Member Info for TheTrotsky

I would add but DEC now accounts for circa 10-12% of my annual dividend income; so for the sake of diversification I'll be looking to reinvest elsewhere for the time being.

Apologies for my typing dyslexia. The last part should have read "... she only now buys what she really needs. Personally, I don't think she's alone and ASOS needs to adapt ..."

I would take note of the article in today's Times. ASOS is currently the most heavily shorted stock on the LSE and it appears that its January trading update is expected to disappoint (again). Next is due to kick off the reporting season on 5 January. Next's results are expected to be sound without any material upside; anything other may not augur well for ASOS in the short term.

Also, I believe your analysis contains some flaws. If you read the FY23 Outlook in the RNS issued on 19 October, ASOS expects to write-off £100m-£130m of stock in H1 2023 plus book an additional £40m of "adjusting items" relating to its change programme (surprisingly, none of these expected charges appear to have been provided in the FY22 results). The stock adjustment may be a a non-cash write-off but, together with the "adjusting items" that reduces the FY22 reported net assets by more than 25% (so we're not trading at NAV) and that's without factoring in any trading loss that may, or may not, have arisen to date in H1 (traditionally H1 has been profitable but ASOS's gross margin has been falling and it takes time to put right the mistakes of the past).

The other worrying issue on the horizon is that China seems to be backsliding again. According to news reports over Xmas, although Covid restrictions have been lifted, staff shortages due to illness are now beginning to affect factory production and shipping once again. So, the (not so unreasonable) expectations a few months ago that shipping costs would reduce and supply chains revert to normal in the coming year may prove to be ephemeral.

I think that ASOS will survive but I'm not sure its out of the woods yet or that all the bad news is yet in the share price. I'd be cautious buying before the trading update and keep an eye on what's happening in China.

PS. I'm not invested but have no axe to grind (I keep an eye on ASOS but don't have any plans to buy). I missed the ASOS boat long ago and I'm not sure ASOS's original business model is now fit for purpose. I think ASOS's target age group will have less free cash than you expect and that they are, perhaps, becoming more socially aware. My daughter is in their target age group and, although a straw poll of one is not a consensus, she has significantly cut back on her ASOS spending over recent years (she's making her clothes last longer). She still buys from ASOS (so it's not dead in the water) but she only now buys waht she really needs. Personally, I don't think she's not alone and ASOS needs to adapt.

PPS. I have the same views on BOO but it's bb is a disaster zone ;-)

It's a wonder that any companies survived the 1970s and continued to pay dividends ;-)

Inflation is nothing new, we've been here before. I think people are getting a bit paranoid. If the current high inflation rate is here to stay (I suspect not) then companies will adapt; they've done it before and will do it again. Markets always tend to overreact but businesses survive.

SirTradealot, small point of order, the US withholding tax rules don't just apply to listed US incorporated companies. Have a look at DEC. It's actually incorporated in the UK but its dividend payments are subject to withholding tax because its trading susbsidiaries operate in the US. DEC has made an election to be treated as "transparent" for US tax purposes so that any dividends paid up from its trading subsidiaries are not subject to withholding tax in the company but are, instead, subject to withholding tax when paid to its shareholders - this is more tax efficient because SIPP/ISA shareholders are liable to a lower rate of withholding tax.

Personally, I'd avoid VOD. I recently sold, at a loss, precisely because its dividend does not look sustainable given the size of its growing debt mountain. VOD is really struggling to keep its debt mountain in check and the more assets it sells the lower its income becomes; a vicious circle. Also, licencing isn't getting any cheaper and the scope to increase prices in many of its markets is limited by competition and regulation. VOD could really do with a cash injection of at least £10bn to get its debt mountain down to a more sustinble level; so if it continues to underperform in all likelihood it will look to cut its dividend again and/or raise additional capital. Also, with a new CEO on deck it's quite probable that they will seize the opportunity to get the bad news out of the way sooner rather than later. Read inherited a poisoned chalice from Colao (they should have retained more of the Verizon proceeds and paid down more debt) and he's been fighting an uphill struggle ever since.

As regards MNG, I don't see it cutting its dividend anytime soon. This year has been challenging but its strong Solvency II ratio should permit it to ride out the storm and maintain/increase its current dividend.

Haggis, On paper perhaps but HUR can use its histroical tax losses to reduce its corporation tax liability to £nil and use new investment to mitigate any windfall tax; so it's highly unlikely that HUR, or any other producer for that matter, will be paying anying like 85%. Also, albeit that there is currently no price floor to the windfall tax, it seems probable that the government will accede in the future (although the government might want to increase the windfall tax above the price floor in return)

Haggis, I think you'll find that HUR cannot use its historical tax losses (I presume that's what you mean when you refer to its historical debt) to avoid the windfall tax; historical tax losses can only be used against corporation tax, not windfall tax.

Crystal Amber is an Investment Trust and would have no interest in launching a bid for DLAR. It's a pity that DLAR did not see fit to publish Crystal Amber's open letter; it was a pretty damning indictment of Loosemoore's reign.

Denied any board representation, and Loosemore being both unwilling to accept that his turnaround strategy has (thus far) failed and consider alternative proposals (Crystal Amber wants DLAR to stop just slashing operating costs, cut head office costs and start looking to grow the top line), I wouldn't be too surprised to see Crystal Amber now selling up, given that they have lost faith in Loosemore's strategy and continuing excuses.

Don't forget that Crystal Amber has been (very) supportive of DLAR since first becoming a shareholder in April 2018 and stumped up an additional £18m as part of the July 2020 fundraise. Crystal Amber even added to their shareholding after this year's first profit warning (unlike Loosemoore who considered he was already too invested). Crystal Amber have just run out of patience (like a lot of other DLAR shareholders) with the ongoing value destruction with no seeming light at the end of the tunnel. In January this year Loosemore told Crystal Amber that he didn't see any fix to DLAR's problems until 2028/30!

Not currently a holder. Might look in again in 5/6 years time to see if there is any change

For those that intend to vote their shares at next month's AGM, please note that the BoD's default recommendation is (most definitely) AGAINST resolutions 16-18. I highlight this because when I was voting my shares yesterday on Interactive Investor I noted that the BoD's default recommendation was incorrectly stated to be FOR the resolutions!

I emailed Rob Parker, the investor contact at TPT, yesterday morning and recevied a response thanking me for pointing out this error yesterday afternoon. So, if you've already voted and inadvertently voted FOR resolutions 16-18 you still have time to amend your vote.

Ah, but timst you miss the point. Both the original loan and the new loan are based on SONIA, so in real terms the interest they pay is reduced in any event

rxdav, I disagree with the comment "... in the early years DEC were making money on these hedges as gas prices dropped, the opposite is happening now ...". The whole point of hedges is to guarantee a price for your product. In the early years the hedged price may have been above the market price (although if that had persisted over time then the hedged price would have tended towards the market price in the future) whereas the hedged price is now below the market price (although, again, if that persists over time then the hedged price will tend towards the market price in the future and we are already seeing higher forward hedged prices as a result of the current market prcie).

DEC hasn't really gained/lost anything; it's just chosen not to gamble and instead secured a fixed price. That said, current cost inflation is likely impacting DEC's expected margins (I wouldn't be surprised if the current operating margin is less than DEC's internal forecasts, say, 12 months ago) and the only solution for that is for DEC to try and squeeze out cost reductions and/or try to find more cost efficiencies and/or try to find additional economies of scale e.g. more bolt-on additions in their existing operational areas which might enable them to further reduce their unit costs.

Luckylurker, I suggest that you sell your Lloyds shares because you clearly don't understand what you are investing in. I'm invested in Lloyds specifically because it is a retail bank, not an investment bank. If you want want the thrills, and spills, of investment banking I suggest that you go and invest in Barclays. My rant isn't against banking per se. Banks are a necessary "evil". I'm saying that banks cannot be trusted to regulate themselves. That's true of most every commercial sector, so why should the banking sector be any different? Like in every other walk of life, I'm sure that most bankers are generally honest but, as always, it only takes a few rotten apples to rock the boat and, let's not forget that investment bankers are generally playing for much larger stakes e.g. they can be investing £trillions every day just to earn £millions (very high leverage).

I do not wish the government to usher in short term growth at the risk of longer term collapse. We barely survived the last finacial meldown in 2008 and the public purse is still paying the price. We cannot afford to bale out the banks again and I do not choose to stick my head in the sand and allow bankers to run around unfettered, investing my savings, with little or no regard for what would happen if their investments go south. Sure, we could chuck them in prison after the event (that would make a change) but personally I'd rather avoid that outcome altogether.

The current rules are already a joke e.g. the likes of Goldman Sachs have been allowed to set up a retail banking arm here in the UK (Marcus) without the need for those retail funds to be ring-fenced (because the existing £25bn rules only applies to UK bank assets). It's a farce! You could not make it up! Marcus should not have been granted UK FSCS protection and, before you suggest that I'm being hypocritical, I've never held an account with Marcus out of principle. Having made the mistake of putting savings into the Icelandic banks (and having been extremely grateful of the subsequent FSCS payout), I've learnt my own personal lesson and now try to avoid UK banking subsidiaries of non-UK based banks.

Nor am I suggesting that retail banks (such as Lloyds) can't/won't make mistakes in the future. Even without the additional risk of investment banking, retail banks are still exposed through their mortgage books. However, the biggest risk to Lloyds remains another worldwide banking contagion; mortgage losses, although not desirable, should be containable provided the bank continues to maintain proper LTV rigour and is willing, where possible, to offer flexible, short term solutions to its customers who might be struggling to pay current mortgage increases but another liquidity crunch may not.

Idiots. Rule 1: You can never, ever, trust an investment banker with other people's money. Rule 2: If in doubt, refer to Rule 1.

The Glass-Steagal Act was introduced in the US in 1933, after the 1929 Wall Street Crash, to separate retail and investment banking, and prevent investment bankers gambling anything other than their own and their investors' money. For the next 67 years there were no major banking meltdowns. Glass-Steagal was repealed in 1999 and, within 10 years, we had a total banking meltdown!

I don't have issue with not capping investment bankers' bonuses per se but I do have issue with giving them access to retail bank funds to gamble for their own profit (and yet again leaving the UK on the hook for their losses if their losses become too big to allow them to fail). Banks cannot be trusted to regulate themselves. Let's not kid ourselves, derivatives are back and investment banks are already active in the blockchain segment specifically because it is lightly regulated. Banks want to be free to make big profits when the opportunity arises and leave the the public purse to pick up any big losses.

We need to continue to ring fence retail banking. Banks are falling over themselves to tell us otherwise but then they would!

I'm sure that the BoD knows full well that fending off a bid (at an acceptable price) from Galleon would be difficult to resist but, as it stands, Galleon's proposals would not be in the best interests of the the other 70% of shareholders. However, an all-out bid by Galleon may not be plain sailing. Vertical integration has it merits but might be counterproductive if Topps starts to lose market share as a result (is you base supply on what you produce rather than on what ciustomers want). Also, Galleon has to consider what impact a takeover of Topps might have on their existing UK sales and the contracs they have with their existing UK customers (they might just end up losing as much as they gain). So an all-out bid may not be as staightforward as at first it might appear.

Seems more of a case of damned if they do and damned if they don't. Short term price fluctuations have little or no impact because most of DEC's current year production is hedged. It seems that the market punishes DEC when gas prices are rising because most of its production is hedged and then (conveniently) forgets that most of DEC's production is hedged when gas prices are falling. Can't win!

I very much doubt that the BoD, or their backers, would currently be interested in even considering a bid below 80p. Despite the current macroeconomic climate the business is holding its own and its prospects are on the up (it's been a long time in the wilderness but it does, at last, appear to have put previous missteps behind it - with the benefit of hindsight, borrowing money to do a capital reduction in 2006 proved to be a disaster - and buying complimentary, bolt-on acquisitions is bearing fruit).

Personally, I think Galleon have the bigger headache at the moment. It seems highly improbable that its propositions will find favour with any other shareholders at the AGM (like turkeys voting for Xmas) and they will be forced to consider either putting up or shutting up. They are making quite a nice return on their investment already but, if they want to persist with their daft proposals, then they will have to go all in and at 55-60p they can forget it.

Agreed Seav

I should first state that I am neither long or short on MEAL but I am slightly intrigued by the recent announcement regarding the proposed cancellation.

Firstly, I cannot see anywhere in the RNS the directors stating that MEAL cannot continue to trade in the event that the proposed resolution is not approved by the members (you would have thought the directors would have emphasised that eventuality, if that was indeed the case). Secondly, although the directors and their connected parties are in favour of the resolution, MEAL had only received irrevocable undertakings from 35.8% of the shareholders in favour of the resolution at the date of the announcement. Thirdly, for the resolution to carry, 75% of the shareholders (who vote) need to approve the cancellation and, even if MoveFresh was to purchase shares in the market before the vote, MoveFresh would not be able to buy enough shares to guarantee getting 75% of the vote without triggering a bid offer for MEAL (MoveFresh would have to increase its interest to over 30%) and an argument could be made that the directors and their connected parties were acting in concert to acquire MEAL if their combined interests now exceed 30%.

Bottom line, the cancellation of the shares is not a foregone conclusion if PIs choose not to vote in favour of the resolution (for a deal that seems to essentially benefit the directors down the the road - there does appear to be scope for additional funding once MEAL has been taken private) and, although M-49 has been getting some understandable flak in recent days there may actually be some method in his "madness" (the directors and their connected parties are by no means certain to carry the vote and they, via MoveFresh, are likely to need to purchase more shares in the market if they want to improve the odds of the resolution passing). If I was a holder, I would want to ponder this one a bit more before deciding whether or not to sell before the General Meeting because a listing cancellation and re-registration as a private limited company are rarely, if ever, in the best interests of PIs and is only normally the recommended course of action when a listed company is left with absolutely no other viable financial option (as I say, the directors were fairly quiescent in the annoucement on the rationale for this drastic course of action - apart from saving listing costs, which would be true for every listed company - and have left it to PIs to assume that the future is dire without actually stating that's the case).

Essentially, for the purposes of calculating any capital gain or loss, the purchase price of the second tranche becomes the (deemed) purchase price of the first tranche. You can't avoid the rule by buying a slightly different number of shares from those you originally sold. Basically it nobbles you "bed and breakfasting".