Hey mate,Can I suggest that when looking at a company's capacity...

Originally posted by Len

Page 18. Loans and borrowings went up [167.3-134.9] = $32.4m / share issue 148.1m = 0.2187 per share.
Doesn't anyone think it's strange that borrowings went up 22 cents a share?
That's about what they paid in Gross Dividends per share!
Are they borrowing to pay dividends?

Hey mate,

Can I suggest that when looking at a company's capacity to pay dividends, you consider its free cash flow (FY2019: NOCF - capex) and not its debt. If you look at page 33 of the AR you will note that the $24m paid out as dividends in FY2019 was well covered by the company's fcf. Moreover, FY2019 represented the last year of high growth capex spend and as the company noted, maintenance capex should normalise between $8m - $10m going forward. This suggests the potential for an uplift in fcf in FY20, again pointing to a well-covered dividend. Say stock pays 16.5c per share in FY20, implied DY = 7.7% (11% grossed up). Furthermore, the perception that IGL is an old-world printing company is not quite right imo when you consider its end-to-end product suite.

Coming back to debt, it is always useful to compare a company's ROIC to its WACC with the differential providing a yardstick to EVA. So it's not just the quantum of debt that should be considered but the economic value added through its employment as management executes on its strategy.

Good luck with your investing!
J