Member Info for Bott

A month ago I asked on this board whether the MNG dividend was viable. This prompted a number of responses, none of which really challenged my figures, taken from five years IFRS reporting.

At end 2024, the past five years had resulted in negative 38p per share, yet dividends for that period had been 95.93p per share.

Now, despite 2025’s positive eps outcome, total eps over the past five years come to a negative 70.1p per share, while dividends in that period will total 98.2p per share.

Even this year’s dividend of 20.5p won’t be covered by eps of 12.6p.

As I reported previously, total equity has been progressively falling. Now we can see that has continued, dropping a further 4.1%.

MNG does have a very substantial cash holding, so, given the negatives mentioned above, it is reasonable to conclude that MNG is persistently paying its dividends from its activities long ago, not its ‘achievements’ now. On that basis it will be able to continue paying out, including its meagre increases, but the balance sheet seems likely to continue eroding. This is surely what is meant by a value trap. Dividends are paid to seduce investors to stay with a company, but the underlying investment is gradually eroded (surely reminding us of the frog that fails to leap out of gradually heating water until it is too late).

So, what is the case for believing that the MNG dividend policy is viable?

Can one continue to hold VANL shares with any conviction, I wonder?

What I have never understood is why it calls itself “The Leading UK Player”. It very obviously isn’t. It can reasonably be compared with Keller (KLR) and Kier (KIE). KLR has revenue of £3,087mn and an MC of £1.45bn. KIE has revenue of £4,077mn and an MC of £931mn, VANL has revenue of only £130mn and an MC of just £39.5mn. VANL is a pygmy.

As a an individual investor one expects, or at least hopes, that pygmies will do better than giants. In 2023 this seemed possible for VANL, but the last two years have been on a downward trend which seems unlikely to be broken in 2026. In one sense the annual reports are always bullish, but the group is also said to be waiting on “expected market improvements” rather than showing belief in its own efforts.

VANL’s share price performance over the past three years is miserable, whereas KLR’s and KIE’s is anything but. The regular complaints by VANL about “challenging” trading conditions don’t seem to have been experienced by its competitors. Whereas VANL’s share price has been on a declining path for years, KLR’s and KIE’s have been sharply upwards.

VANL’s website says it has a “Clear Strategy for Growth”, but that isn’t clear to me. “5%-10% compounded year-on-year revenue growth” has been promised every year, but isn’t being achieved. The dividend is reasonable and the NAV is positive and has consistently been rising, but this isn’t a growth company.

The underlying question to my mind is whether this company’s directors are up to the task. I am thinking particularly of the non-executives. Frank Nelson, chairman for six years, is 75; his record doesn’t suggest he is a driving force. Charles St John is now in his seventh year and David Hurcombe is in his ninth, but you won’t find that information in the annual report. They don’t look up to the task of driving CEO Mark Cutler to improve his performance. Why are they there?

Is there something I am missing?

Thanks for all the educational stuff. To Meconopsis I say the IFRS figures are not called 'fundamentals' for no reason: MNG is making losses, not profits, no matter how the directors may dress them up. In case you hadn't noticed, the dividend increases, while maintained, have not been impressive (last one 1.5%), which I would say reflects the lack of profit. To BlahBlahDoh I say my replacements were of course decided before I sold MNG and the dividend yield is significantly better. My portfolio dividend yield always exceeds 7pc, whereas MNG's is 6.4%.

After further thought I have decided to reduce my holding by two thirds and it's done. I sent my thoughts last night to Simran Parma, Investor Relations Manager, which won't immediately affect anything, but perhaps it will jolt the directors into at least a slight change of direction. It is with that hope that I have kept my remaining third. "Even so," to quote Investors Chronicle last September, "the value trap risk is still a concern.", so one must be wary and check the IFRS versus the share price on a regular basis.

MNG is a sizeable element of my ISA, first bought in 11/19 and another three times since. I have enjoyed its growth and the dividends of course, but have begun to wonder about its viability. I'm thinking I should study the AR, but at 370 pages that's a bit daunting; I'm also thinking it's probably like a bank's AR, mind-numbingly dense and, as I learned in 2008, possibly not really as informative as one would like. So, for the moment, I'm looking at the fundamentals, as reported by lse.co.uk.

This is what they show. Total eps for the past five years a negative 38p and for the past three a negative 86p. Total equity progressively falling, 4% in 2021, 19% in 2022, 5% in 2023 and 19% in 2024. NAV per share has followed the same path, but cumulatively heavier: down 9% in 2021, 35% in 2022, 7% in 2023 and 29% in 2024.

Before doing this analysis (and replying to BOTAK, now with an apology for not addressing him or her), I read a full page of recent posts. These all show a similar level of confidence to that I had until recently, so I do not seek to challenge anyone. However, I don't find it possible to view the figures above without concern. I have also realised that I don't really know the businesses that MNG is running. It does have a lot of cash and the dividend is only ten per cent of it, but I wonder where the business is going. I should be very glad to know what others think, in light of the figures I have quoted.

Redmayne Bentley.

To Theorist, as I wrote under 'Betrayal' six days ago, "Can the directors be trusted?" Although I can't be sure without checking my notes made at the time, I have a fairly strong recollection of hearing Atherley say at the 2023 AGM that the company structure had been devised to avoid equity dilution, one of the factors that persuaded me then to increase my holding. I missed the 2024 AGM, but fully intended to attend this year's. In preparation, I studied the AR very carefully, comparing the narrative with that in 2023 and 2024. I had been bothered by rumours/suggestions that Saltend was being or had been abandoned, but found nothing explicit until I saw the Stonegate report, which told its subscribers, with authority, that Saltend was no longer to be included in the company's plan. The fact that this had not then (and I believe still has not) been communicated to shareholders, even informally, told me that the directors knew it was a very sensitive matter and could not face up to announcing it, hoped shareholders could be distracted by other announcements and, as has been suggested here in the last few days, by Atherley's salesmanship. As I completed my preparation for this year's AGM and reviewed what I planned to say, I realised that I would have to vote against resolutions 1, 2 and 7-11. At that point, close to leaving home, I realised it made more sense to sell my shares rather than attend the meeting, especially as there was little in the public domain to support the share price, so I sold. Since then, I have been following this 'Chat' with continuing interest but no financial involvement. It is a speculative investment I have enjoyed and others may continue to enjoy, but my attention and money have turned elsewhere.

The original plan, as described at the 2023 AGM, was for production of magnets to be at a Pensana factory in Saltend. Potential customers then were actual users of the magnets, such as Stellantis.

The 2024 annual report told us, “Several major OEMs and government agencies have indicated their desire to partner with us once a route to production is evidenced…..” It went on to say, “The move downstream remains core to the group’s business strategy” and “Once Longonjo is in construction attention will turn to the completion of the financing and development of the Saltend facility.”

This year’s chairman’s review tells us that “The construction of Longonjo mine has commenced.” The CEO tells us, “Downstream ambitions are firmly back on track” but then he mentions “the addition of downstream refining in Angola”, which is definitely not Saltend.

Without it being spelled out for us, it now appears that the MOUs with ReElement and Vacuumschmelze, plus other initiatives reported in the chairman’s review, are removing the back end of the original plan. Under ‘Future Developments’ in the Operational Review, page 17, we are told about “further expansion into separation of heavy rare earth oxides and further downstream expansion into magnetic metal/alloy production and magnet recycling.” But none of this seems related to Saltend.

The emphasis on Saltend has disappeared. Is the second half of the original business plan no longer “core”? Has it been abandoned? What are the implications for the company’s ultimate profitability?

Saltend is in the balance sheet as an intangible asset, at £15 million, which is 30 per cent of net assets. Is it now expected to be written off?

Even more important, can the directors be trusted? Paul Atherley’s review in the annual report is dated 14 October and announced by RNS on 15 October. That same day a report was published by Stonegate Capital Partners containing the following statement: “Earlier plans for the Saltend rare earth processing hub in the UK have been shelved; management has confirmed that Saltend will not proceed.” How come Stonegate’s clients were given this privileged information but not Pensana’s shareholders?

What began life as the promise of an exciting ‘minerals to magnets’ enterprise is now being reduced, almost surreptitiously, to just another mining company. The really clever stuff, extracting ‘rare earths’ from raw material and therefore providing the greatest profitability, is being left to to others.

Two years ago the UKW share price was 153.6 and now it is 112.5, a drop of 41.1p, or 26.8%. This is more than twice the dividends paid. Two years ago the NAV was 167.1, now it is 151.2, a drop of 15.9p, or 9.5%. Because the share price has dropped more than the NAV, the NAV discount has increased in the past two years from 8.1% to 25.3%. I have been attempting to explain why this degrading of UKW may have taken place, which hasn’t been an easy task so it has been easy for others to scoff although perhaps not very sensible.

The KID tells us that UKW “is manufactured” by Schroders. In other words, Schroders, a well-known asset management company, launched UKW in order to profit from its investments. The difference from normal practice among investment trusts is that instead of managing a portfolio of businesses owned and run by others, here the assets are SPVs owned and managed by Schroders themselves. This is not apparent from UKW’s annual report, even for those prepared to read it.

UKW has an asset base which appears in the balance sheet as an IFRS 10 “fair value” calculation, subject to a range of variables that are themselves subject to change. The income from it is an “alternative performance measure” (APF) found in the 22 pages of unaudited information that come after the audited Notes to the Consolidated Financial Statements. The 2024 APFs show revenue of £771.1m (down 1.85%) and ‘net cash generation’ of £278.7m (just over one third of the revenue), but these figures are not subject to UKW audit. The APF net cash produced is also lower than in 2023, by just under one third, but it is enough to cover dividends of £221.2m.

The 2024 performance of UKW can be summed up as follows. Investments at “fair value” fell by £380.7m (6.8%). Debt increased by £470m (36.4%). Retained earnings fell by £312.0m (24.0%).

Could it be that the share price has been falling because Schroders is struggling to keep its debt and assets in balance? Is this the underlying flaw in the model? It is a good enough conclusion for me and I’m signing off on that basis.

AdamAnt, To get a reliable answer to your first question one would need to look at more than one year’s report, but for me that is not the point. It was my initial starting point when trying to understand how UKW (and TRIG etc) are reporting to their investors, but I came to believe that it cannot sensibly be done and might be a fruitless task anyway. Please note that not even the auditor attempts it, because the Investment Manager is not part of UKW, but an independent contractor, namely Schroders Greencoat LLP, although one only discovers that by finding Schroders’ name under ‘Company Information’ at the back of the report.

As to your second question, the audited cash flow statement suggests either that the dividend is not covered by profits unless one ignores the negative ‘Movements in fair value of investments’, or that if the negative movement matters (which it surely does as it appears in the income statement) it is only covered (if indeed that is the word to be used) by investment activities.

The ‘Operating profit’ for 2024 was £23.6m versus ‘Dividends paid’ of £249.8m. That low profit is partly a consequence of the £341.2m negative ‘Movement in fair value of investments’, which is added back in a note to the accounts to produce ‘Net cash flows from operating activities’ of £391.0m which then appears on the Consolidated Statement of Cash Flows.

But it doesn’t end there, because UKW is not a company selling electricity, but an investment company, so there are several other figures, including acquisition and disposal of investments and ‘Amounts drawn down on loan facilities’ of £139.0m. which net out at £233.8m, thus almost covering the dividend. The same was true in 2023, but the cash flows then included as much as £820.9m for acquisitions and a drawdown of loan facilities amounting to £1,040m, so clearly significant.

It has taken me some time to write this, so for that reason and space I will deal with other matters tomorrow. Please note, however, that there is no asset depreciation and the share price is at a discount to the NAV, not the other way round.

RisingBull1985, I'm afraid you are onto a loser, despite what the Telegraph's Questor would have you believe. See my recent posts on BSIF (which I once held) and UKW. These are all similar companies, with inherent flaws in their structure. All of them have huge and growing NAV discounts. In the case of TRIG, the last published NAV was at end 2024, when it was 115.9p. Then the SP was 85.8p, a discount of 26 per cent. Less than 3 weeks ago the SP had fallen to 75.5 and now it's 72.3, a discount of 37.6 per cent on that last published NAV.

TRIG is an investment trust, but doesn't have the diversification of a normal IT. The assets that comprise its investments are not held directly, so the income they generate doesn't appear in TRIG's accounts. Its income comes from two sources, one being "interest income from investments" and the other, as you may be surprised to learn, is a "net gain" on those investments, although that may well be a net loss as it was in 2023 and 2024 (£146.8m and £275.6m). You may also be surprised to learn that the "value" of the investments -- for which there is no market price -- is calculated by the concept of "fair Value", which completely depends on multiple assumptions rather than hard facts. All this information is available in the annual reports, which you can access online but do require detailed study to understand. https://www.trig-ltd.com/wp-content/uploads/2025/02/TRIG-FY-2024-Annual-Report.pdf

When you are told there is good dividend cover you might expect to see this in the audited accounts, but its not there. See the cash flow statement, which for 2024 shows dividends paid of £183.5m, but operating income of only £14.2m and in 2023 operating income was actually a negative £2.7m.

This is a response to Actuary63’s post three days ago, under the heading "Too much capital in sector not enough demand". In challenging my severely negative view of this investment, what he wrote was this: “On page 68 of the (2024 annual) report we find the Consolidated Statement of Comprehensive Income for 2024, which shows the group's investment income over the year was £394.7 million, a very similar figure to the wind-farm cash flow on page 9. One wouldn't expect them to be identical because of the difference between cash-flow and realised income, but it confirms that the income earned by UKW is from wind farm revenues.”

Actuary63 makes two fundamental mistakes. Page 9 is written by an external source and not subject to audit. The audited figure on page 68 is only one income element: the other main element is hugely negative, £341.2 million, reducing operating profit to £23.6 million and leaving PBT to a negative £55.3 million.

The audited accounts of Greencoat UK Wind PLC (the company) include its subsidiary, Holdco. Holdco invests in wind farms through special purpose vehicles (SPVs). Holdco has management service agreements with the wind farms, from which it receives substantial sums each year, paid out in their entirety to an Investment Manager and an Administrator, both of which are independent businesses. These sums are shown in a note to the company’s accounts, but the amounts do not feature in the company’s own accounts. In addition to those amounts, the company receives dividends and interest from the SPVs and these do comprise one element of the company’s income statement.

The other principal element of the company’s income statement is “unrealised movement in fair value of investments”. Clearly, this is a non-cash figure, even though it appears in an income statement. It can be negative, as indeed it has been for each of the past two years, £191,402 in 2023 rising to £341,229 in 2024. These investments are the SPVs which, to quote the audit report, are “unquoted equity and loan investments”. The value of these is determined, or rather assessed, by applying IFRS 13. The resulting “fair value” is included in the audited accounts, but the assets themselves are not part of the audit.

The Investment Manager’s report appears in the company’s annual report but is not covered by the audit. It shows a figure for net cash generation from which it derives a figure for dividend cover, but this alternative cash flow report is quite different from the audited cash flow statement. It includes dividends received from the SPVs but not the interest and not all its other figures can readily be reconciled with audited figures. This report by the independent Schroders Greencoat LLP – only named on page 105 – is confusing rather than helpful to investors in Greencoat UK Wind PLC and possibly even misleading.

What I have written above is factual, as anyone can check by looking at the annua

I have never shorted any stock and wouldn't know how to do so. These posts of mine are written to alert others to what I have discovered from hours of research. All the information you need is available online, but you have to look for it in the UKW accounts, which it appears most investors are not prepared to do. Simply relying on what the promoters say, based on unaudited figures, is not sound investing. If you can find the wind farm revenues in UKW audited accounts, please post here the figure with the page reference.

Yes, Actuary63, the market was horribly wrong in 2021, as in all the other renewable energy trusts. Since the market became wise to this, the NAV has persistently fallen, but the much greater share price fall shows that NAVs are still being horribly over-valued. It was only when I dug into the accounts and failed to get clear answers from the fund managers that I realised how we had all been fooled. It would be better if all posters here would do as I have suggested and look at the UKW accounts rather than just dismiss what I have written. It's your money at stake, but these are not good investments. Investors in them are being seriously misled by what may have started with the best intentions but can now be seen as a perverse structure which cannot be righted. It rather looks to me, from what I have seen and read, that the fund managers know all this, but can't get off the roundabout. The investment structure they have devised makes money for them, but this structure does not serve the end investor well, because the use of IFRS 10 keeps the figures that really matter hidden from their clients, ie you. As you can see if you look (and it may take some time to grasp), there is no direct, visible, audited connection between the income from turbines and the dividends paid by UKW. If you discover differently do put it up here, but frankly I think it is a lost cause.

No, Rylidan. Think again. Look at the last annual report and the audit report in particular. See how the "fair value" of the assets is arrived at. Study the financial pages and realise that UKW is an investment company with a single asset class (ie undiversified), wholly owned by a subsidiary, not in receipt of any income from sales of electricity but reliant instead on interest receipts from loans it has made to multiple SPVs which it indirectly owns but are not covered by the audit. Examine the cash flow statement and try to convince yourself from that that dividends are being paid from real income rather than from borrowing. Ask yourself why, since mid 2022, the "fair Value" of underlying assets has been sinking, despite all the government pressure for more renewable energy. It is tough to realise one has been seriously misled, but sometimes it does happen.

All these posts are far too optimistic. AlexHodler says "the company is surely solid", but 'surely' usually means that's a guess. A little time spent reading the annual is likely to change his mind. The NAV is built on numerous assumptions, nodded at by the auditor, but almost all of them pure guesswork. All these renewable energy companies suffer from the same problem and the only sensible conclusion is that the NAVs can't be trusted: it's nothing to do with some supposed "market dislocation". Further time looking at the annual report will reveal no audited justification for statements that the dividend is covered and the only reason the dividend yield has been increasing is because the NAV has been sinking. The dividend has in fact been flat while the NAV has been sinking, with the latest drop shown in yesterday's RNS, from 164.1p the year before to 151.2p now. Another calamity, of course, is the £59.2mn buy-back at 137p per share, when the share price now is 113p.

This is a vain hope, Riskingit. These 'green energy' companies are doomed to fail, because of their structure. If you look at the last BSIF annual accounts in some detail, you'll see what I mean. Most of what you would expect to see is hidden from view. What the 30 per cent NAV discount means is that the NAV simply isn't believed: it's an artificial figure derived from multiple assumptions and almost no hard facts. There is no reason to suppose that is ever going to change. As it happens, the NAV has also been steadily declining since 2022, which on the face of it is the opposite of what omne might expect. The DY looks good, of course, simply because the share price has progressively fallen away: this draws income seeking investors as moths to a flame, but even the dividend can't be justified by reference to the accounts and has anyway barely kept pace with inflation.

lti does seem to suffer from a form of verbal diarrhoea, having posted ten of the 14 posts since my last. it would be nice if he or she contributed to what could be a serious debate about what mike kerley is doing, but even when he or she states, “i am simply having to point out the facts,” he or she doesn’t. assertions are not facts.

lti wrote, “hfel issue shares at a premium when there is a demand – end of”, but has shied away from attempting to show, in actual money terms, how this benefits existing investors, even though he repeatedly asserts that it does. if he or she is so certain of this, it should have been a simple matter to do what i asked and provide us with the figures, but lti’s posts are barren of facts.

the last directors’ report tells us that 3,855,000 new shares were issued for a net £11.0mn. that’s an average of 285.34 pps. the downward sloping share price graph in 2021/22 was fairly smooth, so it might not be unreasonable to assume an average price from the starting point (301.5) to the finish (281.0). that average is 291.25, or 292.25 if one allows 1pps for the offer price being above the mid price. this is actually 7p greater than the average price at which the new shares were sold, suggesting a deficit rather than a premium. we should politely assume that mk did better than that, but was it more than 12 pps better? if it wasn’t, there was no gain at all from the so-called premium and we have all been fooled.

as my last post revealed, the increase in ‘other expenses’ in 2021/22 was £196,000. that is equivalent to 5 pence for each of the new 3,855,000 shares issued that year. so to break even, so to speak, on the issue of new shares, mk needed an extra 7pps to equal the average in the market and another 5pps to cover the extra costs. that would have been a price of 297.34, raising another £462k, just to break even. it should be noted, of course, that whereas the supposed premium from the sale of the new shares would have been a one-off, the increased expenses will occur every year.

lti has also written, sarcastically no doubt, “i tend to make investments knowing what the investment is.” we’d all like to think that, but how can lti know what the investment is when he seemingly focuses solely on the dividend yield and not only ignores other matters but refuses even to consider the issues that others are raising, preferring to **** them off? very disappointing, especially in someone who is supposedly a long term investor.

we will soon have a new annual report to consider. i can’t be alone in hoping that lti will study it carefully, before launching into another grandstanding performance.

My last paragraph to lti was inadvertently chopped. Here it is in full.

A final thought for you to consider. As new shares have, we are told, been continually issued at a premium, that obviously suggests there is an appetite for them. So, if new shares had not been issued to satisfy that appetite, the would-be investors would have had to buy them in the market. Usually, when there is a demand for shares and their number is capped, the price goes up, so existing investors enjoy the boost, but when more shares are pumped into the market that doesn’t happen. Oh dear.

LTI

The directors of HFEL will be pleased to have someone as knowledgeable and forthright as you to defend and promote their strategy. This will no doubt help the sale of new shares, but please explain how we benefit from the premium at which they are sold. How much did this come to in 2022 and where does it appear in the accounts? Is the amount greater than the additional costs incurred, such as increasing audit costs to which I have previously drawn attention (up 23% in 2022).

Have a look at page 50 of the 2022 annual report. This details all ‘Other expenses’. The total increase was £196k, up 21% (the directors got 12%,). How does this compare with what might have been raised from the premium, do you suppose? Would you please do the calculation and share it with us. I have shared my research in several posts, beginning in response to monkeyman99 on 2/9/23.

Monkeyman99 wrote, “Having gone through the portfolio it is clear this portfolio should had been trimmed down and the asset manager is clearly struggling with this portfolio due to its size.” That prompted me to post this.

“It is evident to me that HFEL has been repeatedly issuing shares in order to buy additional earnings and profits with the proceeds, so that it can continually increase its dividend. One adverse consequence is that the accompanying dilution substantially reduces the effect on its EPS/DPS. Another, which is a real danger, is that in straining to acquire more dividend income HFEL is buying companies of increasingly poor quality, which will hold the capital value back when markets recover. These are the stats for the past 4 years: revenue up 33.7% and profit after tax up 37.9%, BUT EPS up only 9.9% and dividend up only 10.2%.”

Do these facts not suggest that at least some of the additional capital has been wasted?

As Napoleon found, constantly increasing the size of your empire can lead to disaster, not glory.

In my letter to Ronald Gould I wrote, “In your chairman’s statement last November you claimed that the NAV had grown by 1.9%, but that is at odds with the Janus Henderson fact sheet. That shows minus 6.7% for the 12 months to June 2022 and minus 1.6% for the full five years to June 2023.” His reply did not address that apparently deliberate misinformation. Do the directors (paid £183k in 2022) actually know what is happening?

You like to deride other posters, but you do not address the facts, nor try to justify your opinions with evidence. This is hardly helpful to others, even if it leaves you feeling smug.

A final thought for you to consider. As new shares have, we are told, been continually issued at a premium, that obviously suggests there is an appetite for them. So, if new shares had not been issued to satisfy that appetite, the would-be investors would have had to buy them in the market. Usually, when there is a demand for shares and their number is capped, the price goes up, so existing investors enj