Ferrexpo Share Discussion Threads

[elsa7878] 22/3/2017 11:53

JJHBEV:
Average cost of capital was NOT 10% as you state:

The average cost of debt for the period ended 31 December 2016 was 6.7% (average 2015: 5.5%). The increased average rate reflected amortisation of the Group's pre-export banking facilities, which have a lower cost compared to the Group's outstanding US$346 million Eurobond.

[jjhbev] 22/3/2017 11:48

Sarah
I mean 35% of the 6.5% yield

[bellbottom] 22/3/2017 11:44

Just emailed HL for their take on the tax situation. I'll update when/if they respond.

[jjhbev] 22/3/2017 11:42

Thanks Bellbottom

I have quite a lot with HL (sipp) & Barclays (ISA). I will check in with Barclays and see what they say. I don't want to see 2+% disappearing to some tax gnome in Zurich!

[sarahbudd] 22/3/2017 11:37

Tax is a bind...unfortunately I can't reclaim in my Sipp run by AJ Bell or idealing. Have added today though

[che7win] 22/3/2017 11:32

Fab results IMHO, the dividend is most unexpected and quite sizeable too.These should be hitting new highs soon (today) IMHO.

[bellbottom] 22/3/2017 11:32

Great post JJ and right about the Swiss tax situation.
This from previous Divi information on FXPO website.

UK tax resident shareholders
The current double tax treaty between the United Kingdom and Switzerland may entitle
you to a certain reclaim of Swiss Withholding Tax on the dividend. Qualifying UK resident shareholders will be able to claim back 4/7ths of the 35 per cent Swiss Withholding Tax, leaving a net tax cost of 15 per cent of the taxation levied by the Swiss authorities on the basis that you are, under UK taxation law, already obliged to pay tax on the gross amount of the dividends (which are treated as income for taxation purposes) received from the Company.

I'm going to check with Hargreaves Lansdown, see what they say about current tax laws.

[jjhbev] 22/3/2017 11:20

So, the results presentation and Q&A has just finished. It was IMO all very positive but I am amazed at the minimal amount of questions raised by the analysts attending (nothing on current production or full year expectation & nothing on current/end Feb liquidity etc. etc.)

As for the actual results for 2016 I had overestimated Revenue & EBITDA. This appears basically due to me overestimating the pellet premiums in H2. As explained by the CFO in the results presentation approx 30% of their pellet premiums are fixed at the start of the year for the full year ahead with the remainder fixed on a quarterly basis. So, some of the premiums for 2016 were fixed at around market lows and these continued throughout the year. My other assumptions re costs seem ok.

Conversely the premiums are now being fixed at very high levels. Page 18 of the results presentation quotes the Platts Atlantic Premium “above $40 pt” and the CFO stated that premiums are currently around “$18 higher” as compared with (I assume) last year’s average.

Key take-aways for me from the results & presentation/ Q&A =

1. 2016 results v good & pellet premiums will be substantially higher this year
2. Cost increases are being offset by efficiencies with a net cost reduction of $1+ as compared with H2 2016
3. Production will be expanded by an initial 1.5+m tons pa – but the cap ex will run through 2017 & 2018 with the increase in output not being seen until H2 2018 at the earliest.
4. Subject to all sorts of provisos the company will then work on a major multi year expansion to take production up to 20m tons pa. But (as was very specifically covered in Q&A with between CEO & Barclays Analyst) the company would plan on the basis of funding this from its own cash flow – it does not believe that major new debt is either available of appropriate.
5. The company is “talking to banks” at present about its current debt. IMO the CEO near as dammit stated that they are negotiating a new PXF to replace the bonds (& they stated specifically that they are out of the bond market for as far as the eye can see). Based on the previous PXFs the cost would be something like LIBOR plus 2+% pa as compared with the more than 10% of the current bonds.
6. The CFO stated that the “regular”; liquidity requirement for running the business is very low because of the quality of its customers and the predictability of cash flow. So, IMO we can expect that the interest cost to the company ($60+m in 2015 & $54+m in 2016) will be below $15m next year.
7. Nothing about this year’s production target, product mix etc. !! WTF do these analysts get paid for??? I suppose it’s only a few weeks to the quarterly production update which should give us some clarity.

Assuming that current pellet premiums are $35 (could be more!) then my previous post about current year performance and cash generation still holds. Of course, we now have approx $80m pa coming to us in the form of dividends!!!!! Now, I did mention that I thought that they may restart these but I certainly didn’t expect this level of payout this year!!! – that’s approx 6.5% at this morning’s share price Who knows what that will do to the share price but it should certainly hugely broaden the prospective shareholder base and hopefully justify an increased P/E ratio.

I shall have to go away now and check on the tax treatment on the divis. I think there is some withholding tax issue because they originate from Switzerland.

[onedb1] 22/3/2017 11:13

Here we go volume building up !! Steadily back up and the day is still long .

[r88ave] 22/3/2017 09:55

The results are based on $58 per ton As stated the 1st quarter average is $86 per ton Almost 50% increased in potential revenue for coming year I don't think this is 'priced' in yet I would say fair price would be around 250p unless the price of iron ore jumps considerable this year So for now we know it's making enough money even at $58 per ton

[pbutterworth1] 22/3/2017 09:12

che7win - yes - just saw it too and though the same. remember the share price declines 6% yesterday too. I would not be surprised to see FXPO share price gain close today highest in FTSE...

[che7win] 22/3/2017 09:02

Is that 311,00k trade a buy? Maybe why MMs dropped this to get sellers?

[bellbottom] 22/3/2017 08:58

The trend is certainly up, but good news is usually followed by a drop in share price I've seen it happen so many times to my holdings over the years. But any dips now can surely be ignored - though I will keep banging on about the specifics of Ukraine risks, even if I get criticised for it or accused of being a shorter - All neatly summarised in the RNS, page 22 onwards.

But I am more buoyant and feel much more positive generally - though will not take my eye off the ball in this respect.

A divi payment has certainly taken me by surprise. A nice bonus.

All looking good for the health of one's SIPP and ISA.

[pbutterworth1] 22/3/2017 08:42

seroserio - yes - thx

[zho] 22/3/2017 08:39

>> ... and the total gits drop the share price 5%>>

Isn't that (at least partly) because the price of iron ore dropped 6% overnight?

[seroserio] 22/3/2017 08:36

Ex divi date also.
Declaration date - This is the date on which the board of directors announces to shareholders and the market as a whole that the company will pay a dividend.
Ex-date or Ex-dividend date - On (or after) this date the security trades without its dividend. If you buy a dividend paying stock one day before the ex-dividend you will still get the dividend, but if you buy on the ex-dividend date, you won't get the dividend. Conversely, if you want to sell a stock and still receive a dividend that has been declared you need to sell on (or after) the ex-dividend day. The ex-date is the second business day before the date of record.
Date of record - This is the date on which the company looks at its records to see who the shareholders of the company are. An investor must be listed as a holder of record to ensure the right of a dividend payout.
Date of payment (payable date) - This is the date the company mails out the dividend to the holder of record. This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled.

[telbap] 22/3/2017 08:35

Well they certainly shook that tree!

[pbutterworth1] 22/3/2017 08:25

Giles - welcome to investing. Divs are VERY important. There are three div dates. 1. The announcement day(eg FXPO today). Not reqd to hold today to get div. 2. The record date. This is the day of record when holders registered at that day will get div. eg FXPO 31st March 3. Payment date 11th April. If you don't have shares on 31st Mar there is No div. This div is quite small but unexpected and payment terms are quick compared to average

[onedb1] 22/3/2017 08:24

About to go positive . Nasty initial shake . Crazy how they can do this

[wigancasino] 22/3/2017 08:19

giles, keep hold of your shares at least until the divi date. If you bought them the day before you would still get the divi. If you sell them on the day of the divi you also get the divi but be aware that the share price will most probably drop during that time to compensate the divi. MM games, as with the share price dropping this morning first thing!

[bowles22] 22/3/2017 08:16

Al in the RNS

The strength of the Company's performance in 2016, together with the strong demand outlook for pellets in 2017, gives the Board confidence to announce a return to paying dividends to shareholders. A final ordinary dividend of 3.3 US cents per share is being proposed which amounts to approximately US$19 million (2015 final ordinary dividend: nil). The Board will also be paying a special dividend of 3.3 US cents per share or approximately US$19 million (2015 special dividend: nil).
If the final dividend is approved by shareholders, the dividend pay-out relating to the financial performance of 2016 will total US$38 million (2015: US$20 million) in line with the full year ordinary dividend of previous years prior to the suspension of the dividend at the end of 2015.
The special dividend will be paid on 11 April 2017 to shareholders on the register at the close of business on 31 March 2017. Subject to approval at the Group's AGM, payment of the final ordinary dividend will be made on 31 May 2017 to shareholders on the register at the close of business on 5 May 2017. The dividend will be paid in UK Pounds Sterling with an election to receive US Dollars.