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Share Name | Share Symbol | Market | Type |
---|---|---|---|
New Atlas Holdco Inc | NYSE:AESI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.135 | 0.63% | 21.565 | 22.39 | 21.50 | 21.69 | 145,549 | 15:24:45 |
Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the “Company”) today reported financial and operating results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights
Financial Summary
.
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
(unaudited, in thousands, except percentages)
Sales
$
304,434
$
287,518
$
192,667
$
157,616
Net income
$
3,918
$
14,837
$
26,787
$
56,327
Net Income Margin
1
%
5
%
14
%
36
%
Adjusted EBITDA
$
71,051
$
79,072
$
75,543
$
84,078
Adjusted EBITDA Margin
23
%
28
%
39
%
53
%
Net cash provided by operating activities
$
85,189
$
60,856
$
39,562
$
55,406
Adjusted Free Cash Flow
$
58,669
$
73,654
$
71,083
$
68,521
Adjusted Free Cash Flow Margin
19
%
26
%
37
%
43
%
(1)
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin are non-GAAP financials measures. See Non-GAAP Financial Measures for a discussion of these measures and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with GAAP.
John Turner, President & CEO, commented, “Our third quarter results were impacted by higher operating expenses related to lingering expenses related to the Kermit feed system rebuild and our follow-on initiatives to improve our operational processes and systems to ensure that the productive capabilities of our key plants are optimized. Importantly, the commissioning of the Dune Express commenced earlier this month. Our focus is on ensuring that Atlas’ diversified network of mines and logistics solutions is optimized for the transformational Dune Express delivery system and our expected expansion of sales in 2025.”
Third Quarter 2024 Financial Results
Third quarter 2024 total sales increased $16.9 million, or 6% when compared to the second quarter of 2024, to $304.4 million. Product sales increased $17.1 million, or 13% when compared to the second quarter of 2024, to $145.3 million. Third quarter 2024 sales volumes increased to 6.0 million tons, or 22% when compared to the second quarter of 2024, which was offset by lower average pricing experienced during the period. Service sales were relatively flat when compared to the second quarter of 2024, at $159.1 million.
Third quarter 2024 cost of sales (excluding depreciation, depletion and accretion expense) (“cost of sales”) increased by $23.2 million, or 11% when compared to the second quarter of 2024, to $225.3 million. The increase in our cost of sales was primarily driven by temporarily higher costs at our Kermit facility associated with process improvements, the re-start of full mining operations, and delays in dredge commissioning. In addition, our costs of sales include incremental operating costs associated with OnCore deployments.
Selling, general and administrative expenses (“SG&A”) for the third quarter of 2024 decreased $1.8 million, or 7% when compared to the second quarter of 2024, to $25.5 million. Included within our SG&A is $6.3 million in stock based compensation and $2.4 million in other acquisition related costs.
Net income for the third quarter of 2024 was $3.9 million, and Adjusted EBITDA for the third quarter of 2024 was $71.1 million.
Liquidity, Capital Expenditures and Other
As of September 30, 2024, the Company’s total liquidity was $253.4 million, which was comprised of $78.6 million in cash and cash equivalents, $74.8 million of availability under the Company’s ABL Facility, and $100 million of availability under the Company's Delayed Draw Term Loan Facility. The Company had $50.0 million of borrowings outstanding under the ABL Facility and $0.2 million of outstanding undrawn letters of credit.
Net cash used in investing activities was $76.3 million during the third quarter of 2024, driven largely by the construction of the Dune Express and other process and operational improvements.
Quarterly Cash Dividend
On October 24, 2024, the Board of Directors of Atlas declared an increased dividend to common stockholders of $0.24 per share, or approximately $26.5 million in aggregate to shareholders. The dividend will be payable on November 14, 2024 to shareholders of record at the close of business on November 7, 2024.
Subsequent Events
Share Buyback Program
Subsequent to quarter end, the Board of Directors of Atlas authorized a share repurchase program under which the Company may repurchase up to $200 million of outstanding stock through December 31, 2026.
The shares may be repurchased from time to time in open market transactions at prevailing market prices, through block trades, in privately negotiated transactions, through derivative transactions or by other means and in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors including management's assessment of the intrinsic value of the Company's common stock, the market price of the Company's common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases by using cash on hand and expected free cash flow to be generated over the next two years.
Conference Call Information
The Company will host a conference call to discuss financial and operational results on Tuesday, October 29, 2024 at 9:00am Central Time (10:00am Eastern Time). Individuals wishing to participate in the conference call should dial (877) 407-4133. A live webcast will be available at https://ir.atlas.energy/. Please access the webcast or dial in for the call at least 10 minutes ahead of the start time to ensure a proper connection. An archived version of the conference call will be available on the Company’s website shortly after the conclusion of the call.
The Company will also post an updated investor presentation titled “Investor Presentation October 2024”, in addition to a "October 2024 Growth Projects Update" video, at https://ir.atlas.energy/ in the "Presentations” section under “News & Events” tab on the Company’s Investor Relations webpage prior to the conference call.
About Atlas Energy Solutions
Atlas Energy Solutions Inc. is a leading proppant producer and proppant logistics provider, serving primarily the Permian Basin of West Texas and New Mexico. We operate 14 proppant production facilities across the Permian Basin with a combined annual production capacity of 29 million tons, including both large-scale in-basin facilities and smaller distributed mining units. We manage a portfolio of leading-edge logistics assets, which includes our 42-mile Dune Express conveyor system, which is currently under construction and is scheduled to come online in the fourth quarter of 2024. In addition to our conveyor infrastructure, we manage a fleet of 120 trucks, which are capable of delivering expanded payloads due to our custom-manufactured trailers and patented drop-depot process. Our approach to managing both our proppant production and proppant logistics operations is intently focused on leveraging technology, automation and remote operations to drive efficiencies.
We are a low-cost producer of various high-quality, locally sourced proppants used during the well completion process. We offer both dry and damp sand, and carry various mesh sizes including 100 mesh and 40/70 mesh. Proppant is a key component necessary to facilitate the recovery of hydrocarbons from oil and natural gas wells.
Our logistics platform is designed to increase the efficiency, safety and sustainability of the oil and natural gas industry within the Permian Basin. Proppant logistics is increasingly a differentiating factor affecting customer choice among proppant producers. The cost of delivering sand, even short distances, can be a significant component of customer spending on their well completions given the substantial volumes that are utilized in modern well designs.
We continue to invest in and pursue leading-edge technologies, including autonomous trucking, digital infrastructure, and artificial intelligence, to support opportunities to gain efficiencies in our operations. To this end, we have recently taken delivery of next-generation dredge mining assets to drive efficiencies in our proppant production operations. These technology-focused investments aim to improve our cost structure and also combine to produce beneficial environmental and community impacts.
While our core business is fundamentally aligned with a lower emissions economy, our core obligation has been, and will always be, to our stockholders. We recognize that maximizing value for our stockholders requires that we optimize the outcomes for our broader stakeholders, including our employees and the communities in which we operate. We are proud of the fact that our approach to innovation in the hydrocarbon industry while operating in an environmentally responsible manner creates immense value. Since our founding in 2017, our core mission has been to improve human beings’ access to the hydrocarbons that power our lives while also delivering differentiated social and environmental progress. Our Atlas team has driven innovation and has produced industry-leading environmental benefits by reducing energy consumption, emissions, and our aerial footprint. We call this Sustainable Environmental and Social Progress.
We were founded in 2017 by Ben M. “Bud” Brigham, our Executive Chairman, and are led by an entrepreneurial team with a history of constructive disruption bringing significant and complementary experience to this enterprise, including the perspective of longtime E&P operators, which provides for an elevated understanding of the end users of our products and services. Our executive management team has a proven track record with a history of generating positive returns and value creation. Our experience as E&P operators was instrumental to our understanding of the opportunity created by in-basin sand production and supply in the Permian Basin, which we view as North America’s premier shale resource and which we believe will remain its most active through economic cycles.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, timing expectations and costs associated with the execution of process improvements at the Kermit facility; expected production volumes; the ultimate impact of the incident on Atlas’s future performance, operations and operating expenses; our plans and expectations regarding our newly authorized stock repurchase program; expectations regarding the leverage and dividend profile and expectations of Atlas; our business strategy, industry, future operations and profitability, expected capital expenditures and the impact of such expenditures on our performance, statements about our financial position, production, revenues and losses, our capital programs, management changes, current and potential future long-term contracts and our future business and financial performance.
Although forward-looking statements reflect our good faith beliefs at the time they are made, we caution you that these forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include but are not limited to: uncertainty regarding the ultimate cost and time needed to execute the desired process improvements at our production facilities; unexpected future capital expenditures; uncertainties as to whether the Hi-Crush Acquisition will achieve its anticipated benefits and projected synergies within the expected time period or at all; Atlas’s ability to integrate Hi-Crush Inc.’s operations in a successful manner and in the expected time period; unforeseen or unknown liabilities; unexpected future capital expenditures; our ability to successfully execute our stock repurchase program or implement future stock repurchase programs; commodity price volatility, including volatility stemming from the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas; increasing hostilities and instability in the Middle East; adverse developments affecting the financial services industry; our ability to complete growth projects, including the Dune Express, on time and on budget; the risk that stockholder litigation in connection with our recent corporate reorganization may result in significant costs of defense, indemnification and liability; changes in general economic, business and political conditions, including changes in the financial markets; transaction costs; actions of OPEC+ to set and maintain oil production levels; the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil; inflation; environmental risks; operating risks; regulatory changes; lack of demand; market share growth; the uncertainty inherent in projecting future rates of reserves; production; cash flow; access to capital; the timing of development expenditures; the ability of our customers to meet their obligations to us; our ability to maintain effective internal controls; and other factors discussed or referenced in our filings made from time to time with the U.S. Securities and Exchange Commission (“SEC”), including those discussed under the heading “Risk Factors” in Annual Report on Form 10-K, filed with the SEC on February 27, 2024, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Atlas Energy Solutions Inc.
Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Product sales
$
145,347
$
128,210
$
113,432
$
114,773
Service sales
159,087
159,308
79,235
42,843
Total sales
304,434
287,518
192,667
157,616
Cost of sales (excluding depreciation, depletion and accretion expense)
225,347
202,136
106,746
67,770
Depreciation, depletion and accretion expense
26,069
25,027
17,175
10,221
Gross profit
53,018
60,355
68,746
79,625
Selling, general and administrative expense (including stock and unit-based compensation expense of $6,289, $5,466, $4,206 and $1,414, respectively.)
25,463
27,266
28,008
14,301
Amortization expense of acquired intangible assets
3,744
3,768
1,061
—
Loss on disposal of assets
8,574
11,098
—
—
Insurance recovery (gain)
—
(10,000
)
—
—
Operating income
15,237
28,223
39,677
65,324
Interest (expense), net
(11,193
)
(10,458
)
(4,978
)
(1,496
)
Other income
289
138
23
136
Income before income taxes
4,333
17,903
34,722
63,964
Income tax expense
415
3,066
7,935
7,637
Net income
$
3,918
$
14,837
$
26,787
$
56,327
Less: Net income attributable to redeemable noncontrolling interest
26,887
Net income attributable to Atlas Energy Solutions Inc.
$
3,918
$
14,837
$
26,787
$
29,440
Net income per common share
Basic
$
0.04
$
0.13
$
0.26
$
0.51
Diluted
$
0.04
$
0.13
$
0.26
$
0.51
Weighted average common shares outstanding
Basic
109,883
111,064
102,931
57,237
Diluted
111,078
112,023
103,822
57,928
Atlas Energy Solutions Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Operating activities:
Net income
$
3,918
$
14,837
$
26,787
$
56,327
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and accretion expense
26,972
25,886
18,007
10,746
Amortization of debt discount
1,045
1,083
407
231
Amortization of deferred financing costs
122
118
78
79
Amortization expense of acquired intangible assets
3,744
3,768
1,061
—
Loss on disposal of assets
8,574
11,098
—
—
Stock and unit-based compensation
6,289
5,466
4,206
1,414
Deferred income tax
154
2,758
7,521
9,432
Other
(906
)
(744
)
(5
)
(42
)
Changes in operating assets and liabilities:
35,277
(3,414
)
(18,500
)
(22,781
)
Net cash provided by operating activities
85,189
60,856
39,562
55,406
Investing activities:
Purchases of property, plant and equipment
(86,276
)
(115,790
)
(95,486
)
(98,858
)
Hi-Crush acquisition, net of cash acquired
—
—
(142,233
)
—
Proceeds from insurance recovery
10,000
—
—
—
Net cash used in investing activities
(76,276
)
(115,790
)
(237,719
)
(98,858
)
Financing Activities:
Prepayment fee on 2021 Term Loan Credit Facility
—
—
—
(2,649
)
Proceeds from borrowings
(3,039
)
3,039
198,500
—
Principal payments on term loan borrowings
(4,333
)
(4,217
)
(1,381
)
—
Issuance costs associated with debt financing
(37
)
(416
)
(730
)
(3,645
)
Payments under finance leases
(863
)
(846
)
(65
)
(232
)
Repayment of notes payable
(1,456
)
(855
)
(216
)
—
Dividends and distributions
(25,271
)
(24,168
)
(21,005
)
(27,158
)
Net cash provided by (used in) financing activities
(34,999
)
(27,463
)
175,103
(33,684
)
Net decrease in cash and cash equivalents
(26,086
)
(82,397
)
(23,054
)
(77,136
)
Cash and cash equivalents, beginning of period
104,723
187,120
210,174
341,674
Cash and cash equivalents, end of period
$
78,637
$
104,723
$
187,120
$
264,538
Atlas Energy Solutions Inc.
Condensed Consolidated Balance Sheets
(in thousands)
As of
As of
September 30, 2024
December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
78,637
$
210,174
Accounts receivable, including related parties
179,924
71,170
Inventories, prepaid expenses and other current assets
57,952
37,342
Total current assets
316,513
318,686
Property, plant and equipment, net
1,449,540
934,660
Right-of-use assets
19,647
4,151
Goodwill
75,219
—
Intangible assets
109,281
1,767
Other long-term assets
3,290
2,422
Total assets
$
1,973,490
$
1,261,686
Liabilities and stockholders' equity
Current liabilities:
Accounts payable, including related parties
125,005
61,159
Accrued liabilities and other current liabilities
96,948
31,433
Current portion of long-term debt
36,219
—
Total current liabilities
258,172
92,592
Long-term debt, net of discount and deferred financing costs
439,043
172,820
Deferred tax liabilities
207,182
121,529
Other long-term liabilities
22,912
6,921
Total liabilities
927,309
393,862
Total stockholders' and members' equity
1,046,181
867,824
Total liabilities and stockholders’ equity
$
1,973,490
$
1,261,686
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow, assess the financial performance of our assets and their ability to sustain dividends or reinvest to organically fund growth projects over the long term without regard to financing methods, capital structure, or historical cost basis.
These measures do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA and Adjusted Free Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion and Maintenance Capital Expenditures may differ from computations of similarly titled measures of other companies.
Non-GAAP Measure Definitions:
Atlas Energy Solutions Inc. – Supplemental Information
Reconciliation of Adjusted EBITDA and Adjusted Free Cash Flow to Net Income
(unaudited, in thousands)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Net income
$
3,918
$
14,837
$
26,787
$
56,327
Depreciation, depletion and accretion expense
26,972
25,886
18,007
10,746
Amortization expense of acquired intangible assets
3,744
3,768
1,061
—
Interest expense
11,831
12,014
6,976
4,673
Income tax expense
415
3,066
7,935
7,637
EBITDA
$
46,880
$
59,571
$
60,766
$
79,383
Stock and unit-based compensation
6,289
5,466
4,206
1,414
Loss on disposal of assets (2)
8,574
11,098
—
—
Insurance recovery (gain)(3)
—
(10,000)
—
—
Other non-recurring costs (4)
6,918
7,049
368
3,281
Other acquisition related costs (1)
2,390
5,888
10,203
—
Adjusted EBITDA
$
71,051
$
79,072
$
75,543
$
84,078
Maintenance Capital Expenditures (5)
$
12,382
$
5,418
$
4,460
$
15,557
Adjusted Free Cash Flow
$
58,669
$
73,654
$
71,083
$
68,521
Atlas Energy Solutions Inc. – Supplemental Information
Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities
(unaudited, in thousands, except percentages)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Net cash provided by operating activities
$
85,189
$
60,856
$
39,562
$
55,406
Current income tax expense (benefit)(5)
261
308
414
(1,795
)
Change in operating assets and liabilities
(35,277
)
3,414
18,500
22,781
Cash interest expense (5)
10,664
10,813
6,491
4,363
Maintenance capital expenditures (5)
(12,382
)
(5,418
)
(4,460
)
(15,557
)
Other non-recurring costs (4)
6,918
7,049
368
3,281
Other acquisition related costs (1)
2,390
5,888
10,203
—
Insurance recovery (gain)(3)
—
(10,000
)
—
—
Other
906
744
5
42
Adjusted Free Cash Flow
$
58,669
$
73,654
$
71,083
$
68,521
Adjusted EBITDA Margin
23
%
28
%
39
%
53
%
Adjusted Free Cash Flow Margin
19
%
26
%
37
%
43
%
Adjusted Free Cash Flow Conversion
83
%
93
%
94
%
81
%
(1)
Represents Hi-Crush transaction costs include fees paid to finance, legal, accounting and other advisors, employee retention and benefit costs, and other operational and corporate costs.
(2)
Represents loss on disposal of one of the Company's dredge mining assets at its Kermit facility and loss on disposal of assets as a result of the fire at one of the Kermit plants that caused damage to the physical condition of the Kermit asset group.
(3)
Represents insurance recovery (gain) deemed collectible and legally enforceable as of June 30, 2024 related to the fire at one of the Kermit plants. Cash was subsequently received as of September 30, 2024.
(4)
Other non-recurring costs includes costs incurred during our Up-C simplification transaction, temporary loadout, and other infrequent and unusual costs.
(5)
A reconciliation of the adjustment of these items used to calculate Adjusted Free Cash Flow to the Consolidated Financial Statements is included below.
Atlas Energy Solutions Inc. – Supplemental Information
Reconciliation of Maintenance Capital Expenditures to Purchase of Property, Plant and Equipment
(unaudited, in thousands)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Maintenance Capital Expenditures, accrual basis reconciliation:
Purchases of property, plant and equipment
$
86,276
$
115,790
$
95,486
$
98,858
Changes in operating assets and liabilities associated with investing activities (1)
(5,389
)
16,134
(2,575
)
40,153
Less: Growth capital expenditures and reconstruction of previously incurred growth capital expenditures
(68,505
)
(126,506
)
(88,451
)
(123,454
)
Maintenance Capital Expenditures, accrual basis
$
12,382
$
5,418
$
4,460
$
15,557
(1)
Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented.
Atlas Energy Solutions Inc. – Supplemental Information
Reconciliation of Current Income Tax Expense to Income Tax Expense
(unaudited, in thousands)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Current tax expense reconciliation:
Income tax expense
$
415
$
3,066
$
7,935
$
7,637
Less: deferred tax expense
(154
)
(2,758
)
(7,521
)
(9,432
)
Current income tax expense (benefit)
$
261
$
308
$
414
$
(1,795
)
Atlas Energy Solutions Inc. – Supplemental Information
Cash Interest Expense to Income Expense, Net
(unaudited, in thousands)
Three Months Ended
September 30, 2024
June 30, 2024
March 31, 2024
September 30, 2023
Cash interest expense reconciliation:
Interest expense, net
$
11,193
$
10,458
$
4,978
$
1,496
Less: Amortization of debt discount
(1,045
)
(1,083
)
(407
)
(231
)
Less: Amortization of deferred financing costs
(122
)
(118
)
(78
)
(79
)
Less: Interest income
638
1,556
1,998
3,177
Cash interest expense
$
10,664
$
10,813
$
6,491
$
4,363
View source version on businesswire.com: https://www.businesswire.com/news/home/20241028196431/en/
Investor Contact Kyle Turlington 5918 W Courtyard Drive, Suite #500 Austin, Texas 78730 United States T: 512-220-1200 IR@atlas.energy
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