Bowleven Share Discussion Threads

[loglorry1] 09/1/2019 14:15

Annoying about the tax treatment being a dividend distribution. I've just sold a chunk which was not tax wrapped and bought back within a SIPP. Paid almost no comms and spreads so it wasn't too painful.

I suggest other peeps do something similar if held outside tax wrappers assuming they have space in the tax wrappers to achieve it.

Good luck

[cyan] 09/1/2019 11:36

We have some numbers we can be fairly confident about. If we add the present cash pile and the anticipated FID payment; we come to about 25p per share.

The tricky bit is the valuation of ETINDE.

If we assume a similar price as paid in the 2014 farmin then we might say we ought to get at least 25p for ETINDE.

Now; question is; when they bought in did they add a bit in the then great hope there was a lot more gas? We have since been a bit disappointed.

So, one could argue that BLVN is NOW worth , before div, 50p.

The market still does not really value ETINDE.

I am not convinced BLVN will drop back 15p after payment. Maybe 5p or so?

[hot_topic] 09/1/2019 11:11

.....further, unless you think the share price will rise, it doesn't make sense to buy only to reap a dividend (on which you may be taxed) of 15p when you know the share price will then fall back by 15p immediately after. You might as weell sell now and take the cash as capital gain rather than income.

[hot_topic] 09/1/2019 09:38

Personally I think the board know a great deal more than they are letting on. I also think the ii's also know something we don't. There was some relatively heavy buying last week before the announcement on Monday so I suspect the news got out. This dividend is part of a planned strategy, not something decided on the spur of the moment. As has been mentioned before they is a clear incentive to achieve a higher share price and therefore knocking it back, unless you're fairly certain it'll recover, doesn't make sense. I'm looking forward to the next few months. Could be some interesting announcements.

[speleologist] 09/1/2019 09:32

I have some of these inside and outside an ISA. As the proposed div for those shares outside my ISA would I believe be treated as div income from a tax point of view, I'd have ended up liable for tax on div income above the £2000 div allowance (Tax year 18/19). My solution has been to sell another stock from inside my ISA, using the proceeds of that sale(still inside the ISA wrapper) to purchase more BLVN into my ISA. I've then sold BLVN outside of my ISA removing my potential tax liability and used the proceeds to buy back the other stock I'd sold from the ISA. This has cost me 4x dealing charges and the spread but will leave me much better off should the proposed dividend happen. This may not be possible for everyone but may be of interest to some.
GLA

[waynz] 09/1/2019 09:30

Very insightful , thank you for your time

[bakero] 09/1/2019 08:38

I blame the taxman rather than BLVN! Am glad I (more luck than judgement) mostly hold in my ISA though now - not sure what I would do if having to hand over a third of the dividend in tax. Think I would be tempted to sell and buy back around the dividend and expect (hope) that to cost less than paying the tax.The Capital gains benefit (as any eventual sale will be 15p less) would not be enough to offset.

[bakero] 09/1/2019 08:31

No.15p of value is removed, so logically the price will halve to 15p (perhaps slightly less if the tax implications mean the 15p dividend is being valued at less than 15p in the current price)The payment action has other impacts, includingThere is no longer a risk this cashpile will be spent and never make its way back to shareholders; conversely it can not be used to produce shareholder value.What remains may be more or less attractive to a buyer, with all that cash gone.Increased focus on the Etinde asset value as a proxy for share price.COC get half of their cash back; is the company now ready for a final sale, or are COC more relaxed about exit timing with less of their working capital tied up?I think we may have a share price of 20p a month from now, and am targetting a sale of the rest of the company at 30p-40p in the next 15 months (max). Would love to be surprised by the analysis of last year's drilling results though.

[kbrook] 09/1/2019 07:58

Bakero..... many thanks,really appreciate that reply and your time. Bloody BLVN find new ways to shaft you all the time!

[gark] 09/1/2019 07:55

So you think that after the 15p is paid the shares will still trade around 30p?

[bakero] 09/1/2019 07:48

You can offset realised capital losses against capital gains (if you have any realised capital gains in 18/19), or carry forward a loss indefinitely if declared to HMRC and do not have gains for it to offset.You can make £11,700 capital gains before paying tax (at 10% for a basic rate taxpayer and 20% for a higher rate). This is the net figure for all your realised losses/gains (i.e. if you made £10k elsewhere and realise a £10k BLVN loss then that loss is 'wasted' as the allowance covered it anyway.Furthermore, you cannot buy the shares back within 30 days, as then no loss is realised (this is to stop the sale and repurchase, particularly around tax year end, to create tax losses).If you sell and do not cover your position elsewhere rather than buyback (e.g. ISA, spreadbet) you are out of the market...could be good, could be bad...but you are invested here for a reason.Whatever you decide, don't 'let the tax tail wag the dog'bakero

[bakero] 09/1/2019 07:38

Hi kbrook,Broadly, yes.The 15p/share dividend should be treated the same way as any other dividends you receive. Being PAYE, and even if you have an unrealised capital loss, does not change this.You do have a £2k tax free dividend allowance (18/19); if your total dividends exceed that then there is additional tax to pay. Note that this is the case if you have other dividend paying stocks too, nothing different about the BLVN payment.Dividend tax is 7.5% for a basic taxpayer, 32.5% for a higher rate taxpayer and 38.1% for an additional rate taxpayer.How does the taxman find out? Because you tell him! You have a legal responsibility to pay the tax due, so you need to inform HMRC. Depending on the amounts involved you may be required to complete a tax return (a simple task I would recommend doing anyway every year to be sure you are always paying the correct tax!)Will people sell prior to 18th Jan? Perhaps. Those who hold in an ISA or SIPP will have no tax to pay, so this does not apply. If it was a widescale issue then the share price would fall less than 15p when it goes ex-div (as the dividend isn't 'worth' 15p), but for majority of shares I do not believe there is a tax issue.If you are impacted then you may consider selling and keeping exposure via buying back in an ISA, or via spreadbet; though those strategies have their own cost (e.g. bid/offer spread)Or you may take a view that you can buy back more cheaply ex-div; I am hoping/expecting not though.bakero

[waynz] 09/1/2019 07:24

Not 100% sure so it may need to be looked into , I believe you can offset losses against capital gains, so in theory sell all your holdings in BLVN today then buy back .

[kbrook] 09/1/2019 06:26

I am completely clueless about all the tax implications. If I am PAYE, don't do an annual tax return, sitting on big losses on this, do I now have to pay tax on this dividend?
If so how does the tax man even find about it? Lastly surely there will be a lot of selling prior to the 18th Jan if people are effectively going to lose 20-40% on that dividend.
Sorry for the probably stupid questions

[nicobellic] 09/1/2019 01:04

Based on the notes in the accounts I seems this was to allow the company share buyback that King Kev started, and there was a prohibition imposed by the court on any dividends being declared prior to March 2016 after the cancellation of the share premium account in 2015.

[bakero] 08/1/2019 22:20

Thanks nicobellic - I was going to go back and try and find the definite reason. I wonder did the old board do that to allow dividends at some point?

[nicobellic] 08/1/2019 21:34

The share premium account was cancelled at the end of 2014 with the effect that the share premium account of c$740m was cancelled with a corresponding adjustment to the retained earnings in the accounts. Essentially, retained earnings went from minus c$153m to positive to the tune of $500m. This is why, despite substantial trading losses, Bowleven is able to pay a dividend.

[gark] 08/1/2019 20:21

Thanks for the response. Any views on where the price will end up in next few days prior to going ex dividend?

[bakero] 08/1/2019 20:01

I don't see how current share nominal value of 10p prevents the payment being made as a return of capital using a 'B' share structure.It was under the old B/C system, but for example Soco certainly paid out much more as return of capital than the nominal value of existing shares.Whether it could have been made as a capital return is likely a moot point in any case with the method unlikely to change.

[bakero] 08/1/2019 19:48

I haven't received any tax advice on this, nor am I by any means an expert, but will in any case give a view.The RNS refers to a 'special dividend', not a return of capital, so will be treated like a 'normal' dividend income and taxed as such.I do not know why a return of capital would not have been possible, by using a 'B' share scheme (such as Standard Life Aberdeen 'SLA' used in 2018). It may not have been considered desirable/optimal by the board? This is different to the 'old' B or B/C share arrangements by which we could choose whether to receive income or capital; a change in law made this approach no longer possible.The last published balance sheet shows ample under 'retained earnings' to make this dividend payment (from the previous sale of part of Etinde?)For those holding in an ISA, a SIPP or (as far as I understand) a company, the treatment does not matter. Perhaps additional costs of a return of capital was not deemed in the best interest of all shareholders to help (a few?) who will be (fairly materially) worse off.To an extent, there will be an offset in capital gains (as the final sale price will now be 15p lower), but unlikely to make up the difference in full.

[gark] 08/1/2019 19:11

Has anyone received any tax advice here? From what I can gather this will be treated as income although there are also rules stating a return of paid in capital would be treated differently. Given the company has never produced a profit can this be construed as a return of share capital?

[oilbethere] 08/1/2019 12:57

If any of you are having issues with the dividend incurring a tax liability, may I suggest that you sell your unprotected holdings and replace them with a spread bet position. You have 10 days left.

[brileyloucan] 08/1/2019 12:33

I have just spoken to Bowleven about the payment of the dividend. At the current time this is planned to be a dividend not a capital reduction (as share nominal is only 10p per share) and will therefore be treated as income.

I have said I am not happy with the tax inefficiency of this approach. If you feel similarly then I would suggest you contact Bowleven to let them know. If enough people contact them they may put in place a more sophisticated approach (though I wouldn't hold your breath).

BL

[welshki] 08/1/2019 11:24

on a side note i take it their is no change to the fact the CEO's 10,000,000 options still dont trigger until 45p+ is obtained or does this 15p payout take that into account and sale at 30p would allow his options to trigger? not really sure how these things work but i am assuming that 45p target is still what the CEO is aiming for

if that is the case and company is then sold for 45p - thats a 60p payout and that isnt too shabby considering the position Kevin Hart got this company in before COC took over

i still dont see how COC would want to stay in this for the long term and seeing the company into full production is not their modus operandi ..............i see a sale shortly after FID or as part of it with either New Age or Lukoil or a combination of both