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Research: Metals & Mining
Excluding a write-off of stripping assets and a $0.5m loss on foreign exchange, Q420 pre-tax profits were within 3% of Edison’s prior forecast (see Exhibit 2), despite the company selling c 23.9kg (768oz) less gold than it produced (Edison estimate). This had the effect of depressing revenue by c $1.44m. Nevertheless, for the full year, the transformation in Auriant’s financial fortunes as a result of its development of a CIL plant in place of the former heap leach operation is readily apparent, with a loss after tax of $1.2m in FY19 reversing to become a profit after tax of $10.7m. Similarly, EBITDA for the full year increased by a factor of four compared to FY19, while cash flows from operations increased threefold.
Auriant Mining |
Making a virtue of dependability |
Q4/FY20 results |
Metals & mining |
17 March 2021 |
Share price performance
Business description
Next events
Analyst
Auriant Mining is a research client of Edison Investment Research Limited |
Excluding a write-off of stripping assets and a $0.5m loss on foreign exchange, Q420 pre-tax profits were within 3% of Edison’s prior forecast (see Exhibit 2), despite the company selling c 23.9kg (768oz) less gold than it produced (Edison estimate). This had the effect of depressing revenue by c $1.44m. Nevertheless, for the full year, the transformation in Auriant’s financial fortunes as a result of its development of a CIL plant in place of the former heap leach operation is readily apparent, with a loss after tax of $1.2m in FY19 reversing to become a profit after tax of $10.7m. Similarly, EBITDA for the full year increased by a factor of four compared to FY19, while cash flows from operations increased threefold.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
29.8 |
(2.2) |
(1.3) |
0.0 |
N/A |
N/A |
12/20 |
53.4 |
17.5 |
13.9 |
0.0 |
3.9 |
N/A |
12/21e |
51.5 |
12.4 |
9.0 |
0.0 |
6.6 |
N/A |
12/22e |
55.6 |
22.0 |
12.3 |
0.0 |
4.9 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Steady into FY21 for production…
Auriant produced 953kg gold from Tardan in FY20, which exceeded the upper limit of its guidance of 900–940kg by 1.4%. In FY21, it expects to produce 900–930kg gold from 350–380kt of ore processed (at an implied head grade of c 2.64g/t and an implied yield of c 2.42g/t), including c 36kg from alluvial operations at Solcocon.
…and also costs
Unit costs are expected to remain broadly unchanged in US dollar terms in FY21 compared to FY20, despite some inflationary pressures in local currency terms (given a boom in resources investment in Russia), a slight strengthening in the value of the rouble and the recovery in the oil price since this time last year. Stripping costs delayed from FY20 are also now expected to be incurred in FY21. In the meantime, Auriant continues to remain broadly unaffected by COVID-19.
Valuation: Steady at $1.76/share (SEK14.89)
We have reduced our forecasts for FY21 to reflect the recent weakness in the gold price. However, we expect this to be only a temporary phenomenon and for gold to remain in a fundamental bull market for as long as real interest rates remain below 4%. On the basis that management executes the Kara-Beldyr project according to the operational and financial parameters expected (NB this is a risk already substantially mitigated by management’s success in developing the Tardan CIL project), we estimate that Auriant is capable of generating average annual cash flows of $63.8m, average earnings of $55.2m and average EPS of $0.418 from FY25–34, thus allowing it to pay (average) maximum potential dividends of 47.0c/share in FY26–34. Discounted at our customary 10% discount rate, the value of such a stream of dividends to shareholders has remained steady at $1.76 per share, rising to $2.80/share on the cusp of the company’s maiden dividend in FY26.
Investment summary
Auriant’s Q420 financial results were reported in the context of known production of 203kg from Tardan for the quarter (cf our prior estimate of 186kg) and a largely known gold price. Notwithstanding a maintenance stop, throughput rates were maintained at high levels and a summary of the plant’s performance during the quarter, relative to our prior expectations, is as follows:
Exhibit 1: Tardan CIL plant performance, Q120–Q420
Q120 |
Q220 |
Q320 |
Q420e |
Q420 |
Change |
Variance |
FY20 |
|
Ore processing (kt) |
100 |
96 |
95 |
79 |
103 |
+8.4 |
+30.4 |
394 |
Grade (g/t) |
3.04 |
2.69 |
2.58 |
2.58 |
2.35 |
-8.9 |
-8.9 |
2.66 |
Gold in ore (kg) |
303 |
258 |
245 |
203 |
239 |
-2.4 |
+17.7 |
1,045 |
Gold in ore (oz) |
9,742 |
8,295 |
7,880 |
6,516 |
7,685 |
-2.5 |
+17.9 |
33,602 |
Gold produced CIL (kg) |
278 |
243 |
229 |
186 |
203 |
-11.4 |
+9.1 |
953 |
Gold produced CIL (oz) |
8,946 |
7,804 |
7,363 |
5,994 |
6,517 |
-11.5 |
+8.7 |
30,629 |
Estimated recovery (%) |
91.7 |
94.2 |
93.4 |
92.0 |
84.9 |
-9.1 |
-7.7 |
91.2 |
Source: Auriant, Edison Investment Research. Note: *Q420 vs Q320. **Q420 vs Q420e.
Of note were the following:
■
The plant exceeded its targeted throughput rate of 50tph (for those periods when it is running). For the quarter as a whole, it processed 103kt of ore, which was an excellent achievement given the requirement for a maintenance stop. In general, Auriant is budgeting a throughput rate of 80.0–82.5kt at the Tardan plant to produce an average 225kg gold per quarter. For the full year, the average throughput rate of the plant was 44.9tph.
■
The grade of ore processed declined to 2.35g/t for the quarter; for the full year it averaged 2.66g/t, which was within 2% of management’s expectation of mined grade for the year of 2.71g/t.
■
During the quarter, we estimate that metallurgical recovery moderated to 84.9%, in part as a consequence of the maintenance stop, but also as a consequence of processing lower-grade material (which was expected). For the full year, it nevertheless averaged 91.2% (Edison estimate), which exceeded management’s targeted recovery rate of 90% by 1.2 percentage points.
■
Estimated unit cash costs of production of $56.88/t processed at Tardan in Q420 were 4.0% above our prior expectation of $54.67/t. However, this in part reflected a return to stripping at Tardan after delays earlier in the year as a consequence of a licence restriction, which has now been fully lifted. This in turn translated into an estimated cost of sales (excluding depreciation) at Tardan of $674/oz (sold), which was again below our prior forecast of $717/oz.
■
For the third quarter in succession, Auriant sold less gold than it produced - in this case, by c 23.9kg, or 768oz (estimate), which would have depressed revenue by c $1.44m. Note that this sales result followed a comparable c 10.5kg (341oz) under-sale of gold in Q320 and a c 23kg (748oz) under-sale in Q220. As a consequence, Auriant reports that it has 56.3kg (1,810oz) of unsold gold included as part of its inventory (worth c $3.1m at the current gold price of $1,726/oz).
Exhibit 2 summarises Auriant’s Q420 results both in the context of the prior quarter’s results and also Edison’s prior expectations. Relative to our prior expectations, the largest variance in Q4 results was a negative variance of $1.8m in ‘other expenses’, which related to a write-off of $1.9m in stripping assets in LLC Tardan Gold, which were accrued in 2017 but are now no longer deemed to be economic. Other negative variances included a $0.5m loss on foreign exchange and a $0.7m negative variance in the tax charge. Note that, in the absence of these first two factors, adjusted pre-tax profits, of $2.6m, would have been within 3% of Edison’s prior forecast (see ‘Q420 (adjusted)’ column in Exhibit 2, below). Nevertheless, compared with the prior year, the transformation in Auriant’s financial fortunes as a result of its development of a carbon- in-leach (CIL) plant in place of the former heap leach operation is readily apparent, with a loss after tax of $1.2m in FY19 reversing to become a profit after tax of $10.7m in FY20. Similarly, EBITDA for the full year increased by a factor of four, while cash flows from operations increased threefold.
Exhibit 2: Auriant results, Q319–Q420e, by quarter ($000s*)
Q319 |
Q419 |
FY19 |
Q120 |
Q220 |
Q320 |
Q420e |
Q420 |
Change |
Variance |
Q420 (adjusted) |
FY20 |
FY20e |
|
Production |
|||||||||||||
Tardan heap leach (kg) |
202.3 |
95.4 |
525.0 |
0 |
0 |
0 |
0 |
0 |
N/A |
N/A |
0 |
0 |
0 |
Tardan CIL (kg) |
0.0 |
110.0 |
110.0 |
278 |
243 |
229 |
186 |
203 |
-11.4 |
9.1 |
203 |
953 |
936 |
Tardan total (kg) |
202.3 |
205.4 |
635.0 |
278 |
243 |
229 |
186 |
203 |
-11.4 |
9.1 |
203 |
953 |
936 |
Solcocon production (kg) |
24.1 |
2.5 |
54.0 |
0 |
0 |
5 |
6 |
7 |
40.0 |
16.7 |
7 |
12 |
11 |
Gold price ($/oz) |
1,474 |
**1,481 |
1,416 |
1,585 |
1,713 |
1,911 |
1,876 |
**1,875 |
N/A |
N/A |
**1,875 |
1,751 |
1,748 |
Income statement |
|||||||||||||
Revenue |
10,007 |
8,975 |
29,762 |
16,154 |
12,276 |
13,832 |
11,605 |
11,147 |
-19.4 |
-3.9 |
11,147 |
53,409 |
53,867 |
Cost of sales |
6,316 |
4,830 |
19,610 |
5,928 |
4,459 |
4,772 |
4,551 |
4,165 |
-12.7 |
-8.5 |
4,165 |
19,324 |
19,710 |
Gross profit |
3,691 |
4,145 |
10,152 |
10,226 |
7,817 |
9,060 |
7,054 |
6,982 |
-22.9 |
-1.0 |
6,982 |
34,085 |
34,157 |
Depreciation |
(1,142) |
(1,652) |
(5,011) |
(1,647) |
(1,846) |
(2,278) |
(2,333) |
(2,283) |
0.2 |
-2.1 |
(2,283) |
(8,054) |
(8,104) |
General & administration |
(547) |
(480) |
(2,184) |
(576) |
(567) |
(873) |
(668) |
(929) |
6.4 |
39.1 |
(929) |
(2,945) |
(2,684) |
Other operating income |
24 |
7 |
241 |
53 |
15 |
4 |
0 |
24 |
500.0 |
N/A |
24 |
96 |
72 |
Other operating expenses |
(140) |
(755) |
(1,001) |
(182) |
(8) |
(911) |
(116) |
(1,958) |
114.9 |
1,587.9 |
0 |
(3,059) |
(1,217) |
Impairments etc |
0 |
||||||||||||
EBIT |
1,886 |
1,265 |
2,197 |
7,874 |
5,411 |
5,002 |
3,937 |
1,836 |
-63.3 |
-53.4 |
3,794 |
20,123 |
22,224 |
Interest income |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
N/A |
N/A |
0 |
0 |
0 |
Interest expense |
(1,066) |
(1,200) |
(4,390) |
(1,584) |
(1,597) |
(1,339) |
(1,231) |
(1,151) |
-14.0 |
-6.5 |
(1,151) |
(5,671) |
(5,751) |
Net interest |
(1,066) |
(1,200) |
(4,390) |
(1,584) |
(1,597) |
(1,339) |
(1,231) |
(1,151) |
-14.0 |
-6.5 |
(1,151) |
(5,671) |
(5,751) |
Forex gain/(loss) |
448 |
(240) |
679 |
(147) |
128 |
(225) |
(480) |
113.3 |
N/A |
0 |
(724) |
(244) |
|
Profit before tax |
1,268 |
(175) |
(1,514) |
6,143 |
3,942 |
3,438 |
2,706 |
205 |
-94.0 |
-92.4 |
2,643 |
13,728 |
16,229 |
Tax |
(13) |
445 |
(278) |
248 |
1,275 |
475 |
416 |
1,077 |
126.7 |
158.9 |
3,075 |
2,414 |
|
Effective tax rate (%) |
(1.0) |
(254.3) |
18.4 |
4.0 |
32.3 |
13.8 |
15.4 |
525.4 |
3,707.2 |
3,311.7 |
22.4 |
14.9 |
|
Profit after tax |
1,281 |
(620) |
(1,236) |
5,895 |
2,667 |
2,963 |
2,289 |
(872) |
-129.4 |
-138.1 |
10,653 |
13,814 |
|
Average no. shares (000s) |
98,649 |
98,649 |
98,649 |
98,649 |
98,649 |
98,729 |
98,768 |
98,768 |
0.0 |
0.0 |
98,699 |
98,698 |
|
Derivatives (000s) |
0 |
0 |
0 |
345 |
0 |
0 |
0 |
0 |
N/A |
N/A |
0 |
0 |
|
Fully diluted no. shares (000s) |
98,649 |
98,649 |
98,649 |
98,994 |
98,649 |
98,729 |
98,768 |
98,768 |
0.0 |
0.0 |
98,699 |
98,698 |
|
EPS ($/share) |
0.013 |
(0.006) |
(0.013) |
0.060 |
0.027 |
0.030 |
0.023 |
(0.009) |
-130.0 |
-139.1 |
0.108 |
0.140 |
|
Diluted EPS ($/share) |
0.013 |
(0.006) |
(0.013) |
0.060 |
0.027 |
0.030 |
0.023 |
(0.009) |
-130.0 |
-139.1 |
0.108 |
0.140 |
Source: Edison Investment Research, Auriant Mining. Note: *Unless otherwise indicated. **Estimate. ***Q420 vs Q320. ****Q420 vs Q420e.
In 2020, Tardan became a participant in the Regional Investment Projects programme and obtained the right to apply a reduced income tax rate of 17% and the mineral extraction tax at a nil rate. According to Russian legislation, tax losses are accumulated on the balance sheet and can be offset against future taxable earnings. Thus, in Q420 only $39k was paid in cash income tax out of a total charge on the income statement of $1,077k, with the remainder being offset against the balance sheet amount of the deferred tax asset related to tax losses carried forward. Compared with a normalised estimate of cash flow from the income statement of $1.4m ($0.9m loss plus $2.3m depreciation) therefore, actual cash flow from operations amounted to $4.5m (including evidence of diligent control of working capital), of which only $1.0m was consumed in investing activities and the remainder used to pay interest and to repay debt (including leases).
Guidance and assumptions
Auriant produced 953kg gold from Tardan in FY20, which exceeded the upper limit of guidance of 900–940kg by 1.4%.
FY21
Production
On 21 December, Auriant announced total production guidance for 2021 of 900–930kg gold from 350–380kt of ore processed through the CIL plant from the Pravoberezhniy deposit. That total included an assumed c 30kg being produced at Solcocon, implying production from the Tardan CIL plant of c 885kg, a yield of 2.42g/t and a head grade of 2.64g/t. However, the amount of gold assumed to be produced at Solcocon has since been raised to c 36kg, implying total production from the group of 921kg. This is very similar guidance to that provided for Tardan for FY20 (900–940kg from 350–380kt, implying a yield of 2.37–2.69g/t and a likely plant feed grade of 2.58–2.92g/t) and is consistent with the recent performance of the mining operation and CIL plant, but also reflects the delay to stripping at Tardan in FY20 as a result of changes to mine sequencing necessitated by a licence restriction (which has now been lifted). As in FY20, relatively little seasonal variation in production is anticipated (in sharp contrast to the former heap leach operation). However, Q121 will be slightly affected by the same scheduled maintenance stop as occurred in Q420, albeit this is already reflected in our production expectations for that quarter (see Exhibit 3).
Costs
As a result of test work conducted during the ramp-up phase, Auriant has upgraded the leaching tanks at Tardan to improve ore oxidation to ensure stable processing results. In addition, in December 2019, the company agreed a new energy deal to increase the power allocation to the Tardan CIL plant by 25% from 2.0MW to 2.5MW using a newly built 35kV power line, which has allowed it to minimise its use of diesel generators on site and, on occasion, to cease their use entirely.
Unit costs are nevertheless expected to be broadly unchanged in US dollar terms in FY21 relative to FY20, reflecting some inflationary pressures in local currency terms (given something of a ‘boom’ in resources investment in Russia). At the same time, the rouble has appreciated by 1.4%, from RUB75.1712/US$ at the time of our last note (see Turning into the home straight, published on 23 December 2020) to RUB74.0979/US$ at the time of writing, while the oil price – depending on how you measure it – has either doubled or quadrupled since this (volatile) time last year. In addition, staff costs appear likely to rise as a result of local inflation and salary indexation and, as a consequence, there is expected to be little or no improvement in budgeted exploration expenses. Finally, stripping costs delayed from FY20 are now also expected to be incurred in FY21.
FY21 quarterly forecasts
Based on the production guidance provided by management for FY21 (and with the usual caveat surrounding quarterly predictions), our financial forecasts for Auriant for FY21 by quarter are as shown in Exhibit 3.
Relative to our prior forecasts, the main changes that we have made to our forecasts are:
■
A reduction in the average gold price, from $1,880/oz to $1,726/oz for the remainder of the year.
■
An increase in gold production at Solcocon from 30kg to 36kg, such that it is in line with management’s updated guidance.
■
A small 1.6% increase in our estimate of cash costs at Tardan, from $56.00/t to $56.88/t, to reflect, among other things, the recent strengthening of the rouble, local cost inflation and stripping costs delayed from FY20 now being incurred in FY21.
Exhibit 3: Auriant estimates, Q121–Q421e, by quarter ($000s*)
Previous |
Current |
|||||||||
Q121e |
Q221e |
Q321e |
Q421e |
FY21e |
Q121e |
Q221e |
Q321e |
Q421e |
FY21e |
|
Production |
||||||||||
Tardan heap leach (kg) |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Tardan CIL (kg) |
192 |
231 |
231 |
231 |
884 |
192 |
231 |
231 |
231 |
884 |
Tardan total (kg) |
192 |
231 |
231 |
231 |
884 |
192 |
231 |
231 |
231 |
884 |
Solcocon production (kg) |
0 |
5 |
20 |
5 |
30 |
0 |
6 |
24 |
6 |
36 |
Gold price ($/oz) |
1,880 |
1,880 |
1,880 |
1,880 |
1,880 |
1,799 |
1,726 |
1,726 |
1,726 |
1,741 |
Income statement |
||||||||||
Revenue |
11,598 |
14,249 |
15,155 |
14,249 |
55,251 |
11,100 |
13,137 |
14,136 |
13,137 |
51,510 |
Cost of sales |
4,366 |
5,465 |
6,109 |
5,465 |
21,405 |
4,494 |
5,640 |
6,350 |
5,640 |
22,124 |
Gross profit |
7,232 |
8,784 |
9,047 |
8,784 |
33,846 |
6,606 |
7,497 |
7,786 |
7,497 |
29,386 |
Depreciation |
(2,358) |
(2,383) |
(2,408) |
(2,433) |
(9,582) |
(2,308) |
(2,333) |
(2,358) |
(2,383) |
(9,382) |
General & administration |
(750) |
(750) |
(750) |
(750) |
(3,000) |
(750) |
(750) |
(750) |
(750) |
(3,000) |
Other operating income |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Other operating expenses |
(116) |
(116) |
(116) |
(116) |
(464) |
(116) |
(116) |
(116) |
(116) |
(464) |
Impairments etc |
0 |
0 |
||||||||
EBIT |
4,008 |
5,535 |
5,773 |
5,485 |
20,800 |
3,432 |
4,298 |
4,562 |
4,248 |
16,540 |
Interest income |
0 |
0 |
||||||||
Interest expense |
(1,163) |
(1,088) |
(986) |
(880) |
(4,117) |
(1,150) |
(1,088) |
(1,012) |
(931) |
(4,181) |
Net interest |
(1,163) |
(1,088) |
(986) |
(880) |
(4,117) |
(1,150) |
(1,088) |
(1,012) |
(931) |
(4,181) |
Forex gain/(loss) |
0 |
0 |
||||||||
Profit before tax |
2,844 |
4,447 |
4,786 |
4,605 |
16,683 |
2,282 |
3,210 |
3,550 |
3,317 |
12,359 |
Tax |
444 |
694 |
746 |
718 |
2,602 |
355 |
500 |
553 |
516 |
1,923 |
Marginal tax rate (%) |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
15.6 |
Profit after tax |
2,401 |
3,754 |
4,040 |
3,887 |
14,081 |
1,927 |
2,710 |
2,998 |
2,800 |
10,436 |
Average no. shares (000s) |
129,518 |
129,518 |
129,518 |
129,518 |
129,518 |
98,768 |
98,768 |
135,393 |
135,393 |
117,081 |
Derivatives (000s) |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0 |
0 |
0 |
0 |
0 |
Fully diluted no. shares (000s) |
129,518 |
129,518 |
129,518 |
129,518 |
129,518 |
98,768 |
98,768 |
135,393 |
135,393 |
117,081 |
EPS ($/share) |
0.019 |
0.029 |
0.031 |
0.030 |
0.109 |
0.020 |
0.027 |
0.022 |
0.021 |
0.089 |
Diluted EPS ($/share) |
0.019 |
0.029 |
0.031 |
0.030 |
0.109 |
0.020 |
0.027 |
0.022 |
0.021 |
0.089 |
Source: Edison Investment Research. Note: *Unless otherwise indicated.
Financials
At end-December 2020, Auriant had net debt of $66.9m on its balance sheet, but $67.2m if lease liabilities are included; this is ostensibly flat compared with the $67.0m that it had on its balance sheet at end-September, but still $5.7m less than the $72.9m that it had on its balance sheet at end-June (also including leases payable). Assuming the company raises an additional SEK169.2m ($20m) in cash via equity funding in the near future, we forecast its net debt will evolve as follows until FY25, before being eliminated in FY26:
Exhibit 6: Auriant forecast net debt evolution, FY20–25e ($m)
End-year |
FY20 |
FY21e |
FY22e |
FY23e |
FY24e |
FY25e |
Net debt (current estimates) |
66.9 |
42.4 |
40.3 |
56.2 |
51.6 |
16.3 |
Source: Auriant Mining accounts, Edison Investment Research
Note that our estimate of Auriant’s maximum (future) net debt requirement of $56.2m ($52.0m previously) at end-FY23 will equate to a leverage ratio (net debt/(net debt+equity)) of 50.5%.
Current COVID-19 situation
Mining operations at Tardan continue to operate, to all intents and purposes, as normal. All personnel on site are subject to daily temperature checks and the mandatory use of personal protective equipment to minimise the risk of infection. Intensive disinfection measures have also been implemented. To date, the quarantine measures are reported to have had an insignificant effect on the mine’s operations. Further measures will depend on employee test results. In the meantime, however, management is confident that mining and gold production can continue at Tardan, although there may be temporary interruptions to some of the mine’s operations depending on the number of people who are infected and their positions at the mine. In accordance with Rospotrebnadzor’s instructions, infected employees are released from observation once two negative test results at least one day apart have been obtained.
Exhibit 7: Financial summary
US$'000s |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||||
Revenue |
|
|
33,429 |
43,380 |
33,532 |
17,373 |
29,762 |
53,409 |
51,510 |
55,577 |
Cost of Sales |
(19,360) |
(19,391) |
(25,061) |
(16,790) |
(19,610) |
(19,324) |
(22,124) |
(17,392) |
||
Gross Profit |
14,069 |
23,989 |
8,471 |
583 |
10,152 |
34,085 |
29,386 |
38,185 |
||
EBITDA |
|
|
10,242 |
21,987 |
8,846 |
(1,714) |
7,208 |
31,236 |
25,922 |
35,185 |
Operating Profit (before amort. and except.) |
|
919 |
15,416 |
2,487 |
(6,373) |
2,197 |
23,182 |
16,540 |
25,403 |
|
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
(14,216) |
0 |
(104) |
0 |
0 |
(3,059) |
0 |
0 |
||
Other |
0 |
0 |
1,027 |
(1,763) |
679 |
(724) |
0 |
0 |
||
Operating Profit |
(13,297) |
15,416 |
3,410 |
(8,136) |
2,876 |
19,399 |
16,540 |
25,403 |
||
Net Interest |
(7,081) |
(7,577) |
(5,568) |
(3,798) |
(4,390) |
(5,671) |
(4,181) |
(3,396) |
||
Profit Before Tax (norm) |
|
|
(6,162) |
7,839 |
(3,081) |
(10,171) |
(2,193) |
17,511 |
12,359 |
22,008 |
Profit Before Tax (FRS 3) |
|
|
(20,378) |
7,839 |
(2,158) |
(11,934) |
(1,514) |
13,728 |
12,359 |
22,008 |
Tax |
(1,116) |
(1,355) |
(28) |
1,831 |
278 |
(3,075) |
(1,923) |
(5,757) |
||
Profit After Tax (norm) |
(7,278) |
6,484 |
(2,082) |
(10,103) |
(1,236) |
13,712 |
10,436 |
16,251 |
||
Profit After Tax (FRS 3) |
(21,494) |
6,484 |
(2,186) |
(10,103) |
(1,236) |
10,653 |
10,436 |
16,251 |
||
Average Number of Shares Outstanding (m) |
17.8 |
17.8 |
35.6 |
92.7 |
98.6 |
98.7 |
115.4 |
132.1 |
||
EPS - normalised (c) |
|
|
(40.9) |
36.4 |
(5.8) |
(10.9) |
(1.3) |
13.9 |
9.0 |
12.3 |
EPS - normalised and fully diluted (c) |
|
|
(35.8) |
35.1 |
(5.7) |
(10.8) |
(1.2) |
13.9 |
9.0 |
12.3 |
EPS - (IFRS) (c) |
|
|
(120.7) |
36.4 |
(6.1) |
(10.9) |
(1.3) |
10.8 |
9.0 |
12.3 |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
42.1 |
55.3 |
25.3 |
3.4 |
34.1 |
63.8 |
57.0 |
68.7 |
||
EBITDA Margin (%) |
30.6 |
50.7 |
26.4 |
-9.9 |
24.2 |
58.5 |
50.3 |
63.3 |
||
Operating Margin (before GW and except.) (%) |
2.7 |
35.5 |
7.4 |
-36.7 |
7.4 |
43.4 |
32.1 |
45.7 |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
56,192 |
53,684 |
49,397 |
57,690 |
63,685 |
54,896 |
59,402 |
72,199 |
Intangible Assets |
32,197 |
32,638 |
30,183 |
30,525 |
30,133 |
23,238 |
24,768 |
26,468 |
||
Tangible Assets |
23,995 |
21,046 |
19,214 |
27,165 |
33,552 |
31,658 |
34,634 |
45,731 |
||
Investments |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
10,460 |
17,062 |
19,102 |
8,436 |
10,050 |
10,688 |
37,696 |
40,761 |
Stocks |
4,833 |
7,883 |
7,425 |
3,753 |
5,057 |
7,449 |
8,585 |
9,263 |
||
Debtors |
2,272 |
186 |
5,148 |
3,298 |
4,111 |
1,455 |
2,822 |
3,045 |
||
Cash |
43 |
4,173 |
5,069 |
1,189 |
145 |
423 |
24,927 |
27,092 |
||
Other |
3,312 |
4,820 |
1,460 |
196 |
737 |
1,361 |
1,361 |
1,361 |
||
Current Liabilities |
|
|
(36,001) |
(34,149) |
(6,179) |
(16,227) |
(29,189) |
(16,499) |
(17,577) |
(17,188) |
Creditors |
(5,901) |
(3,537) |
(2,005) |
(1,828) |
(6,147) |
(2,434) |
(3,512) |
(3,123) |
||
Short term borrowings |
(30,100) |
(30,612) |
(4,174) |
(14,399) |
(23,042) |
(14,065) |
(14,065) |
(14,065) |
||
Long Term Liabilities |
|
|
(70,307) |
(66,995) |
(82,054) |
(73,053) |
(68,864) |
(61,649) |
(61,649) |
(61,649) |
Long term borrowings |
(61,366) |
(58,117) |
(71,098) |
(62,671) |
(59,781) |
(53,306) |
(53,306) |
(53,306) |
||
Other long term liabilities |
(8,941) |
(8,878) |
(10,956) |
(10,382) |
(9,083) |
(8,343) |
(8,343) |
(8,343) |
||
Net Assets |
|
|
(39,656) |
(30,398) |
(19,734) |
(23,154) |
(24,318) |
(12,564) |
17,872 |
34,122 |
CASH FLOW |
||||||||||
Operating Cash Flow |
|
|
6,347 |
19,359 |
9,752 |
3,992 |
9,185 |
25,714 |
24,919 |
34,063 |
Net Interest |
(7,081) |
(7,577) |
(5,568) |
(3,798) |
(4,390) |
(5,671) |
(4,181) |
(3,396) |
||
Tax |
(13) |
(27) |
(79) |
(58) |
0 |
(674) |
(1,923) |
(5,757) |
||
Capex |
(118) |
(2,391) |
(3,025) |
(8,605) |
(9,556) |
(3,822) |
(14,310) |
(22,745) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
49 |
(10) |
5,424 |
2,367 |
11 |
(272) |
20,000 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(816) |
9,354 |
6,504 |
(6,102) |
(4,750) |
15,275 |
24,504 |
2,165 |
||
Opening net debt/(cash) |
|
|
90,607 |
91,423 |
84,556 |
70,203 |
75,881 |
82,678 |
66,948 |
42,444 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
(2,487) |
7,849 |
424 |
(2,047) |
455 |
0 |
(0) |
||
Closing net debt/(cash) |
|
|
91,423 |
84,556 |
70,203 |
75,881 |
82,678 |
66,948 |
42,444 |
40,279 |
Source: Company sources, Edison Investment Research
|
|
‘Kaizen’ (change for the better), the philosophy of Wagamama, Restaurant Group’s (TRG) most formidable asset, continues to apply across the board. The exit from a long tail of unattractive Leisure leases has accompanied the refinement of airport concessions, while current refinancing proposals, requiring shareholder approval on 29 March, should allow COVID-19 liquidity headroom, expansion and progress towards the medium-term goal of net debt/EBITDA (pre-IFRS 16) of under 1.5x. Given so many moving parts, FY20 results were not meaningful other than to show the strength of TRG’s retained estate when allowed to trade. Resumption in, say, 2022 of its pre-pandemic performance of £118m EBITDA (pre-IFRS 16), which excludes said rent reductions, would give an EV/EBITDA of <10x post capital raise.
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