Danakali Share Discussion Threads

[cinoib] 10/2/2002 19:18

TT.
Like to know where you get your 400% in a month from 100%=28p,200%=42p 300%=56p (not yevreached)400%=70p, would love to reach, please lern Mathermatics.

[picaroon] 10/2/2002 18:35

Conc2

Your point is?

It is misleading to include the 6.5% participating shares in a calculation of equity because they are quasi debt and will need to be repaid in accordance with their terms (see note 10 to the full year accounts).

As I have stated above, the company has a NEGATIVE net worth from the Ordinary shareholder point of view.

[conc2] 10/2/2002 18:15

Danka's Chief Financial Officer, Mark Wolfinger, commented: ``Due to our financial restructuring, the sale of DSI and our continued progress in generating free cash flow from improved operations, we have decreased our total debt by $377.0 million, or 52%, from $719.2 million at the beginning of the fiscal year. Danka's ratio of total debt to total capitalization (including participating shares) has decreased from 81.9% as of March 31, 2001 to 55.1% as of December 31, 2001.''

[picaroon] 10/2/2002 17:31

Hallett

OK I'm happy with what you say about the loss.

However I'm more interested in the vast amount of debt still on the balance sheet and also the 6.5% Senior CP shares. The company shows no sign of ever being able to repay all that lot and have money left over for the Ordinary shareholders.

[forfaiter] 10/2/2002 17:30

The Q1 figures are confusing due to the one off gain through the disposal of the DSI division.

The continuing operations before accounting for the DSI disposal in Q1 showed an operating profit of 6.1m on revenues of 282m.

The disposal then generated a pre tax gain of 127m and an exceptional pre tax gain of 32m for early retirement of the debt giving a total of 158m.

Taxation then reduced the figure to £110m giving a post tax profit figure of £110m for Q1.

Obviously it is mistake to include this profit in working out the pe ratio for the stock over the course of the financial year as it is a one off gain.

But I think most investors realise that and the price would be a tad higher than it is now if that figure had been factored in....

Reference to the one off gain and the participating shares that are not due to be repaid until 2010 at this point in time and valuation level is irrelevant.

Especially as the company is now cash flow positive and meeting all its obligations as shown by the profitable Q3...

[hallett] 10/2/2002 17:22

Picaroon

It is not a matter of what I "like" but a question of what is correct and
what is accurate.I hardly think that overstatements of £35m within total figures
of £45m can be dismissed so lightly.

Anyway,lets leave it on the your second paragraph and the ground on which we agree.

[picaroon] 10/2/2002 17:01

Hallet

You can add back the tax charge if you like, but we are still talking about a loss.

Investment is a combination of objective and subjective points I agree

[picaroon] 10/2/2002 16:54

palawrence

I agree. My view of Danka remains the same i.e. it is an unattractive investment. I take it you are a holder of the shares and hope to see the price rise?

Your point is?

[hallett] 10/2/2002 16:54

Picaroon

You have taken the retained profit figure of £108,489,000 as your starting
point then simply selected figures with which to adjust it if they suit the
purpose of supporting your contentions.

For instance,if you are going to minus the exceptional interest credit of
£32,991,000,why would you not add back the tax charge of £35,214,000 which
I am sure you will agree only exists as such a large figure due to
the gain on disposal which you are keen to repeatedly point out is not
likely to be repeated.

Your other points in the main are subjective and you are as entitled to be right as anybody else but supporting figures must remain a matter of fact.

[conc2] 10/2/2002 16:50

the directors most probably do , and they just bought

[palawrence] 10/2/2002 16:40

Picaroon

If DNK reported a figure for the period before interest costs, that is what it is. Retained profit is after certain adjustments, but these do not affect the operating profits. The c.£150million of exceptional items happenned, by their very nature are unlikely to repeat in the future, but the only thing that the figures quoted by yourself "prove" is that the operating profit (loss) after interest costs was x. You have failed to take into account any seasonality of the trading pattern and that interest costs will be permanently reduced because of the exceptional credits.

I do not know what will happen to DNK in the future, but then again, neither do you.

[picaroon] 10/2/2002 16:27

Hallet

The figure of £20,795,000 is the operating profit before interest costs.

My figure was calculated as follows:

Retained profit £108,489,000 less Exceptional interest credit £32,991,000 less gain on disposal of discontinued operations £119,243,000 = £43,475,000 Loss.

The gain on the disposal on the subsidiary will not be reapeated and so should be excluded from the point of view of continuing operations. Similarly the exceptional credit in respect of interest arising as a result of restructuring will not be repeated.

I contend that the reason for the share price spike arose in the US as a result of misleading presentation of the company's results on various financial websites. These included the above two items as part of the company's normal earnings. As a result there has been a lot of talk on US BBs stating that Danka's p/e ratio was less than 1. This is of course nonsense.

As I believe I have proved the ongoing operations of the company will show a loss in the full financial year and it is in a very poor financial state.

[hallett] 10/2/2002 15:51

Picaroon

Why do you assert that Danka made a loss of £43,475,000 for the 9 months
to Dec 2001 after adjusting for exceptionals?

The recently released accounts for the period,excluding exceptionals,show
a profit of £20,795.000 comprised of £4,747,000 non-continuing and £16,048,000
from continuing operations.

[picaroon] 10/2/2002 15:13

photon

Danka still has a negative net worth as far as the Ordinary shareholders are concerned.

You have forgotten to deduct the prior claim of the 6.5% Senior Participating shares. See Note 10 to the full year accounts. These are entitled to dividends in priority to the ordinary shareholders and they must be repaid by 17.1.2010.

The current amount due in respect of these shares is £166,734,000.

As the recent results statement makes clear the Equity Shareholders have a DEFICIT of £141,558,000.

[photon] 10/2/2002 15:04

danka has turned a positoin of £100m of negative equity into a net asset position of £25m - nothing short of remarkable

i had given danka up as a dead dog long ago but now i see a company that has put itself on a much sounder footing

as interest payments continue to decline, the recent move into EBITDA profit will translate into pre-tax profit

plenty of losses to use up and therefore no tax for a while, boosting EPS

picaroon seems not to have been observing the trend that's clear for all who read the accounts carefully to see... well that's his business, let him continue to ignore the uptrend

[picaroon] 10/2/2002 14:48

Chestnuts

It is all very laudable I am sure wanting companies to do well, but such wishful thinking should not be the basis of stockmarket investment.

Speaking personally I have short positions in dud companies and long positions in great companies but that is as a result of careful analysis.

Danka I am afraid is one of the duds in my opinion of course.

[chestnuts] 10/2/2002 14:32

Picaroon
You must just be a gambler and not bothered if a company does well or not and can't stand it when you have shorted a company when it as great possibilities of going up. I never go short i would rather people did well than try too put them down.

[picaroon] 10/2/2002 13:47

Forfaiter

All stock market investment is risky.

Am I to understand that you do not hold any shares in the company and therefore have no interest in seeing the price move upwards? Are your comments entirely dispassionate?

The company is not profitable. Excluding exceptional profits mentioned in the recent statement the company made a retained loss of £43,475,000 in the 9 months to 31 December 2001.

What positive news are you expecting? Perhaps you could share it with us.

[picaroon] 10/2/2002 00:20

This stock has junk status.

I believe that the stock is taking a dive because the market is coming to recognise that the headline figures are giving a misleadingly positive picture. This company is a basket case. The claims of the Banks and prior ranking 6.5% convertible participating shareholders will ensure that all profits and cashflow never reach the Ordinary Shareholders.

After deduction of these claims there is a NEGATIVE net asset position of £141 million - see the recent 3Q statement.

Much of the explantion for the spike in the share value can be put down to a spurious prediction of $0.55 per share earnings which has been put about on various US BBs. The prediction of $0.55 eps in the current year includes a gain on the sale of a substantial part of the company's business. THIS WILL NOT BE REPEATED.

If you exclude exceptional credits the company will make a LOSS.

It appears that many holders of Danka have benifited hugely from the unexpected rise in the share price and quite understandably they are now taking profits.

The Photocopying industry sales are in decline as machines get more reliable. Margins are under pressure.

This share cannot defy gravity forever and so it has proved. Sure there will be rallies along the way, but the trend is downwards.

Look at it any way you like, technical or fundamental. This share is a sell.

[erdmanski] 09/2/2002 19:48

Britlad -

Good post, must firmly point out that Danka if any company is WORTH putting
your speculative money into, as the probability of a retracement towards
50p is very good.

Around 30-34p is an extremely favourable entry level, and if sentiment improves in US on Monday the recovery should commence swiftly.

[britlad] 09/2/2002 19:22

exactly pkvidean, this stock can rise again once all the yellow bellys are out and when people buy in at such low prices, the drive will be back north - directors don't buy when the price is in the 40p's for nothing and this company is turning a corner.

[pkvidean] 09/2/2002 18:10

picaroon,

You may be right, but I am going to give DNK the benefit of the doubt, for now. A company with a turnover of 1,000m sterling should, following any potential recovery, be able to generate a profit of 30m+ sterling (otherwise the directors should be terminated). Normally, in support services, this would justify a P/E of about 18 which equates to a market capitalisation of 540m (218p per share). Net debt of 230m appears, currently, to be large but viewed in the context of a more appropriate capitalisation, say in 12-18 months time, would not be unusual. It really depends on whether DNK can continue and build on the recovery it has initiated.

To say that the share price is on a downward trend is ludicrous (other than over a 3 month horizon). The Q3 2000 low of 7.25p was surely the bottom, followed by a recovery to 20p, followed by a severe 2 quarter retrenchment to 9.25p and recently a possibly over exuberant rise to 51.75p. Yes, with Doubting Thomas' like you around, it may go back to 15-20p but the trend is firmly up. IMRO.

[paulg8] 09/2/2002 17:19

picaroon...

Are you saying that the entire share price increase was produced by small uniformed investors and that there was no 'professional' trading at 40-50p who would have known what you were saying long before the orice increase started.?

[pkvidean] 09/2/2002 08:55

Agree with tts and bought some more yesterday! The drop was inevitable following the 500%+ rise. Stck with the fundamentals and ignore the chartists and the tree shakers! IMRO.

[webley] 09/2/2002 00:59

panagos, 4 mm quoting the bid, and 1 mm qouting the offer, the rest being higher.