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Hard up .. have a think about where base rates are now?

Final salary pension schemes have been hard hit because of the way their valuation is calculated ie the link to Gov bond yields / annuity rates which have been on the floor whilst interest rates have been 0.5% fro the last 14 years.

I suspect you might just find that the actuarial valuation shows it to be in surplus.

To explain lower yields mean a lower discount rate. Every 0.25 percentage point fall in the discount rate (calculated using inflation-adjusted gilt yields) adds 3-4 per cent to pension liabilities. This means that by some estimates a scheme’s on-paper actuarial liabilities are about three times what it would actually have to pay out.

However that maths is now working in reverse. Ten-year UK government bonds now yield more than 3 per cent. Pension Protection Fund data showed that 672 defined benefit schemes were in deficit in February; last year the number was 3,149. More and more schemes are heading for a level of surplus that allows them to be transferred to an insurer, relieving the sponsoring company of responsibility.

How about you go educate yourself ..... https://www.ft.com/content/23936304-4c6c-4273-8a56-faf3a948f05f

And so your point is?

Something I found interesting hidden away in the year end figures was the contribution of £2.2bn to cover the deficit in the frozen final salary schemes ahead of an actuarial valuation as at 31 Dec 2022.

Assuming the pension deficit is gone, that is £2.2bn that will go onto the bottom line and potentially be available for increased dividends or share buy backs during 2023.

To put this into context, the total of the 2023 interim and final dividends were 2.4p. Assuming the current 66bn shares in issue, the cost was circa £1.6bn.

On that basis, they could potentially double the dividend to 4.8p without impacting their capital position as we see a £2.2bn jump in profitability given the fully funded pension schemes won't need any more contributions.

The Q1 numbers are going to make interesting reading. I think their biggest challenge is to keep the profits as low as possible through provisions to keep this greedy high tax high spend government from shouting 'windfall tax' and helping themselves to yet more of our money.

Yes good point Fishy :) An investor buying at 25p would have 3 times as much money but a 200% return plus a 5% yield compounded, not to split hairs!

So if as I deduce from your posts Gazzleberry, you don't, why are you here?

You remind me of a Turkey waiting for Christmas.

I was fortunate enough to go long on lloyds at 25p so even 75p is a 3 bagger (300% return plus divis).

Time will tell..... and don't forget they put £2.2bn into the pension funds last year .. they won't have to do that this year so those monies will arrive onto the bottom line, probably in the form of a decent rise in the dividend.

Oh it most certainly is Gazzlebury. Sometimes it takes time for true value to be recognised and therein lays the opportunity to make super normal returns.

Take 40bn shares and divide £3bn of dividends into it and you get 7.5p.

At a share price of 50p, that’s a div yield of 15%. You really think the shares will be 50p in this scenario?

More like £1.50.

Gazzleberry… get with the programme and read the post properly.

The hypothesis is that they buy back 4 billion shares a year for the next 5 years and they’re are circa 40 bn shares in issue by 2028 and they make £8bn profit.

The only fool around here is you for not being able to understand the basic drivers of a share price and why if it stays at sub 50p, what I have shared will come to pass.

It’s a question of maths, not an opinion.

In that case Skier, they will just continue to buy back the shares at increasingly low prices and cancel them..

Buying 4bn shares a year when there are just 40bn in issue in a few years time increases EPS by 10% and with every year that passes, they
Impact off EPS growth increases exponentially.

With a potential dividend yield of 15% in 5 years assuming the buy backs continue and the share price fails to rise, they will probably triple to bring the yield back down to 5% as income investors won’t be able to resist them.

Chid .. an interesting view on the share buy back. How about looking at it this way.

Lloyds are buying back 4 billion shares a year at this rate. Suppose they do this for another 5 years and the number of shares in issue will have dropped from 70bn plus before the buy backs started to circa 40bn shares in issue in 5 years time.

At 50p the market cap of Lloyds will have dropped to£20bn by then if the price doesn’t rise. Earnings per share based upon £8bn of profit with 40bn shares in issue will be 20p so Lloyds will be on a Price to Earnings ratio of 3.5. A discount to the market if 300%.

Assuming they pay £3bn of the profits out as dividends, that equates to a dividend of 7.5p per share and a yield of 15%.

You don’t have to be a mathematical genius to realise that at some point over the next 5 years, there is going to be a huge re-rating.

It’s just a question of when not if.

When a stock like this is news driven and their are no earnings, price action is pretty much your only indicator of sentiment.

To this end charts can be incredibly powerful indicators of sentiment and investor behaviour. What we are seeing is a moderate reaction to what we know happened in the Falklands a couple of weeks ago, possible FID this year and the OM settlement which has to be worth 30p a share on its own when paid.

Loads to potentially drive the price up this year so no surprise that people are taking positions and we are finally starting to see a change towards an uptrend as highlighted by ADVN.

The risk / reward ratio here looks very appetising.

Interesting. Normally when RKH have these little pops they form a perfect head and shoulders and head back to where they came.

However this time the right shoulder appears higher and with updates around OM and FID imminent, can’t help thinking that this time it’s going to be different.

Fingers crossed that many of us long term sufferers might finally get back into profit.

For what it’s worth I hold 170k shares at an average cost of 28p per share with the intention of holding through to production in 2026.

That's another £1m a year from Italy to help keep the lights on.

Going to start to get very expensive if they decide to string this out and not pay once their appeal has been thrown out.

Harbour needs to get out of the North Sea and away from these high tax god forsaken anti business shores and focus elsewhere.

Harbour know all about Sealion and the follow-on opportunities including Isobel down in the north basin of the Falklands.

Given what has occurred, they need to swallow their pride and take out Rockhopper.

Gives them enough acreage and barrels to keep them going for the next couple of decades in a stable and low tax environment.

Appreciate they will have to be junior partner in Sealion but they can assume the lead for Isobel where they will have complete control and can take the lead.

This is where it starts to get really mind blowing.

Assuming $40 a barrel extraction costs and an average oil price of $80 during the life of the field, you get a pre tax profit from the extraction of Rockhopper’s share of $9.8bn.

And then you have Isobel which they will definitely have a poke at as part of the development of Sealion as an even bigger follow on.

RKH currently valued at £60m….…the upside here is off the scale. Question is will FID or the money from Italy come first?

£1 a share by Christmas ….. beyond that and if all goes to plan, the sky is the limit.

It’s just come to me…it was Borgo who used to talk in riddles ….

Not to mention Sharkeys and the dancing girls…

Nothing immoral about insuring people against not being able to work and meet their liabilities as a result of sickness, unemployment or death.

Insuring yourself is no different to insuring your house. Sadly the Lloyds CEO was stupid enough to roll over instead of appealing the rather surprising initial high court decision, condemning the industry (unnecessarily in my opinion) to pay out over £50 billion of shareholders money to mostly undeserving cases and chancers.

If the market wants to give up shares at these prices to the Bank buy back then bring it on.

I'm not selling and am in no hurry to do so in which case its happy days.

Lloyds Execs probably can't believe their luck .. its not often you can buy back your shares this much under book.

Totally agree PortStanley.

If this was a football forum and we all supported different teams you would kind of get it, but we’re all on the same side supporting the same team looking for the same outcome…..

On a more positive note nice break out today opening the way to 12.5p….if that goes 15p and beyond that into the twenties with resistance at around 28p.

The £2bn buy back would translate to an extra 3p a share dividend .

If you also add back in the £2.2bn one off they put into the final salary pension scheme you can add an extra 6p a share dividend.

Fair shout Ovets and I don't disagree with anything you say.

I guess what I am trying to avoid is a situation whereby people with helpful information aren't put off from sharing. However and as you rightly say, this needs to be offset by challenge where appropriate to ensure innocent people and hard earned cash aren't lost.