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Research: Metals & Mining
Alphamin’s Q121 financial results were released in the context of known operating results (which were announced on 9 April). These inevitably reflected the pattern whereby sales from Q4 were delayed into Q1 on account of seasonal rains and, as a result, revenue, costs and depreciation were all higher than our (pro rata) FY21 expectations. The immediate consequence of the results is that we have increased our earnings estimates for FY21 by 20.1% (see Exhibit 2). However, the much more substantive point is that they were absolutely consistent with our longer-term expectations for Alphamin that, at a long-term tin price of US$23,425/t, it is capable of generating revenues of c US$280m pa (average FY22–27), EBITDA of US$149m and EPS of 6.48 US cents/share.
Alphamin Resources |
Results confirm long-term potential |
Q121 results |
Metals & mining |
17 May 2021 |
Share price performance
Business description
Next events
Analyst
Alphamin Resources is a research client of Edison Investment Research Limited |
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Alphamin’s Q121 financial results were released in the context of known operating results (which were announced on 9 April). These inevitably reflected the pattern whereby sales from Q4 were delayed into Q1 on account of seasonal rains and, as a result, revenue, costs and depreciation were all higher than our (pro rata) FY21 expectations. The immediate consequence of the results is that we have increased our earnings estimates for FY21 by 20.1% (see Exhibit 2). However, the much more substantive point is that they were absolutely consistent with our longer-term expectations for Alphamin that, at a long-term tin price of US$23,425/t, it is capable of generating revenues of c US$280m pa (average FY22–27), EBITDA of US$149m and EPS of 6.48 US cents/share.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
27 |
(3) |
0.01 |
0.00 |
100.9 |
N/A |
12/20 |
187 |
(1) |
(0.01) |
0.00 |
N/A |
N/A |
12/21e |
318 |
143 |
0.07 |
0.00 |
8.2 |
N/A |
12/22e |
271 |
115 |
0.06 |
0.00 |
9.7 |
N/A |
Note: *PBT and EPS (diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Net debt on track for extinction
During the course of the quarter, Alphamin’s net debt reduced from US$57.5m to US$46.5m. However, this reduction was achieved in spite of a concurrent US$21.8m increase in accounts receivable, in the absence of which, we calculate that Alphamin’s underlying net debt reduction would have been c US$32.3m (or US$10.8m per month or US$129.2m per year).
Valuation: Exploration and tin price are key
The tin price has now risen by 58.8% since Q420 to US$29,815/t. Assuming that this price prevails for the remainder of Bisie’s life (ie adopting the current tin price as our long-term price), we calculate a valuation for Alphamin (excluding any blue-sky exploration potential) of 61.5 US cents, or 74.3 Canadian cents, per share (cf 42.4c and 51.2c, respectively, at US$25,600/t, previously). Stated alternatively, we calculate that Alphamin’s current share price of C$0.72 discounts a long-term real tin price of US$29,169/t, that is 24.5% above our assumed long-term price of US$23,425/t, but 2.2% below the current (three-month) price at the time of writing. However, if management is successful in replenishing reserves and resources to the extent that it keeps its plant at full capacity beyond FY27 (NB see Alphamin’s announcement, Alphamin confirms high grade tin mineralisation on exploration drilling at Mpama South, dated 14 May), then our valuation of Alphamin’s shares rises by an average of 2.5 Canadian cents for every year up to FY32 and, beyond that, potentially to as high as C$1.162/share (cf C$1.117/share, previously). At Edison’s long-term tin price of US$23,425/t, by contrast, we estimate an updated valuation for Alphamin of 42.4 US cents, or 51.2 Canadian cents per share – representing increases of 8.3% and 3.2% relative to our previous valuations, respectively, largely as a result of the installation and operation of the fine tin recovery circuit in the plant from June this year.
Q121 results review
Alphamin’s Q121 financial results were released in the context of known operating results, which were announced on 9 April and are summarised in the table below with respect to prior quarters.
Exhibit 1: Alphamin operating results, Q419–Q121
Q419 |
Q120 |
Q220 |
Q320 |
Q420 |
Q121 |
|
Tons processed |
71,559 |
85,060 |
91,928 |
96,086 |
93,560 |
93,997 |
Tin grade (%) |
4.9 |
3.5 |
4.3 |
3.8 |
4.2 |
3.8 |
Contained tin (t) |
3,506 |
2,977 |
3,953 |
3,651 |
3,930 |
3,572 |
Overall plant recovery (%) |
64 |
71 |
69 |
71 |
74 |
74 |
Actual payable tin produced (t) |
2,235 |
2,119 |
2,739 |
2,563 |
2,898 |
2,611 |
Payable tin sold (t) |
1,109 |
3,860 |
2,613 |
2,695 |
2,306 |
3,351 |
Tin price achieved (US$/t) |
17,849 |
15,553 |
15,359 |
17,436 |
18,497 |
23,083 |
Source: Alphamin Resources.
While we have not hitherto formally published estimates of quarterly results for Alphamin, a number of features of the company’s operational and financial results (page 4, below) are noteworthy:
■
Operations at Bisie in Q4 and Q1 are inevitably affected by the seasonal rains that occur, largely in Q4. This typically has the effect of delaying sales of tin concentrate from Q4 until Q1 (which has the effect of inflating revenue and associated costs in Q1). However, Q1 is also invariably affected by the aftermath of the rains in Q4 when roads become degraded and are harder to traverse, which also inflates costs. As a result, both revenue and costs were higher in Q1 than the pro rata level implied by our prior FY21 full-year forecasts. Depreciation – which is conducted on a units of production basis for mine development and infrastructure – was also inflated given a pro rata contribution from sales of concentrate out of inventory. In addition, off-mine costs that are linked to the price of tin, such as marketing commissions, government royalties, export fees and smelter deductions, also increased as the tin price increased.
■
Q121 financial results included a US$5.6m charge relating to the company’s outstanding warrants and the fact that Alphamin’s share price rose over the period in question. This charge is non-cash in nature and therefore affects neither cash flow nor our valuation of Alphamin. In our opinion, it also distorts the results of the group and, as such, it is a cost that we decline to attempt to forecast and one that we treat as an exceptional item (as far as historic, incurred warrant charges are concerned) in our financial summary on page 7.
■
During the course of the quarter, Alphamin’s net debt reduced from US$57.5m to US$46.5m and its gearing (net debt/equity) and leverage (net debt/[net debt+equity]) from 33.5% and 25.1%, respectively, to 25.5% and 20.3%. However, this reduction in net debt of US$11.0m (US$44.0m on an annualised basis) would have been much greater had it not been for a simultaneous US$21.8m increase in accounts receivable. The increase resulted from the change of payment terms since mid-February 2021 from 80% free on truck (FOT) Logu to 95% on arrival in Kampala (Uganda), which resulted in an approximately 25- to 30-day delay in receiving the 80% portion of the payment. In the absence of this change, we calculate that Alphamin’s underlying net debt reduction over the course of the quarter could have been in the order of US$32.3m (or US$129.2m on an annualised basis).
■
Alphamin’s effective tax rate varies materially from quarter to quarter – for example, between 97.9% in Q320 to -259.4% in Q419 – not least, on account of the warrant charge discussed above. In Q121, it was a relatively high 44.6%, albeit almost all of the charge related to movements in deferred tax rather than cash taxes.
■
The minority interest reflected in Alphamin’s income statement has also proved to be of a similarly variable nature on a quarterly basis – eg ranging from 1,286.0% of net profit in Q320 to -8.9% in Q420. Again, in large part, this apparent variability is a function of the warrant charge (see above) that occurs at top company level and in which minorities do not share. In Q121, this item amounted to 26.3% of net profit – closer to the middle of the range, but still above the ambient 15.86% rate implied by Alphamin’s 84.14% interest in the Bisie mine. However, if the warrant charge is excluded, then the rate reduces to 17.3% (ie within one percentage point of where it would typically be expected to be).
■
In addition to its financial results for Q121, Alphamin also provided production guidance of 2,700t for Q221.
We have now formulated quarterly estimates for Alphamin for the remainder of the year (see Exhibit 2 below). In addition to Q121 results, Q221 guidance and the recent strength in the tin price, we have also now incorporated the effects of commissioning a fine tin recovery circuit into the plant from June 2021.
Fine and ultrafine tin losses in circuit were identified at the time of the plant’s commissioning in 2019 and the decision was taken to install a fine tin recovery circuit to reduce them. Subsequently, at the time of its operational results on 9 April, Alphamin confirmed that the fine tin recovery plant was on schedule for commissioning during June 2021. In the light of this, we have increased our overall plant recoveries by 5.5pp into the future (to 77–80%) and throughput by 5%.
Quarterly estimates for Alphamin in the light of these adjustments are provided in the table below, albeit with the caveat that the quarterly results of junior mining companies can be prone to material volatility relative to both historical results and analysts’ forecasts. At the time of writing, the current three-month price of tin is US$29,815/t. Note that, for the purposes of forecasting, we have assumed that this price will prevail for the remainder of the year.
Exhibit 2: Edison forecast of Alphamin income statement, Q121a–Q421e (US$ unless otherwise indicated)
Q121a |
Q221e |
Q321e |
Q421e |
FY21e |
FY21e |
|
Tons Processed (t) |
93,997 |
93,250 |
97,913 |
97,913 |
383,072 |
373,000 |
Tin Grade (%) |
3.8 |
4.0 |
4.2 |
4.2 |
4.03 |
4.16 |
Contained tin (t) |
3,572 |
3,707 |
4,073 |
4,073 |
15,425 |
15,517 |
Overall plant recovery (%) |
74 |
73 |
78 |
78 |
75.8 |
72.8 |
Actual payable tin produced (t) |
2,611 |
2,700 |
3,191 |
3,191 |
11,693 |
11,302 |
Payable Tin Sold (t) |
3,351 |
2,700 |
3,191 |
2,537 |
11,779 |
11,302 |
Tin Price achieved (US$/t) |
23,083 |
27,892 |
29,099 |
29,099 |
27,111 |
23,978 |
Revenue |
76,032,045 |
75,308,948 |
92,853,212 |
73,818,303 |
318,012,509 |
271,012,782 |
Cost of goods sold |
(37,256,106) |
-28,239,750 |
-30,375,125 |
-23,148,892 |
-119,019,873 |
(111,372,291) |
Depreciation |
6,380,606 |
6,444,399 |
6,508,192 |
6,571,985 |
25,905,182 |
21,853,394 |
Gross profit |
32,395,333 |
40,624,799 |
55,969,895 |
44,097,427 |
173,087,454 |
137,787,096 |
General and administrative |
(4,549,884) |
-4,579,482 |
-4,579,482 |
-4,579,482 |
-18,288,330 |
(18,317,928) |
Operating profit/(loss) |
27,845,449 |
36,045,317 |
51,390,413 |
39,517,945 |
154,799,124 |
119,469,168 |
Other |
||||||
Warrants |
(5,636,827) |
-5,636,827 |
0 |
|||
Profit on foreign exchange |
16,595 |
16,595 |
0 |
|||
Loss on write off of assets |
0 |
0 |
0 |
|||
Interest expense |
(2,648,401) |
-2,648,401 |
||||
Interest income |
11 |
11 |
||||
Net interest |
(2,648,390) |
-1,182,789 |
-1,182,789 |
-1,182,789 |
-6,196,756 |
(6,196,756) |
Profit before taxes |
19,576,827 |
34,862,529 |
50,207,624 |
38,335,156 |
142,982,136 |
113,272,413 |
Current income tax expense |
(11,113) |
-8,715,632 |
-12,551,906 |
-9,583,789 |
-30,862,440 |
(28,318,103) |
Deferred tax movement |
(8,713,199) |
-8,713,199 |
0 |
|||
Total tax |
(8,724,312) |
-8,715,632 |
-12,551,906 |
-9,583,789 |
-39,575,639 |
(28,318,103) |
Effective tax rate (%) |
(44.6) |
25.0 |
25.0 |
25.0 |
-27.7 |
(25.0) |
Net profit/(loss) |
10,852,515 |
26,146,897 |
37,655,718 |
28,751,367 |
103,406,497 |
84,954,309 |
Other Comprehensive income |
||||||
Items that may be reclassified to profit or loss |
||||||
Exchange differences on translation of foreign operations |
(1,803) |
-1,803 |
||||
Total comprehensive profit/(loss) for the period |
10,850,712 |
26,146,897 |
37,655,718 |
28,751,367 |
103,404,694 |
84,954,309 |
Profit/(loss) and total comprehensive profit/(loss) attributable to: |
||||||
Shareholders |
8,002,190 |
21,999,999 |
31,683,521 |
24,191,400 |
85,877,110 |
71,480,556 |
Non-controlling interests |
2,850,325 |
4,146,898 |
5,972,197 |
4,559,967 |
17,529,387 |
13,473,753 |
Minority (%) |
26.3 |
15.86 |
15.86 |
15.86 |
17.0 |
15.86 |
Total |
10,852,515 |
26,146,897 |
37,655,718 |
28,751,367 |
103,406,497 |
84,954,309 |
Weighted average number of shares in period |
1,182,251,580 |
1,185,431,350 |
1,185,431,350 |
1,185,431,350 |
1,184,798,408 |
1,184,713,455 |
Derivatives |
119,536,582 |
98,507,626 |
98,507,626 |
98,507,626 |
98,507,626 |
98,604,716 |
Fully diluted weighted average number of shares in issue |
1,301,788,162 |
1,283,938,976 |
1,283,938,976 |
1,283,938,976 |
1,283,306,034 |
1,283,318,171 |
Headline earnings |
8,002,190 |
21,999,999 |
31,683,521 |
24,191,400 |
85,877,110 |
71,480,556 |
EPS (US$/share) |
0.0068 |
0.0186 |
0.0267 |
0.0204 |
0.0725 |
0.0603 |
Diluted EPS (US$/share) |
0.0061 |
0.0171 |
0.0247 |
0.0188 |
0.0669 |
0.0557 |
HEPS (US$/share) |
0.0068 |
0.0186 |
0.0267 |
0.0204 |
0.0725 |
0.0603 |
Diluted HEPS (US$/share) |
0.0061 |
0.0171 |
0.0247 |
0.0188 |
0.0669 |
0.0557 |
Source: Alphamin, Edison Investment Research. Note: Company presented basis.
Valuation
At an (unchanged) long-term real tin price of US$23,425/t, we estimate an increased discounted dividend valuation of Alphamin of 42.4 US cents (cf 39.1c previously), or 51.2 Canadian cents per share (cf 49.6 Canadian cents per share previously), largely as a result of the installation and operation of the fine tin recovery plant from June this year.
|
Exhibit 3: Alphamin LOM forecast EPS, DPS and NPV10 of DPS, FY18–32 (US$/share) |
|
|
Source: Edison Investment Research Note that this valuation otherwise assumes that management executes the Bisie life of mine (LOM) schedule according to plan and applies a 10% discount rate to future forecast dividends. |
Key sensitivity
One key sensitivity for Alphamin is its exposure to exploration success. Alphamin’s processing schedule follows its mining schedule very closely. As this drops away towards the end of the life of the mine, so too does production, earnings and cash flow. To the extent that Alphamin is successful in its exploration at Mpama North and Mpama South in keeping its plant in full production at FY27 levels into the future (see Alphamin’s announcement, Alphamin reports extensive mineralised intercepts on drilling at Mpama South, released on 12 March 2021 and also its announcement, Alphamin confirms high grade tin mineralisation on exploration drilling at Mpama South, released on 14 May 2021), our valuation of the company increases as follows:
Exhibit 4: Alphamin valuation sensitivity to exploration success
Additional years at full capacity |
To year |
Valuation |
Valuation |
Incremental change (C$/share) |
0.425 |
0.512 |
|||
0 |
2027 |
0.411 |
0.497 |
-0.015 |
+1 |
2028 |
0.432 |
0.522 |
+0.025 |
+2 |
2029 |
0.458 |
0.553 |
+0.031 |
+3 |
2030 |
0.476 |
0.575 |
+0.022 |
+4 |
2031 |
0.491 |
0.594 |
+0.019 |
+5 |
2032 |
0.514 |
0.622 |
+0.028 |
Source: Edison Investment Research
For the purposes of this valuation, we have assumed an ongoing exploration commitment at Alphamin of US$2.7m per year in order to achieve the replenishment of reserves and resources required to keep the mine operating at full capacity. Readers should note that this is the reason for the apparent decline in valuation for ‘0’ years of additional life in Exhibit 4, above; in this case, extra exploration expenditure has been incurred for no additional increase in mine life.
On average therefore, each additional year by which the plant is maintained at full capacity (in the short term) adds 2.5 Canadian cents per share in value to our valuation of Alphamin. In the limiting case, in which exploration success is sufficient to maintain production at FY27 levels indefinitely (which, for these purposes may be taken to mean c 48 years), our valuation of Alphamin rises to US$0.95/share, or C$1.162/share, and its valuation profile to that shown in Exhibit 5, below:
|
Exhibit 5: Alphamin EPS, DPS and valuation forecast, including exploration success, FY18–32 ($/share) |
|
|
Source: Edison Investment Research |
Note we calculate that Alphamin’s current share price of C$0.72 discounts a long-term real tin price of US$29,169/t, that is 24.5% above our assumed long-term price of US$23,425/t, but 2.2% below the current (three-month) price of tin. Alternatively, adopting the current (three-month) tin price, of US$29,815/t, as our long-term price would result in a valuation for Alphamin (excluding any blue-sky, upside exploration potential) of 61.5 US cents, or 74.3 Canadian cents, per share.
Financials
Between Q419 and Q121, Alphamin paid down financial net debt (ie excluding leases) by US$45.2m, from US$88.6m at end-December 2019 to US$43.4m at end-March 2021. This level of net debt equates to a gearing (net debt/equity) ratio of 23.9% and a leverage (net debt/[net debt+equity]) ratio of 19.3% (cf 61.0% and 37.9% at end-FY19, respectively). As discussed previously, with the tin price remaining high and at the current (underlying) rate of net debt repayment, we estimate that there is scope for net debt to have reduced to zero before the end of FY21 and for Alphamin, at least theoretically, to be in a position to make dividend distributions to shareholders.
Exhibit 6: Financial summary
Accounts: IFRS, year-end: December, US$000s |
|
|
2018 |
2019 |
2020 |
2021e |
2022e |
INCOME STATEMENT |
|
|
|
|
|
|
|
Total revenues |
|
|
0 |
27,221 |
187,445 |
318,013 |
270,976 |
Cost of sales |
|
|
0 |
(7,915) |
(119,554) |
(119,020) |
(111,747) |
Gross profit |
|
|
0 |
19,306 |
67,892 |
198,993 |
159,229 |
SG&A (expenses) |
|
|
(9,440) |
(14,526) |
(17,238) |
(18,288) |
(18,288) |
R&D costs |
|
|
0 |
0 |
0 |
0 |
0 |
Other income/(expense) |
|
|
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
|
0 |
(3,673) |
(7,649) |
0 |
0 |
|
Depreciation and amortisation |
|
(20) |
(7,927) |
(25,471) |
(25,905) |
(26,300) |
|
Reported EBIT |
|
(9,460) |
(3,147) |
25,182 |
154,799 |
114,641 |
|
Finance income/(expense) |
|
3 |
(6,330) |
(15,614) |
(6,197) |
229 |
|
Other income/(expense) |
|
7 |
(4) |
(1,518) |
17 |
0 |
|
Exceptionals and adjustments |
|
6,272 |
6,850 |
(8,776) |
(5,637) |
0 |
|
Reported PBT |
|
|
(3,178) |
(2,632) |
(725) |
142,982 |
114,870 |
Income tax expense (includes exceptionals) |
|
|
0 |
7,755 |
(7,141) |
(39,576) |
(28,718) |
Reported net income |
|
|
(3,178) |
5,123 |
(7,866) |
103,406 |
86,153 |
Basic average number of shares, m |
|
|
733 |
845 |
1,066 |
1,185 |
1,185 |
Basic EPS (US$) |
|
|
(0.00) |
0.01 |
(0.01) |
0.07 |
0.06 |
Adjusted EBITDA |
|
|
(9,440) |
8,453 |
58,302 |
180,704 |
140,940 |
Adjusted EBIT |
|
|
(9,460) |
526 |
32,831 |
154,799 |
114,641 |
Adjusted PBT |
|
|
(9,450) |
(5,809) |
15,699 |
148,619 |
114,870 |
Adjusted EPS (US$) |
|
|
(0.00) |
0.01 |
(0.01) |
0.09 |
0.07 |
Adjusted diluted EPS (US$) |
|
|
(0.00) |
0.00 |
(0.01) |
0.07 |
0.06 |
BALANCE SHEET |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
230,626 |
255,125 |
239,103 |
219,577 |
197,616 |
Other non-current assets |
|
|
2,467 |
10,632 |
15,882 |
19,628 |
22,338 |
Total non-current assets |
|
|
233,093 |
265,757 |
254,985 |
239,206 |
219,954 |
Cash and equivalents |
|
|
17,105 |
5,941 |
6,559 |
45,898 |
157,588 |
Inventories |
|
|
3,235 |
27,755 |
21,866 |
17,425 |
14,848 |
Trade and other receivables |
|
|
0 |
1,486 |
7,601 |
31,801 |
27,098 |
Other current assets |
|
|
3,738 |
17,633 |
6,710 |
6,710 |
6,710 |
Total current assets |
|
|
24,078 |
52,815 |
42,736 |
101,835 |
206,243 |
Non-current loans and borrowings |
|
|
80,896 |
78,229 |
34,821 |
0 |
0 |
Other non-current liabilities |
|
|
6,699 |
9,641 |
8,872 |
8,872 |
8,872 |
Total non-current liabilities |
|
|
87,595 |
87,870 |
43,693 |
8,872 |
8,872 |
Trade and other payables |
|
|
7,030 |
23,487 |
17,037 |
16,353 |
15,357 |
Current loans and borrowings |
|
|
0 |
16,339 |
25,810 |
0 |
0 |
Other current liabilities |
|
|
5,711 |
16,290 |
13,250 |
13,250 |
13,250 |
Total current liabilities |
|
|
12,742 |
56,116 |
56,098 |
29,603 |
28,607 |
Equity attributable to company |
|
|
131,914 |
145,215 |
171,735 |
258,841 |
331,329 |
Non-controlling interest |
|
|
24,921 |
29,371 |
26,196 |
43,725 |
57,389 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Profit before tax |
|
|
(3,178) |
(2,632) |
(725) |
142,982 |
114,870 |
Net finance expenses |
|
|
0 |
5,456 |
15,616 |
0 |
0 |
EBIT |
|
|
0 |
0 |
0 |
0 |
0 |
Depreciation and amortisation |
|
|
20 |
7,927 |
26,504 |
25,905 |
26,300 |
Share based payments |
|
|
300 |
403 |
471 |
0 |
0 |
Other adjustments |
|
|
(6,272) |
(6,851) |
8,842 |
0 |
0 |
Movements in working capital |
|
|
3,942 |
(6,710) |
(20,281) |
(20,443) |
6,285 |
Interest paid/received |
|
|
0 |
(3,092) |
(11,378) |
0 |
0 |
Income taxes paid |
|
|
0 |
0 |
(843) |
(39,576) |
(28,718) |
Cash from operations (CFO) |
|
|
(5,188) |
(5,498) |
18,205 |
108,868 |
118,737 |
Capex |
|
|
(116,094) |
(22,720) |
(7,448) |
(10,126) |
(7,048) |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
151 |
(46) |
(96) |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(115,943) |
(22,766) |
(7,544) |
(10,126) |
(7,048) |
Net proceeds from issue of shares |
|
|
55,235 |
11,936 |
10,010 |
1,229 |
0 |
Movements in debt |
|
|
69,448 |
0 |
(18,735) |
(60,631) |
0 |
Dividends paid |
|
|
0 |
0 |
0 |
0 |
0 |
Other financing activities |
|
|
6,317 |
5,165 |
(1,319) |
0 |
0 |
Cash from financing activities (CFF) |
|
|
131,000 |
17,100 |
(10,044) |
(59,403) |
0 |
Currency translation differences and other |
|
|
0 |
0 |
0 |
0 |
0 |
Increase/(decrease) in cash and equivalents |
|
|
9,869 |
(11,164) |
617 |
39,340 |
111,689 |
Currency translation differences and other |
|
|
0 |
0 |
0 |
0 |
0 |
Cash and equivalents at end of period |
|
|
17,105 |
5,941 |
6,559 |
45,898 |
157,588 |
Net (debt)/cash* |
|
|
(63,791) |
(88,627) |
(54,073) |
45,898 |
157,588 |
Movement in net (debt)/cash over period |
|
|
(63,791) |
(24,836) |
34,554 |
99,971 |
111,689 |
Source: Company sources, Edison Investment Research. Note: *Excludes lease liabilities.
|
|
Research: Financials
Secure Trust Bank (STB) announced in its Q120 trading update that new business lending rose 7.1% year-on-year and 2.4% quarter-on-quarter to £318.5m. Loan balances declined by 6.6% and 1.0% respectively, with lending still affected by the COVID pandemic lockdown. The loan balances of the Business Finance and Consumer Finance divisions were ‘static’, but the run-off of the closed Asset Finance and Consumer Mortgage books led to the 1% decline. Management viewed credit performance as ‘benign’. STB is seeing a phased return to pre-pandemic lending criteria in the Motor Finance division. We continue to forecast a 5% year-on-year increase in group loans by the end of FY21. Client deposits fell 8.2% year-on-year and 3.8% quarter-on-quarter in Q121, but STB said it was able to further reduce its cost of funding.