Member Info for steph

If we had a house builder who specialized in TEF type product in Dublin, Frankfurt, and Luxembourg I'm sure most of us would put a fair bit in as a Brexit hedge to the London market. I don't think one can even assemble such an investment creature even in fragments -although open to advise. I think London will muddle through this mess. I also think the final Brexit configuration will be less damaging than the current proposals for a near complete Brexit indicate. Common sense and compromise will come into play at some point. A long enough transition period puts the final configuration of Brexit on the other side of the current parliament and I suspect the future parliament will quietly ditch the harder elements. We will probably end up frozen in some form of EFTA arrangement half in half out with no vote on EU policy but a fair bit of influence. Immigration from EU will remain technically free but with many caveats and hand brakes to prevent surges. Public angst at immigration will subside in any case over the next few years as the wave from the new eastern countries subside naturally as their wages rise closer to EU averages. http://www.efta.int/free-trade/free-trade-agreements EFTA can and does have their own free trade agreements independent of the EU ones (27 in total) so Mr Fox can make himself useful but on behalf of EFTA members and not just the UK. Can't see the advantage for the UK to be independent of EFTA on trade. It is a small enough membership where the UK would clearly lead but big enough to attract extra attention globally. A energized EFTA would also be seen as an outer ring of the EU and thus as a geopolitical player in it's own right with an ability to influence the EU partly from the inside. I can see Canada in time for example joining EFTA but not the EU. The fact that zero diplomacy has been done to prepare EFTA members for a UK application "just in case" is a failure of imagination that sits squarely at Teresa May's doorstep. Left to the last minute it will be the EU who will end up helping us out of the mess we created by pressuring EFTA members to accept us. Pathetic UK leadership really.

yes Brexit is not a good idea from the viewpoint of us TEF share holders dependent as we are on the knowledge economy of London to continue growing. Exacerbating the substantive but not catastrophic Brexit damage is Maybot's focus on immigration controls as the solution to the electorates anxiety over globalization and her misunderstanding that international trade treaties (included WTO I should add) comes without international judicial oversight of some sort. Limiting grad student numbers to hit some arbitrary immigration number is the height of self imposed damage to our knowledge economy. There is obviously a debate going on inside the conservative parliamentary party on what Brexit actually means. Too bad for the nation they id not do that before triggering article 50. Too bad Teresa may set down all sorts of impractical red lines before there was a consensus of approach. She comes across as a late arrival to the hard Brexit party and overly keen to demonstrate she was one of the hard brexit boys and now the nation has to suffer for her posturizing and lack of a strategy or communication. My investment strategy is now weighted for the long term with the lowest percentage of short term positions I have had for a very long time. I think the odds are we wil as a nation muddle through without a chaotic Brexit induced sharp recession. The conservative party will eventually find a more business friendly way forward which means backing down from various mines maybot has unhelpfully laid for us all. Even if the UK side got it's act together miraculously (which in would imagine at this stage is some form of cross party Board overseeing the Brexit negotiation team as the EU 27 have a "board" overseeing their negotiating team. As we did when winning the Olympic bid we need to use all talents (and a deep societal consensus) to lobby the EU to be flexible on some points. There was a brilliant double act between centrist pro American Blair and left wing pro Arab Livingstone. They divided the nations up to lobby according to their natural allies and the result was a big win for the UK and London. A narrow team of zealot Brexateers (who dot really represent Parliament or the nation accurately) is hardly the way to pressure the EU on any major point of contention.

https://www.thetimes.co.uk/edition/news/borders-will-remain-open-for-two-years-after-brexit-rpg3838dt first indication in some weeks that the risk of a chaotic Brexit is 5% or less rather than something more likely and more frightening for me in my hold strategy. I'd need a bit more good news than this to aggressively top up though.

https://www.bloomberg.com/news/articles/2017-07-21/british-missteps-in-1970s-flag-political-risks-in-brexit-nation It's cheering that there seems to now be a consensus in cabinet to have at least a 2 year transition where the existing rules apply. Much more realistic. Also that reduces substantially the divorce bill as much of that is forward budget commitments that will be largely eliminated in a 2 year semi detached but still paying status. If once must have a hard Brexit I'd prefer a 5 year transition period. It will probably take that long. 2 years with probably some weasel words to be able to extend it as needed is probably enough to limp onwards without serious damage to London and TEF's market.

be great if you visited the sites. I'm sure TEF management would even help you to do that formally if you asked. Bit beyond me the complexities of managing a major constriction site contract and workforce but I can see disruptive technology coming for the sector (after nearly 5 decades without) and I want any firm I am heavily invested to be better position then thee rest to be early adaptors. A first that will be an early adaptor is one that is focussed 5 years ahead rather than flattering half yearly figures. It costs money to adapt new techniques and equipment and the payback is not instant. TEF management is not immune to share holder pressure for short term results but they seem to have a sensible ability to not get too focussed on the short term as a result. A purl private firm would be an even better structure but then I would not be a share holder.

be great if you visited the sites. I'm sure TEF management would even help you to do that formally if you asked. Bit beyond me the complexities of managing a major constriction site contract and workforce but I can see disruptive technology coming for the sector (after nearly 5 decades without) and I want any firm I am heavily invested to be better position then thee rest to be early adaptors. A first that will be an early adaptor is one that is focussed 5 years ahead rather than flattering half yearly figures. It costs money to adapt new techniques and equipment and the payback is not instant. TEF management is not immune to share holder pressure for short term results but they seem to have a sensible ability to not get too focussed on the short term as a result. A purl private firm would be an even better structure but then I would not be a share holder.

Looking at the report -especially the expert analysis page 29 it seems that direct labour forces are the best way to develop and improve cost saving productivity enhancing skills. It is not a finding I would have naturally expected. YOU might have thought that highly specialized sub contractors would adapt new labour saving technology first but maybe for a constriction site it is the knitting together of the whole that is more important. I've seen that elsewhere. Too many sub contracts can become hard to manage with lawyers involved too often. There is some optimum mix of a single entity having control over most on site processes. For TEF in complex sites how to build a building is more important than cheap labour. Going forward where I am convinced the industry is about to undergo disruptive change as finally productivity enhancing technology will become to construction firms. Who can adapt first and will gain a major competitive advantage. Again all in all getting more and more comfortable with my near 100% investment in TEF for my ISA and through that major chunk of my retirement planning.

maybe a bit too much chardonnay last night. https://kj06q2hv7031ix2143c36tpx-wpengine.netdna-ssl.com/wp-content/uploads/2016/05/CIOB-Productivity-report-2016-v4_single.pdf if you are interested in construction sector productivity and TEF's model to tackle this key factor in our EPS and future growth in relative terms to the industry this is a good report. Little discussed on this board by on site productivity is a key driver of our EPS and future prospects and TEF is well aligned with the recommendations of this report. Chart 4 is interesting. Germany who is streets ahead of UK in manufacturing productivity is well behind us in construction sector productivity. Only USA ahead of us and I suspect that is due to differences in code rather than like for like comparisons. Faster to build a wood frame house faced with brick than the real thing. Report notes that productivity and on site techniques have hardly changed for decades. Chart 2 shows the historic very flat nature of productivity improvements for the construction industry anywhere. I think, as described below, this is about to radically change. New technology will have a major impact over the next 10 to 15 years on costs and nimble firms that take advantage will end up with major comparative advantages. Best to read it and not my comments on it. .

one aspect of the near "unique" TEF business model is the in house construction team mentioned in the anti slavery statement. Jon mentioned it at the AGM as a reason to concentrate on London so the in house team can get home to families after work -but there are other advantages to the contractor model of the majors. Firstly if skilled EU labour supply gets disrupted better to have your in house team than rely on contractors. Also as technology driven on site productivity improves you can be an early mover ahead of contractors. As technology increases on site the premium given to a skilled stable workforce outweigh the benefits of access to large volumes of cheap labour. Imagine a machine that lays bricks for example. IN the first wave of that type of technology it will require a skilled operator with more training, pay and experience than the average brickie -but will lay at a rate of 10 brickies. SO the productivity improvement will pay for the capital costs, extra salary and training costs. Maybe at some point in the distant future one will be able to just feed plans into a machine that assigns fully automated equipment to build it but for the foreseeable future most new construction technology will need to mix with humans on site and thus be quite carefully controlled by humans of a high skill level with a whole drawer full of safety certificates and training. It will be a move to skilled operators and away form "unskilled" or "semi skilled labour". Any labour shortages will accelerate this trend and give firms such as TEF with in house talent a competitive advantage. More power to TEF's management to recognize that the skills of the constriction workforce can be a competitive advantage. IN the capital intensive chemical and auto sectors I occasionally deal with skills is often the deciding factor on where they locate in the world or region a new factory. As residential constriction continues to capitalize it's construction techniques the opportunity to change will apply. Whole residential construction industry has not had a major change in typical constriction technology for decades. This will change. I think we are close to a tipping point here and TEF are positioning themselves to be ahead of he new wave not behind it. It is one of the reasons I like to see TEF with some more volume. Early adaptation of new construction technology that gives a competitive advantage will flavour larger, innovative affirms with strong links to government drivers and funding. Partnership working. UK's application based rather than zoning based planning system gives developers an incentive to hit policy boxes that do not directly bear on housing output. This has benefited eco standards (which can go well above minimum regulations) and also other objectives like social hosing. An innovation strategy that assists UK construction industry to be early adaptors of new technology can help the TEF

https://www.theguardian.com/politics/2017/jul/20/no-deal-brexit-would-spawn-legal-morass-and-economic-disaster self explanatory really. It beggars believe that we have senior minsters, including the prime minister, even saying they can contemplate this as a credible scenario. I hope my 5% risk is the right number and the risk is not significantly higher than that. Market seems to have priced in a hard brexit but of course not a chaotic Brexit as yet. I suspect that upside news is more likely than downside from here. Are the Tories really that stupid to engineer a chaotic exit. Surely someone will stop them from within their parliamentary party -perhaps in combination with Parliament itself. At some point Corbyn will need to get off the fence and give them a way out. At the moment he is content to sit back and let the public see how completely daft they are. Understandable given all the barbs of incompetence they gave to him but not in the national interest. Murdock asking May to reappoint Gove is a sign of how diminished we are as a nation. Our government taking orders form an Australian poisonous press baron. You just could not make it up.

Yes good to know TEF is anti slavery. I suspect the majors are all pro -TW first amongst them. Sain yes the PwC report is in line with all the major analytics. Modest house price inflation over the next 5 years -maybe a percentage or 2 more than general inflation. I other words stable market conditions that will support TEF"s business plan and EPS and growth projections. Of course they can all be wrong at the same time if a major unforeseen or unweighted black swan becomes fact. I'd give the risk of that as 6%. 5% for a chaotic Brexit followed by a steep recession and 1% for all the other black swans put together including Trump starting WW3. I believe a hard Brexit is priced in but not a chaotic Brexit. A softer Brexit will cause a positive push for us. Each day the chaotic Brexit risk rises a tad though. I keep looking for clarity at the end of the confusion on our side but keep being disappointed. I believe at the last minute we will make a dash for a soft Brexit that will be called "transition" to satisfy the hard Brexiteers with endless assurances it will be short lived but in fact could be long term and even with the best will in the world will need to last a few years. A bespoke Brexit is simply fabulously complicated to do and will take a few years to set up. May has put us all into a corner and done nothing to prepare us for the compromises needed to get out.

http://www.homesandproperty.co.uk/area-guides/newham-borough/stratford/living-in-stratford-area-guide-to-homes-schools-and-transport-links-a111956.html Telford mentioned. Most extensive regeneration area with massive government investment and excellent tube lines. Good choice to concentrate resources.

https://www.theguardian.com/politics/2017/jul/18/city-brexit-plans-transitional-deal-fca-citi-bank-frankfurt I hope I'm right that there is only a 5% risk of a chaotic crash out of the EU. We seem to be governed by idiots at the moment (nationally not TEF management). Strangest of all is that if Corbyn gives more voice to his momentum membership it will soften Brexit and that will be good for business. If you were writing a novel you could not make it up. A Telford stochastic oscilator sure sounds like a sex toy to me rather than investment analysis. I trust it comes in a convex or concave version to satisfy both sexes.

given your valid questioning I've tried to articulate why I am concentrating in TEF and not a slightly wider band of UK builders as you do. It was helpful to me to do so. I suppose it comes down to differential geography even more than TEF's good management and business plan -which Sain highlights. I feel London's diverse jobs market can survive even a bad Brexit or other spanner that can be thrown at us. I just don't have that same confidence about the midlands. As what happened to Spain and Ireland (see my earlier posting) if the jobs growth is not there in the correct price brackets the completions statistics can drop off a cliff. London completions (with a buyer I should add) did not drop off a cliff even during the great recession of 2008/9 (see TEF's annual report page 9). I have a professional connection to a jurisdiction that had a severe banking crisis in 1993. Housing starts collapsed from 10,000 per year to 100. Mortgage finance was simply 100% withdrawn for a bit and except for a handful of rich people building their own there was no market. SO I know a bit about dropping off cliffs. P/E ratios for UK builders build in that risk however remote it may be. I think TEF has gotten caught in that net even though it has a geographically and financially different business model. RIsk abatement for me can be achieved by a concentration in a UK builder who can weather a severe downturn rather than diversification between builders who have a wider (and thus for me more risky) catchment. Hopefully my thesis will never be put to the test. On top of that I believe long term TEF will outgrow them as well and by a wide margin. BIt like getting on an express train and not panicking when the milk run train pulls out of the station first. I find it entirely credible, even probably, that TEF will grow volume form 750 today to 5,000 to 10,000 pa in 20 years time. If it does we will all be rich. Slightly tighter margins along the way do not matter much if the volume growth really is achieved. Margins and dividends will tend to fatten out as the growth rate decelerates in 15 to 20 years time in any case as TEF reaches some optimum percentage share of it's market niche.

880k for over 1000 sq feet at that location at that specification is quite a decent price. Frankly I'm surprised not already breaking 1000. I think Strafford has still some way to go to catch up to London prices. Already well connected crossrail will add something more in 2019. London dock development equivalent in Wapping over 1500 per sq foot and actually not as well connected tube wise. http://www.rightmove.co.uk/property-for-sale/property-60717772.html

yes there is a real Brexit risk to us in tiny TEF. A truly incompetent crashing out of the EU followed by what I think will then be an inevitable sharp recession will be enough to blow a 5 year hole even in TEF's business plan. TEF along with the sector will recover but it will take time. Could be 5 lost years of TEF growth so a 5 year delay in my retirement SP and divi targets. I still give the odds of this as low -say 5%. I just don't believe the Tories (who I have never voted for nationally so no natural defender) would actually do something that will blow up the economy. If they are not the party of economic competence they will be lost at sea as the UK is basically a socially liberal country and there is no space for an economically incompetent socially conservative party such as the tea party republicans in the US. We just have a very unfortunate situation where the tail is wagging the dog. 60 hard ideologically driven brexiteers in the Tory parliamentary party with the cover of a totally incompetent careerist PM (and a very small number of hard brexiteers in ownership or editorship of a few large circulation right wing newspapers) are driving an agenda that most of parliament and the nation don't want. Just nobody strong enough to stand up to them -including comrade Corbyn for his own 1980's reasons. Yes there may be a narrow majority in favour of some sort of Brexit but that majority evaporates like a snow shower in June if it means any major economic downside. They were promised on this complex issue there would be no economic downside, not even temporarily on exit, The way forward for the Tories to politically survive this fiasco is some form of soft Brexit either temporary or permanent. Temporary would give time to negotiate a more complete Brexit and prepare domestically with new procedures and facilities. They have run out of time for a complex bespoke hard Brexit in one stoke. It was daft to trigger article 50 before the UK had prepared position papers on all 3000 of the Brexit issues that need to be agreed with the EU. For example the EU nuclear collaboration seems to have come as a surprise. It was daft to trigger article 50 just before you trigger by choice a general election. Time lost and ties the hands of the next parliament. What worries me the most is our hapless PM has done nothing to prepare her parliamentary party or the nation for this inevitable outcome. She really is way out of her depth. Tim and Fiona can only take a modest percentage of the blame. May appointed them, relied almost exclusively on their daft advise and endorsed them blocking her from receiving wider views and consultation even from her own ministers never mind business and civil servants. Without this 5% risk I'd be more leveraged but I do see a risk here and I don't want to get wiped out if it comes to pass. Will need 5 years or so for the mess to clear if we get a chaotic Brexit.

As page 9 of our TEF annual report figure 3 compared to the enclosed EU country housing start chart show London's housing market is completely different and much safer than housing markets elsewhere. This is for a wide variety of reasons much discussed here. SO long as a London developer has a business model that can trade through a price dip during a severe recession the volume of sales for that developer need not decrease much if at all. Indeed if there is another great recession money may well be pumped into the affordable sector in general and housing associations in particular and volume of starts could go up not down. Look at the crash of Spanish and Irish housing starts during the great recession. That is why p/E ratios for the sector price in such a lot of catastrophic potential news. Yet London and TEF in particular are different. Chronic undersupply and a dearth of institutional rental for profit and social rental/sale underpin the market even in a severe recession. It creates the closest to a free lunch you get as an investor. A high growth share with low risk of fundamental disruption to it's business model at a utility P/E. P3 of http://danskeresearch.danskebank.com/link/EuroAreaHousingMarketActivity080813/$file/EuroArea_HousingMarketActivity_080813.pdf p 9 of http://www.telfordhomes-ir.london/media/1225/telford-homes-ar17.pdf

I'd love to see Brexti reversed but I think that a period formally not a member of the EU is now politically necessary. If I was advising Corbyn I'd say put the effort into a soft Brexit through EFTA membership. Corbyn all over the place on Brexit. EFTA -where we were a leading member before we went into the EU- is as good a parking space as any. Both parties and the nation badly split on what type of Brexit desired so a half way house has merit. From there we could negotiate a harder Brexit, stay parked in the EFTA or go back into EU membership (which we have done once before from EFTA). https://en.wikipedia.org/wiki/European_Free_Trade_Association The good thing about EFTA is it maintains equivalence with EU regulations (which the "great" repeal bill does anyway). It is therefore relatively painless to move between EFTA and EU membership in either direction. Indeed EFTA was set up by the UK to be an outer ring of countries who for one reason or another did not want (or could not) to be full EU members but wanted the benefits of the free trade. EFTA members can and do sign independent trade deals beyond the EU but need to do tis jointly. If UK joined EFTA again it would dominate and would surely lead on all future EFTA trade negotiations. Maybe better for our national psychology to be a big fish in a small pond. EFTA is a pretty rich club of near EU members and the UK might find itself quite happy long term there. Nor do EFTA members have zero influence on emerging EU policy that affects them. EU working groups include EFTA members where appropriate (obviously for the UK's financial services this would be critical). UK would lose a vote on the outcome but many EU regulations are consensual and for those where they are not the UK could have been outvoted in the qualified majority system allowed on many issues. Influence is all rather than the vote and an expanded EFTA would have weight vis a vi the EU and the UK as a leading EFTA member might get some additional leverage. EFTA members also have a bit more flexibility on limiting immigrant than full EU members. Some weasel words as yet unused are there. Certainly politically the EU could be more flexible with an EFTA member than a full member as less precedent involved.

ceretto gave good report on rest of AGm questions and TEF management response. No need to repeat. Long term we are on track to double every 5 years (give or take a year) which if you accept that can continue for 20 years or so (glass ceiling at around 10,000 homes per annum for TEF regeneration patch). is about the best ticket to ride to get rich slowly. Ideal for an ISA holding. Shorter term we are at the mercy of market sentiment on the UK and the sector. I think a lot of bad news is priced in (as was mentioned at AGm where there was general astonishment at the P/E being so low in spite of nearly assured 100% growth over a 4 year period) so the longer one can hold the better the odds of capital gains. It is not a share or even sector to hold for just a few months. A 2 year hold should be safe enough to obtain capital gains -even with some (or should I say continuing) stupidity along the way on Brexit by our government. I still believe that a long "transition" period with the UK parked in some form of association or membership with EFTA is the most likely outcome in the next 2 years (in spite of government denials) and stocks will breath a sigh of relive if that happens. EFTA would allow our dear friend Mr fox to show what free trade deals he really can come up with. I very much doubt Mr FOx will come up with much of substance in addition to what the Eu (and maybe EFTA) has already negotiated. New trade deals will come with painful trade offs and there will be much opposition to those trade offs once the detail is public. US will surely demand we open up NHS procurement to more private sector participation than the UK public might stomach. India will want some favourable immigration for it's nationals as part of any deal. The low hanging fruit has been picked. New trade deals will have toxic bits and a lot of objections. Immigration liberation is these days normally attached to free trade deals. Even NAFTA has some liberalization of movement of people with the goods deal as well as a super-national court to enforce disputes. It is the way of the world and May and company are living in some fantasy land of their own creation. Personally I think May is simply stubborn and stupid but maybe, cleverly, she is a secret remainer who has given the hard Brexiteers enough rope to all hang themselves. https://www.uscis.gov/working-united-states/temporary-workers/tn-nafta-professionals https://www.nafta-sec-alena.org/Home/Dispute-Settlement/Overview-of-the-Dispute-Settlement-Provisions Eventually May and her cohorts (along with the rather retro Corbyn on this) will be brought into the modern world, hopefully before the 20 month article 50 deadline approaches. Never in modern UK history has the nation been so poorly led at such a critical juncture. Luckily London economy is pretty resilient to all this nonsense. US economy is resilient in spite of Trump. Belgium can run even without a government

Went to agm Very impressed with responses to my questions. I grow ever more confident in my near 100% tef led strategy. Tef will double in volume in 4 years from 750 units per annum to 1500. They have said that previously, Jon said though that the business model that will deliver that is not forecast to change after 4 years subject of course to no radical change in background market conditions. He said rate of volume growth might slow a bit but doubling in size will likely occur every 4to 6 years for the foreseeable future. He said London market has 50,000 homes per annum need and demand, and unless tef is pushing 10,000 per annum not reaching end of market niche or risking over supply for tef to expand at that rate. Also said, which pleased me, that keeping it to london's near prime markets and not venturing outside. I think that is the right call and is the analysis I expound here for a long list of reasons. Jon added the reason of sub contractors preferring to stay in London probably for family reasons. I suppose once your workers direct and indirect have bitten the bullet of accommodation in London no point in using them outside London. They will be relatively high cost and reluctant. The implications for us isa long term holders of volume growth of a credible pace of doubling roughly every 5 years is quite spectacular. As terry keeps saying a share to get slowly rich on if you can hold for a 20 year period. That credible potential is not priced in at current sp at all. Nothing else on the market that can credibly rise16x over a 20 year period plus paying pretty good dividends along the way. No volume housebuilder can offer that due to glass ceiling of demand parameters. On aggregate volume builders can only double in size even if they wanted tef style growth. Were other points made but for me those were the most spectacular ones .