RE: Edison new report25 Jul 2025 09:56
The problem with Darton quoting from one half year report is that it misses key elements of the longer term results of HFEL.
Take the half year 2025 report that is mentioned by all means, but one has to read the Fund Manager's Report to understand the numbers. I quote:
"The key reason for the decline in income from investments was due to changes in some ex-dividend dates which will
now be captured in the second half of our financial year, combined with disappointing dividends from Australian mining
and energy companies. We have been pleasantly surprised by the number of companies increasing their dividends
and this has continued into the second half where a raft of companies in Korea, Indonesia and China have reported
dividends well ahead of expectations."
One ought to wait for the full year results to judge whether the income will indeed reflect the narrative.
But I prefer to look at full year results over more than one year. The best place to look, in my view, is the Statement of Changes in Equity.
The full year 2024 shows dividends paid (split between Distributable Reserves and Revenue Reserve) of £39.927 million compared to Total Comprehensive Income (excluding Capital Reserve items) of £45.334 million. Thus increasing Reserves overall.
The same Report for full year 2023 has dividends paid of £38.345 million with income of £33.219 million. Thus decreasing Reserves overall.
For 2022, the figures are - dividends paid of £36.067 million and income of £37.102 million. Increasing Reserves.
For 2021, the figures are - dividends paid of £34.040 million and income of £33,773. A reduction of Reserves.
Overall, the amount of Revenue Reserve has moved from a surplus at 31st August 2020 of £25.928 million to £29.852 million at 31st August 2024.
In the same period, the Distributable Reserve has gone from £180.471 million to £177.596 million.
In total, the dividends paid have been more than net income generated by £1.049 million.
At the same time, the Capital Reserve (changes in the value of holdings, realised and unrealised profits) has gone from a surplus of £14.653 million to a deficit of £114.052 million.
And the Stated Share Capital has gone from being £204.875 million to £272.708 million representing the net effect of share buybacks and share sales. They do not give a breakdown of shares issued by value and a separate share premium account (being the difference between what the par value of the shares are versus the amount paid for them when issued). The Market Value of the Company today is £472 million (according to HL). There are 181.29 million shares in issue according to HL, possibly with no par value, meaning that the whole Stated Share Capital value is the premium.
I hope that this summary puts to bed the debate over whether dividends are covered or not. Clearly, there is a 4 year shortfall, but in my opinion, it is just petty cash. The share price reduction (and NAV
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