Member Info for SlickMongoose

Thanks.

Charlie, where can we see the amount paid for buybacks so far? Or are you just picking it up from each RNS seperately?

Seems high risk.

Revenues went up 7% here as well, the issue is energy costs. The USA produces its own energy so not as vulnerable to the global energy crisis.

Yes. The reduction in share count is almost hypnotic to be honest, I love a proper buyback that actually does what it's supposed to i.e. reduce the share count significantly.

Share count down 1% in a month, hopefully they can keep to that pace, they will need a higher authority than 10% at the next AGM though.

The problem oil companies are currently facing is that at the current ridiculous low valuations (even big oil companies are trading at 3-4x cash flows) buybacks have a better ROI than growing production. Companies aren't being rewarded much for growing production, so they aren't.

This is a good thing for investors because if every company in Canada decides to increase production oil and gas prices will crash again.

Some comments from Canadians:

https://twitter.com/ValueNotDeadYet/status/1598025334670372865

Looking perky:

https://www.gasalberta.com/gas-market/market-prices

Trading at 3-4x cashflow can't last forever, although I hope it does because that would be amazing for buybacks. Either oil & gas prices come down significantly (and they might) or the returns from here will be spectacular.

If they can sustainably increase the dividend over time then the share price will follow, with plenty of volatility of course.

Pokerchips, I think you might be right, it will make the book value of the company look lower, it roughly halves equity. I assume the double entry is something like Dr Equity Cr Deferred income, then the deferred income gets unwound over the life of the contract. It will make return on equity look a lot higher as well.

My opinion is still that this has no real bearing on the business, it's just a change in accounting methodology.

It's just accounting changes rather than cashflow changes so if the share price has dropped because of the RNS, it shows how inefficient the market is. However there were a few bits that stood out to me:

Lower profit due to deferral to balance sheet and release over time:

"IFRS 17 also introduces a more stable and predictable profit profile through the CSM release. For L&G, this benefit emerges through the deferral of new business profit and demographic assumption changes to the CSM, which will then be spread and released into profit consistently over the lifetime of the contract. Historically, these two components have made a meaningful contribution to Group operating profit from divisions. Indicatively, the removal of these two components, with an adjustment to reflect the higher anticipated release from the in-force book, would reduce divisional operating profit by c20-25%.[4] We expect Insurance earnings to grow in a more stable and predictable way from this new base. We are confident in our ability to continue to write profitable new annuity and protection business, and therefore to grow the CSM and related profits over time. Indicatively, writing £10bn of UK PRT per annum would result in 6-7% CAGR in related operating profit over five years. This would be higher if we wrote more than £10bn per annum. We continue to see compelling investment opportunities across all our businesses, providing further scope to deliver growth beyond this level."

Dividends up by 5% per year hopefully:

"The Group set out an ambition at its 2020 capital markets day to grow the dividend at 3-6% per annum to FY24[2]. Whilst dividend decisions are made annually, the Board's aim is to continue to grow the dividend at 5% per annum to FY24.[3]"

Forward guidance solid:

"Consistent with the guidance provided at HY22, we expect to deliver resilient FY22 operating profit growth in line with the 8% delivered in H1 (£1.16bn vs £1.08bn) and FY22 capital generation of £1.8bn."

The great thing about buybacks is that I couldn't care less what institutions do, in fact I want them all to sell out so the company can buy back more shares.

Buybacks being permanent has everything to do with it, it's a permanent increase in the % ownership of the business vs a 1-off cash payment.

That 10% divi increase from buybacks reducing the share count by 10% is permanent without requiring any additional cash after the buyback is completed, along with a 10% increase in the value of any future uplift in dividends, and a 10% increase in the value of the assets which might accrue to shareholders in a sale.

If they can afford to do the same next year as well, and the year after, then this impact keeps getting magnified. Buybacks are fantastic for long term shareholders if a company is undervalued.

I find UK shareholders don't like buybacks for a few reasons, one is that a lot of UK listed companies don't do them on a decent enough scale for the difference to be noticeable, or they just do them for a short period then stop, or the company isn't actually undervalued (see housebuilders buying back stock in 2007).

Share count under 18bn by the new year?

Interesting article: https://www.yahoo.com/news/look-federally-funded-gas-well-050100305.html

When was the last success in the North Sea? I don't just mean i3e, but anyone?

I think when the US is shut a lot of traders take the day off, even if they're not US based.

Interim results out tomorrow.