Member Info for TheTrotsky

Did you execute over the phone or online? I'm assuming the latter.

Which platform do you use? iii is still showing AV as not existing!!

Well at least I've learnt that AJ Bell and iii are useless platforms. They've known about this for months and should have affected the changes over the weekend.

It's still chaos. My AJ Bell account is now showing the shares as available to trade but is still showing the same number of shares in my account as Friday! I'm almost tempted to sell and argue that it's their loss not mine ;-)

No. The shares are being autotraded and/or spread bet for the most part. Some brokers may have updated their systems but the last time I looked AJ Bell and iii hadn't. These are the new shares being traded and (I think) speculators are taking advantage to try and drop the price in the hope of picking up cheap shares. At current levels AV is trading on the same dividend yield as LGEN

Would love to know who is selling at this price because most PIs appear to be locked out. Tempted to spread bet

Can't trade on iii - AV doesn't exist!

"I sold out a couple of weeks ago @4.41 as didn't want all the complications and with a view of buying back again"

AV has not been immune to recent market falls and I think selling out 441p will prove to have been a good move as long as you can buy back below c446p (including stamp duty and dealing cost).

Given Friday's close, I can't see existing shareholders wanting to sell much below c410p (if you bought at 408p on Friday you're going to need at least 410p to cover costs and make a small "margin") but can't discount "naked" shorters applying selling pressure at the open in the hope that they will be able to buy back at a lower price later in the day and make a profit. Any existing shareholders selling out below c403.30p would be selling at a loss to Friday's close (assuming all other external factors remained constant). Obviously, it goes without saying that recent market tribulations can't just be ignored and if the general market opens down then it's quite feasible that AV will open down (relative to Friday's close) as well.

EmmaJane, I believe the forward dividend was reduced to 31p when AV changed the reorganisation from 75 new shares to 76 new shares.

Hi Leapfrog, My dividend cover figures are based on the adjusted EPS which excludes the share incentive scheme charges and licence amortisation. I still think the dividend cover is very thin. Cash isn't only needed to fund growth. It can also be used to pay down debt and, as interest rates rise, the cost of financing that debt will rise.

At 31 March 2021, TEP had £89.4m of long term borrowings (it also had cash of £25.1m) and £2.4m of financing costs. In the absence of any rate cap etc. it does not seem unreasonable to assume that TEP's financing costs could double from 2021 levels over the next 12 months as the BofE interest rate rises. You've also got to factor in that the corporation tax rate will rise from 19% to 25% from 1 April 2023 onwards. These, together with the likelihood of additional bad debt costs, are all good reasons why TEP should not be increasing its dividend and should, if anything, be considering reducing its dividend so that it can pay down debt at a faster rate.

AV is not immune from what's going on elsewhere in the market. Based on yesterday's closing price and assuming all other factors remain equal (they won't) I'd plumb for c419p at close on Monday (which would give AV a 0.5% lower dividend yield than LGEN currently). It's a fact that the market just isn't pricing dividend paying shares higher at the moment. Part of the reason being that they expect rising inflation to impact margins and their ability to maintain/increase payouts. It seems that these days the market always finds an excuse not to give dividend paying shares their dues; preferring to chase companies that have no profits (or no expectation of profits for the foreseeable future) and no track record in the hope that they might make it big at some ill defined point in the future.

It'll be interesting to see what happens at the open. As some posters habe already suggested, some PIs will panic (despite being well flagged in advance, it seems that some PIs never read the news and are always flumoxed by reorganisations). I wouldn't be wholly surprised to see the price initially drop as the MMs try to shake out those unsuspecting PIs.

adeg1, Will they. Won't they show the B shares as well?

Don't forget SFH300 that the capital return is treated as partial disposal of your existing shareholding for CGT purposes. So, say you buy today 10,000 shares today at (say) 405p. On Monday you will receive 10,000 B shares worth £10,169 but the B shares will have a deemed acquisition cost of £10,057 and your new ordinary shares will have a deemed acquistion cost of £30,443 (this assumes that the mid-price on Monday is 405p). QED in this example your CGT gain would be £112.

Obviously it goes without saying that the figures are all dependent on Monday's share price. I would expect AV to announce the appropriate percentage in due course (once the dust has settled)

If you buy today and there is little price change on Monday then any CGT issues will be negligible

The expectation going forward would be that the price of the preference shares will start to fall from here out as the BofE rate rises; the coupon is fixed and the only way the yield can rise is if the price falls. Preference shares are like gilts in that respect. If capital protection is important to you then I wouldn't be buying preference shares or gilts when interest rates are rising.

They were probably issued at 100p so, at 139p, they are currently yielding about 6.3% and as interest rates rise the share price will need to drop for that yield to increase.

Has somebody hoovered up £40m worth of shares at the close?

Greg a) You've crystsallised a potential capital gain unless your shares were held in an ISA/SIPP, and b) the 30-day rule will apply if you re-purchase within 30 days of sale i.e. your sale may be matched with your re-acquisition for capital gains tax purposes (again irrelevant if the shares are held in an ISA/SIPP)

No, the difference is that they would would have used the money on the balance sheet to pay part of the acquisition cost; they'd probably end up paying the same net amount

I've been swimming in the Red Sea for weeks ;-)

My beef Nomlungu, as CJ66 has correctly pointed out, is not about the placing per se but the timing, the discount and the ability of existing shareholders to participate. The share price was 42p on 3 May. Okay, market conditions have worsened but I think the 10% discount was unwarranted. It seems to me that the directors know a good deal when they see one and have taken the opportunity to increase their shareholdings on the cheap at the cost of those of us who weren't able to participate. I'll bide my time and probably sell in due course because it's been my long experience that directors who run businesses simply to line their own pockets at small PIs expense don't generate the best returns (for the rest of us) over the long term.

Years ago I used to own Dana Petroleum and the CEO was forever awarding himself more free share options that meant the share price barely rose; he did very nicely when the company was eventually sold, the rest of us less so.