Ann: BFG - Presentation with Market Update, page-7

this is a great announcement for bfg holders.

for those who have been  holding for a number of years and following every announcement closely as i have, there a a few key takeaways from this update which are very important:

1) the major concern that both the company and informed investors have had is that ECM revenue spiked in the 2nd hlf of cy2017 and this was a major driver of the spike in npat growth for 2017 vs 2016. the problem with ecm activity is that it can be volatile and so such a large jump in 2017 was always going to create a strong risk tht 2016 would be comparatively flat or even significantly lower. this announcement today derisked tht possibility, because ecm revenue was 54m for entire 2017 and already for q1-3 2018 the ecm revenue has reached 49m via a stable and continuous flow of ecm revenue and a “strong pipeline for q4” which ensures the ecm component of group revenue will be heading towards 65m (based on 16m/qtr so far) which is around 10% segment growth for the ecm division.

2) the other major news from this update was that npbt was around 27m for the q1-3. given that all divisions are growing profits above 2017 (even the ecm division) this means that npbt should be at least equal to the average of q3 of and thus npbt should be around 36m. after 30% tax thats npat of around 24-25m. so we are now pretty much guaranteed 20% eps/npat growthover 2017.

for a company which has consistently grown profits year on year for several years and pays a dividend grossed up to over 10% which will likely increase its divi by another 10-15% this year and has zero debt, this is a compelling investment.