Showing its mettle
But did it have to pay an interim dividend?
THE SHARE PRICE of AltX metals trader Insimbi has held steady despite a rather spectacular – but largely expected – fall in interim profits. Presumably, the market likes the fact Insimbi still managed to generate around R19m in operating cash flow for the rather tough six months period. However, after accounting for dividends, tax and interest its net cash outflow for the period was around R8m. And then another R7,5m was spent on new assets.
All in all, Insimbi saw its cash balances halved from R34m at the beginning of its new financial year to around R17m as at end-August.
During the interim period major Insimbi operations – such as its steel, its non-ferrous business and the company foundry – felt pressure at both top line and operating level. The pressure isn’t surprising considering recessionary conditions throughout most of Insimbi’s markets. Directors warned tough trading conditions were expected to persist into the second half of its financial year and alluded to “definite” signs of a sustainable and gradual recovery in markets.
If trading conditions remain iffy, why then did Insimbi declare a dividend of 2c/ share – a decision that will see another R5,2m flowing out of its coffers. Finweek has previously raised the issue of the determination of smaller cap companies to declare a dividend no matter how badly operations have fared. Insimbi’s interim dividend cover is a generous 1,3 times.