Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
With all the deals we’ve had over the last year and collaborations with manufacturers and producers it would be nice to get some clarity from the company as to which major outlets are selling opti products to demonstrate its migration from a niche market to a mass market. Can you now buy the products in major supermarkets, pharmacists, whole food stores or on prescription or is all that to come.
I can’t see any dividends being paid over the next 5 years on the basis that every £ given in dividends will reduce the market cap / share price by the same amount. The directors share options which are not insignificant can only be exercised I think after 5 years from the start of this year and they are only have value once the share price exceeds 1.55. So far more likely that if there is surplus cash that there will be a share buy back which should in theory increase share price. Or surplus cash could be invested in new or existing projects. The negative for all gold miners at the moment is the prospect of higher interest rates in the US which makes gold returns less attractive. The frustrating thing is all long term holders know that Ariana should unlock so much value over the next 5 years
Hi van van - totally makes sense. My gut feeling is that they are probably under reporting the results but that means over reporting in the years ahead and I agree with your points. Disappointingly I think shareholders look at the headline profit and don’t look beyond that, and I think this may have adversely affected the share price recently. I think Ariana is a great investment but there’s obviously the political risk lurking in the background!
All the best
Hi JohnPWH - all listed companies should adopt international accounting standards so turkey should also but I can’t be sure. The economic life of the mine should affect amortisation rate but the amortisation rates will be set by the JV. There is not enough information to know for sure why the breakdown of non current assets are and the amortisation rates but just looking at balance sheet movements suggest the amortisation will be complete within around 3-4 years. I think the mine life is a few years longer. ps it’s alao possible that some of the non currents are amortised at different rates and over different years. Not enough info to determine to the calculations are ‘broad brush’ hope this helps for your own analysis as we all can interpret things differently!
Hi van van - thanks for your points. Have not really looked at the consolidated accounts. Ariana point out that they use the equity method of accounting so they don’t consolidate the JV line by line. So I have looked at note 4 in detail which has the JV accounts and how they impact Ariana. If you look at note 4 current liabilities have fallen from £12.6m to £11.9m and non current liabilities from £17.1m to £14.1m a total of £3.7m. We don’t know the movement to the individual liabilities individual liabilities but the loan reduction must be in these numbers. If you look at the non current assets these have reduced from £32.1m to £28.1m a fall of £4m. This must be included in the finance expense of the profit and loss account. The other 700k is probably bank interest on the loan. What we don’t know is what is in non current assets of £28.1m at 30/6/18 but it must be the development of the site. It’s also possible that the JV has rolled up bank interest and included it as a non current asset. So if you look at the remaining non current asset of £28.1m, this will pass through the profit and loss in the next few years. If about £4m of that has been charged in the first 6 months then that’s £8m in a year so maybe 3 1/2 years to clear through then after that happy days in terms of profit reporting. Van van - I hope this make sense. If you still want me to look at your other points let me know and I’ll look at the consolidated accounts. Am at a funeral tomorrow so wouldn’t be able to look at it until Friday
Hi van van - I think you are getting confused between profit and cash. If you look at the JV accounts current and non current liabilities have fallen. This is the mainly the loan repayments a balance sheet movement. Loan repayments do not go through the profit and loss account in any business. So the loan is being repaid but the accounting is different to how you envisage. Hope that clarifies. And as you know it’s the profit announcements that usually drive the share price
I would just like to make a point on the recent half year results and the JV disclosures and this expands on the point in4cedros made. Have been through IAS28 and it would seem that the £4.7m finance change for the half year is the amortisation of the non current assets ie effectively the mine set up costs. This is a non cash item. The cash being generated by the JV is being used to reduce to loan in the liabilities side of the balance sheet. What is interesting Is that it would seem that the JV is aggressively amortising these cost over a three year period after which this cost will stop. Unser the accounting standard they could amortise over the life of the mine (at least 7 years?) which would have significantly improved the half year results. I think they are doing it more quickly probably to reduce the corporate tax bill. But what it does mean is that after 3 years Arianas annual profit from the JV will be around £6m to £7m . When they release those results the share price will soar. Funnily enough this will be around the time that the directors will be cashing in their share options so it suits them that the mine is being aggressively amortised now. Anyway if they can get 5 years out of the mine after this three year period that is worth about £30m- 35m less Arianas costs of around £7m in this period giving a net of at least £28m and then there ar all the other projects, so in my view a great long term investment although there are obvious political risks. A strong buy for me and I feel sorry for investors who lose faith short term
Guys, thanks for the response. Do you know how I can get hold of the JV accounts so I can link it into how Ariana is accounting for it, and hopefully the finance charge deduction explains it as in4cedros explains. The reason I'm a bit confused is that the equity method of accounting is the share of profits in the period from the jv and not the cash available for distribution so it will be great to see how the two marry up. Thanks
Can someone explain where I am going wrong in a sanity check on the results. If 12,037 oz were produced and sold in the period and broadly speaking the JV makes around $600 per oz (1,200-600). And Ariana share is 50% then my calculation is 12k * 50% * 600 = $3.6m which in £ is around £2.8m (ie 3.6m / 1.3er). So why is Ariana share only £1.1m. It can’t be the paying off of loans as this is just balance sheet movements in the JV. So is it admin costs of the jv which would sound high? Has anyone else done a sense check and could challenge my numbers above. Thanks
Can someone explain where I am going wrong in a sanity check on the results. If 12,037 oz were produced and sold in the period and broadly speaking the JV makes around $600 per oz (1,200-600). And Ariana share is 50% then my calculation is 12k * 50% * 600 = $3.6m which in £ is around £2.8m (ie 3.6m / 1.3er). So why is Ariana share only £1.1m. It can’t be the paying off of loans as this is just balance sheet movements in the Kev. So is it admin costs of the jv which would sound high? Has anyone else done a sense check and could challenge my numbers above. Thanks
Risky 246. Some good points here. But the one thing that I think is unclear is that Opti is responsible for bringing the product up to pharmaceutical manufacturing standard. How much of the £60m do you think will be involved in that part of the process considering this is something Opti has never do before. Also how long do you think the whole process will take if £60m is being spent? Is 10 years reasonable before they get the seven figure sum. My fear is that the pharmaceutical company will keep pushing back and challenging Opti on the pharmaceutical ability of the product before they spend too much.
Always focus on the fundamentals
Revenue
Profit
Book value
Debt levels
Visibility of future revenue
Understand the business
Competitive advantage
Could an idiot run the business
Valuation/ market cap
If you can tick these boxes, great
Hi dobbin. Thanks for that and that’s Optis claim which if true would be truly transformational. I wonder what process statins had to go through to get regulatory approval. Do you know of anywhere that Opti claim they are near the stage that all they need is clinical approval. Has the product been pharmalogicalky tested and confirmed up to phase II? If so then I’m in!
Ok - if you read the RNS, the cost is for Opti to bring the product up to the state that it should get regulatory approval. Are we saying that Opti have already achieved this? Are we saying that this product could have the same impact as say statins? I thought Opti was a life science company and not a pharnalogical company. I can imagine that the company has said to Opti - if you say that the product does what you claim, then prove it and we will chip in something to show some commitment and then we will put it through the clinical trials if you can demonstrate that. Do you not think that’s a possibility. That’s how I read it but am always looking at the downside risk
Before we get too carried away let’s nit forget that the US has one of the toughest regulatory processes and it could take years and years before approval if this is ever granted. And it will cost far more for Opti to bring it to regulatory standard than anything they get in upfront fee Could all be a red herring - eg they say to the company ‘you give us £100k and we will spend say £500k getting it to regulatory standard but makes a good story.