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EXCLUSIVE: David Lenigas answers investor questions in a detailed interview about UKOG, Doriemus, LGC Capital, AfriAg and Angus Energy.


Member Info for steph


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Member Since: Wed, 6th Aug 2008

Number of Share Chat Posts (all time): 4,106
Number of Share Chat Posts (last 30 days): 16

Last Posted: Today 08:06


Post Distribution over the last 30 days




23 Jul '17

yes Brexit is not a good idea from the viewpoint of us TEF share holders dependent as we are on the knowledge economy of London to continue growing.

Exacerbating the substantive but not catastrophic Brexit damage is Maybot's focus on immigration controls as the solution to the electorates anxiety over globalization and her misunderstanding that international trade treaties (included WTO I should add) comes without international judicial oversight of some sort. Limiting grad student numbers to hit some arbitrary immigration number is the height of self imposed damage to our knowledge economy.

There is obviously a debate going on inside the conservative parliamentary party on what Brexit actually means. Too bad for the nation they id not do that before triggering article 50. Too bad Teresa may set down all sorts of impractical red lines before there was a consensus of approach. She comes across as a late arrival to the hard Brexit party and overly keen to demonstrate she was one of the hard brexit boys and now the nation has to suffer for her posturizing and lack of a strategy or communication.

My investment strategy is now weighted for the long term with the lowest percentage of short term positions I have had for a very long time. I think the odds are we wil as a nation muddle through without a chaotic Brexit induced sharp recession. The conservative party will eventually find a more business friendly way forward which means backing down from various mines maybot has unhelpfully laid for us all.

Even if the UK side got it's act together miraculously (which in would imagine at this stage is some form of cross party Board overseeing the Brexit negotiation team as the EU 27 have a "board" overseeing their negotiating team. As we did when winning the Olympic bid we need to use all talents (and a deep societal consensus) to lobby the EU to be flexible on some points. There was a brilliant double act between centrist pro American Blair and left wing pro Arab Livingstone. They divided the nations up to lobby according to their natural allies and the result was a big win for the UK and London.

A narrow team of zealot Brexateers (who dot really represent Parliament or the nation accurately) is hardly the way to pressure the EU on any major point of contention.
21 Jul '17

https://www.thetimes.co.uk/edition/news/borders-will-remain-open-for-two-years-after-brexit-rpg3838dt

first indication in some weeks that the risk of a chaotic Brexit is 5% or less rather than something more likely and more frightening for me in my hold strategy. I'd need a bit more good news than this to aggressively top up though.
21 Jul '17

https://www.bloomberg.com/news/articles/2017-07-21/british-missteps-in-1970s-flag-political-risks-in-brexit-nation

It's cheering that there seems to now be a consensus in cabinet to have at least a 2 year transition where the existing rules apply. Much more realistic. Also that reduces substantially the divorce bill as much of that is forward budget commitments that will be largely eliminated in a 2 year semi detached but still paying status.

If once must have a hard Brexit I'd prefer a 5 year transition period. It will probably take that long. 2 years with probably some weasel words to be able to extend it as needed is probably enough to limp onwards without serious damage to London and TEF's market.
20 Jul '17

be great if you visited the sites. I'm sure TEF management would even help you to do that formally if you asked.

Bit beyond me the complexities of managing a major constriction site contract and workforce but I can see disruptive technology coming for the sector (after nearly 5 decades without) and I want any firm I am heavily invested to be better position then thee rest to be early adaptors.

A first that will be an early adaptor is one that is focussed 5 years ahead rather than flattering half yearly figures. It costs money to adapt new techniques and equipment and the payback is not instant.

TEF management is not immune to share holder pressure for short term results but they seem to have a sensible ability to not get too focussed on the short term as a result. A purl private firm would be an even better structure but then I would not be a share holder.
20 Jul '17

be great if you visited the sites. I'm sure TEF management would even help you to do that formally if you asked.

Bit beyond me the complexities of managing a major constriction site contract and workforce but I can see disruptive technology coming for the sector (after nearly 5 decades without) and I want any firm I am heavily invested to be better position then thee rest to be early adaptors.

A first that will be an early adaptor is one that is focussed 5 years ahead rather than flattering half yearly figures. It costs money to adapt new techniques and equipment and the payback is not instant.

TEF management is not immune to share holder pressure for short term results but they seem to have a sensible ability to not get too focussed on the short term as a result. A purl private firm would be an even better structure but then I would not be a share holder.
20 Jul '17

Looking at the report -especially the expert analysis page 29 it seems that direct labour forces are the best way to develop and improve cost saving productivity enhancing skills. It is not a finding I would have naturally expected. YOU might have thought that highly specialized sub contractors would adapt new labour saving technology first but maybe for a constriction site it is the knitting together of the whole that is more important. I've seen that elsewhere. Too many sub contracts can become hard to manage with lawyers involved too often. There is some optimum mix of a single entity having control over most on site processes.

For TEF in complex sites how to build a building is more important than cheap labour. Going forward where I am convinced the industry is about to undergo disruptive change as finally productivity enhancing technology will become to construction firms. Who can adapt first and will gain a major competitive advantage.

Again all in all getting more and more comfortable with my near 100% investment in TEF for my ISA and through that major chunk of my retirement planning.
20 Jul '17

maybe a bit too much chardonnay last night.

https://kj06q2hv7031ix2143c36tpx-wpengine.netdna-ssl.com/wp-content/uploads/2016/05/CIOB-Productivity-report-2016-v4_single.pdf

if you are interested in construction sector productivity and TEF's model to tackle this key factor in our EPS and future growth in relative terms to the industry this is a good report. Little discussed on this board by on site productivity is a key driver of our EPS and future prospects and TEF is well aligned with the recommendations of this report.

Chart 4 is interesting. Germany who is streets ahead of UK in manufacturing productivity is well behind us in construction sector productivity. Only USA ahead of us and I suspect that is due to differences in code rather than like for like comparisons. Faster to build a wood frame house faced with brick than the real thing.

Report notes that productivity and on site techniques have hardly changed for decades. Chart 2 shows the historic very flat nature of productivity improvements for the construction industry anywhere. I think, as described below, this is about to radically change. New technology will have a major impact over the next 10 to 15 years on costs and nimble firms that take advantage will end up with major comparative advantages.

Best to read it and not my comments on it.

.
20 Jul '17

one aspect of the near "unique" TEF business model is the in house construction team mentioned in the anti slavery statement. Jon mentioned it at the AGM as a reason to concentrate on London so the in house team can get home to families after work -but there are other advantages to the contractor model of the majors.

Firstly if skilled EU labour supply gets disrupted better to have your in house team than rely on contractors. Also as technology driven on site productivity improves you can be an early mover ahead of contractors. As technology increases on site the premium given to a skilled stable workforce outweigh the benefits of access to large volumes of cheap labour.

Imagine a machine that lays bricks for example. IN the first wave of that type of technology it will require a skilled operator with more training, pay and experience than the average brickie -but will lay at a rate of 10 brickies. SO the productivity improvement will pay for the capital costs, extra salary and training costs.

Maybe at some point in the distant future one will be able to just feed plans into a machine that assigns fully automated equipment to build it but for the foreseeable future most new construction technology will need to mix with humans on site and thus be quite carefully controlled by humans of a high skill level with a whole drawer full of safety certificates and training. It will be a move to skilled operators and away form "unskilled" or "semi skilled labour". Any labour shortages will accelerate this trend and give firms such as TEF with in house talent a competitive advantage.

More power to TEF's management to recognize that the skills of the constriction workforce can be a competitive advantage. IN the capital intensive chemical and auto sectors I occasionally deal with skills is often the deciding factor on where they locate in the world or region a new factory.

As residential constriction continues to capitalize it's construction techniques the opportunity to change will apply. Whole residential construction industry has not had a major change in typical constriction technology for decades. This will change. I think we are close to a tipping point here and TEF are positioning themselves to be ahead of he new wave not behind it. It is one of the reasons I like to see TEF with some more volume. Early adaptation of new construction technology that gives a competitive advantage will flavour larger, innovative affirms with strong links to government drivers and funding. Partnership working.

UK's application based rather than zoning based planning system gives developers an incentive to hit policy boxes that do not directly bear on housing output. This has benefited eco standards (which can go well above minimum regulations) and also other objectives like social hosing. An innovation strategy that assists UK construction industry to be early adaptors of new technology can help the TEF
20 Jul '17

https://www.theguardian.com/politics/2017/jul/20/no-deal-brexit-would-spawn-legal-morass-and-economic-disaster

self explanatory really. It beggars believe that we have senior minsters, including the prime minister, even saying they can contemplate this as a credible scenario. I hope my 5% risk is the right number and the risk is not significantly higher than that.

Market seems to have priced in a hard brexit but of course not a chaotic Brexit as yet. I suspect that upside news is more likely than downside from here.

Are the Tories really that stupid to engineer a chaotic exit. Surely someone will stop them from within their parliamentary party -perhaps in combination with Parliament itself. At some point Corbyn will need to get off the fence and give them a way out. At the moment he is content to sit back and let the public see how completely daft they are. Understandable given all the barbs of incompetence they gave to him but not in the national interest.

Murdock asking May to reappoint Gove is a sign of how diminished we are as a nation. Our government taking orders form an Australian poisonous press baron. You just could not make it up.
19 Jul '17

Yes good to know TEF is anti slavery. I suspect the majors are all pro -TW first amongst them.

Sain yes the PwC report is in line with all the major analytics. Modest house price inflation over the next 5 years -maybe a percentage or 2 more than general inflation. I other words stable market conditions that will support TEF"s business plan and EPS and growth projections.

Of course they can all be wrong at the same time if a major unforeseen or unweighted black swan becomes fact. I'd give the risk of that as 6%. 5% for a chaotic Brexit followed by a steep recession and 1% for all the other black swans put together including Trump starting WW3. I believe a hard Brexit is priced in but not a chaotic Brexit. A softer Brexit will cause a positive push for us.

Each day the chaotic Brexit risk rises a tad though. I keep looking for clarity at the end of the confusion on our side but keep being disappointed. I believe at the last minute we will make a dash for a soft Brexit that will be called "transition" to satisfy the hard Brexiteers with endless assurances it will be short lived but in fact could be long term and even with the best will in the world will need to last a few years. A bespoke Brexit is simply fabulously complicated to do and will take a few years to set up. May has put us all into a corner and done nothing to prepare us for the compromises needed to get out.


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