RE: back at ya, ngVery interesting, and, in hindsight, not all that suprising.
I should have clued in to what you were saying about operating earnings right away - I could have told you why the numbers look odd if I'd just taken a step back and thought about it. This is something I asked myself a long time ago, and, like you, eventually got tuned in to the fact that there are 'leading' storage and marketing costs that give context to this number.
Regarding the prepayment risk, my take has been that it's pretty low. The trust has consistently delivered subscribership above its estimates (usually well above, come to think of it), so the marketing is clearly working, over and over, in different markets. And, the storage prepayment risk seems moot, if the marketing is working and there are always going to be more and more subsribers for the stuff in storage. I'd be interested to know if you saw other risks in this regard.
In any case, thanks for posting the response from SIF.UN here. Again, best wishes for all of your investing.
Oh, as an aside, are you an options fan?
- beck
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Beck i received a detailed reply from ESIF. The three salient points were
A] my interpretation of their cash flow statement was correct that it shows that they are meeting somewhat over half of their distributable cash flow from operations in Q1 to q3 2005.
They explain that the actual distributable cash is different from the cash flow statement for two reasons.
B] they are required to pay for and put gas in storage with some of the utilities they are servicing. They will then recoup this cash as the gas is consumed and paid for by their clients.
C] Marketing costs. They calculate distributable cash on a pre marketing cost basis...ie. they have incurred the marketing costs but assume that these will generate extra customer contracts.
Prior to making an investment decision on ESIF , I need to think a little about the extra risk i would be incurring because of these two substantial prepaid cash flow reducing items.