Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
“Meconopsis
You are getting yourself confuses between 'captiatl returns' and 'dividends'.
They are not the same things at all and are treated totally differently, as stated, under taxation rules.”
You are correct only insofar that dividends (payments declared from excess, retained profit); capital distributions (most typically from the sale of an asset) and share buybacks are all a form of capital return to the shareholders.
Your example stated dividends. Dividends are taxed as income. They are paid after the payment of corporation tax to the shareholder who then pay tax on dividends based on their marginal tax rate - https://www.gov.uk/tax-on-dividends
If a company declares a capital distribution to shareholders then that is taxed via capital gains by adjusting the base cost of the shares - https://www.investopedia.com/terms/r/returnofcapital.asp and https://library.croneri.co.uk/cch_uk/hmrctaxm/cg-cg57800 (I can’t be bothered finding the HMRC bit).
My only point with all this being that if you’re going to call someone dumb then please be correct with what you’re insulting them with.
I make absolutely no judgement about anyone’s dumbness here :)
"Now, its not my fault a simpleton like you doesnt understand the taxation treatment of capital returns. Ive explained it to you plenty of times before, clearly you are too daft to understand.
So to make it easier for you, lets just suppose i bought a s8ngle share for £5 in 2017, for arguments sake. That share has received nice fat dividends twice a year for that period until the current date. Lets say 40p/year for 7 years. This would total up to a capital return of 7x40p= 280p.
What do you think the base cost price of that share is now for taxation purposes?
You'll probably say £5 because your dumb, but the answer is, and check with HMRC if you wish, £2.20."
I'm not wishing to call anyone anything. But this is manifestly incorrect.
Dividends received outside of a tax privileged investment vehicle (ISA, SIPP, etc) are taxed as income - even if reinvested.
Your capital gain (or loss) is based on your original purchase price.
On the subject of checking with HMRC then I'd suggest visiting https://www.gov.uk/tax-sell-shares/work-out-your-gain
This, from The Times…
“There remains significant uncertainty as to the extent of any misconduct and customer loss, if any, the nature of any remediation action, if required, and its timing,” Lloyds said of its motor finance charge. “Hence the impact could materially differ from the provision, both higher or lower.”
Presumably, they’ve taken a “most likely outcome” case based on what they know from engagement with the regulator and other affected organisations.
You would expect the financial services organisations to be working together on an “industry position” to at last some extent.
Looking at the Lloyds results, I’m inclined to agree with @liam1om - their forwards guidance doesn’t include any indication of the need for further provisioning.
“ Any writedown on an asset valuation will of course be non cash and just affect the Equity level”
It is non cash. But IFRS requires that investment gains and losses are now recognised in year and not when actually realised.
I leave it to the more eloquent Mr Buffett - https://www.berkshirehathaway.com/letters/2017ltr.pdf
The thing to be careful of with the reporting of the CITI note is that - almost certainly - none of the reporters will have seen the CITI note itself, just the associated new release.
In terms of headline EPS, it's important to remember that the IFRS requirement to account for unreleased investment losses means that headline profit numbers take a hit when the underlying investment value go down. Commercial real estate is in the doldrums and L&G will have taken a substantial paper "loss" on its investments in Cardiff, Bristol, etc - regardless of the fact that they're substantially fully let and L&G was not planning on selling most of the redevelopments.
"Negative investment variances" are only an issue if you need to sell the investment.
Personally, I regard that as fluff and noise.
It's also important to remember that this will be the first set of full year results using the IFRS17 accounting standard, which defers recognition of new business profits by pushing those profits into the Contractual Service Margin (CSM) and Risk Adjustment (RA) pots.
It might be that operating profit (broadly money in vs money out, ignoring unrealised investment gains/losses) is down 3%. But that needs to be read in the context of what happens to the CSM/RA.
It wouldn't be a surprise to see assets under management down again - although someone in the industry recently reminded me that all those pay rises have had associated pension contributions attached to them.
PRT and annuities will be both up. Substantially.
It might also be the case that the new CEO clears the decks by recognising losses on some of the pet projects of the former CEO.
“This is getting fxcked…..dividend will be cut or suspended, watch this space, its long term gilts are being decimated. 340 target, and Iv nailed it so far you 🤡🤡🤡‘s.”
Clown car for Porchy…?
"Just hit my target 440, god I’m good, the backchat I got from you 🤡’s when I said months ago where this was going. New target 396 by Dec…..the stuff under the waterline with this junk still to come out…..enjoy. God I have made ridiculous sums of money shorting this year, get yourselves over to IG or someone and buy in the money PUTS on this rubbish and make 5x plus what you are making ( losing 😂 ) on U.K. ftse shyte like this. Dividend numpties."
That went well Porchy.
Absolutely prophetic insight.
Still, you got your 440.
"If D S Smith shareholders are given share in Mondi, that's a take over. If shareholders of each get shares in a new entity , that's a merger."
My view is that if the board of directors of the resulting company is mainly ex-Mondi BoD then it's a takeover. If it's more evenly matched then it's a merger.
Look at the proposed "merger" of BDEV and RDW. Only one exec and two non-execs from RDW make it into the new board or directors. It's a takeover.
Mondi talks about a "combination" :)
SMDS market cap is £4b (ish); Mondi is £6b (ish).
Morningstar suggests that SMDS is trading on a 16% discount to fair value vs 2% for Mondi.
That would appear to cap any premium for an all share merger at 20-25%. You'd expect a higher premium if it was a cash offer.
Thoughts?
It's worth having a look through them. At least one new short position. LOTs of corporate to-ing and fro-ing.
No worries FangKat - I suspect that we were writing at the same time.
Absolutely no offence taken nick2723.
"The dealer sells the car, making his money, and then the customer chats with CBG to get alone to pay for the car. This makes CBG liable for mis-selling, as they did not offer them the cheapest deal."
Not quite.
The customer goes to the dealer who acts as a credit broker for the finance company (CBG, Black Horse Finance, etc).
The customer asks for finance and they've got three options:
- 2% APR and the dealer gets a £500 introduction fee
- 4% APR and the dealer gets the £500 introduction fee plus (say) 1.5% of the additional 2% APR
- 6% APR and the dealer gets the £500 introduction fee plus (say) 3% of the additional 4% APR
Because the customer seems like they can afford it, but aren't flush, the salesman opts to provide an illustration at 4% APR. The customer is happy with the quote.
No mention is made that other interest rates were ever available.
The customer signs up for credit using paperwork provided by the finance company.
The introduction fee is fine and doesn't need to be disclosed. It's a flat fee and a cost of doing business.
BUT, the additional 2% adds, say, £2,000 to the repayments of which £1,500 goes to the dealer. The consumer credit act says that that commission must be disclosed as it affects the loan repayments.
It's all on the finance company paper. The finance company has the duty to disclose.
The point is that the customer wasn't made aware of all of the options and that a better value option was available.
IF the finance company had declared that £1,500 of your repayments are going to the dealer as commission then that would have been ok.
Hope that makes sense.
I understand your point about brand Krustysmegma.
It probably helps that they've already got experience of working with the three brands together on site. What customers see as branding will count more than corporate ownership. Few will care that it's the same corporate entity. For example, people don't seem to struggle with Skoda / Volkswagen / Audi being one and the same.
FangKat - the way the discretionary commission worked is that there was generally a base rate where the dealer got an introduction payment, but no cut of the interest payment.
The value of that introduction payment didn't need to be disclosed because it was a flat fee and had no interest on the APR paid.
If the dealer used one of the higher interest rates then they kept some or all of the additional bit. The value of that bit should have been disclosed as it was a direct component of the APR.
nick2723 - why CBG and not the dealer? Because the contract was between the finance company and the customer - not the customer and the dealer.
It's important to say that I'm not agreeing/disagreeing on the rights or wrongs - just reporting the basis of the Ombudsman decisions, which are worth reading.
It's worth noting that CBG are one of the smaller players. The three big players are Lloyds, Santander and Barclays. All of whom will be fighting the corner of minimising payouts.
FangKat - I agree.
It wasn't illegal to have different interest rates.
But there was a requirement to disclose the value of commission payments. The finance companies cop the compensation as it was them paying the commission and so they had the requirement to disclose it.
Where the value of the commission payment was disclosed then there is no case to answer. Some finance companies did disclose the value of commissions.
krustysmegma - it's well worth reading the analyst presentation deck at https://investors.redrowplc.co.uk/sites/redrow-ir/files/offer-for-redrow/presentation-recommended-combination-of-barratt-developments-and-redrow.pdf
their argument is:
- cost savings through synergies - half of which look to be low hanging fruit based on the expectation that they'll achieve them within a year
- take redrow brand into scotland and onto more sites - this gives a bigger range of home types and price points on each site
the latter point is an interesting one. where they've had both brands on a single site then they believe that planning permission was easier to obtain and both brands sold homes more quickly. i'm presuming that it's because it reduces the ****genisation of the site.
as i say, the deck is worth a read.
it must be said that if you care about immediate capital value and income then it sucks in the short term.
"Martin Lewis: £13 billion could be paid out over car mis-selling
BBB report that money so with so many peoples will take complaints so quickly go up as there is no one dont like money . Letting this into trouble as more and more people aware now ."
It's important to moderate the Martin Lewis headline with the fact that he's stated a range of outcomes like customers being fully reimbursed for the whole loan or the whole interest amount.
Neither of which is where the relevant Ombudsman rulings landed, which was that the customers:
- had the car, so have to pay the value of the car
- chose to take financing, so have to pay interest
In both cases, the compensation was to pay the difference between the interest rate paid and the lowest rate available at the same car dealer - plus 8% per annum.
This ISN'T the same as PPI mis-selling where the whole premium was returned. In those cases people were sold products that they didn't need or would never be able to claim against.
In this case, they got a car they wanted, paying in a way they preferred.
I know others here question why compensation is due.
Yes, customers were offered a deal that they knowingly took - at a time where the offering different interest rates wasn't outlawed as it is now.
But, the issue is that the value of the commission payments wasn't disclosed to the customer. Had it been disclosed then the Ombudsman argues that customers were likely to have sought to haggle on price / rate.
In truth, I don't understand all the negativity here. And the reaction here certainly doesn't reflect the wider analysis in the market, which has broadly
I thought the results showed "steady as she goes" competence by the Board. Yes, profits and the dividend are down, but that's to be expected at this point in the cycle. Cash conserved. Headcount down 10% through a hiring freeze, which controls costs without destroying morale.
We'll have to wait until the end of Feb before we see what PSN and TW do in terms of dividends, but I'd be amazed (and actually distressed) if they don't similarly cut dividends by around 50%.
I think the merger is a shrewd move. Prior to the announcement:
- BDEV had a market capitalisation of £5.5bn against net assets of £5.4bn, of which the land bank is £3bn - so BDEV were trading at par with NAV
- RDW had a market capitalisation of £2bn against net assets of £2.9bn, of which the land bank is £1.6bn - so RDW were trading at a 30% discount to NAV
By proposing a merger with Redrow and making the offer all share the Board is calling the bottom of the market cycle. Rather than taking over a basket case like Crest which will take years to come right; it's proposing to merge with a competitor that it's already worked with, with complimentary market offerings and where co-branded sites have had better sell though than single-brand sites.
The all share nature of the deal preserves capital in the business and we end up with a company with net assets of £8.3bn of which there's £850m of cash and a land bank of £4.6bn. That land bank value is a "bottom of the cycle" valuation - so will improve as the market ticks up.
The immediate downside is that the combined market capitalisation has dropped to Redrow's discount. On the basis that the stock market appeared to trust BDEV's Board over RDW's then I suspect that the discount will get priced out once the merger happens - although still subject to both shareholder votes and Competition and Markets Authority approval. But I'm relaxed about that.
I also realise that I'm in a TINY minority here :)