I had written about GMDC being a dividend candidate earlier in the post 👉 Dividend Candidate(#1): GMDC🤑 and had considered this year’s dividend to be Rs. 3/- share. But this year the dividend declared in Rs. 2/- share (100% face value).
The dividend is usually declared in September and the payout happens by October. But this year, things happened late, the dividend is declared in December and the payout expected by Jan 2021, the AGM is being held on 31 Dec 2020. The ex-dividend date is 22 Dec 2020 (seen below).
On the bright side, the dividend payout is same as last year and the company remains debt free and is a state owned enterprise.
If the company is debt free, then what is the Finance Costs in the above financial highlights? It is explained in the schedule below.
“Provisions are recognised at present value when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the Statement of Profit and Loss net off reimbursement, if any.
Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of PPE. The cash flows are discounted at a current pre-tax rate that reflects the risk specific to the decommissioning liability. The unwinding of discount is expensed as incurred and recognised in the Statement of Profit and Loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as may be appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset. Progressive mine closure expenses are accounted for as and when incurred.” – from the Annual report
The share price is yet to see it’s previous highs, but it has recovered from the lows of Mar 2020👇.
Till next post, take care !!