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Severn Trent is a group of companies employing more than 15,000 people across the UK, US and mainland Europe, with some involvement in the Middle East. It is traded on the London Stock Exchange and is a constituent of the FTSE 100 Index. Severn Trent Water provides water and sewerage services to over 3.7 million households and businesses in the Midlands and mid Wales. The group also operates a non-regulated business. Severn Trent Services is one of the world's leading suppliers of water and waste water treatment solutions. Headquartered in the US, it has a growing presence in Europe, the Middle East and Asia. The business has three main divisions: Water Purification, Operating Services and Analytical Services
Severn Trent Sell 09-Jul-12 £150,181.10 Michael J E McKeon 8,916 @ 1,684.40p Severn Trent Sell 09-Jul-12 £88,346.78 Andy Smith 5,245 @ 1,684.40p Severn Trent Sell 09-Jul-12 £65,371.56 Martin Kane 3,881 @ 1,684.40p Severn Trent Sell 09-Jul-12 £59,358.26 Tony Ballance 3,524 @ 1,684.40p
INFLATION-BUSTING DIVIDENDS COURTESY OF SEVERN TRENT A recent deal in the water utility sector underlines the value on offer to shareholders and, with inflation-beating dividends still flowing, they remain the defensive share of choice for these turbulent times. Brokers at Liberum Capital estimate that if the 30 per cent premium paid for Veolia Water in a private deal last week was applied to the three remaining water stocks, it would imply prices of 900p for Pennon , 2,200p for Severn Trent and 920p for United Utilities - a significant premium to today's prices. Private buyers' thirst for water assets show little sign of being quenched after Hong Kong-based businessman Li Ka-shing snapped up Northumbrian Water last year and now French utility company Veolia has sold its UK assets to Rift acquisitions, a consortium of infrastructure funds including Morgan Stanley Infrastructure and M&G. The headline price paid was £1.24bn, a 30 per cent premium to the regulatory capital value - the value of reservoirs and pumping stations - of £948m. The wider water utility sub-sector is currently only trading at an 11 per cent premium to regulatory capital value. Buyers would need deep pockets to take out United Utilities, with a market capitalisation of £4.6bn, Severn Trent at £3.9bn, or Pennon at £2.8bn, but sovereign wealth funds could be in the frame, especially now that UK banks seem off the menu as investments. Even if a deal doesn't come along, investors get guaranteed dividend growth targets until 2015 of retail prices inflation (RPI), plus 2 per cent for United Utilities, plus 3 per cent for Severn Trent, and plus 4 per cent for Pennon. Dividend yields are already inflation-busting with United Utilities on 4.7 per cent, Severn Trent at 4.2 per cent (plus a 63p special dividend), and Pennon at 3.5 per cent. Pennon also looks set to join the FTSE 100 after shares in International Power were suspended following its takeover by French utility giant, GDF Suez.. IC VIEW: Shares in the water sector are supported by strong fundamentals, they are tailor-made for the current economic backdrop of low borrowing costs and elevated inflation, and foreign buyers are attracted by solid assets and defensive revenues. That makes the shares cheap relative to recent deals. BUY. Source: http://www.investorschronicle.co.uk/2012/07/05/shares/news-and-analysis/three-cheap-inflation-busting-water-shares-evs0LEkkyxTfPK07Rwa3xM/article.html P.S. Here's a couple of links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?threadid=252803 http://www.euroinvestor.com/community/discussionthread.aspx?threadid=253089
UK water stocks - United Utilities, Pennon and Severn Trent - are in 'a sweet spot in current markets', according to UBS which says they provide safe returns and consistent outperformance. "We believe that the UK water companies will remain in a sweet spot for as long as the current lacklustre macro environment persists, thanks to a limited risk profile, low UK sovereign gilt yield environment, and likely ongoing inflation support from quantitative easing," the broker said. UBS initiates coverage of United Utilities with a 'buy' rating and 725p target price (TP). With Severn Trent (1,695p TP) and Pennon (740p TP) trading at a premium ("deservedly") to United Utilities, UBS has started with a 'neutral' rating on both stocks given that their relative benefits outside of M&A are already priced in
Mike McKeon, Chief Financial Officer at Severn Trent, said: "We are pleased to be the first water company to issue a retail bond. With a large, inflation linked, investment driven, regulated water utility at the heart of our Group, we are well suited for this product. This retail bond issue diversifies our funding sources while also seeking to meet demand from retail investors for inflation linked products." Barclays Bank PLC and Investec Bank plc have been appointed Joint Lead Managers of the bond issue. The bonds are expected to be issued on 11th July 2012. The offer period for the bonds is expected to remain open until 4th July 2012 or such other date as Severn Trent Plc may agree. The bonds are being issued by Severn Trent Plc pursuant to its EMTN Programme and are expected to be listed on the Official List of the UK Listing Authority and to trade on the London Stock Exchange's Order book for Retail Bonds ("ORB").
SEVERN TRENT PLC LAUNCHES RPI LINKED 10 YEAR STERLING RETAIL BOND Severn Trent Plc ("Severn Trent") has today launched an RPI linked 10 year Sterling bond available to retail investors. The bonds will pay interest semi-annually at a real rate of interest of 1.3% per annum adjusted to take account of changes in the level of the UK Retail Prices Index ("RPI"). On maturity, the amount due to be repaid will be the full face value of the bonds, adjusted to take account of any overall increase in the RPI. However on maturity, even if there is an overall fall in the RPI, Severn Trent will be required to repay the bonds at no less than their full face value. Severn Trent Plc is the first water company to issue an RPI linked bond available to retail investors, having historically only offered bonds to institutional investors. In accessing the retail bond market, Severn Trent aims to diversify sources of funding for its 2010-2015 capital investment programme of approximately £2.5 billion.
http://www.investegate.co.uk/Article.aspx?id=201206210700068258F
As expected some sells offs first thing probably by people who having got in early and got the dividend too are in profit so decided to get out, plus a few people who on seeing the drop panicked and sold or hit a badly set stop loss. Since then again as expected people have been buying in on the dip and we're currently back to about where we should be. Hopefully the buying can continue but time will tell - harder to predict from here.
Would have been worth it a month ago I reckon. Kicking myself as was meant to watching it with a view to buying in. Bought today and am aware its a risk but we'll see how it pans out. Fingers crossed
Sorry for delay getting back.........Been in touch with hargeaves lansdown......Who said treat special div like any ordinary div........So would expect sp to drop 105p.........Is it worth all the hazzle.......Best time to buy this share was around april at 1520p.........I myself bought to close to ex div date...................Have to wait and see!!! GLA
I think the key tomorrow will be to see how well and how quickly the SP starts to recover after the drop. A drop like that usually catches a few uninformed people napping and makes them panic sell. But then other people try to get in on the perceived dip. I wouldn't be surprised to see more than 105p drop off the SP early doors tomorrow but hopefully there may be a rally either later in the day or over the coming days. Also depends how many people were in this one purely for the dividends and how many see it as a medium to long term share worth being in.
............just below break even......close or hold.....................tic toc tic toc...............
........I would expect the SP to drop by the full amount (i.e. 105ish). I hold a long position at just about break even...(ok £50 down inc fees)..I opened it almost a fortnight ago expecting (hoping) the price would raise into the div. My decision would have been whether to get out before ex-d or hold and hope price recovered. However, looks like I was too late and those that wanted in bought in not long after the announcement (summat I missed - timing!). I may close the position before close of play today even if down......not sure how long this would take to recover after the drop.
If the Final Ordinary Dividend of 42.06p isn't going to cause a drop in SP in the morning by the same amount (on top of the extraordinary 63p divi) then why isn't the market wading in to get it for free? Seems to me we should expect a drop in the morning of the sum of both dividends but would be very happy to hear a good explanation of why that shouldn't be the case.
why though?
The sp should drop no more than 63p.This applies to final and special div i am led to believe........................ Good Luck...............................
As I understand it, and please correct me if I'm wrong anyone, there's a special dividend of 63p plus the ordinary final dividend of 42p for investors on record on 22nd June (Ex-dividend date therefore tomorrow (Weds 20th June). So the total dividend is around 105p and that's how much lower the shares should open (all other things being equal) tomorrow morning.
There is only one Uk water company in a position to trade water to others - go figure..
New investors have a week to buy shares in Severn Trent before they trade without the right to a 63p-a-share special dividend. But is it worth it? The shares trade without the right to this payment from June 20. The cash return was announced alongside the company's results two weeks ago. Severn shares offer a yield of 4.2pc rising to 4.5pc next year. The special payment is also an attractive proposition, although the shares are likely to slide next Wednesday when the shares trade without the right to the one-off dividend. It will be interesting to see if the fall is more than 63p a share. Severn shares appear richly priced and the company's exposure to non-regulated businesses in Southern Europe clouds the issue. So, on balance, Questor maintains a hold rating, Questor says.
Profit before tax fell 38% to £156.7m in the year to the end of March, something the firm blamed on operational, infrastructure and employment costs.
In a statement made on May 30th, Wray said the company had "delivered outperformance" and its shareholders "provide the capital investment for us to keep investing in our networks".
Tony Wray, the Chief Executive Officer of Severn Trent, the FTSE 100 utility provider which serves eight million customers, has ditched 4,570 shares in the firm to cover his tax liabilities following the award of shares under a long-term incentive plan. Wray traded the shares at 1,747p a pop, pocketing a tidy profit of £79,838 and leaving him with a total of 17,731 shares. Only a week ago the director was forced to defend the company's decision to pay a special dividend of £150m, equal to 63p per share, despite a decline in annual profit and soaring consumer water bills.
....Magic.....was not sure if special div was up to h 63p or As an addition.........I'm in......... Cheers
NO. It will be 105.06p!!! This is made up of the Final div of 42.06p and a Special div of 63p. The shares go ex-div on 20/6 and the div is to be paid on 27/7.
....is it 63.7p per share?