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A brief update on this coal mining related stock which I have written up before - see categories list to the side of the blog for more details. If the thought of anything to do with coal puts you off then click away now.
In brief they have made a good looking disposal in terms of the price they got for their Imperial Tankers operation. They expect to receive £26.9 million in cash which does represent about 10% of their market cap. These proceeds are for a business that had turnover of £29.7 million and a book value of £9.5 million and which they estimate made EBITDA of £4 million and net profits of £1.6m in the year to 31 May 2014. Elsewhere in the statement, which you should probably read if you are interested in this one, they talk about a strategy review to: "...maximising the quality of future earnings by exiting profit streams that are deemed to represent the lowest risk-weighted returns and weakest prospects for sustainable long term growth whilst strengthening the Group's longer-term position in its core markets. As the review progresses and the outcome of the current strategic initiatives take shape, the Board will consider the optimal capital structure and distribution policy for the Group, ensuring that they are properly aligned to the long term expectations and requirements of both shareholders and the Group. With regard to the capital that is liberated by the review, consideration will be given to reducing debt, distributing it to shareholders or re-investing it in the business. Any re-investment would be focussed on attractive and value enhancing projects related to the Group's core business activities." This was all being done on the back of on going price weakness in the coal price and difficulties at their Monkton coking facility. None of which read particularly well but they seem to be in the process of managing the business for cash and the inevitable (?) decline of coal in the energy mix longer term. So overall a mixed bag which to be honest didn't read that well and I'm a bit surprised the stock isn't off more than about 1% first this morning. Having said that though I guess the valuation of about 5.5x with a 4% yield for next year are probably providing some support?
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 Click to Download / Read This is one I wrote up a while back and after interims, has today put out a brief year end trading update. This one to be honest, was dull if good value at the time and since then it has certainly been dull as the shares have not really gone anywhere apart from a brief visit to the 900 pence region and have sat there like a pudding as I feared they might. In the update today they say profits have remained resilient in three of their divisions and that trading is in line with management's expectations. However, they go onto say that demand and pricing for coking coal remained difficult in the second half. They also talk about a production shortfall of £3 million to £5 million in the production division as a result. This was caused by start up delays in the first half and wet weather early in the second half. Not sure how this squares with their in line statement or market expectations - perhaps they have made it up elsewhere? Looks like MR. Market has taken it negatively as he has taken about 4% off the price first thing. Finally they talk about discussions with Government continuing to progress over potential support from Hargreaves to deliver an orderly closure plan for UK Coal. The share still look cheap on 6x and a 3% yield which should go to 5x and 5% if they hit forecasts in the next couple of years, but then it is involved in coal mining after all. Still you pay your money and take your choice and although this is not one of my better quality selections, I'll choose to run it as part of a diversified income portfolio as patience is not only a virtue but can also be quite rewarding in investing. It is also now near the bottom of it recent trading range so if the coal mining aspect doesn't put you off it might be worth a look if you can raise the enthusiasm and as they say where there's muck there's brass.  |
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