Officially, the dividend policy of Highland Gold Mining (HGM) is to pay out 20 per cent of net cash flow operating activities each year. In 2018, that figure rose 4 per cent to $136.2 (£104m), suggesting investors could expect distributions to hit $27m.
But in announcing a third interim dividend with full-year results, the Russian precious metals group has not only doubled its minimum payout, but paid out almost all of its post-tax profit.
Executive chairman Eugene Shvidler didn’t offer up an explanation. His three-sentence commentary on these figures made only vague nods to “significant developments” in the group’s commitment to growth, “maintenance of rigorous cost disciplines” and “the roll-out of a new programme for operational efficiency and continuous improvement”. Taken alongside a planned increase in output of up to 11 per cent, we can only assume that management is very confident cash generation can step up too.
They’ll need to be. While capital expenditure rose slightly to $62.3m last year, broker Numis expects this will leap to a combined $359m over 2019 and 2020, as Highland gets to work on the development of the Kekura mine.
Consensus forecasts are for earnings of 20.5¢ a share in 2019, rising to 23¢ in 2020.
| HIGHLAND GOLD MINING (HGM) | ||||
| ORD PRICE: | 182.7p | MARKET VALUE: | £665m | |
| TOUCH: | 182.2-182.7p | 12-MONTH HIGH: | 193p | LOW: 125p |
| DIVIDEND YIELD: | 7.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 228¢ | NET DEBT: | 23% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
| 2014 | 304 | 45.5 | -7.7 | 4.5 |
| 2015 | 276 | 13.9 | -3.2 | 4.5 |
| 2016 | 306 | 66.2 | 14.5 | 10.4 |
| 2017 | 317 | 100 | 20.1 | 10.4 |
| 2018 | 311 | 108 | 15.4 | 13.4 |
| % change | -2 | +8 | -23 | - |
| Ex-div: | 25 Apr | |||
| Payment: | 7 Jun | |||
| £1=$1.31 | ||||
