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Hi WWG I have been investing for some time and rely mainly on my portfolio for finance. However as my main portfolio is boring, long term and consists of FTSE 100 cos and fixed interest investment it almost gives me nothing to do.
So , as i enjoy the mental challenge of investing and the sometimes stimulating debate it brings I run another much smaller scale portfolio of "blue sky" companies which just might become giants.In its perverse way this smaller, more volatile but much more interesting portfolio occupies much more of my time. It is also a portfolio in which I can and do trade,therefore I monitor it closely and adjust my positions more frequently.
I don't see it as "gambling" in that sense, rather as pitting my wits and backing my judgement and like all of us I get a "buzz" when I get it right.The upside is i can sleep peacefully at night as my losses(infrequent though they are!!) are not financially significant , they mostly only dent my pride.
As to my position in sxx, I did exit at a good price and also said I might re-enter at sub 20, or after ST2 , IMO the recent news has been less than re-assuring and I am holding off for now,as the short-term prospects still seem weighted to the downside.

Sorry cranleigh I reread your post , your audited historic cost NAV, implies that you do recognise that the historic cost of the assets may not be reflected in the SP, so you are willing to pay me more than the SP in 2024 if it is lower than the assets cost?
Is that right?

Cranleigh If I buy shares now at 20p , you offer me the appropriate call option premium of, lets say 20p, to hold an option to buy in five years at today's market price.
I get the option premium , so I get the shares for free, in 5 years time you pay me a further 20p to acquire my shares. I am guaranteed to double my money.A notional capital return of 100% or about 15% pa compounded( though in actual fact infinite 'cos I have paid nothing out)
You , on the other hand undertake to pay me twice today's market price, whatever the SP is in 2024, which may vary from zero to several pounds You earn anything from -200% of your outlay to infinity.My only risk is Schadenfreude at seeing you make a fat profit.
I would much rather be on my side of the deal.But as I said i don't hold any shares , however, if you are serious, i'm sure a legally binding contract could be drawn up.........

Couple of recent RNS's detailing share issues to satisfy the share incentive plan which was a hot topic here a while ago.
Today's document the award of 825k shares bought at 45.86 p .
Notes
These are new issue shares for which the company and the staff have paid, so add ~£550k to the kitty and increase the shares in issue and market cap ever so slightly
Each employee awarded pays from PRE-TAX salary for some, gets twice as many bought by the company and some "free" shares . So far as I can see there is nothing in the RNS which specifies any milestones or conditions to be met.

Cranleigh .I'm sure you understand that If you write me a call option you are paying me a fee to buy my shares at today's price in 2024.If I were to accept .as you probably know, though others may not, options expiry is normally quarterly and option premia are 5% is(though as a fairly volatile share I should probably ask more). Therefore you would be paying me >5% per quarter for five years, or about the full current price of a share. Thus you would need the SP to double to be in profit. You may well make a large profit , I, being a cautious investor, would be happy with the guaranteed doubling of my investment(plus the guaranteed revenue stream for further investment.) If only I were a holder we could have a deal . Sadly......

John 2015 credit for the calcs(and the dose of realism they engender) is entirely due to wwguk.

Scotman I said well done because its nice to read a thoughtful , well-researched post rather than gratuitous insult. Thank you for underlining my point so effectively!!

WWGUK re your 22.30 post.

I think your post provides a very useful framework for analysis(so much so that I have already consumed 2 cups of coffee thinking about it!)
First and most fundamentally in its favour is that it addresses the real problem of SXX and all other companies and that is money.Far more companies fail or are held back by financial problems than by problems with their actual business.
Your post sets out , based on certain assumptions (and they can only be assumptions at this stage)the cash inputs to each stage of SXX's future and arrives at a SP of between 35 and 46p by 2024 at 10 mtpa production . While we both know that the arithmetic depends entirely on the inputs chosen , I think yours are at least of the right order of magnitude and hence offer very plausible outcomes, far more rational than the £1 next xmas we often hear here!
Now the bad news !, (anybody who has ever read my posts knew this was coming!)
Cash inputs do not always match cash outputs, in simple terms the cash will be turned into a mine which is obviously the driver of SXX profits., but companies are notoriously capable of value destruction and the stock market graveyard or infirmary are littered with examples where the cash spend does not produce £ for £ outcomes.It is for this reason that the SP does not directly reflect the long-term NPV of the company, the market is and will remain wary until the major milestones are successfully cleared. That is why your perfectly plausible cost analysis requires a discount factor for risk , which may be anything from a few percent to 100%, and sadly is not readily susceptible to soundly-based arithmetic evaluation.
However leaving my caution aside I repeat ,I think your analysis is strong.It will be well worth holding on to it and plugging in the real values at each stage of the process to compare it with reality in both input costs and the key output measure (ie SP)
well done !

Yeah Cranleigh you're right , I was trying to find a way to explain to wwguk why the additional debt acquired by Eg SXX would not automatically add to the SP but my example is flawed.The problem is that wwguk is assuming that access to the debt automatically elevates the SP , on the basis that it provides the wherewithal to build the mine. As you say the debt is offset by the cash in the bank,if you can set out a better logical answer to the problem posed in Wwwguk post of Sat 2.51 please do so..

HI PE some simple answers to your questions based on the UK market system.Qualification- this describes normal, legal activity.
Q1 Anyone in the US wanting to buy a ftse share must submit a buy order with a broker with access.They can do so outside of UK market hours but obv. it will be processed within UK market open hours.
Q2 It is a requirement of the UK Stock exchange that the "beneficial owner" of a stock is identified(but that may be an offshore co , which is owned by another entity which is owned by another entity ad infinitum)...
Q3 It is a legal requirement that the "beneficial owner " declare his/her/their interest in a share above certain levels, but this can be circumvented by creating multiple "vehicles" each of which hold below notifiable levels , this is illegal....
Q4 Anyone with the financial firepower can manipulate a stock price by either buying in volume, hence driving the price up or by shorting hence driving the price down . Read the Bunker Hunts attempts to corner the silver market decades ago, but the effect on the SP in a large company (which despite no revenue SXX is )may well be less than the costs incurred.To , as you suggest, manipulate the SP down is not easy , it presupposes a large "short " position , which as you unwind , ie buy back to cover , drives the SP back up again. It needs someone much cleverer than I (and there may be the odd one somewhere!!!.)

Follow up for WWGUK
I think the best way of dealing with your belief that the Enterprise value (EV) should be regarded as relevant to the subsequent SP value is a little "thought experiment".
Lets assume that you are the FD of a medium sized company and you and your fellow directors design a bonus scheme for yourselves.

The SP is £1, the company has 100 mill shares in issue, market cap £100 mill, your scheme rewards you with 50% of your annual salary as a bonus if the SP in a years time exceeds £1.50. You go to the AGM, the shareholders think yeah fine, we're looking at a 50% profit and vote it through.
9 months on, the SP is still £1 and your bonus is far away , so you trot off to the bank, tell them you want to build a new factory and need £50 mill, they lend you the money, you bank it and suddenly the company's EV rises by £50 mill. Your posts suggest that you believe that the additional lending should affect the SP directly Ie EV now £150 mill still 100 mill shares - SP £1.50, bonus assured!!
It doesn't work that way for, I hope, obvious reasons.
Borrowing money whether as part of, or in parallel with, other fund raising DOES add to the EV BUT not to the SP.
You are correct in assuming that successfully acquired funding will be positive to SXX , but the effect on the SP will be entirely subjective, not arithmetically based .
As ever debate and disagree if you want , I will respond as and when I can

cheers !

Hi WWGUK finally got some spare time to respond to your posts of Tue 1.08 et seq.
At the risk of telling you what you already know i'll offer a little background before the arithmetic.
Companies can broadly raise funds in only two ways, via debt or equity (ie new shares)though there are variations , they all amount to these or a combination (ie Convertible bonds)
To quote my old MBA text book "the risk to investors is lower on debt and higher on ordinary shares (ignore prefs),therefore debt is the lowest cost source of funds." If you wonder why this is the case it is because debt ranks above shares in the pyramid in an insolvency and get paid first .
If a company decides to raise funds via equity it can "place" shares or make an "open offer" a placing is organised by "bookrunners " who promise to find Institutions to buy the shares and if they cannot, to buy the shares themselves. Thus obviously the bookrunners take on the risk of buying shares in a company that they might not wish to . In order to ameliorate this risk they earn a fee and they seek to keep the shares on offer at an attractive price , normally below and often well below the market price.It is also the case that IIs who buy in a placing could have bought on the market, but have not,as it is the "discount" to market price which attracts.In addition of course the reason the company needs the money is relevant if it is a "rescue " situation the discount will be higher than if it is a company whit a new idea or product or market opportunity a la SXX.It is mostly silicon valley start ups which have set a fashion for placings at a premium , this is exceptional, and appears to be a passing fad.
So , generally a placing will be in the form of an offer to "sell X million shares at an indicative price of between Y% and Z% BELOW the market price . where the calculation is that X million at Z% brings in enough revenue for whatever purpose it is intended.
THIS IS AN EXAMPLE(in round figures) so please anybody don't start shooting the messenger again.
In the current SXX situation, there are 4.8 bill shares outstanding market cap ~£1 bill and they need $500 (around £385)mill of additional cash, so with a current SP of 20p they could offer 2 .6 bill shares at 15p(ie a 25% discount) to raise the money.The company ends up with 7.4 bill shares in issue and the MC rises to ~£1.4(note as they have sold shares the cash is in the bank and has not added to debt )
The simple logic of this transaction is that the new SP should become £1.4bill divided by 7.4 bill, ie 17.1p. The existing shareholders lose, in that their shares are worth 2.9p less, the placed shares immediately become worth 2.1p more.
Normally as soon as a placing is announced the SP will move sharply towards the new composite price.It is also the case that the "bookrunners" and indeed the company are well aware that the buying II's are lined up and the "book" is closed within hours.
Will follow up with more in a while.

My final word on this thread . I have one intention only , that is to analyse the financial news relevant to SXX and offer an opinion (no more, just an opinion like all the rest here)on the implications of current events.No one need read it nor act upon unless they choose to. Despite the regular sarcasm and personal abuse it draws I hope to help balance the often inaccurate and wildly optimistic interpretations of others.As I seek to interpret rather than merely reproduce details of published materials I will get it wrong sometimes , and when I do I hold my hand up.
Nevertheless, I believe that sensible and profitable investment requires more than just following the company and hoping / believing all will be well.My input is intended to better inform the debate , indeed to stimulate debate and to promote critical (in the sense of analysis not criticism per se) thinking rather than for this forum to be a one sided cheerleading affair.
PS I will continue to post I still owe wwguk a response and will deliver it !

Litc I refer you back to your post of last thurs.13.06 "the lions share of the $3 billion as straightforward debt underwritten by HMG ....."
and at 21.09 " $1.5 bill of corporate bonds underwritten by HMG at a coupon of ~2-3% ..."
And you still think nothing has changed??????

OR interesting thanks.

Litc Istill don't seem to be able to convince you that today's RNS implies that Gov has passed much the risk from itself to the lenders,therefore they will expect more profit from it to bear that risk and the latest figs ~(if accurate) illustrate that.The IPA backed portion was always the lowest risk to the lenders(and hence cheapest) and is now smaller.Debt service cost for SXX will clearly be higher than before and will weigh more heavily on the company before it is earning any revenue so higher costs for longer, ergo lower NPV lower SP.

Hi MYO i see the figures , i await the reality! I will apologise profusely if the Chines companies with Torps ever take the full amounts .
Incidentally, as our resident researcher can you establish how many of the 800 people working on the project are SXX direct employees(my FT feed, admittedly probably many months out of date, shows a headcount of <100 for SXX) and how many contractors? and how much of the 2.5 millions of man hours expended thus far is UK based and how much is actually going on beyond these shores?
I suspect that as yet a lot of the cash expended has not "worked its way in to the local economy," though in time I am sure it will.

Litc re your 3rd para .
The problem is that the "early money " is the most at risk therefore commands the higher reward. Two things stand out the newly identified high yield bond up front will be expensive , remember the coupon on the CB's was/is 8.5% and they hold the hope of a capital gain. A new round of bond issue will have to offer similar or better terms inf there is no conversion option.
In addition as the IPA tranche is later rather than parallel?,the government has reduced risk to the taxpayer by transferring most of it to the unbacked debt and hence the risk borne by banks for the unsupported element is correspondingly greater.As a consequence they are likely to price that debt higher.
I stand by my analysis( as incidentally do Liberum, you, perhaps inadvertently? omitted their comment that "it also puts upward pressure on the interest cost...."

GK sadly companies cannot fund their borrowing by issuing gilts only the UK gov can do that! Also if you look at the chart you reference from MId 2016 to now yields have risen., along with almost all forms of commercial debt. That really is a fact.

Scotman I think the only clear things to come out of today's RNs are that ST2 is not yet resolved and that SXX debt service costs are likely to be higher than forecast. I suppose it was always likely that this would happen as borrowing costs are rising all over the world.and risk appetite is falling .That's more to do with global politics/economics than anything SXX specific. However caused, it is going to affect the medium term funding picture and until that is entirely clear the SP will IMO drift.Today's RNS , unsurprisingly, did nothing to resolve matters and that is why IMO again, the SP has fallen, and may fall further. IF the FT's figures are based on knowledge( and I repeat, despite its unpopularity here, the FT has a world wide reputation to protect, and they are unlikely to pluck figures out of the air)then my wet finger estimates follow directly from the revised position , they may be wrong but they indicate a probable consequence of increased debt cost.That knocks on to the NPV and possibly implies a slow down in engineering progress(note , I have not yet listened to the conference call)if a funding resolution drags on much longer.