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From 2006 til 2014, coy has blown 690mio into investments, funded thru 20mio of operating cashflow and 600+mio of debt.
Net gearing has spiked from net cash to net debt of 130%.
So the balance sheet is looking rather wobbly, but despite this, dividends has stepped from 2.5c in 2011 to 4c in 2014, with 0.5c step up p.a. - essentially paying dividends out of debt i/o FCF.
Personally, I don't think this is the most prudent way of managing one's balance sheet (certainly not mine). One also has to question the reasoning behind the dividend policy in the absence of FCF thru the years, esp with such a huge acquisition of MRI.
From a biz point of view, I never like anything with <5% NPM - the margin of error is just too small. The argument that the biz of capturing the spread is "riskfree" is also rather dubious - just look at LTCM.
Net gearing has spiked from net cash to net debt of 130%.
So the balance sheet is looking rather wobbly, but despite this, dividends has stepped from 2.5c in 2011 to 4c in 2014, with 0.5c step up p.a. - essentially paying dividends out of debt i/o FCF.
Personally, I don't think this is the most prudent way of managing one's balance sheet (certainly not mine). One also has to question the reasoning behind the dividend policy in the absence of FCF thru the years, esp with such a huge acquisition of MRI.
From a biz point of view, I never like anything with <5% NPM - the margin of error is just too small. The argument that the biz of capturing the spread is "riskfree" is also rather dubious - just look at LTCM.
