Member Info for TheTrotsky

It's a refreshing change to allow the share price to do the talking ;-)

Whilst back in the real world AV's acquisition of AIG Life has been referred to the CMA and all of its peer insurers seem to be in the same boat at the moment (a sea or red). I suggest that all the anti-wokists just keep their trousers on or get some real cajones like Amanda (who has to deal with your drivel day in day out)!

I'm a long-term SOS holder, so I'm fairly biased, but I believe that SOS can achieve bigger and better things if given the time; I keep a watching brief on ASOS, BOO, QUIZ, SDRY etc. and SOS was the only one to deliver growth in sales in the December quarter. The pivot that SOS made in Q2 FY24 to reduce its discounting and maximise gross margins was well considered but there were inevitable short-term costs (it had to gear back its previous promotion-led sales growth plans and the additional marketing costs associated with that) and, together with the high street and overseas expansion plans, it needs a bit more time to show that its sales growth (albeit at a lower rate but higher margin) is back on track. I think the post-Xmas Q4 FY24 trading period is going to be tough (it's difficult to ignore the current wider economic situation) but am hopeful that SOS will still be able to deliver on its revised FY24 targets and beyond.

I think the market over reacted to SOS's Q2 FY24 results (which is still reflected in the current share price) and does not yet appreciate the management team's capability to deliver its long-term aims. The team is laser focused and rarely sits on its laurels. The team showed its mettle during COVID and, whilst other UK online retailers have been just "plugging the leaks" for the last 12 months (their strategies haven't really changed; they've just been downsizing), has taken decisive action to shore up the bottom line and move forward.

Hopefully we should start to see the dividends in the next 6-9 months and the share price start to improve. The analysts haven't been keen on the pivot to the high street but the truth is that if analysts ran businesses they'd probably be bust before they even opened their doors! The SOS management team understands fashion and is not prone to making rash, ill-considered decisions. Hang tough.

Caveat emptor as always

AB, You seem to be pretty well on course already.

Assuming that:

1) You are (say) 35 now;

2) You are generating £10k of dividends within an ISA wrapper now;

3) No income or capital is withdrawn before you reach the age of 50;

4) All dividends are re-invested to earn (say) 6% per annum;

5) A first year dividend re-investment discount rate of (say) 55%;

6) Annual dividends grow by (say) 2.5% per annum; and

7) Annual platform fees of (say) £150

Then I would project that you might expect annual, tax-free dividend income of c£33k by the age of 50, even if you don't make any further capital contibutions into your ISAs, and should be able to withdraw an income of (say) £25k per annum from 50 onwards, uplifted by 3.5% per annum thereafter, without needing to deplete your capital.

If you were able to contribute an additional £5k per annum each year up to the age of 49 on the same terms then you might expect annual, tax-free dividend income of c£41k by the age of 50 (c£49k at £10k per annum and c£65k at £20k per annum).

HOWEVER, there are a number of important caveats:

a) The projection is very sensitive to the annual dividend growth rate (at 1% pa you would start depleting your capital);

b) It goes without saying that you've got to pick shares that can sustain their dividend;

c) Companies can cut their dividends and/or simply go pop;

d) You take a risk if your dividends are overly reliant on one share or one sector; and

e) This is an ideal world paper exercise (the world is rarely ideal)

Diversification is IMHO key. Personally, I've got about 8% of my portfolio in an income trust (AEI) which is currently paying c8%. It aims to distribute all of its current dividend income (so there isn't much dividend coverage and it's dividend is susceptible to the performance of its underlying investments) but it's invested in 50+ companies across the UK and Europe.

Hope that helps.

Caveat emptor as always

What level of income after tax are you looking for when you reach 50? Are you married? How old are you now?

It's profitable and cash generative but due to historical issues with its Vislink Communication Systems divison (which it sold back in February 2017 following a strategic review) it became lumbered with ~£12.1m of bank borrowings and net liabilties of ~£6m as at the end of FY17.

Its been progressively repaying its bank borrowings ever since and its borrowing should now be down to ~£5.5m as at the end of FY23. At the end of FY22 it had net laibilities of ~£750k but should now have net assets at the end of FY23. It took a bit of a knock during Covid and the subsequent chip shortage (like a lot of businesses) but now seems to have fully recovered its mojo.

It's currently prioritising repaying its borrowings and I wouldn't expect a dividend to be paid in FY24 but, subject to working capital requirements and/or business investment opportunities that might arise in the meantime, I would expect a dividend to, at least, be up for consideration in FY25 or FY26 (the payment of a dividend would require court sanctionioned approval to convert its merger reserve and share premium account to distributable reserves).

That said, it did explore a potential equity raise in FY22 to provide it with additional capital to accelerate the development of next generation solutions but, despite good levels of support from existing and new investors, it ended up shelving the plans because of the worsening global economic situation and falling investor sentiment for the equity markets generally. If the markets and the global economic situation continue to improve throughout FY24, it may consider revisiting these plans if expansion opportunities exist (at the moment it's funding this investment from its own cash flows).

Positive update this morning. It's not every day that you find Pebble at the top of the share risers list ;-)

'Trotsky ? I mean, you wouldn't try to mislead the morons of this board by failing to warn what happened to the majority of 'investors' who were suckered by a carefully orchestrated con ?'

GG, as usual you are reading posts out of context. One would have thought that even you would have learnt to add by now! I wasn't advocating that the bulls should (or should not) buy. I was just pointing out that the short sellers could be countered by the bulls buying if the bulls were of a mind to do so and advocating that DEC should borrow to buy back shares was not a sensible course of action (none of us know the future and borrowing should be limited to operational matters, not propping up the share price).

You think that DEC is a con despite there being no real tangible evidence. I, on the other hand, am more concerned that DEC may be out on a limb i.e. having been brought to account, it can't now justify its depletion rate and ARO provisions being so materially out of kilter with other operators. The bulls on the other hand simply believe economies of scale alone can justify the disparity.

Bottom line, I think if the share price is to recover then DEC needs to do more to justify its depletion rate and ARO provisions than it has done to date to restore investor confidence and that borrowing to fund buybacks is not the way to go.

Obviously DEC needs to balance disclosure with business confidentiality but if you look at DEC's reports and presentations you'll find that despite there being a lot of information they are actually fairly detail light e.g. I could find a lot of words but very little detail about its underlying ARO assumptions. That's not necessarily unusual (companies generally try to disclose the bare minimum to try and maintain any competitive advantage) but once a company finds itself under the spotlight then it has to be more forthcoming (or suffer the share price consequences)

Just signed second SPL within a week. It would appear that the financial constraints that have afflicted the market over the last 12-18 months may, at last, be loosening. This could be good news for MXCT at long last.

Alternatively, the bulls could buy more shares themselves (it worked for GameStop). In fairness, quite a lot of the bulls are probably already tapped out (having been buying steadily as the share price has dropped and maxed out their exposure). Borrowing to fund share buy backs is a slippery slope especially if you consider the current economic and geopolitical backdrops. There is no absolute guarantee that base rates will drop; it might only take a further escalation of the conflicts in Ukraine and the Middle East to once more adversely tip the balance in favour of base rate rises. Topps Tiles tried a capital reduction back in the mid-2000s (because debt was relatively cheaper than the cost of dividends; not disimilar to DEC's current position) only to get unexpectedly caught out by the subsequent financial crisis. It took Topps Tiles the best part of a decade to repay its borrowings and the share price is still c75% below its peak back in the mid-2000s. Obviously a capital reduction is not the same as a share buy back and if DEC bought the shares back into treasury (and didn't cancel them) it could potentially sell the shares back into the market at a later date, if the share price recovers. However, borrowing to buy back shares is not risk-free and best avoided if at all possible; DEC's business is operating oil/gas wells not trying to manage its share price.

Bismarck, The results were, more or less in line with market expectations. There was something for everybody. From a bull's perspective, there was reassurance that it was business as usual and no nasty surprises. From a bear's perspective , there appears to have been a period on period decline in the production rate and potentially a (modest) rise in the depletion rate (none of which is necessarily conclusive). However, at the end of the day, it's the future potential ARO costs rather than the here and now that will finally decide whether this share price will rise or fall and, thus far today, the jury seems to be out.

NAV up 0.67p week on week. The trend continues.

Have you actually given any consideration to the number of people who would need to be treated? In all likelihood you'd be long dead before your turn in the queue came around! Current CAR-T treatments are not only expensive but also use a lot of hospital resources; patients currently have a risk/recovery period of 2-3 months and it's not uncommon for them to have to be admitted to hospital throughout because the treatment can impair their immune systems (it may cure their cancer but in the "change over" period they can be susceptible to other diseases).

I'm not saying that the research is without merit but, unless they can come up with a pill or an injection, the pure logistics, let alone the economics, of the existing procedures make a mass roll-out unfeasible. Furthermore, OXB is about the delivery system rather than the treatment itself (if you like, OXB provides the inhaler not the drug) and unless the drug makers can come up with a means to swap out the T-cells without the need for a "transfusion" (the reason that they have to remove the old T-cells before replacing them with the new T-cells is because they can't "co-habit") and the consequential hospital stay then the type of delivery system becomes a fairly mute point.

The existing treatment just can't handle millions of patients each year, let alone tens of millions, hundreds of millions or even billions; it's not (necessarily) the cost of the treatment that is the ultimate stumbling block but the time (2-3 months per patient) and resources needed (individually tailoring the treatment for each patient, hospitals, beds etc.).

Finally, and it shouldn't be ignored, no drug company is going to pursue this because if it achieved all of its aims it might ultimately put them out of business! You only have to look at the treatment for stomach ulcers to see that this is true; for decades drug companies refused to accept evidence that stomach ulcers were caused by bacteria in the gut and that some, if not all, of them could (potentially) be cured by a simple, one-off dose of antibiotics because they were making £billions from ulcer drugs (such as Zantac) that tackled the symptoms rather than the cause.

It should be noted that GSF is down c40% over the last 12 months whilst GRID is down c60%. It's not so long ago that people were bemoaning the poor performance of GSF relative to GRID and selling GSF to buy GRID; so things could be worse ;-)

At this juncture, I would only expect a dividend cut to be driven a fall in NAV and, for the time being, the current dividend of 7.5ppa looks just about safe IMHO.

Monty, the shorters are more concerned with the potential long term issues (ARO, depletion rate, ESG etc.) rather than the short term results. I would be very surprised if the results aren't materially in line with current market expectations, given the level of hedged production. The only thing in the results that might swing it one way or the other is the H2 production rate and/or greater transparency on their ARO and depletion rate calculations. The production rate is a two-edged sword; given the relatively low spot price during the period, one might expect that DEC would, from an operational perspective, have wanted to limit production over and above any agreed hedged production but shorters would no doubt see this as further evidence of a "false" depletion rate. If the production rate is lower than might have been expected then DEC will need to come out swinging (both justifying the production reduction and its depletion rate calculations). I don't think DEC can simply rely on "trust what we say" and leaving it at that (they need to anticipate and be proactive rather than reactive).

MrG123, I don't think as much consideration has been given to DEC's concentration of its production to certain geographic locales as it should. By piggy backing off the infrastructure needed for its more productive wells, DEC is able to leverage its economies of scale and keep less productive wells producing for longer. But the real benefit of this approach may not be so much its bottom line as deferring the date when its less productive wells might normally be abandoned and, by extension, the timeframe for plugging said wells.

It's debatable whether continuing to operate (potentially) thousands of wells at a (very) marginal operating profit is a good use of capital employed and/or just simply a mechanism to defer its ARO expenditure. DEC are currently selling it as part of their smarter asset management (SAM) i.e. maximising income/profits on its "dud" wells which they had to acquire in any event (they weren't permitted to simply cherry pick the "good" wells from the previous owners; they came as a package). This argument is not without merit. But if DEC's overriding business rationale is to simply defer its ARO expenditure then it does become a bit more questionable in the bigger picture; although there's a clear monetary benefit to deferring the ARO expenditure as long as possible it does, nevertheless, open up DEC to additional scrutiny over affordability and whether its ARO estimates are indeed all they are cracked up to be.

I'm not so sure. CAR-T treatments are individually tailored and, as I understand, involve removing an individual's existing T-cells and replacing them with altered T-cells (essentially using a process similar to a blood transfusion). It's never going to be feasible to do this on a large scale.

The Americans are historical isolationists (despite what some people might think). Couple that with the fact that despite what else is going on in the World they are wedded to cheap energy and if a president doesn't deliver (regardless of the reasons) they rarely, if ever, get given a second term. Against a backdrop of rising worldwide conflict and the prospect of higher energy prices, they are prone to go into their shell.

Even if Biden does get a second term, I'm not sure that he'll be in a rush to roll back the decision to pause the approval of licences for new LNG hubs. The Democrats are between a rock and a hard place and if they want to try and stop US politics lurching even further to the far right then they've got to keep those floating voters (the ones who are only really interested in their own "check" books) sweet.

PS. These are looking like politically desperate times in the US. Neither Biden or Trump will make for a good next president. On the one hand you have a Democrat who really should have retired four years ago but continues because there is no other Democratic candidate who stands a chance of beating Trump. Whilst on the other you have a complete egomaniac who is capable of anything (even bringing the US to the brink of civil war). The bar is so low that it makes both Sunak and Starmer look like political titans in comparison ;-)

Https://www.thetimes.co.uk/article/biden-lng-natural-gas-export-ban-uk-rqhwh5wvs

For those who can't read the attached link, the article talks about the Biden administration's decision to (indefinitely) pause the approval of licences for (new) LNG hubs.

The apparent rationale for the decision is that "... the present economic and environmental analyses used by the Dept of Energy to underpin its LNG export authorisations were roughly five years old and “no longer adequately account for considerations like potential energy cost increases for US consumers and manufacturers”, or greenhouse gas emissions ...".

The potential impact of this decision is (at least) threefold. Firstly, it has the potential to increase Europe's energy costs and either force us back into the arms of Russia and/or invest yet more into (relatively more expensive) renewables sooner (and perhaps forcing the UK, at long last, to invest more in its "not fit for purpose" energy transmission network; it's a national disgrace that we are currently paying some offshore wind farms not to produce because we are unable to transmit/store the electricity). Secondly, it will put a cap on US gas prices (whilst US supply continues to outstrip US demand), which may be good for US consumers and manufacturers but less so for US-based producers like DEC. Thirdly, it will (at least in the short/medium term) hand a competitive advantage to the US.

Personally, I'm not sure whether environmental groups aren't shooting themselves in the foot here. Americans are wedded to cheap energy and whilst oil/gas prices remain relatively low there is no incentive for the US to invest more in renewables unless the White House intervenes and, as evidenced by the Trump campaign, lower energy prices are still a potential vote winner in the US (and any president promoting more costly alternatives is unlikely to be invited back for a second term).

From a DEC perspective it could make it more likely that there will be lower prices for longer i.e. make it more likely that gas production will extend beyond 2050 (as DEC already expects) but that the prices realised will remain at the lower end of the potential price spectrum. Bottom line, not sure whether it's good news for DEC and its ilk.

Pickedpeck, You've completely missed the point. If you read the rebuttal letter again you will see that DEC says it was able to save money by using its own equipment on its own wells (the implication being that it didn't use its own equipment on third party wells). Given that it only capped six of it own wells in the period under review, it seems hardly likely that it has gone out to buy equipment soley for use on its own wells. QED it's more likely that it's currently using existing equipment from elsewhere in its operations.

Nothing wrong with that so far as it goes. However, as its production declines and plugging activities increase over time, it's unlikley that it will be able to continue to borrow equipment from eslewhere in its operations and will have to either buy or hire equipment for use in its own plugging operations.

The question therefore is, did DEC make an internal recharge for the use of it own equipment? I rather got the impression from the letter that they might not and, as such, their quoted plugging costs would be misleading and understated. Who's laughing now?

If you are interested in investing in bonds you may want to take a look at TFIF. It holds a portfolio of primarily investment grade bonds. It currently has a dividend yield of 9.01% based on the dividends paid for the year ened 31 March 2023 but is likely to pay 11p (a prospective yield of c10.5%), perhaps a bit more, for the years ended 31 March 2024 and 31 March 2025 (if there's no material change in the current base rates).

Caveat emptor as always.