csearle wrote:EPIC My choice Date Comment
BT-A.L Veto 13/05/2021 Restarting at 7.7p per share in 2021/22
CNA.L Veto 10/05/2021 The Company is due to release its 2021 Interim Results on 22 July 2021.
HSBA.L 29/04/2021 Paid a final
LLOY.L 25/05/2021 Paid a final
MARS.L Veto 19/05/2021 No dividends to be paid in respect of financial year 2021.
MRW.L 28/06/2021 Paid a final
MTO.L Veto 10/06/2021 The Board does not recommend the payment of a final dividend for FY21.
RMG.L 06/09/2021 Paid a final
SGC.L Veto 09/12/2020 We are not planning an interim dividend in respect of the six months ended 31 Oct. 2020.
SMDS.L 04/05/2021 Paid an interim
I'm a bit surprised about the inclusion of two of those companies as 'problem children':
* Morrisons has been behaving itself well since 2016, including paying significant specials in the last four years. Admittedly it threw a bad tantrum between 2015 and 2016, but (assuming you've had it that long) you clearly gave it another chance back then, and IMHO it's shown itself to be one of the ones that deserved another chance with a dividend CAGR in the 5 years since 2016 of 7.4% (or 17.4% if you include the special). I know its capital performance has been lacklustre, and its dividend yield is OK but nothing special at 4.0% (historical, excluding the special), but it would seem rather odd to have given it another chance back then and not continue to do so now.
* DS Smith's problems seem quite mild to me: eyeballing a share price chart, its share price was about the same at the end of 2020 as it was at the start, and it's skipped a year's dividends, but resumed with an interim that's cut from the pre-pandemic level but a considerably smaller cut (-23%) than many HYP companies' cuts. Its
most recent trading statement says:
Trading overview
Trading in the second half of the year has, through all parts of the business in the UK, Europe and the US, continued to build positively on the trends and momentum which we reported on 3 March this year. Higher sales volumes, initial price recovery and an enhanced performance from our US business have been better than expected and, whilst input costs have increased materially in the second half, our financial performance for the full year ended 30 April 2021 is anticipated to be line with our expectations.
...
Cash flow and input costs
Cash generation continues to be a key area of focus, and we expect a continued strong free cashflow performance, driven by a significant working capital inflow, with cash conversion of over 100 per cent and a continued reduction in our net debt.
Input costs, including OCC, have increased significantly during the second half of the financial year. This is due to a combination of high levels of demand and lower availability of raw materials due to the Covid-19 impact on the market, which has also resulted in substantially higher paper prices. However, we are making good progress in recovering these higher costs through increased packaging prices, with the usual lag, as we move into our next financial year.
The company has clearly suffered shocks from the pandemic, some of them timing-related rather than intrinsic to the business (the mention of the "usual lag" seems from earlier RNSes to be that their contracts allow/require them to adjust their sale prices in line with their paper costs, but there's a delay - so they temporarily make smaller profits when paper prices rise, and temporarily make larger profits when paper prices fall). But the comments generally seem positive to me - especially the free cashflow performance and reduction in net debt, at a time that there seems to be more talk in the news about inflation rising and interest rates eventually rising in consequence. I am however very uncertain about how fast net debt is falling, as the company's
interim results said "
The Group's net debt position decreased by £14 million to £2,087 million (30 April 2020: £2,101 million; 31 October 2019: £2,444 million), due to the increased free cash flow for the period, offset by payments made for the 10% settlement of the Interstate put option of £82 million, £19 million of adjusting items and foreign exchange, fair value and other non-cash movements of £80 million." A fall of £343m in one half year followed by a fall of £14m in the next half year leaves me very uncertain whether the fall is significant or not!
Overall, DS Smith strikes me more as a child to be kept under observation than a problem child. And on the subject of observing it, it's due to release its final results Tuesday next week (22nd June), and I think we'll get a much better picture of where the company is then, especially with regard to debt reduction and what it's doing with its dividend. In particular, the 23% cut to the interim compared with pre-pandemic levels might indicate that it thinks it needs a similar-sized cut to dividends going forward, or might indicate that the directors were still being cautious with cash in view of Covid uncertainties (remember that the interim was declared in early December, when there were far more uncertainties about the extent of vaccination success than there are now). The level of final dividend declared on Tuesday should hopefully make it clearer which of those indications is the right one.
Gengulphus