Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Got this response from IR on buybacks:
I understand your point and its one we’ve discussed with several other investors.
I think whilst the financials clearly look compelling at this level one also has to consider buybacks within the overall context of the Groups capital allocation policy which is something the Board look at on a regular basis.
Tactical buybacks are one option but in my experience buybacks derive the greatest benefit for shareholders when they are a sustained part of the overall distribution of capital.
Clearly the valuation, yield, dividend etc. are part of the overall mix when the Board look at this but we also have to consider the need to delever the balance sheet further too.
Rest assured that this is a live area of debate within the Group and management are fully aware of your particular challenge.
Velo, my final thoughts on this matter is a simple question: If a company earned £1,000 in profit but had to report it as £500 due to the amortisation of acquisitions made years ago how much cash does it have available to for dividends, debt reduction, capex etc? Hint: the answer is not £500.
Velo I was simply showing how cash flowed through the business, all figures were pulled from the 2018 annual report so there shouldn't be anything contentious there. I stand by my last point that the dividend cover of 0.76 reported earnings does not paint a true picture as it suggests the company is borrowing to pay dividends, which is not the case. To accuse me of buyers bias whilst admitting to being deeply underwater suggests some degree of psychological projection.
Bismarck I suggest you look at the cash flow statement to get a better idea of the business. For example, in 2018 the company generated approx. £3100m from operations, spent £230m on investments, paid off £650m (net) of debt, paid shareholders £1700m in dividends (another 10% increase), it also sold a subsidiary for £200m and paid £500m in interest on its debt. This meant the company finished the year with around £200m more cash than the previous year.
So in simple terms the company managed to increase the dividend by 10%, reduce debt by a decent chunk and invest for the future whilst also increasing cash reserves by a couple hundred million. If you simply look at the 0.76 reported dividend cover and panic that it's unsustainable you are not getting the full picture in my view. ATB
Bismarck, this is how the dividend cover is calculated. Go to the 2018 annual report and look for the earnings per share figures on page 1. Imperial has two figures for EPS, one is reported using GAAP and comes to £1.43 EPS the other is adjusted and comes to £2.72. The adjusted figure adds back various items that management believe obscures true performance i.e. amortisation, you can find the breakdown table on page 102.
So therefore we adjusted dividend cover of £2.72 adj eps / 1.88 div = 1.45.
We also have reported dividend cover of £1.42 eps / £1.88 div = 0.67.
One figure suggests the company is making ample cash to cover dividends and reduce debt the other suggests they are borrowing to pay the bills. You'll need to look at net debt levels and the balance sheet over the last few years to work out which is one represents the true economics of the business. ATB
All the best Skeletor, I'm holding as based on my re-based cost price I'm getting almost 9% dividend yield here. Even if management decide to give it a trim it should still look quite healthy. Agree RE markets... Imperial Brands caught my attention sitting on a 10% dividend yield in plain sight...
Given the short interest and sentiment towards asset managers I think a lot of people hedged these results. Looks like a few buying back in now and causing a small pop in price. I decided to hold through results but definitely considered selling on more than one occasion. Happy to take the 28.5p dividend and hope that AUM can be built back up over time. ATB
Benefit of the doubt it may have been a drafting error. However, it's not like they included the $103m loss anywhere in the 2017 annual report or prospectus so that investors could make a clear judgement on revenues from spreads/charges/market p&l. They neglected to draw attention to this at a time the founders were selling huge amounts of shares, the founders knew the full story, investors didn't.
RetiredBanker, yes it was nice of them to offer an apology on Friday after knowing about the issue from Tuesday morning. In the meantime the price was trashed. I merely pointed out the inconsistencies as soon as I spotted them as the entire point of the annual report is to give a true and fair representation of the business. I know the financial statements are correct as I've received many dividends from them, however what was previously hidden was how P&L impacted revenues in previous years.
This needs to be suspended until the accounting position is clarified by the company. At the moment either the prospectus, 2017 accounts or 2018 is materially incorrect. How can this trade when the numbers for the last two years cannot be trusted?
hxxps://www.thetimes.co.uk/edition/business/plus500-may-have-misled-shareholders-over-losses-n8cmxsrqw
Skeletor another Times article for you, they seem to be copying what I'm posting on here (but a few days late). Be very careful here, I don't think this management is worthy of trust.
Good luck Tom. Personally I think the FCA need to look into why the $103m market loss has only just been reported for 2017 and not sooner? A lot of founders shares were sold last year at around the £15-16 mark and management must have known but kept it quiet. I've looked and looked but can find no mention in the 2017 accounts or prospectus. I thought the whole idea was that these documents give a true representation of the company?!
Skeletor there is news buddy, check the times article on PLUS. They have mislead investors about the true nature of their revenues. They neglected to include mention a $103m P&L loss in 2017 until now. They could have used the prospectus or 2017 accounts to make investors aware of this but were too busy offloading the founders shares. Good luck.