RE: Any reason for today's fall?2 May 2024 15:14
Toneman, You say "... their revenue is still using a high portion of acrual ...". I'm not sure that I follow your drift. The accruals at the end of FY23 and H1 FY24 don't appear excessive (trade creditors have fallen from c£3m at the end of FY23 to c£1.8m at the end of H1 FY24; they were high at the end of FY23 because of the timing of fund raising in H2 FY23). Obviously there may be some deferred cash flow impact if your creditors are higher than your debtors but I wouldn't say that GSF's is abnormally high. Also, accruals are irrelevant to operational cash flow (they are adjusted out).
I take your point about the dividends although I'd be surprised if they quoted their dividend cover based on the dividend actually paid in the quarter. I think it's more likely that they'd quote their dividend cover based on their EPS for H1 FY24 divided by half of their expected DPS for FY24 to smooth out any peaks and troughs in the frequency and quantum of their dividend payments. I think this would be the approach adopted by most companies that paid their dividends less regularly and I don't think that investment trusts would adopt a different approach simply because they pay their dividends at least quarterly but I stand to be corrected.
As with most everything else in life the proof of the pudding is in the eating and it will be interesting to see the FY24 figures. I'd currently expect investment income to be in the region of £25-£30m (I don't think we'll start to see the full benefit of the 27% increase in operating capacity in Q3 FY24 until FY25) and admin expenses of c£10m or less i.e. revenue PBT should be in the region of £15-£20m for FY24 (as opposed to c£2.6m in FY23). The PBT in H2 might be less than H1 because some fees don't appear to be accrued evenly through the year (see below).
Having looked at the admin expenses again, I can now see that the main contributory costs are the investment advisory and performance fees. The latter fees, at least, don't appear to be evenly accrued through the year. Instead, they are computed based on performance against a Benchmark after the year end and would appear to be wholly charged in H2 (and capped at no more than 50% of the advisory fees). Given that there hasn't been any major change to the disclosed NAV since the end of FY23, I'd currently expect the investment advisory and performance fees, subject to any cash adjustments, to be broadly in line with FY23 but it would seem probable that the expected performance fees (c£2.5m) would be wholly charged in H2.