What is the secret of a good dividend - Timing
Quote:
Originally Posted by
Roger
...2. They fully imputed this dividend and are unlikely to be able to in the future, (more below on that)...
...Lets unpack point 2 which is the major driver behind my decision making. A company can only impute dividends to the extent that they have a credit balance in their Imputation Credit account. ICA accounts are credited when a company pays tax and are debited when they, amoung other things, attach imputation credits to dividends paid). The significant delay in making payment of the interim dividend till after 1 April put me on enquiry regarding the state of their ICA account and after reviewing their financial I see the ICA account cupboard is basically bare...which explains why they had to delay the dividend till after 31 March...ICA accounts must be in credit as at 31 March each year otherwise the company pays a penalty....
Quote:
Originally Posted by
Harvey Specter
2. Or they could prepay their tax as at 31 March. Depends how long they will be in a ICA deficit position for...
In the IPO prospectus Genesis proclaimed that they would probably be paying $160M of dividend for the FY15 and that it would probably be fully imputed. They have since re-iterated that a couple of times and have not yet contradicted that statement.
Genesis had an Imputation Credit Account (hereafter the ICA) with nearly $300m in it prior to the IPO but this was lost (set to $0) on 17th Apr 2014 by the large change of ownership. But as the previous owner was the government they are not really that worried about getting tax credits from themselves.
So the rule, as stated by Roger, is that the ICA at 31-Mar in any year should be positive or zero. The rest of the year it can be negative.
Being a big company Genesis will be (pre)paying (provisional) tax at times through out the year and it looks to me and my spreadsheet that because of the timing of those payments and because they delayed paying the Interim dividend until after 31-Mar this year and if they delay paying next years Interim dividend until after 31-Mar next year (which is of course, just being consistent) then they can indeed fully impute the Final dividend later this year.
Thus keeping their word.
BUT after this Final dividend in 2015 then they have really reached the limit and it will be partially imputed after that at best. What a pity - never mind.
Best Wishes
Paper Tiger
Disc: I could be wrong
The Devil is always in the detail
Yep PT they can "probably" artificially engineer that outcome by delaying next year's interim dividend again and possibly pre-paying their 2016 provisional tax.
I still find it a little disingenuous that they at no stage highlighted the fact that they're unable to fully impute dividends in the medium term. (Asking for too much honesty in the IPO documentation ?, arguably yes).
Once a Tiger always a Tiger - Continuity personified.
Quote:
Originally Posted by
sideline
PT, do you know that for sure? I thought the rule was 50% continuity and since the government kept just above that, why would the rule be broken?
Of course I am sure - I am surprised you even ask ;).
The continuity rule, as extracted from IR274, is
Quote:
Imputation credits can only be passed on to shareholders if at least 66% of the company’s voting rights and/or market value interests haven’t changed hands, from the date the credits arose in the ICA to the date when they are passed on to the shareholders
The Genesis energy accounts for FY2014 also gave the game away on this.
Best Wishes
Paper Tiger
Frequency Keeping Services?
The following is a quote from the 18th July 2008 submission to the Electricity Commission, by Genesis Energy.
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Specification for Frequency Keeping Performance
Genesis Energy welcomes the move from strictly input-focussed performance criteria to more output focussed criteria as a significant step in the right direction.
Previously, the performance criterion was expressed in terms of “all plant must provide 10 MW/min when frequency moves by X amount, whether frequency is inside the normal band or not”. The revised criterion recognises individual provider performance within the band via a standard deviation of frequency error, backed up by a requirement for all plant on average to provide a 10 MW/min ramp rate when outside the normal band.
Genesis Energy believes that this shift will not compromise or reduce overall frequency quality. The revised criterion recognises that frequency keepers have different types of plant, different control systems, and different processes for providing frequency keeping services. It is natural that each provider’s plant will have different standard deviation characteristics while maintaining frequency within the normal band.
The outside-of-band requirement to provide an on average ramp rate response of 10 MW/min is an improvement on the previous requirement to provide 10 MW/min constantly. This is a pragmatic move that recognises the reality that for some frequency errors, even if outside the band, the full 10 MW/min is not required whereas other errors will require in excess of 10 MW/min.
This change in specification for frequency keeping performance will allow Huntly Units 1 to 4 to resume participation in the frequency keeping market after having been forced out due to changes in the 2006 procurement plan. This represents a significant deepening of the frequency keeping market.
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Not quite sure what it all means except it may be tie up with power factor correction. Can any industry gurus elaborate for me?
SNOOPY