should have time to post any initial thoughts BEFORE the market opens, if the figures are wildly different from analysts or investors expectations. Free-for-all tomorrow, so it wil be interesting to read everyone's views on the results.

A bit of supper then I'll hopefully remember to post those pivot points.
(The same thing can be obtained from free sites in the US but you'd have to wait until gone 9pm our time before they publish updated data).

Yes, I'm pleased with the 'Bonneville' earnings net profit, it's a positive which IMO the only media opinion report of the day (rapidly published on the day within hours) missed. There will be other, more considered media reports coming out next week onwards no doubt, for a fuller more rounded picture.

For instance, for a complete rounded review of the interim results there has to be a dissection of revenue and the increasing debt announced, and declining cashflow etc.,

Didn't touch on revenue as busy enough with earnings in my posts. I accept it's down again.

And also, although I briefly highlighted the additional new increasing debt etc., BT have made clear they have a plan to deal with debt and they are dealing with it right now, but what the CEO said in his opening statement made for unedifying reading nonetheless, so leaving it to see what the media make of.

It was 1,2,3 nasty. This what he said in the RNS:

". . . normalised free cash flow2 of £604m, down 38% due to increased capital expenditure, higher interest and tax payments, partially offset by one-off cash flows.."

[[ So 1: Free Cashflow has gotten worse - 38% worse!]]

"• Capital expenditure £1,882m. Up £225m excluding BDUK grant funding deferral, driven by increased network investment"

[[ And 2: Spending expenses up, but from expected commitments]]

"• Net debt2 increased primarily due to implementation of IFRS 16, £6.1bn, and net business cash outflows, £1.2bn "

[[And 3, debt has increased yet further]]

If there's a bearish media reporter out there next week, will they make it sound worse? Patience needed for the debt plans to take years to work through, not speculation. Long term.

In other words, to turn this ship around is going to take another couple of years yet.
After Q3 going to attempt using the very latest forecasts post the H1 results, to see the 3 future years they include if there's a hint of a commencing turning point. Thought I saw something in the now "old" 3 year forecast, but will wait until the H1 gets into the system and see what the new updated 3 year forecast is then, what I'm hoping for is if year 3 shows the start of a clean pair of heels, as the market via the SP in such situations usually responds a full year before a turnaround is obvious to everyone and his dog.
The Long game.

Hi Donvan'T1,

If the question was : "Do any disposals over Q2 appear in your derived net profit figure or are they treated separately" then I was ready to answer succinctly no, but then came "...in your analysis".

The answer is no because no one can - it would be akin to cooking the books. Net profit is derived solely from revenue received, after operational costs, some taxes and some other bits.
Net profit is a result of BT's direct endeavours to provide a service to its customers. Capital disposals are not earnings, they go in the cash account and improve Free Cash Flow. The Inland revenue have plenty to say about that, and allow such receipts to go into amortisation etc., to help pay down debt or say uncovered dividends or whatever, so that the amount is spread over time to even out the books, otherwise net profit would zig-zag up and down energetically like a monkey on a stick from one year to the next. No one would know if they were coming or going :)

Therefore in short - it's nothing to do with actual earnings. I was going to ask did you mean BT Tower and the 200 odd offices and stations, and the worldwide sell-off of all international businesses etc., etc., So thanks Aus for confirming that is precisely what you're getting at.

I did notice the Free Cash Flow slightly improve from it's disastrous metric of 33 down to 29 months back, and wondered if some of that capital disposal money had come through but just Googled and it would appear they were all announced in roughly July as an intention, so doubt a single penny has been received yet (FCFlow is now unfortunately back up to 34.8)

The disposals, all of them each, appears to be hundreds of millions and not billions, as eg., quote:

" These include the troubled Italian arm, which is embroiled in an accounting scandal, as well its Irish and Spanish divisions. Now The Mail on Sunday can reveal that BT's internal deals team has also been sounding out potential buyers for its sprawling Latin American business.
A sale would mean a retreat from 28 countries – almost half of the 60 countries that BT operates in – underlining the scale of the change in the company's approach after years of expansion.
Although BT does not publish figures for its Latin American arm, the sale could bag it hundreds of millions of pounds. "

- The BT Tower sale is not as much as I'd have thought either, quotes abound of £200m. So over the coming year or so maybe all these little £200m disposals might add up to billion/s?

( Part 2 concludes) > > >

Personally, I have the full year's net profit showing as an increase over last year. A bit embarrassed to declare it in pounds and pence as I must be wrong, and therefore the only person in the whole world with that view. And that's the point of this post. I want to take the net profit increase in Q2 and show what's really happened in the last 3 months; hence the interest in Q3 - will it reflect what I'm about to post, or will the market in the meantime concentrate on the increasing debt levels and declining Free Cash Flow?

Here we go:
The very last Q1 analysts forecast still displaying on BT's website of July 26th before the actual publication of the interim results - showed to expect a Q1 net profit £484.5m

BT subsequently produced the actual Q1 results which showed the analysts were too bearish and BT had in fact achieved net profits of £505m an increase on the forecast, beating the analysts more gloomy outlook by a small margin of 4.2%

I was over the moon and felt the first Q1 net profit showed that an increase over last year's net profit might not be a bad error on my part, as £505m x 4 quarters takes BT over the "target" full year net profit of £2b+

Check the latest RNS and the H1 published results of £1b have blinded me to the achievement of Q2. Had to go back and reread the RNS and the actual Q2 in isolation and it makes for startling good reading - and utterly missed by the first reports on the day of the publication of BT's results.

First off, the latest and last Q2 forecast by the analysts of 25th October said to expect between £474m and £498m for net profit. (Say an average of £486m)
A nice increase on their bearish Q1. But still they underestimated. The actual Q2 was much, much more.
Check the RNS, they give the half year net profit as £1.068b - nowhere do they actually publish the Q2 quarter net profit. Have busy journo's missed the most important fact like I did - until tonight? Do you get it?

Q1 actual = £505m
H1 Actual = £1068m

THERFORE Q2 produced £563m net profit !!! That's a MASSIVE 15.8% Increase and beating of the analysts forecast for Q2 !

Look:
Q1 Actual net profit = £505m
Q2 Actual net profit = £563m

Do you see what's happened? And the consequences if that progression continues? Not yet seen a media report that's picked up on that. Only mealy mouthed "pre-tax" net profit "as expected".

Well I'm telling you here and now, that's not what the analysts forecast for Q2. They forecast 15% less!

BT's Q2 achievement in net profit has made mincemeat out of the analysts net profit forecasts. Will the analysts self-correct themselves in Q3 with inevitable reaction in market sentiment towards the SP? As of this weekend and the modest close of the SP no one appears to have noticed. All the better then, if this continues and BT over delivers in Q3 - then stand back and watch :)

On the other hand was Q2 net profit increase just a passing flash in the pan?
You dec

(Part 1 of 2)

The next House brokers analysts update for BT, will be quite early now they have the half year figures in to play with, and thus project forward, so I would expect the Q3 forecast update, either as early as next Friday 8th Nov or much more likely - on Thursday 14th November (guesstimates on my part there, as no dates have been announced yet, but pretty sure it'll be the 14th or if not, then the earlier one).
------------------------------

Having all (all of them!) of the house brokers analysts averages provided by BT is like handing you a weapon, where it's denied to you by most other stocks. There are 20 analysts on BT's case (Have all the B/Houses, and the names of the appointed analyst in each for BT, if anyone wants the full list).

In BT 's case their forecast of future Revenue has been for both Q1 & Q2 quarters, have been scarily accurate.

Net profit, less so.
(Note: Net profit only - defo NOT PRE-TAX net profit by the way! As only charities escape paying the taxman)

But that can be a double-edged sword in the case of net profit.
Underestimate as the analysts did for net profit in the first Q1 of the year and the media ran wild starting with downgrades to expect the SP to descend to £1. That wasn't some media journo plucking from thin air, he was basing it on the latest and genuine brokers analysts updates for the new trading year which showed the first quarter net profit to come in at £424m (think I posted back in the year of one update showing £420m) which if then multiplied by 4 quarters meant that BT's net profit would cease increasing - and would now commence falling.

So instead of a full year £2.159b+ net profit like last year, the current year would only be barely £1.7b - I was horrified and so was the market and the SP went down all the way to 160 and intra-day'ed to as low as 157/158p. That was sentiment that caused that flight into oversold condition. Noticed that the earliest forecast on July 19th showed £490.3m net profit for Q1 so the forecasts got worse as they progressed, panicking the SP further.

BUT when the Q1 actual achievement was published by BT themselves - up the SP flew and up into recent overbought condition and is only just now out of it and "settling".

So they do, between interims - control market sentiment. The market takes notice and reacts until D-Day and BT produces the actual truth. I say a double-edged sword because isn't better to under promise - then BT can over-deliver? As seen by the steady rise escaping from the wicked descent into oversold, once the truth, the actual published results, came out for Q1.

(Continues >>>>>)

Latest Share Chat

Member Info for Velo

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)

Latest Share Chat

Member Info for Velo

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)

Please enter at least 2 characters

No results found

Search results

Recently viewed

Trending