Member Info for TheTrotsky

Pip56

I think you've chosen to deliberately misread the previous trading update. It always seemed clear to me that the 3p dividend would be paid when the Big Rock ITC payment had been secured, and not before. I'm somewhat surprised that they are only telling us now that Big Rock ITC has been sold; I thought they'd have released an RNS as soon as the deal had been struck but that's a minor quibble.

I also think that people are getting unnecessarily hot under the collar about the delay between agreeing the sale of the ITCs and the cash being received; the reason seems fairly obvious if you actually think about it. What are the ITCs being used for and when does the liability in question normally fall due? In the US most companies normally pay their corporate taxes quarterly and they are probably unwilling to pay for the ITCs until either the corporation tax falls due or a tax refund has been received (if the ITCs are being applied to past payments on account). That's quite normal business practice. So, if it only recently struck a deal to sell its Big Rock ITC then its quite possible the tax in question won't normally be payable/refundable for 2-4 months, hence the delay. No need to be alarmed.

With regard to ToD's point about "suspect" revenues one would have to say, respectfully, that he's not been paying attention to GSF's recent past results. UK storage revenues have been abnormally low for the last 2+ years and are only now showing signs of recovery. GSF is not alone; this is an industry-wide issue. On the the other hand, GSF's revenues in Ireland, Germany and the USA in the previous couple of years have been abnormally high and these markets are now returning to more normal pricing levels. I would therefore suggest that rather than current year revenues being abnormally low they are actually returning to more normal levels with some protential further upside in the UK. Also, we shouldn't forget that most of GSF's new storage capacity has only come online in recent months and we will only see the full benefit in FY26.

I think the main issue in FY25 is that there were longer than expected delays (mostly outside GSF's control) in the electrification of the new storage capacity and this threw a big spanner into their cash flow forecasts.

Finally, more information is needed about the new dividend policy, but if they are seeking to more closely align dividend payments with seasonal generation peaks and troughs (with quaterly dividends matching the peaks and troughs) then I personally wouldn't have an issue with that if it helps to reduce financing costs. However, it remains to be seen whether they will aim to retain the 7p minimum dividend payment; I believe that the new storage capacity now coming online should enable them to sustain a 7p minimum dividend from FY26 onwards (with perhaps the occasional special dividends if, and when, they make the occasional abnormal profit) but that remains to be confirmed.

Well my "back of the proverbial cigarette packet" calculations were very wide of the mark! Didn't help that the cash balance figure they gave in the previoius update wasn't the figure at the end of H1 or that there wasn't the normal stock build up into H2 (with the consequential knock-on-effect on payables).

These results are basically rubbish. We are none the wiser as to what the Board's expectations are for FY25 but the term is liberally used throughout the RNS anyway. Motion capture looks to be going into terminal decline whilst Imogen "fiddles" with her new pet project (smart manufacturing).

Let's put this in perspective, motion capture has gone from a profit of £2.2m in H1 FY24 to a loss of £0.5m in H1 FY25 whilst smart maunfacturing has gone from a profit of £318k to a profit of £251k (despite the acquisition of Sempre and the economies of scale that was expected to deliver). Everything is moving in reverse! To add insult to injury we've incurred a further £0.5m loss from discontinued operations that were discontinued in FY24!

I'm sorry but Imogen must go. These results contain all the worst sleights of hand that a CEO could use when faced with falling sales and profits. Did anybody else notice how she seemed to imply that smart manufacturing was going from strength to strength (emphasising the H1 sales including the newly acquired Sempre rather than on a LFL basis) whilst completely ignoring the fact that LFL smart manufacturing profits had actually fallen.

I expect my CEOs to be upfront and honest; Imogen hides behind meaningless soundbites and financial contortions. Motion capture is in an utter mess and is currently looking set to get worse (it would appear that US sales are expected to fall still further now that US grant funding has been cut) and there seems to be no clear strategy for fixing it. I will be voting her out at the next AGM. I'm sorry but she's been promoted beyond her capabilities.

Just another day in paradise (or not) ;-)

Unfortunately this has been the typical fair for RWS for 12 months+.

The MMs just sit on the sidelines and leave the PE funds to have their fun at our expense; RWS is the meal ticket of choice!

OB is no oracle. He's been a long-term promoter of Diversified Energy to no avail; its share price is still in the doldrums and the jury is still very much out on how DEC can continue to make 1+1 = 3! DEC has got to continue spinning its plates (more acquisitions) because if it ever stops it might come unstuck! DEC has highly optimistic provisioning for plugging and capping its old wells (considerably less than other oil producers) and if its estimates are incorrect then it's essentially bust. I sold at a loss (before it susbequently cut its dividend which is never a good sign); I decided the reward didn't warrant the risk.

I'll have to digest his analysis but I'm always wary of somebody "doing a job" on one share to justify their stance on another.

I did recently dip my toes in at SEIT before I got spooked and sold out (made a 10% return plus a divi so can't complain).

I'm not sure that Onyx is all that OB likes to crack it up to be. SEIT was until recently trying to sell or part of Onyx but ended up negotiating a new RCF instead (the underlying suggestion being that SEIT couldn't find a buyer to match their valuation; the same valuation that OB suggests is understated) and it's highly likely that the Trump's new Chinese tariffs will materially affect the cost of Onyx's future installations/repairs. SEIT have also got problems at RED-Rochester because of Trump pulling all new IRA loans (whether or not approved). Trump may change his mind and these problems may go away but it's no slam dunk.

Plus, before all of these recent issues, there was someting in SEIT's historical financials that looked problematic when I first cast an eye over them. Irritatingly I didn't make a note and subsequently haven't been able to pinpoint the problem again! I'm not saying there is another problem but I've got it lodged in my mind that there is and can't shake the thought. So, when Temple of Doom recently started suggesting that there was another potential issue with SEIT, other than Onyx and RED-Rochester, that he was keeping under his hat I decided that discretion was the better part of valour and not wait for the next results ;-)

****ney rebel didn't strike me as any kind of "guru". his views on the musk/trump relationship weren't particularly persuasive; yet another person trying to logically analyse trump's likely actions (he talks about a symbiotic relationship, both of them needing each other and trump knowing that he owes musk the presidency; i doubt very much that trump would ever concede that in private, let alone public).

haven't we learnt yet that trump defies logical analysis? he's an egomaniac who's more interested in winning above all else, regardless of the financial cost to others. musk may have made a pathetic, grovelling apology on x (he should never have got into a public slanging match with trump to start with) but he's slighted trump and trump never forgets the smallest of slights. trump has made it his life's work to fall out with most all of the people he's ever worked with and it's generally always ended very acrimoniously. it's quite surprising how many close friends and colleagues have subsequently become sworn enemies; he attracts people like moths to a flame but they quickly learn that he burns them, if they're lucky (the unlucky ones end up bankrupted, unemployable or worse).

musk will feel the wrath eventually. spacex may not lose its current government grants but future grants might become harder to come by and less easy to access. also, following the spat, the relationship between nasa and spacex is likely to become more fraught now the whitehouse is pulling nasa's budget strings. e.g. spacex was on the verge of bankruptcy before its fourth, successful flight test (the three previous crashed and burned) and virtually the next day nasa awarded it a $2bn contract which kept the wolves from the door. if those events had followed the recent spat it's quite probable that spacex would be in new ownership today! trump would have had no compunction in going for the jugular.

Looks like the onslaught has started again. Convinced that there is short concert party acting in the background. Despite there being no notifiable short positions for six months there has been constant selling pressure whenever the share price has tried to creep into the blue.

This share has been everbody's whipping boy for several years now and the price drop has been overdone.

These half-year results were flagged months ago and the share price has already taken a hammering for it. The important takeaways from today are that the business situation doesn't appear to have got any worse, that they remain on target to meet their reduced, previously announced current year targets and, certainly as yet, there do not appear to be any plans to reduce the dividend.

Rumpel, I compare both but the problem, as ever, is being able to find a share of comparable quality (reliable dividends) paying a better return in which to invest.

Personally I've always believed that having a diversified portfolio, both in the insurance sector (AV, DLG, LGEN, MNG and PHNX) and the wider market as a whole (with come sector exemptions/minimalisations - there's certain sectors I've tried to avoid investing in directly but haven't been able to completely avoid due to some of the investment trusts I hold) but, if I'm honest, barring a few exceptions I might have been better off simply sticking to my insurance stocks and perhaps adding CSN to the list.

Jatw, Don't disagree. However, the problem with LGEN, PHNX and MNG is that, at least until of late, the share prices have been quite fickle and my gut feeling is that the market will reverse at some point and MNG will (probably) be back sub-£2 again because that's how private equity makes their money (they don't care if the price moves up or down as long as they can make a turn at our expense). I'd love to be proven wrong but I've been burnt too often in the past to believe that this time is any "different" (the Goldilocks zone).

I'm primarily a dividend investor so price swings, other than offering an opportunity to buy more shares at a higher yield (if I can find the money), are fairly irrelevant in the short to medium-term as long as the long-term fundamentals remain sound. That said, everybody, myself included, likes to see their shares in the blue ;-)

Robleo, I would agree that the quoted dividend yield makes little or no difference to an existing shareholder * (their dividend yield will be based on their acquisition cost not the current share price) and, in absolute terms, I'm anticipating that the annual dividend will increase by c2% in the near term.

Oldbutnowisa was suggesting that the dividend yield was likely to rise from here. Personally, I'd hope not because that would seem to imply that he thinks the share price is about to fall! You can only have a rising dividend yield and a rising share price if the annual dividend is increasing at a faster rate than the share price and I would suggest that the share price is currently increasing faster than low single digits. He then chucked in the expectation of a potential bid for good measure, which would be counterintuitive if he was expecting the share price to fall (to support his rising dividend yield hypothesis)! QED I think he was getting his message in a twist.

* I don't think that an existing shareholder should completely ignore the current dividend yield. If you are a dividend investor then you should be comparing the current dividend yield with other stocks and, at least, considering whether or not to sell to reinevst for a better return (obviously capital growth needs to be factored in too). E.g. If one invests, say, £1,000 for an annual dividend of, say, £100 (a dividend yield of 10%) and the market value of ones investment then rises to, say, £1,500 whilst ones annual dividend remains constant at £100, the dividend yield would have fallen to c6.7%. The conundrum is then whether one should sell if one can reinvest the £1,500 for an annual dividend of, say, £150 per annum (a 10% yield). Personally, I've been considering this exact same conundrum with AV recently and the jury is still out in my mind. The decision isn't made any easier by the fact that I think Blanc is one of the best operators in the sector, has done an excellent job since becoming CEO of turning AV's operations around and has a proven record of over delivering on expectations. I also think that the acquisition of DLG, if it's given the green light, will prove to be a great success.

You need to be basing your investment decisions based on the adjusted PE ratio, not the quoted IFRS PE ratio. IFRS chucks the kitchen sink at the balance sheet without any regard to the likelihod of Armageddon actually happening (and if Armageddon did actually happen you'd be far better off invested in tins of baked beans anyway).

As and when, investment valuations start to improve or bonds start reaching maturity, whichever comes soonest, you could just as easily see LGEN starting to trade on a quoted IFRS PE ratio of, say, 1 or less as previous downward fair value adjustments are reversed, which would be equally ridiculous.

The reality is that stocks and bonds have gone through a very rocky valuation period since the start of COVID, which makes comparisons year on year under IFRS increasingly difficult (almost meaningless).

Even if you are not inclined to rely on the adjusted PE ratio, you should not be comapring the current PE ratio with the PE ratios of yester years because you'd be comparing apples (IFRS) with pears (UK GAAP). UK GAAP tried to "smooth" results (companies would provision in good years and release said provisions in poor years) and relied on companies taking a view of the likelohood of an event happening. This was considered too subjective in some quarters so, under IFRS, companies are now required to mark to market even if they have no intention of selling and holding to maturity.

And we wonder why the UK stock market is in such dire straits. As soon as we see a swallow we head for the exit!

Comparing FTC now with FTC at the end of the 1990s is like comparing chalk and cheese. Completely different market sectors; completely differenet market dynamics. Then FTC was predominantly operating in the high volume, low margin mobile phone antenna sector; it didn't have either the volume capacity or the economies of scale needed to compete with manufacturers in the Far East. Now FTC operates in higher margin, niche communications sectors where cutting edge technology, rather than volume, is more critical and where higher barriers to entry exist (competitors would need a lot of upfront R&D spend).

FTC is operating in the "Goldilocks" zone. It has the possibility of generating steady, recurring profits of c£10-£25m in the forseeable future; on the one hand, its potential recurring profits are unlikely to warrant a larger competitor to want to move in on the act (you can spend a lot of money on R&D and still end up with a plum; it's debatable whether the level of recurring profits would warrant the risk - it's not a "slam dunk") whilst, on the other hand, the share price premium a competitor might need to pay to acquire FTC, plus the additional regulatory hurdles (if the UK government has any sense they wouldn't want FTC to fall into the hands of an overseas competitor, particularly considering its defence work), would mean that an overseas competitor, at least, is likley to balk at buying. If a takeover was on the cards, I still believe that BAE Systems would be the most logical purchaser (likely to get the nod from the UK government and FTC would/could compliment/enhance its existing defence and space businesses). Despite SpaceX prospectively owning c15% of FTC, I do not think that the UK government would currently (if ever) sanction the acquisition of FTC by a company owned by Elon Musk.

I think it's unlikely that FTC will reach the same heights (valuation-wise) that it did at the end of the 1990s; the niche, low volume, high margin sectors that it now operates in are unlikely to offer the possibility of generating the same level of recurring profits that its mobile phone business once promised at the end of the 1990s.

We only become a "victim" if we choose to be.

I think you're getting yourself in a twist. M&G have committed to raising the near term annual dividend by low single digits (there's no stated indication that the Dai-ichi Life deal will change the near term dividend prospects). So, if the share price remains at current levels, any increase in the yield will be relatively small and the only way the yield can materially increase is if the share price starts falling! On the other hand, if the share price continues to rise, as most PIs hope and expect, then it's inevitable that the the dividend yield will fall (because the annual dividend increase is unlikely to keep pace with the share price increase).

That's not an argument to sell but the prospect of a rising dividend yield would definitely not be grounds to hold because rising dividend yield = falling share price!

ToD, My previous reading of the situation was that RED-Rochester didn't have an investment in Li-Cycle but that Li-Cycle was, rather, one of its customers looking to expand its existing operations using an approved US government loan and that Glencore was mooted to be looking to either acquire or invest in Li-Cycle, and that this looks to have been scuppered by Trump's new administration (all new loans, approved or not, have been stopped), at least for the time being. From RED-Rochester's perspective, the investment by Li-Cycle would have resulted an increase in its occupancy rate and increased energy efficiency.

I wouldn't be surprised if Li-Cycle, like a lot of other US businesses in a similar situation, isn't currently in the process of suing the US government; the loan was approved and its quite feasible that money would have been expended once approval was received before any government funding was received. As regards RED-Rochester, it may currently be in limbo - whilst the litigation is ongoing it may not be able to market the additional land/buildings etc. that Li-Cycle was expecting to occupy to alternative users.

The FY24 results were announced on 31 July 2024 and I'm seeing suggestions on a couple of investment websites that the FY25 results will be announced 4/5 August but can't find anything on FTC's website. Does anybody have any insight on the announcement date?

I have to say that it's a difficult report to read, let alone understand.

With reference to a couple of points that Therosyl raised:

1) Underlying loan interest income does appear to be reasonably steady (the "predictable" revenues). The loan interest income is less than 12 months previously but that seems to be due to two main factors. Firstly, the sale of assets over the last 12-18 months; it's inevitable that loan interest income will decline as some of the assets are sold. They've sold c£57m of assets to date and that would probably account for at least c£2m of the loan interest decline against the comparable period. Secondly, the decrease in loan interest received from "solar assets with equity-like exposure". That's more difficult to explain but I surmise that GCP is entitled to additional loan interest if the solar assets generate electricity in excess of certain agreed levels. GCP is unlikely to factor this additional loan interest into its baseline ("predictable" revenues) forecasts because solar generation is, by its nature, unpredictable.

2) Don't confuse apples and pears. The loan interest is made up of both predictable, recurring income and also top-up, opportunistic income which will occur from time to time. The report does not distinguish.

3) Profits may have fallen because loan interest has declined whilst unrealised losses on asset revaluations have increased but adjusted EPS has fallen from 3.5p to 3.3p. The latter has more bearing on the ability to continue paying dividends and, although the fall is not ideal, the decline in EPS is not catestrophic and may well be rectified in following periods. One swallow does not make a summer.

4) Likewise, the sale of a couple of assets below NAV is not ideal but is not necessarily a disaster. The assets appear to have been non-core and picked up with a parcel of other assets from Platina Partners in 2017. Since acquisition, the assets in question have generated an internal rate of return of at least 9.7% (this figure may rise depending on the receipt of certain further contingent amounts). That's not too shabby and would seem to suggest that the assets were sold at, or above, their original acquisition cost. If all my bad investments could generate an annualised return of c10% I'd be a very happy man!

I can understand why some might think that GSF might be affected but GSF's two US construction projects are completed and it has already received the tax credits. As far as I'm aware there has been no discussion in the US of revoking the tax credits already awared under the IRA. That said, I would have expected to have heard some news on the sale of the Big Rock tax credits before now. In the RNS issued on 15 April GSF said that they would provide a further update in the "near term" and that timeframe must surely be rapidly expiring, if it hasn't already.

I'm surprised that he's still got any neck left to wind in ;-)