Member Info for hghotshot

Trots, you are clearly not as clever as I thought or as clever as you think you are.

Have you ever heard of compounding? 1.123 to the power of 6 is 2.006.

Trots, yes, of course you are correct. The yield on FGEN is 12.3%. I was doing the calculation for NESF (15% yield) and got it mixed up with FGEN. I should be more careful.

However, I believe your maths may also require attention. If one invests at the current share price and dividends continue at the current level of 12.3%, you will receive back your initial investment in dividends after six years (not eight). I agree, you should always make investments decisions for the right reasons; that includes being able to do the maths ;-)

Trots, thanks for this erudite contribution.

As regards the "capital return vehicle" comment, it may be worth pointing out that if one invests at the current share price and dividends continue at the current level, you will receive back your initial investment in dividends after five years. Seems like a good idea to me.

Damien, you may find this more informative:

https://quoteddata.com/research/foresight-environmental-infrastructure-strategic-refresh-mc/

I am aware that the research note was paid for by FGEN. However, I find the content very convincing.

To address your concerns surrounding assets wearing out, I would make the following comment. It is normal business practice that all assets are subject to continual repairs, maintenance and replacement wherever necessary. I have no reason to believe this is not being done.

Even if assets were to “wear out” (which I don’t think they will), I would find the following statement from the research note a source of significant comfort:

“As at 31 March 2025, the weighted average remaining asset life of the portfolio was 16.3 years, although the manager feels it is being conservative in this area, especially in its AD (anaerobic digestion) portfolio.” 

Once again, even if assets were to “wear out” (which I don’t think they will), they will be generating significant amounts of cash for more than 16 yoears.

To return to my initial point, my only concern surrounds the effects (if any) of the possible changes in the use of CPI/RPI which are currently under discussion, on FCF and dividends.

By the way, what is a “capital return vehicle”? I have not come across such an expression before.

Damien, I do not share your concerns. I am confident in the long term viability of the company. The 2025 results were perfectly satisfactory.

https://player.vimeo.com/video/1095605180?h=7dd4bdb171&badge=0&autopause=0&player_id=0&app_id=58479?share=copy

My only concerns are those surrounding the changes which are currently being discussed, on FCF and dividends.

My principal concern is whether the planned annual dividends of 8.43p (over 15% at current share price) are sustainable long term. According to the most recent Net Asset Value and Operational Update as at June 30, 2025 (issued on August 21), the planned current year dividend is forecast to be covered 1.1 - 1.3 times, which indicates that management is confident that future cash generation will be sufficient. Clearly the possibility of a reduction in NAV is not good news, but surely that is of limited concern if dividends and dividend cover continue at the current levels.

Clearly the possibility of a reduction in NAV is not good news. However, my principal concern surrounding the changes which are being discussed, is the effect (if any) on FCF. According to the most recent Net Asset Value and Operational Update as at June 30, 2025 (issued on August 21), the planned current year dividend of 8.43p is forecast to be covered 1.1 - 1.3 times. What are going to be the effects on dividends and dividend cover? I have seen no comments on this.

Clearly the possibility of a reduction in NAV is not good news. However, my principal concern surrounding the changes which are being discussed, is the effect (if any) on FCF. According to the most recent Fact Sheet (June 30) the dividend is covered 1.2 times. What are going to be the effects on dividends and dividend cover? I have seen no comments on this.

This must be a sad day for you two?

Received today. Some encouraging remarks which I am happy to share.

https://theoakbloke.substack.com/p/golden-opportunity-for-gpm-golden

Trek,

Thanks for that clarification. I am a long-term fan of your contributions.

For the record, I am a long-term fan of RECI. Dividends have been near enough 10% for many years with the share price at a discount to NAV of around 15% for a long time now.

You mention in your earlier post, "For long term investments there’s much better elsewhere imo." What do you have in mind? I wish I could find better?

"Afterall the divi has been flat for over 5 years and the NAV has been drifting down and yet they still want 1.76% in charges plus a performance fee!"

I believe you may be mistaken. I believe the 1.76% to which you refer includes the Performance Fee.

The Management Fee is 1.25%. The Performance Fee is 20% of the amount by which performance exceeds 7%. See page 96 of the 2025 Annual Report and Accounts.

WillJa,

My apologies. Sorry, schoolboy error in my earlier contribution. FCF is, of course, calculated before dividend payments and interest payments on debt so there will be no change in FCF as a result of increasing borrowing which is used to buy back shares, as you rightly state.

However, the principle of the exercise remains valid. The cash remaining in the company, after cost of debt and dividends, will be significantly increased by replacing equity which costs 13% with debt which will cost much less.

The discount to NAV is now 30% and the dividend is over 13%. Why are there no buy backs? It is as if the company does not see value in the shares. FCF could benefit significantly from borrowing at far lower than the 13% dividend cost and buying back the shares to save on the dividend payments.

Borrow £100 million at (say?) 6%, costing £6 million. Reduce dividends paid by £13 million. What am I missing?

Yes. In other words, if all properties are revalued with an uplift of 11.4% the share price discount will be around 50%.

EPRA Net Tangible Assets ("NTA") figure at June 30, 2025 was 209.5p.

CLS is majority owned (55%) by the Morstedt family trust. Peter Gyllenhammar AB now has 3%. I cannot imagine that a 3% shareholder can have a significant influence on business strategies under these circumstances.

I bought some more at 56p. I couldn't resist at this price. The shares are now at a discount of more than 73% (based on the buy price of 56p and EPRA NTA of 209.5p). This does not make sense for a business that is making decent money.

There is a massive disconnect between the business performance and the share price. Something is wrong. I have said this before: I think it is the share price is "wrong".

The shares are now trading at a discount of 70% (based on the current buy price of 63p and EPRA NTA of 209.5p). Discounts in real estate companies and property investment trusts are commonplace, but I am unaware of a discount of this magnitude for a company operating in major European economies.

Something does not add up. I think the share price is "wrong".

I can remember a time when this board was interesting, informative and entertaining. It was only occasionally polluted by claptrap from GG and rrb. Sadly, it has now become the most excruciating board since such boards were conceived. The relentlessness and sheer quantity of the drivel being perpetrated leads one to question the sanity of the perpetrators.