Ann: Half Yearly Report and Accounts, page-7

The elephant in the room is how they choose to fund this ambitious project Montrose.

The investment in intangibles over the years haven't lead to higher rates of profitability as measured by ROE or ROCE.


I have, in the past, had a bit of a look at the ROE for this company and questioned the reasonableness of being a longtime holder of shares here when the ROE numbers are so low.

Madam has already provided a pretty sensible insight into both the likelihood of a Capital raising and the reasons for the relatively poor ROE performance.

I'd put together the following table:



What I contend through the table is that management tend to be conservative with their Capital allocation through dividends.
A more generous dividend would have pared back the Equity number in the balance sheet each year and supported better ROE numbers.
But by holding onto a little more cash than may be necessary, they dissolve the need to seek future extra funding from external sources or from shareholders through a Capital raising.
It might be argued, therefore, that the poor ROE is why they may be able to navigate their build without any significant "abnormal" sourcing.
I'm sure there's more to the ROE performance than the dividends paid out, and their future cash requirements won't sink or swim on the dividend payout, but, to me, the table symbolizes managements approach which recognizes that they (the family) own more than half of the shareholding and have a little less concern about the share price at any point in time than most other companies.

My guess is that they would pull a few levers around dividend payout ahead of a Capital raise.

This is not a criticism of management whom, I think, provide clear, easy to read and understand periodic results that leave very few questions unanswered.