Member Info for TheTrotsky

I think these figures need a bit further consideration. Firstly the total dividend appears to be 3p below broker forecasts, I believe that they were predicting an FY2022 dividend of 38p. Secondly, the cash movement needs a bit more study; the cash generated from operations during the year was actually less than the dividend paid. This is mainly explained by the £12.5m Ofgem settlement, a £6.5m increase in payables and a £9.7m decrease in clients’ funds and retailers’ deposits (compared to a £11.9m increase the prior year). I understand the former two (albeit such a large increase in payables needs some further scrutiny) but am scratching my head on the latter.

Overall I don't think the results are bad and now that we've cleared the decks of our discontinued operations things should become more "normal" but I can understand why the city isn't necessarily rushing to "fill their boots" just yet.

Not too impressed. There's a 3p spread at the moment. Not at all tempting. Methinks the MMs are sucking in buyers and will then lower the offer. Time will tell but I think the MMs are killing off any further (real) upwards momentum today.

Mug, My mistake. What's £4m between friends ;-) I had it in my mind the forecast was double 2021. Mea culpa. I do however recollect GB being questioned in his Proactive Investor presentations, after the April update, about the current year target and saying something along the lines that it was normal for sales to ramp up through the year and pointing to the Q1 orders as evidence that they were making good process. The target wasn't specifically mentioned but I don't recollect him being overly concerned (then again he never is).

Newuncle, I agree that GB does (appear) to know how DVRG is going to make money but it's all a bit cloak and dagger. We are lead to understand that DVRG is subject to a number of NDAs, therefore the information flow is soemwhat restricted and often after the event. I think if DVRG got into the habit of regular quarterly updates (at the moment it's all a bit ad hoc and minimalist; the last update prodvided no information on cash balances), saying in black and white whether they were still comfortable with market expectations at each update (rather than having to be prompted into some limited commentary in investor presentations that not everybody sees) and (possibly) and brought forward their final results to late April (that would incur more audit costs but the otherwise paucity of detailed financial information between early January and late June makes a lot of long term investors very jittery and the share price prone to short attack), it would help.

Mug, I'm still reasonably relaxed about the lack of company guidance. If DVRG expected revenues to be signficantly below current market expectations then it would be obliged to make an announcement to the market (and GB would have to walk if they failed to do so). That said, I'm not entirely confident in DVRG's ability to forecast future revenues. I don't think DVRG was that far off target last year when you consider the COVID-related issues it had to deal with but I always had a sense that GB simply plucked £10m out of thin air without running all the possible scenarios (he was just too glib and didn't provide any business rationale; he just said "I'm comfortable with that figure"). Likewise, the current £20m market target seems to be based on new production capacity coming online mid-2022 without any further confirmation from DVRG about orders; it only ever seems to notify Q1 orders as if that is suffice explanation to support current year expectations (you're left on a wing and a prayer). DVRG has to sort it's act out; the amount of financial information it provides to the market is laughable compared to the quarterly updates some companies, with a fraction of the revenues, provide.

I'm sorry TheDetector but I think it's you that hasn't comprehended the implications.

Large amounts of surplus cash can either be invested to grow the business (by acquisition) or returned to sharedholders (either by way of a special dividend or capital return, makes no difference). Growing the business is usually preferable but only if the right opportunities exist. Investing simply to use surplus cash should be avoided at all costs.

On balance, I think returning the surplus cash to shareholders was the right move at this time. It does not show a lack of ambition, AV can always come back to the market at a later date if the right opportunity affords itself, but sound business sense. How the surplus cash has arisen is irrelevant. In the absence of a good, complimentary business opportunity, surplus cash on the balance sheet is an underperforming asset (the interest return on surplus cash would be significantly less than the return on the rest of AV's business).

As regards the reduced dividend, you are completely wrong. You have less shares but a higher dividend per share. As I said in my previous post, read the RNS, read the circular and (please) do the maths. If AV had not done the capital reduction you'd now be looking at a future dividend of c23.56pps rather than 31pps. You say that future dividends aren't guaranteed (pie in the sky) and yet moan that your (future) dividend income has been reduced. Your argument is not coherent!

Finally, you might argue that if AV had retained the surplus cash it would have been a (very large) buffer against future economic downturns and/or provided addtional income to pay even higher dividends. The former point has some merit but can be counterproductive (companies become lazy, less efficient and more prone to delay making critical decisions during market downturns; leaner companies adapt more quickly because it's sink or swim). As for the latter, I would suggest that AV could currently get an investment return of no more than (say) 2.5% on invested surplus cash (assuming they deposited it on a long term fix) whereas I can currently get a projected return (albeit unguaranteed) of c7.1% if I invest that cash in AV shares today. My preference is for AV to give me that money so that I can invest it in AV shares (or another high dividend yielding company) and obtain a higher return on that cash than AV can offer me by keeping the money in the business. I've actually invested some of my cash in Vesuvius because I wanted to diversify my dividend portfolio and reduce my exposure to AV's sector.

Disagree. Sure there are short term problems which are feeding into future hedge prices and supply does seem to be tight but the fundamental problem does not appear to be a lack of oil and gas (excluding Russia) but that alternative oil and gas supplies aren't where they are currently needed. However, there is every reason to believe that these logistic problems can be solved in the medium term.

DEC has a long term strategy and should not ditch that strategy for short term considerations. I'm sure that DEC's free float will increase in the near future, as hedges increase, but the vast majority of production will continue to be hedged against the probabilty that current prices will drop. Everybody expects the current hike in consumer energy prices to start easing next year (rightly or wrongly) and that can only occur if the current benchmark prices start to drop and that can only come about by fixing the current logistical problems and/or a volte face on Russian gas and oil supplies e.g. Europe plans to reduce its reliance on Russian gas and oil, not necessarily totally exclude it. From a Russian perspective, politically it makes sense to try and normalise relations with Europe again to avoid them becoming totally reliant on China in the short/medum term.

Patience and fortitude are required. It's far too early to say that current prices are here to stay.

This share price is going nowhere without financial information. GB should spend more time delivering regular, timely financial information and a lot less time hyping the share on his Twitter feed. I actually think his hype is now becoming counterproductive; without the financials to back up his assertions, nobody believes him anymore. I think the business is growing on target but I have absolutely no accurate financial information to support this. For a small, growing company, cash burn is an important consideration and albeit that I think the company's cash burn is modest, the lack of reporting by means that people can make all kinds of assertions and long term shareholders get jittery. Sort out your financial reporting for chrissakes! GB you need to be a CEO not a gibbering cheerleader!

It should be noted that GSF is an investment company not a trading company, and, as such, doesn't have a staff per se. For example, Alex O'Cinneide is CEO of Gore Street Capital, the investment adviser to GSF, which might explain why they don't reply to emails (albeit, if they have an email address, it does seem somewhat incumbent on them to respond).

As regards some brokers stopping investors buying shares, are you sure? I hold my shares with AJ Bell and I've noticed that they've recently added an additional tick box (which isn't immediately obvious) when you transact in GSF shares, or shares of a similar ilk, that warns you that it's an investment fund (you have to tick the box before you can proceed to acknowledge that you understand the associated risks).

The detector, the returned capital is just like a dividend. If investors choose not to reinvest that capital/dividend, that is their choice. Even now, if investors chose to reinvest that returned capital in AV their dividend income would be more than their dividend income before the reorganisation because their % holding would be larger and the total dividend pot is expected to be at least the same, if not more, than FY2021. Okay, no dividend in guaranteed but if you are investing for income then it's a win.

Greygeorge, I'm just looking at one transaction to try and determine whether that transaction has benefited shareholders or not (and trying to quantify that). I've chosen LGEN as a comparitor because it operates in the same sector and has certain defined characteristics e.g. EPS, DPS etc. for comparison. The assumption is that over a short period of time both AV and LGEN are subject to the same external economic factors and, in the absence of any specific, share price news it's not wholly unreasonable to assume that AV's share price movements would have closely mirrored LGEN's without the the capital reduction and trading update. I'm not trying to determine whether AV is a better investment than LGEN (indeed I hold both shares in my SIPP) or whether AV has out/underperformed LGEN over any given fixed period of time. Yes, AV's share price has performed better than LGEN's over the last week but that does not prove that AV is a better investment than LGEN or vice versa. LGEN is simply a benchmark which enables me to strip out the (estimated) impact of external factors that might have affected AV's share price over that period to try to prove/disprove whether or not the capital reduction was benefical in the short term. I may be saying very little (to you) but at least I'm not saying nothing at all (by the way I write, not read, my thoughts; do keep up), LOL!

Thedetector, I'm afraid to agree with LTI (for once) and say that your analysis is, I believe, flawed.

In my previous posts I've set out an estimation of the share price increase, by comparison with LGEN, that might be attributed to the surplus cash discount built into the share price prior to reorganisation (although remote, until the opening on 16 May there was still a possibility that the capital return could be pulled and, as such, some risk would still have been factored into the share price at close on 13 May). Assuming that AV's share price had simply tracked LGEN's since 16 May and there had been no share consolidation/capital return, then AV's share price might have been expected to be c414.95p (100.2% x 101.45% x 408.2p) at today's close, which would value 100 old shares at £414.95, whereas at today's close 76 new shares would be valued at £330.45 (76 x 434.80p), which together with the £101.69 capital return, would make a total return to date of £432.14 per 100 old shares (a c4.1% improvement).

As regards the dividends, you seem to be labouring under the misapprehension that AV would have increased the FY2022 forecast dividend to 31pps regardless of whether or not they'd made the capital reduction. They would not. In FY2021, AV paid 22.05p per OLD share, which is equivalent to 29.01p per NEW share. In the press releases AV highlighted that they were proposing to pay 31p per NEW share to emphasise that they would not be reducing their overall dividend payout, which is often the case following a capital reduction. If AV had not proceeded with the capital reduction, AV would be proposing to now increase the FY2022 dividend to c23.56p per OLD share (31/29.01 x 22.05p). Your dividend payout has not been reduced by the capital reduction. If you still don't agree, I suggest that you re-read the results RNS and subsequent circular.

Apologies, there was a typo in my previous post.

The estimated closing share price at point (4) below should have read c414.11p (1.045% x 408.20p) not 415.11p. As a result:

a) The value of the remaining shares at point (5) would be c411.08p (not c412.39p);
b) The closing price at point (7) would be c411.90p (not c413.21p);
c) c22.9p (not c21.59p) might be attributed to the impact of the reorganisation and c17.25p (not c18.56p) might be attributed to rectifying the share price turmoil after the reorganisation; and
d) c57% (not c54%) might be attributed to the unwinding of the surplus cash discount (a c5.3% discount)

My apologies

Interesting snippet for those of you with an open mind and willing to discuss the pros and cons of the capital return and not shoot down anybody who does not agree 100% with your interpretation i.e. excluding LTI ;-)

As of tonight's close, the share price of AV's closest competitor, LGEN, is 252.8p, just a smidgen more than it's closing price of 252.2p on 16 May, whereas AV's share price has increased from 394.65 on 16 May to close at 434.80p at tonight's close. Now some, mentioning no names, will attribute all of that gain to the reorganisation whereas some of us are willing to be a bit more opened minded. So, here we go:

1) Assuming that LGEN is a reasonable bellwether for AV's market segment;
2) Between 13 May close and 16 May close, LGEN's share price increased from 248.70p to 252.30p (c1.45%);
3) AV's unadjusted closing price on 13 May was c408.20p;
4) Assuming that there had been no reorganisation and AV's share price had moved in-line with LGEN's on 16 May, it's not wholly unreasonable to suggest that AV's closing price would have been c415.11p (101.45% x 408.20p);
5) Allowing for the capital return and reduction in number of shares, and following the maxim that the value before equals the value after, then the value of your remaining shares on 16 May (stripping out all the market shenanigans on 16 May) might have been expected to be c412.39p ([100 x 415.11p - 100 x 101.69p] / 76);
6) Since 16 May, LGEN's share price has increased from 252.3p to 252.8p (c0.2%);
7) Assuming AV's share price had simply moved in-line with LGEN's, then it's not wholly unreasonable to suggest that AV's closing share price tonight would have been c413.21p
8) It could therefore be postulated that there has been a c21.59p increase in AV's share price (434.80p - 413.21p) since the close on 16 May which might be atrributed to the impact of the reorganisation and a c18.56p increase in the share price (413.21p - 394.65p) which might be attributed to the market "putting right" the price "manipulation" that occurred in the immediate aftermath of the share reduction.

So, by (rudimentary) mathematical analysis, it could be argued that c54% of the share price increase since 16 May cannot be explained by market fluctuations and/or the share price turmoil in the immediate aftermath of the reorganisation and could be attributed to other factors, the primary one being the benefit derived from the unwinding of any surplus cash discount (the assumption that, on a discounted cash flow basis, the surplus cash returned as part of the reorganisation wasn't being valued on a £1 for £1 basis) in the share price prior to the reorganisation being completed (the above figures would suggest a c5% discount, which is not wholly beyond the realms of reason).

As of tonight's closing prices, LGEN is trading on a historic dividend yield of c7.26% whereas AV is trading on a historic dividend yield of c6.67%, which is within my pre-reorganisation target range of (0.5%-1%).

Can't have everything ;-) Good luck on Saturday.

Michu was a class act until he got injured (we overworked him). Never recovered his form. We also had another really good midfield player prospect around that time, Bode from the Netherlands, who would have gone on to feature in the PL I'm sure if he hadn't sufferred a career ending injury (he tried to make a couple of comebacks and it was really sad to see him reduced to tears when his injury recurred).

NicetoMichu, A Swans supporter perchance?

BlueBiscuit, Yes, it's a CGT event if your shares are held outside an ISA. It's deemed to be a partial disposal of your original shareholding and, as such, c25.3% of your original acquistion cost (based on the closing share price on 16 May) would be attributed to the disposal of your B shares (the remaining c74.7% being attributed to your retained shares). Aviva should be confirming the exact percentage in due course. In their literature Aviva said they'd put a worked example on their website after the redemption of the B shares but I couldn't find one last week.

PS. The cost is only reduced by the cash payment if it's a "small" disposal but this transaction doesn't meet the necessary criteria.

Neither ;-) I hold VOD more in hope than expectation.

Good thing Tesla has got $20bn of cash; at least it can afford to write off it's $2bn investment in bitcoin ;-)

Tesla is run as Musk's own private fiefdom and I wouldn't be wholly surprised to find Tesla investing in Twitter or in more bitcoin to prop their prices. Tesla should be returning a slug of that cash to shareholders rather than wasting it on Musk's little fancies. He's more than welcome to invest his own money but I'd be seriously unimpressed if I was a shareholder.

"My point was that it is incorrect information"

Quite right, we received c24.9% by value and disposed of c25.3% by cost based on the (unadjusted) closing prices on 13 May and 16 May respectively ;-)

Interestingly, Google says that the adjusted closing price of the (new) shares on 13 May was 435.42pps which is a load of bunkum (they've calculated the adjusted share price by deducting 101.69p per new share when they should be deducting 133.80p per new share, which equates to 101.69p per old share).

Seems you're not the only one who can't get their information right ;-)

That's a joke before you take umbrage.

"Any gain is clear".

No it's not. The market has been rising the last week. You cannot therefore simply attribute the gain since the capital return with the transaction. One could claim, with equal justification, that the recent gain is entirely to do with the change in the general market sentiment and absolutely nothing to do with the transaction. I believe it's a bit of both but how much you attribute between them would be an educated guess.

Think of a snowball rolling down a hill; re-investing dividends is like picking up snow as it rolls. Your trading strategy is not so different; under normal circumstances and allowing for trading costs, spread and stamp duty you might gain a bit extra if you time your sales and re-purchases correctly. However, Beachbum (and my) strategy eliminate the timing risk. I'm forever selling too early and buying too late, and a few pennies either way can turn a gain into a loss.

I should just add that given that AV is trading above the breakeven price now does not prove that there has been a market value gain because the whole market has improved since 16 May and it would unreasonable to assume that the price of AV shares would not have increased in any event (following market sentiment). That's why I'm benching the AV price against LGEN's, all other factors being equal, to try and determine whether we are better off because of the transaction or simply because the whole market has improved. I believe it's a bit of both.