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REFERENDUM RESULTS AND DISCUSSION THREAD

I should mention that using loan finance to pay dividends increases debt to the tune of the loan and reduces cash reserves that can be used to service the debt by the value of the dividend. It isn’t a particularly sensible financial play.
 
once you privatise you can expect a company to gear up and to pay dividends. it would be mad to think otherwise. I’d expect the regulatory return model to presume it when assessing the regulatory return. it would be based on a cost of capital (WACC) basis on a notional gearing level. If they presumed all equity the allowable equity return would have to increase.

I don’t think it unreasonable to point out the level of divi payout if the infrastructure hasn’t been looked after but it’s more a failure of a combination of the private model, the regulator and the operator rather than something to do with dividend and debt policy (over gearing aside).
 
I should mention that using loan finance to pay dividends increases debt to the tune of the loan and reduces cash reserves that can be used to service the debt by the value of the dividend.
once you privatise you can expect a company to gear up and to pay dividends. it would be mad to think otherwise. I’d expect the regulatory return model to presume it when assessing the regulatory return. it would be based on a cost of capital (WACC) basis on a notional gearing level. If they presumed all equity the allowable equity return would have to increase.

Those two posts just set me up for the day, once my headache clears!
I've never seen words that I fully recognise in a different context been assembled in such a way as to make it difficult to breathe whilst trying to understand what you're trying to say.

Pair of you clearly have no idea what you're talking about!

🤦‍♀️
 
It’s easy. A listed company and its board exists to maximise return to shareholders. Raison d’être as it were. So all decisions push raising the share price and / or raising the dividend pay out. That is what matters.

Under UK company law you must have sufficient reserves in cash in the bank to meet the dividend you propose. This ratio is dividend cover. You must have the cash backing behind what you want to happen. Creating that backing by taking on debt effectively leverages the business as the cash you are using to measure how much dividend you are paying out isn’t actually yours and will also have interest consequences.

I sort of ignored the rest of your post WH. If you don’t think it works that way maybe you know better than me who spent twenty years working in in house law and regulatory shit for some of the biggest FTSE companies.
 
It’s easy. A listed company and its board exists to maximise return to shareholders. Raison d’être as it were. So all decisions push raising the share price and / or raising the dividend pay out. That is what matters.

Under UK company law you must have sufficient reserves in cash in the bank to meet the dividend you propose. This ratio is dividend cover. You must have the cash backing behind what you want to happen. Creating that backing by taking on debt effectively leverages the business as the cash you are using to measure how much dividend you are paying out isn’t actually yours and will also have interest consequences.

I sort of ignored the rest of your post WH. If you don’t think it works that way maybe you know better than me who spent twenty years working in in house law and regulatory shit for some of the biggest FTSE companies.
headache's come back...
 
The regulator is just totally out of their depth, I know a few people who work there and they are good people trying to do their best. But put them up against the scummy Aussie banks and it’s worse than San Marino playing Argentina.

Personally I think the French concessionaire model of private operators running publicly owned assets seems to work best but then I’m probably contractually obliged to say that.
 
As long as those private operators run public assets under public asset rules rather than private or listed rules I don’t see that being a bad thing.

You want a nationalised asset it has to be run under those rules. Which are so massively different.
 
If it causes a headache maybe step away and let people who do know comment
Or educate the man.

You will need to use words Dean Saunders will understand though.

Think of it as your "I have 2 beans and if i add 2 more beans, what do I have" moment.
 
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As long as those private operators run public assets under public asset rules rather than private or listed rules I don’t see that being a bad thing.

You want a nationalised asset it has to be run under those rules. Which are so massively different.
It does seem to work well in a lot of countries, I suspect that ship has sailed here and ultimately we’ll end up with creeping re-nationalisation over the next few years, followed by massive underinvestment and we will do the dance again.
 
The regulator is just totally out of their depth, I know a few people who work there and they are good people trying to do their best. But put them up against the scummy Aussie banks and it’s worse than San Marino playing Argentina.

Personally I think the French concessionaire model of private operators running publicly owned assets seems to work best but then I’m probably contractually obliged to say that.
Its evidential in the market. I wrote back in the day about the cadent acquisition by Macquarie as they (per FT I think) valued the Company at £13.5bn when it’s regulatory asset base was only £8bn. unless we think Macquarie are fools there’s something seriously amiss with the model - ie the companies are making far more out of the exercise than the model was intended to allow.
 
Its evidential in the market. I wrote back in the day about the cadent acquisition by Macquarie as they (per FT I think) valued the Company at £13.5bn when it’s regulatory asset base was only £8bn. unless we think Macquarie are fools there’s something seriously amiss with the model - ie the companies are making far more out of the exercise than the model was intended to allow.
I find that deal very odd, I can only imagine someone somewhere made some very foolish guarantees about Hydrogen.
 
It does seem to work well in a lot of countries, I suspect that ship has sailed here and ultimately we’ll end up with creeping re-nationalisation over the next few years, followed by massive underinvestment and we will do the dance again.
I would think the social enterprise model would work too. Private ownership but not allowed to make a profit/ pay dividends.
 
I would think the social enterprise model would work too. Private ownership but not allowed to make a profit/ pay dividends.
They have that in Welsh Water. Performance is pretty similar, if not worse, than rest of the country.
 
I find that deal very odd, I can only imagine someone somewhere made some very foolish guarantees about Hydrogen.
Nah, I’d expect any new type business would have been heavily discounted. More like they ran huge provisions, maybe network related, that they knew weren’t needed so could be used to massage divis when and if they need to. when better than in a sale process and thereafter by the buyer. probably some gaming in the WACC calcs as well. it would need to be sufficiently real to convince a Macquarie.
 
Nah, I’d expect any new type business would have been heavily discounted. More like they ran huge provisions, maybe network related, that they knew weren’t needed so could be used to massage divis when and if they need to. when better than in a sale process and thereafter by the buyer. probably some gaming in the WACC calcs as well. it would need to be sufficiently real to convince a Macquarie.
There’s a huge amount of lobbying to ensure the NTS is converted to deliver Hydrogen - if that does happen then I’d imagine that would have large impact of the value.
 
There’s a huge amount of lobbying to ensure the NTS is converted to deliver Hydrogen - if that does happen then I’d imagine that would have large impact of the value.
maybe it will going forward but the transaction I’m referring to was in 2017 or around then.
 
Or educate the man.

You will need to use words Dean Saunders will understand though.

Think of it as your "I have 2 beans and if i add 2 more beans, what do I have" moment.
A very small casserole. One of the great comedy lines 😂
 
WHAT THE COVID INQUIRY TELLS US ABOUT BREXIT
Chris Greys latest must read blog👇

"What both Brexit and coronavirus reveal are some fundamental flaws in the way we are governed and the political discourse around it. The populist explosion of this decade, of which Brexit was a prime example, has bequeathed a way of governing which is impervious to reason, and incapable of engaging with complexity. It isn’t just chance that we have a woefully incompetent Prime Minister, a dud stand in [i.e. Dominic Raab], and a cabinet of mediocrities, propped up by a cadre of special advisors with few skills beyond contrarian posturing.

They are the legacy of Brexit. They were brought into power by Brexit. But all the things which secured the vote for Brexit – the clever-but-dumb messaging, the leadership-by-slogan, the appeal to nostalgic sentiment, the disdain for facts and evidence, the valorisation of anger and divisiveness, the bluff ‘commonsense’ and the ‘bluffers’ book’ knowledge – are without exception precisely the opposite of what is needed for effective governance in general, and crisis management in particular.” "
 
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