Capitalised Dividend Valuation (FY2021 & FY2022 view) Part 1: Data
Quote:
Originally Posted by
Snoopy
Financial Year |
Normalised 'eps' |
Net Dividend Paid (per share) |
Gross Dividend Paid (per share) |
2016 |
10.3c |
8.4c + 2.5c(S) + 5.7c |
11.67c + 3.47c + 7.92c = 23.06c |
2017 |
12.1c |
8.6c + 2.88c(NI,S) + 5.8c |
11.94c + 4.0c + 8.06c = 24.00c |
2018 |
14.0c |
8.8c + 5.0c(S) + 6.0c |
12.22c + 6.94c +8.33c = 27.49c |
2019 |
11.7c |
9.1c + 6.2c |
12.64c + 8.61c = 21.25c |
2020 |
11.7c |
9.3c + 6.4c |
12.92c + 8.89c = 21.81c |
2021 |
?c |
9.4c + ?c |
13.06c + ?c = ?c |
Total FY2016 to FY2020 |
59.8c |
84.68c |
117.61c |
Notes:
1/ The above 'per share' table is based on the 1,400m MCY shares on issue.
2/ (NI) means 'Not Imputed', (S) means 'Special Dividend'.
In a change of policy I have decided to work with all dividends. Despite special dividends not being repeatable, they are paid frequently. And, using this particular valuation method, I have not recognised these special dividends as a benefit for shareholders in any other way.
From the table, the average annual normalised gross dividend payment over the last five years has been:
(23.06c+24.00c+27.49c+21.25c+21.81c)/5 = 23.52c
Nevertheless time has moved on and I have decided to include the first dividend for FY2021 (13.06c gross) -that has already been paid- and remove the equivalent dividend from five years previously (11.67c + 3.47c gross).
(7.92c+(24.00c+27.49c+21.25c+21.81c)+13.06c)/5 = 23.11c
Financial Year |
Normalised 'eps' |
Net Dividend Paid (per share) |
Gross Dividend Paid (per share) |
2016 |
10.3c |
8.4c + 2.5c(S) + 5.7c |
11.67c + 3.47c + 7.92c = 23.06c |
2017 |
12.1c |
8.6c + 2.88c(NI,S) + 5.8c |
11.94c + 4.0c + 8.06c = 24.00c |
2018 |
14.0c |
8.8c + 5.0c(S) + 6.0c |
12.22c + 6.94c +8.33c = 27.49c |
2019 |
11.7c |
9.1c + 6.2c |
12.64c + 8.61c = 21.25c |
2020 |
11.6c |
9.3c + 6.4c |
12.92c + 8.89c = 21.81c |
2021 |
10.1c |
9.4c + 6.8c |
13.06c + 9.44c = 22.50c |
2022 |
11.6c |
10.2c + 8.0c |
14.17c + 11.11c = 25.28c |
Notes:
1/ The above 'per share' table is based on the 1,400m MCY shares on issue.
2/ (NI) means 'Not Imputed', (S) means 'Special Dividend'.
3/ 'Normalised eps' = 0.72x(EBITDAF-DA-I) / 1,400 shares on issue
For this valuation technique, I work with all dividends. Despite special dividends not being repeatable, they are paid frequently. And, using this particular valuation method, I have not recognised these special dividends as a benefit for shareholders in any other way.
FY2021
From the table, the average annual normalised gross dividend payment over FY2017 to FY2021 inclusive has been:
(24.00c+27.49c+21.25c+21.81c+22.50)/5 = 23.41c
FY2022
From the table, the average annual normalised gross dividend payment over FY2018 to FY2022 inclusive has been:
(27.49c+21.25c+21.81c+22.50+25.28)/5 = 23.67c
SNOOPY
Equity Ratio FY2013 to FY2021.5
The following is a break down of the equity ratio of what was once 'Mighty River Power' and is now 'Mercury Energy' since float time.
|
Equity (A) |
Assets (B) |
Equity Ratio (A)/(B) |
FY2013 |
$3,182m |
$5,802m |
0.5484 |
FY2014 |
$3,219m |
$5,689m |
0.5658 |
FY2015 |
$3,337m |
$6,058m |
0.5508 |
FY2016 |
$3,315m |
$6,085m |
0.5448 |
FY2017 |
$3,308m |
$5,997m |
0.5516 |
FY2018 |
$3,286m |
$6,091m |
0.5395 |
FY2019 |
$3,537m |
$6,484m |
0.5455 |
FY2020 |
$3,739m |
$6,885m |
0.5431 |
FY2021 |
$4,186m |
$7,978m |
0.5247 |
HY2022 |
$4,605m |
$8,497m |
0.5419 |
Notes
1/ The Tilt renewables NZ assets acquisition was not finalised until August 2021. I have included the HY2022 equity ratio so shareholders can get a feel for how the balance sheet looks following this transaction.
SNOOPY
'Thin Air' capital created since the GFC (FY2021 Perspective)
Time to update my table
|
Reval. Hydro & Thermal Assets ($m) |
Reval. Geothermal & Other Generation Assets ($m) |
Total Revaluation ($m) |
Post tax New Capital Per Share ($m) |
Pre Tax Revaluation ($m) |
Pre Tax New Capital Per Share (c) |
2009 |
0 |
170.987 |
170.987 |
12.2 |
244 |
17.4 |
2010 |
200.900 |
60.250 |
261.150 |
18.7 |
373 |
26.6 |
2011 |
153.300 |
135.275 |
288.575 |
20.6 |
412 |
29.4 |
2012 |
119.520 |
2.880 |
122.240 |
8.7 |
170 |
12.1 |
2013 |
30.960 |
26 |
57 |
4.9 |
79 |
5.6 |
2014 |
4 |
25 |
29 |
2.1 |
40 |
2.9 |
2015 |
356 |
0 |
356 |
25.4 |
497 |
35.5 |
2016 |
? |
? |
99 |
7.1 |
137 |
9.9 |
2017 |
0 |
38 |
38 |
2.7 |
52 |
3.7 |
2018 |
0 |
40 |
40 |
2.9 |
55 |
3.9 |
2019 |
109 |
71 |
180 |
12.9 |
250 |
17.9 |
2020 |
182 |
31 |
213 |
15.2 |
296 |
21.1 |
2021 |
396 |
279 |
675 |
48.2 |
938 |
67.0 |
Total |
|
|
2,530 |
181.6 |
|
253 |
less Special Dividends Declared (FY2015-FY2018) (per share) |
|
|
-229 |
-15.4 |
|
add Snowtown Windfarm dividend (FY2021) |
|
|
55 |
3.9 |
|
add Hudson Geothermal sale Profit (FY2021) |
|
|
41 |
2.9 |
|
add Tilt Stake Gain (FY2022) |
|
|
404 |
28.9 |
|
equals Residual Thin Air capital |
|
|
|
201.9 |
|
Notes:
1/ Capital per share figures assume 1,400m shares on issue throughout the whole comparative period.
2/ 30% tax rate assumed up until FY2012. 28% tax rate assumed from FY2012 forwards.
3/ I notice that after FY2014 the break down in the annual report between 'Hydro & Thermal Assets' and 'Other Generation Assets' has ceased in the 'Property Plant & Equipment table. This detail was reinstated in FY2017, if you looked at 'Assets at Fair Value' sub note under the subsequent annual report notes on 'Property Plant & Equipment'.
4/ Since I am counting 'thin air capital' as an extra return over and above dividends, I feel it is appropriate to look at the 'post tax' effect of the new thin air capital. That aligns more closely with the post tax effect of dividends. Dividends 'post tax' are what shareholders get in their bank account.
5/ I have removed the special dividends declared over time from my analysis, as these may been seen as a method of balance sheet optimization by paying back excess 'thin air capital' (ref post 1440).
6/ For the calculation of the 15.4cps special dividends paid, see my post 1318 on this thread.
7i/ Mercury acquired 19.9% stake in Tilt Renewables acquired for $144m in FY2018. This had a market value of $130m at EOFY2018.
7ii/ During FY2019 Mercury subscribed $55m to a 'Tilt Renewables' capital raising. The book value of Mercury's share of Tilt increased to $249m over FY2019.
7iii/ During FY2020 Mercury acquired a seat on the Tilt board. This meant that Mercury could exert 'significant influence' over Tilt. Consequently accounting rules forced the Tilt stake to be reclassified in the balance sheet as an 'associate' rather than an 'investment'. The Tilt 'associate shareholding' was valued at $230m on the books at EOFY2019.
7iv/ Mercury subsequently sold their 19.9% stake in Tilt for $608m
7v/ The Tilt sale price was adjusted down to account for a $5m pre-sale dividend already booked.
7vi/ The 'thin air' capital gain on this series of transactions was therefore:
$608m - $5m - $55m - $144m = $404m
This $404m figure is at variance with the profit figure of $376m in AR2021 p63, because I am basing my profit calculation on original cost, not book value at the time of sale.
7vii/ Final agreement on the Tilt stake sale was made 21st June 2021. This is why I am including the Tilt sale capital profit in this FY2021 analysis, even though teh actual money would not be received until August 2021.
---------
201.9cps x 1,400m shares = $2,827m of retained 'hidden value' 'Thin air capital' over the years.
Of course not all of this still exists because it has been used to build both the Nga Awa Purua (FY2010) and Ngatimariki (FY2013) power stations over the years, the Turitea wind farm, and the acquisition of the NZ wind farm assets of 'Tilt Renewables'. These constructions and acquisitions were built using a combination of new equity (the infamous 'thin air capital') and borrowings. We should also bear in mind that some of this thin air capital may be needed to retain the credit rating of the company. Put simply, the more capital the company have, the less borrowings they need. So some unspent thin air capital could contribute to a better credit rating for the company.
Notwithstanding the large amount of thin air capital created since 2008, 2021 foresaw the biggest spend ups so far, signing up to buy the biggest NZ windfarm assets back off Tilt's new owner, and also signing up to buy the retail assets of Trustpower. (The transaction went through on 3rd August 2021, which was in FY2022, although commentators were aware of the details in FY2021 - refer AR2021 Note 19 'Subsequent Events).
.
And how much did shareholders have to stump up to make these acquisitions? Nothing. And how much was the debt ratio of the company increased so that borrowings could pay for these acquisitions? Not at all.
There is the power of 'thin air capital' for you.
SNOOPY