Goldplat Share Discussion Threads

[kimboy2] 07/12/2024 16:00

Through recent engagement with the Ghana authorities, it has become clear that their preference is for us to refine as much material to bullion as possible in Country.

I think that tells you why.

[ih_692232] 07/12/2024 14:02

Kimboy
It’s all very troubling and the failure to explain 900k expenditure in detail is typical of this board - they just spend what they like when they like -it maybe for good reasons but never is the detail given that enables shareholders to have confidence in what they do - the same applies now to the latest RBS as to Ghana
But at least this is on the positive side
Roll on to getting the deal done with DRG and buyout —-or huge dividends
Alm

[kimboy2] 07/12/2024 09:25

They haven't really explained what is going on in Ghana in any detail. It would be interesting to know the payback period on thie £900k they're spending.

In the old days we used to get Edison reports which explained these sorts of things.

[dangersimpson2] 07/12/2024 08:57

£4.8m PBT at the last note that has the block model. £6m announced this week. not seen an updated note, but we will get the actual figures soon.

My guess is that this is simply a function of the strength of production in Ghana in Q4 and the length of the pipeline to get it refined and the changes in gold price. Normally these factors even themselves out over time, but a big final quarter combined with a long refining pipeline and gold going up significantly made this material in this case.

This is another reason why getting paid 2 weeks after shipping dore bars in Ghana will make things simpler overall, even if it has a capital cost up front.

[kimboy2] 07/12/2024 08:07

The auditor says;
The Group generates its revenue from the sale of precious
metals. The Group recognises this revenue when the metals are
delivered to the customer and the customer takes control of
the metals in line with the contractual terms.

The sales price is estimated by management on a provisional
basis as 95% of market price at the end of the month in which
the material is delivered to the refiner. Consequently, there is
a risk that revenue is not recognised in accordance with IFRS
15 Revenue from Contracts with Customers. Specifically, there
is potential for cut off errors arising around the timing of
the recognition of revenue and accuracy errors arising from
the sales transactions which require estimated valuations to
conclude on pricing.

The question then is if the amount is wrong what do they do about it? This falls into whether it is material or not. The auditor says;

For each significant component in the scope of our audit, we allocated a materiality based on the maximum aggregate component materiality. The range of materiality allocated across components was between GBP150,000 and GBP110,000.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above GBP 8,000 as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Clearly the uplift over the estimate was greater than £150k.

The next thing is whether they announce this to the market. The company have to announce if the deviation is deemed to be 'material'. In this instance material means exceed analyst estimates by 10-15%, which is the consensus threshhold.

I have no idea what the analyst estimates were but that would indicate that they were exceeded by at least £0.5 - 1 million.

[russman] 07/12/2024 05:50

How long have GDP been in this business.
Significant errors in their contract estimates.
Are the valuations of stocks / WIP also misaligned.
Is it an accounting system failure or an accounting cover up.

[lowtrawler] 07/12/2024 02:45

They would have had to book the revenue at Q4 prices and would not be allowed to book it at Q1 prices, so the gold price changing is not a factor. The only possible error of this type is underestimating the quantity of gold recovered. Goldplat should be able to accurately estimate this to within 1 or 2%.Clearly, we have not been provided enough information to fully understand what has happened

[kimboy2] 06/12/2024 19:38

Seems clear to me that some contracted gold sales in FY24 were intially estimates. The final amount was larger than the amount allowed for, probably due to an increase in gold price.

I would presume they wanted to migrate it to 2025 to smooth the numbers during changes in Ghana.

It is ironic that an announcement that indicated no change in overall profitability leads to a 25% increase, but good announcements have zero effect (if we're lucky).

[ih_692232] 06/12/2024 16:47

Low
We have learned to our cost that nothing runs simply and smoothly with Goldplat
I remain concerned as what this is all about and why
It may well be necessary for Goldplat to issue a further detailed RNS as to this because the market has been confused perhaps even misled as to what has occurred and its impact
Alm

[lowtrawler] 06/12/2024 14:35

Having re-read the actual RNS:

"Due to adjustments identified as part of the year end audit process, some revenue recognised in Q1 FY25 has been brought forward to Q4 FY24, as final assays received in Q1 FY25 relating to provisional revenue recognised in Q4 FY24 were adjusted for."

The other possibility is that they booked revenue in Q4 thinking the assay's would contain less metal than actually proved to be the case. For the size of adjustment, that would be a fundamental operating error and not an accounting error.

As always with GDP, they provide less information than is needed to understand what happened. If it is the accounting error, I have some sympathy but it should still not have happened. If it is underestimating the assay result, I have no sympathy.

[shareholder7] 06/12/2024 11:12

Thanks Low that's what I think

[lowtrawler] 06/12/2024 10:59

shareholder7, whether the Q1 results will need to be adjusted downwards will depend on whether the contract causing the revenue recognition issue was similarly mis-treated at the end of Q1 and for a comparable value. We don't have that information. I believe we are safest to assume the Q1 results will have been adversely impacted.

[shill10] 06/12/2024 10:15

more sell volume than buy volume showing, price up...has been the other way around for a good while, let's see if that makes a difference.

[ertugrul] 06/12/2024 08:10

Good start... I wish I can buy more

[shareholder7] 06/12/2024 07:19

Thanks Low this is useful. The other part of the question was that will not 1st quarter results need to be adjusted downwards so net effect no change. The only really measurement that I like is Cash which I will now take a second look at.

[russman] 06/12/2024 06:36

the RNS does not inspire confidence.
what is a profit.
Tardy Annual Report being "adjusted".

[michaelfenton] 06/12/2024 04:12

thanks for your excellent explanation. I am not up with these matters anymore but this situation is costly for such a small company? Anyway numbers seem to be excellent.

[lowtrawler] 05/12/2024 22:28

shareholder7, to get an accurate answer, you will need to ask GDP.

Under revenue recognition rules, they can only recognise revenue when they have met their obligations under a contract. This can often mean different timing for different contracts.

As a completely made up example, they may have one contract where the obligations are met once the assayed gold is sold. For another, it might be when the assay is completed. For another, it might be when it is sent for assay. Worse, the contracts might be ambiguous as to when GDP's responsibilities complete. It is likely GDP have a default treatment to recognise revenue on sale of the assayed product and make adjustments as appropriate. However, if the contract is ambiguous, they may need to agree treatment with their auditors.

In the past, companies could set an accounting policy to always recognise revenue at a particular point e.g. on sale of the assayed gold. That was simple, unambiguous and did not require different treatment for each customer contract.

[shareholder7] 05/12/2024 19:52

I am sorry but you have to question what the board is up to, especially as it's full of accountants. They don't know when revenue hits the P&L? I think this is worrying! All this means is 1st Quarter numbers will be down by the amount the full year goes up unless I am missing something. Any help to enlighten me much appreciated.

[wigwammer] 05/12/2024 15:20

Fingers crossed yasX comes back and talks total sh1te again soon. Best day in ages :)

[lowtrawler] 05/12/2024 14:38

ertugrul, I am more cautious. While I am confident we will move into double figures before long, whether it happens in the next few weeks is beyond my knowledge. Today's announcement might well be enough to provide the momentum but, if it is not, the first announcement of shareholder return surely will.

[ertugrul] 05/12/2024 14:30

Its surely going to one way now, 8p is little resistance as you see, once its gone it will be gone for good then we will be trading at double digits...

[lowtrawler] 05/12/2024 14:29

shill10, I believe yasX has more accurately expressed why the GDP price is suppressed. The lack of dividend, ability to splash money on pet projects, poor shareholder engagement, slow progress on the TSF.....

2025 is the year where those worries should start to be addressed and resolved. It is nice to end 2024 with today's surprise and hopefully it is the starting gun to what will be a prosperous new year.

[lowtrawler] 05/12/2024 14:25

ertugrul, we may shortly find out if you are correct.

[shill10] 05/12/2024 14:23

trying to rationalise why we have been so low c w what we all know regarding the TSF, the only logic I could see was the risk that Goldplat ran out of money before the TSF was brought online. The results today seem to put that risk to bed, positive free cash flow even with Ghana expenses - in fact even Ghana on its own justifies double the current share price, there will be plenty of down days on the way to June 2025 TSF announcement , I will be buying those down days.