Member Info for TheTrotsky

You're looking backwards rather than forwards. It's not uncommon for investment trusts investing in structural assets to pay dividends out of capital whilst the assets are under construction. In their recent NAV updates GSF have indicated that dividends are now being covered by operational cash flows. 12 months on from the FY23 results they are now benefitting from a full year's production from the assets brought on line during FY23, plus the production assets brought on line since, and the (marginally) rising BESS prices in the UK. Furthermore, operational cash flow should continue to improve as more of the assets currently under construction are brought on line.

My thoughts would have been one of the warrant holders, either Rockmasters or Sparks Advisory, who are able to exercise their warrants at 0.1p per share. We know from the RNS issued on 24/07/23 that Sparks exercised the warrants they held at 30 November 2022 (they would likely have received these warrants in lieu of fees and are unlikely to be a long-term holder). Rockmasters might not have exercised their warrants yet but they could in principle be selling shares they currently own (or perhaps be using CFDs and/or spread betting) in expectation that they will be able to replace the shares when they exercise their warrants. We also know that 8.75m warrants were issued as part of the fundraising in June 2023 but don't know the terms, exercise price or expiry date.

GSF has an operational dividend cover of 1.15x and that's likely to start increasing as more assets come on line and a low debt burden. Also, 55% of its operational income is being generated in the US; so it's not been as exposed to the UK BESS market as the likes of GRID.

They're a bit late by historical standards; failing the end of last week, I would have expected a NAV and dividend declaration yesterday/today but it may not be too late today. Although unusual, they have made announcements mid-afternoon before now. Regardless, I would expect an announcement this week.

Zac, Thanks for the response reagrding the S&P 500 growth. With regard to the figures from MSOFT, they have to be taken into context. From what I've seen from Meta for example, quarterly figures are no bellwether (they tend to fluctuate from one quarter to the next without any consistent line of travel).

As regards MSOFT, it's FY24 Q3 figures were impressive and its diluted EPS growth year to date is up c27% but it's trading on a P/E of c35 and a PEG ratio of c1.35. Ideally you'd want a PEG ratio below 1, which would imply that MSOFT's current share price is at least c25% overpriced. It's definitely no bargain.

I should point out that my comments re: the boggling returns were mainly, if not entirely, aimed at the Magnificent 7; it's sometimes easy to forget that the Magnificent 7 aren't the only constituents of the S&P 500 ;-)

Tich, You state that LGEN has gone up 6x over the last 30 years whilst Zac you state that the US market has gone up 18.5x over the same comparative period. Tich/Zac, are your figures cum-dividend? If not, they should be. There is a huge disparity between the dividend yields on US shares compared to UK shares which is mainly driven by the much less favourable US tax treatment of dividends. I'd check but I haven't got access to any data going back more than 10 years.

Also, is it reasonable to compare the return on the whole US market against the return on a UK insurer? How do US insurers compare to LGEN?

Zac, I would question whether the US tech stocks are actually now producing the mind boggling returns you suggest. On first read, when you compare their FY23 results with their FY22 results many of them generated YoY net income increases of over 100% but when you compare their FY23 net income with their FY21 net income most of them have actually flat-lined (their FY22 results took big hits from large intangible asset write-downs) and their Q1 FY24 reporting season seems to have kicked off poorly thus far (increases tempered by expected falls later in the year).

A lot of the Magnificent 7 are currently trading on P/Es in excess of 25, suggesting that investors, to the extent that they've actually given it any thought at all, are currently expecting them to double their net incomes again in FY24, which appears highly improbabl). It augurs that the Magnificent 7 are all due a significant market correction. Whether that will actually happen rather depends on the wall of money that investors seem intent on throwing at them despite, rather than because of, their results. Investors seem hell bent on ignoring all the traditional valuation metrics and happy to spend significantly over the odds; in any other walk of life, they'd steer clear with a barge pole until the valuation metrics were more aligned.

I'm not suggesting that the Magnificent 7 haven't done well over the last 30 years (to the extent that they've existed that long) but their current valuations are (again) completely out of kilter with the near term reality.

An £840 difference between 300k at 2.28p and 300k at 2p. Given the relatively small volumes traded (£s) each day it's hardly life changing.

H88, I think you'll find that the TheCumbrian is referring to the price fall today (4.5p/14.63p) not the normal 2:1 dividend split between final and interim dividends.

Shatter, Ignore him. I think the dividend still remains relevant to shareholders who were holders before it went ex-dividend, at least until 23 May when the money is in the bank, for comparison purposes pre and post dividend. That said, I think it's reasonable to conclude (this time) that selling before it went ex-dividend and buying back after might have been the wisest choice (particularly if you'd managed to sell at c495p in early April and bought back at c455p on 16 April)

Just checked my dividend receipts. It was end of July and end of September in the three years prior to last year. There was a delay to the preliminary results announcemnet last year due to the additional statutory accounting and audit work related to the acquisition of Appreciate Group (the results were released at the end of July rather than the end of May), so they may well revert this year to July and September this year. We should hopefully get a post-closing trading update early next week.

They don't pay quarterly dividends per se; they split both the H1 and H2 dividend payments into two equal instalments

Historically the H1 dividend instalments have been paid in late December and early March whilst H2 dividend instalments have been paid in early/mid September and late September.

A bit quirky I know ;-)

Hope that helps.

I think taking the fees from income rather than capital although understandable would nevertheless appear to be a change of policy from prior years where they've aimed to distribute all the income they've received. Perhaps they might clarify and confirm the change of poliicy (and why).

Also, I'm not sure that I follow the "income drag" comment. I would imagine that the purchase yield is forward looking; in which event crystallising trading gains (which I'm assuming is akin to selling shares cum dividend) and posting all the gain to NAV is a bit of a "cheat" (IMO part of the gain would be attributable to the interest foregone and that element should be posted to income to "square the circle").

PIs are a fickle bunch. These results were as good as baked in following the strategy pivot. SOS may have fallen short of its revised sales and profit targets but only fairly marginally. To have set a revised sales target of £46.8m and only fallen short by £500k in the current economic environment is actually no mean feat (the small loss, as opposed to the small profit, more or less followed the sales shortfall).

SOS's revised strategy is beginning to pay dividends (the profit before tax in H2 FY24 more or less matched the profit before tax in FY23. Overheads have risen but that was to be expected given SOS's new overseas activities in Australia and Canada from mid-Q3 FY24 onwards (which should now help bolster prospective H1 FY25 sales) and the push into bricks and mortar (costs are being incurred despite no stores having yet been opened). The delay in opening new stores (I think that at least one store was expected in Q4 FY24) might be disappointing but is in keeping with the management's cautious approach (they've proven themselves capable of being reactive to evolving events and I trust them to only move forward when they think the time is right and/or have the cojones to cut their losses if needs must).

They missed their revised sales target by c£500k which, with a c60% gross margin, would potentially have generated an additional profit of c£200k. A miss maybe, but not a disaster.

Overall, not too bad when you consider the current economic backdrop and how their peers are currently performing.

Looking forward, following the strategy "pivot" in mid-Q2 FY24, I'd currently expect SOS to breakeven in H1 FY25 based on H1 FY24 LfL sales and H2 FY25 gross margins and operating expenses. However, SOS is currently targeting a 17% increase in overall FY25 sales (c£54.6m) and, allowing for an increased weighting to H2, then a (say) 10% increase in H1 sales would be the current expectation which should then deliver an H1 FY25 profit of c£1.3m. Whether SOS thinks it can stay on target to deliver a 17% increase in sales in FY25 in the current economic environment remains to be seen.

I think we have to accept that it's currently a very challenging retail environment and if in H1 FY25 SOS can deliver both an increase in sales and profits in excess of (say) £500k then I think that would be a positive outturn. SOS made a handbrake turn in mid-Q2 FY24 and it was always going to take at least 12 months to wash through (including being able to pare back the additional marketing overheads that would have taken on in expectation of a renewed and enlarged marketing drive) and if SOS had continued with it's previous strategy of chasing sales at the expense of gross margins, it's probable that its FY24 loss would have been significantly higher IMHO; when people are tightening their belts it becomes unrealitic to expect an additional (say) 10%+ increase in sales just to offset not only the gross margin that you are foresaking but the increased marketing and other overheads.

Is it any wonder that the UK market is so undervalued when brokers can't even be bothered to value Uk companies relative to their overseas-listed counterparts? Jefferied have just cut their target to 810p this morning but there is absolutely no way in the world that Jefferies, or any other broker for that matter, would ever accept a low-ball offer of 810p for SAFE. They are completely adrift and totally incapable of determining the value of anything. UK brokers might as well shut up shop now!

Well I know that the "high enders" still exist in my neck of the woods and I certainly dont't live in "... an area with higher than average property values and with affluent residents ...", quite the reverse.

That takes the total dividend for the year ended 31 March 2024 (FY24) to 9.96p (FY23: 9.46p). Can only assume/hope that they're keeping some FY24 income in reserve so that they can increase the dividend payout again in FY25. I don't see any likelihood of them increasing the minimum quarterly dividend payout above 2p at this juncture.

Any thoughts Momk?

3.96p! That's quite a bit less than I'd been expecting. Given that the puchase yield has been consistently above 11% for the last 12 months and their previously stated intention to distribute all income received (meeting expenses out of capital), I was expecting at least 5p minimum.

I'd beg to differ. I know of several niche, local retailers in my area alone who cater to the higher end of the market (and if they exist in my area of the world I assure you that they will definitely exist in yours too). They are there if you just care to bother to go to look (but it does mean that you'll have to get up from your computer and go out into the real world).