That's "non-cash" write-off. Google it, part of GAAP and US tax code. When an investment is made, cash is spent/invested, and the acquired property is set up on the books as a physical asset at the value of the cash spent on it [debit cash; credit property asset]. If and when and to the extent that the asset becomes uneconomic [unable to earn enough to offset the annual depreciation and operating expenses], it should be "written off" as a no longer valuable asset. The write off does not affect cash, so the cash income stream is not affected. But the reported income for that period is reduced by the amount of the write off, which reduces net worth of the company. This is an over simplification, but you get the drift.
PICK has a good spread of miners/commodities but has too small a market capitalization [only $60m] for my taste. PICK is probably a good way for small, long-term investors to participate in the mining sector if fund expenses [0.39% for PICK] are not too high and they don't churn the holdings [18% for PICK]. Short term is anybody's guess
If you do a Yahoo, five year interactive chart comparison, PICK vs BBL, both are down, but BBL down less than PICK. IMO PICK is less likely to be able to maintain the trailing 11% [historic] dividend. Even BBL's net income was lowest in last six years. BBL has the lowest production costs of the bunch.
For my money, BHP has a better track record than the companies in the PICK ETF. BBL has a more consistent dividend record for over 100 years. They are more diversified than most stocks in PICK. Both will recover when commodity prices recover. I can't say which will do better. I don't buy ETF's. I sometimes make up my own ETF "Fund" by buying the shares of companies I like best in an interesting ETF and avoid the management fees.
Long BHP and BBL for over thirty years.
The reported 48 PE is due to net income being reduced by non-cash write-offs. The PE based on underlying ongoing earnings is 14.4. The write-offs were one-time events and do not affect ongoing earnings. Cash flow was $17.7bn so ability to pay dividends is still there. The bookkeeping losses don't bother me as long as they have positive earnings to more than absorb them. Better not to have write-offs, but those are the risks with commodities. They still have the asset, the oil, copper, iron ore, coal is still in the ground, and can be produced over the long-term as prices recover. You invest for long-term and hope prices stay up/. Long-term long.
For once, all of BHP's commodities are at rock bottom prices at the same time and likely to remain so for a while. Commodity price cycles are common. Supply will slow and demand will increase and the share price will come back up. BHP has a better record than most of maintaining the dividend during downturns.
Not sure of the actual accounting, but if FAX is paying out $0.42/share and only earning $0.22/share, you have a cash deficit (or "loss") of $0.20/share. Notice that while the $0.035/share distribution is level, the amounts that comes from earnings and capital varies each month over the year. I presume they sell securites and have gains and losses on those as well.
In the April 2015 annual report, FAX show net investment income of $35.8 million and realized net loss on investments of $$34.1 million. They also show unrealized loss of $63.4 million, for an overall net loss of $61.7 million
Fax's overall net loss of $61.7 divided by 258.5 shares outstanding gives you a net loss per share of $0.239/share. Close to what Yahoo shows (-$0.20). Who knows how Yahoo calculates it.
Fax has a Managed Distribution Policy of paying monthly distributions at an annual set rate, currently $0.035 per share per month. "The Fund's policy is to provide investors with a stable monthly distribution out of current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital." per their April 2015 annual report. So the answer is "out of capital."
If you read their monthly announcement of record and payment date (on the Yahoo FAX summary page see link under "Headlines") they state the percentage of distribution comes from earnings (59%) and paid-in-capital (41%).
No, that can't go on forever, but that is what you sign up for when you buy FAX. But at 8.8%, who's complaining? You are buying income, not potential appreciation.
You were working with the 2014 annual report. My numbers were post spin-off, pro-forma projections for fiscal year 1 July 2015 thru 30 June 2016. During 2015 BHP sold one energy mine in New Mexico.
Some coal assets went to S32, and BHP kept some. According to the Demerger Circular, Coal revenue with the all S32 coal assets was 14% of BHP revenue; and 13% without the coal assets spun off to S32.
As to BHP's total coal EBITDA, the percentages were 6% with, and 5% without. So energy coals EBITDA would be some fraction of 1%
The S32 Met coal pro-forma revenue will be 11% of total, and 8% of EBITDA.
Energy Coal will be will be 15% and 11%.
My guess is that if BHP got rid of their remaining energy coal assets [New South Wales; Correjon; San Juan), the reduction in EBITDA would be so small in the scheme of things, that it would be insignificant and difficult to quantify.
There is no tax withholding on BHP or BBL dividends. In Australia dividends are not taxed so long as the company earns a profit sufficient to cover the dividends [not double taxed as in USA]. BHP and BBL report earnings and pay dividends twice a year. They issue a production report quarterly. The ADS's each represent two underlying Australian or UK shares respectively. BHP Billiton, a dual listed company, keeps books and pays dividends in US dollars because commodities they produce are priced in in dollars.
2015 Final Dividend: [For fiscal year ending 30 June 2015]
Preliminary Results Announcement and Dividend Determination 25 August 2015
Last day to trade cum dividend on JSE Limited and currency conversion into RAND
4 September 2015
Ex-Dividend Date (Johannesburg Stock Exchange)
7 September 2015
Ex-Dividend Date (Australian & New York Stock Exchanges)
9 September 2015
Ex-Dividend Date (London Stock Exchange)
10 September 2015
Record Date (including currency conversion and currency election dates for Australian & London stock exchanges) [declared US$ dividend converted to A$ and BPS for local BHP.AX and BLT.L shareholders]
11 September 2015
29 September 2015
Fiscal year ends 30 June every year..
Who says they are selling at a loss? BHP's practice is not to operate a cash-negative operation. As I understand it their production cost is about $30/t. The amount of ore they have is pretty much unlimited, so why not produce and sell it, to preserve market share as long as you are covering costs?
So you want to reduce cash flow and allow Vale and Rio pick up market share? If BHP withdraws production, the other two will jump in, fill the demand, and will be better off when better prices return, which they eventually will. It's the same game OPEC is playing. Who will blink first? Probably the smaller, higher-cost producers. That's how the markets work. Fire the management? Put who in charge? Not a smart move.
By the way, China is still growing, albeit at a slower rate than the last few years. China is BHP's biggest customer. So if they only grow at 6%, that's still growth. US two to three percent, Europe one or two percent, India (?) . BHP is a low-cost producer in every field, and as high-cost producers cut back or fail, supply will fall and prices will begin to recover.
If you go to the website indexmundi you can see the 30 year cycles for individual commodities, iron ore, coal, petroleum, copper, etc. Strangely enough the thirty year charts look a lot like the BHP log chart, but with different high and low points. For BHP commodities you would have to blend them, and even then I don't think the history will tell you when the "cycles" will turn and BHP SP will head back up, like I know it will. You also have to factor in the value of the dollar which affects commodity prices. There are just too many unknown factors and variables to expect any kind of credible predictive information. The cycles are not bound by historic factors, but by compound, unknowable, future events, political and economic.
There has never been a situation where all of BHP's commodities were all way down all at the same time. BHP's diverse asset's usually shielded BHP from decline in a single commodity. This time they are all down. Somewhat of a cycle appears in Yahoo max log chart with the bottom of the dips about 1988, 1998, and 2008 (see link below if Yahoo allows it to be posted). If that is more than coincidence then we should turn up in 2018. It all depends on increased demand from China, India and Europe.
I have held BHP since the early 1980's, and have added regularly, so am still way ahead of the game. A buy and hold vet.
Who knows? As good as any time if you think commodities are at bottom about to recover. Even so, they will eventually rise again. I'm waiting to see some sustained positive improvement and keeping powder dry.
When commodity prices begin to recover. Commodity stocks rise and fall with the commodity market. Glut of oil, copper, coal and iron ore right now. Happens in regular cycles. The overall market (SP 500) hasn't done very well either. All gains for the year wiped out as of this week. Also need better news from Greece, Puerto Rico, China, Europe, Middle East........................
BHP Billiton is a dual listed company listed in UK [BHP.AX in Australia], and UK [BLT.L in London]. The US ADS's [BHP and BBL respectively] each represent two of the underlying shares. BHP Billiton fiscal year is July 1 to June 30. They declare and pay dividends in US$ twice a year. If you look deeper on their website you will find the news release: The proposed dates for the 2015 Final Dividend of BHP Billiton Limited and BHP Billiton Plc are as follows: "2015 Final Dividend:
Preliminary Results Announcement and Dividend Determination 25 August 2015;
Last day to trade cum dividend on JSE Limited and currency conversion into RAND 4 September 2015;
Ex-Dividend Date (Johannesburg Stock Exchange) 7 September 2015;
Ex-Dividend Date (Australian & New York Stock Exchanges) 9 September 2015;
Ex-Dividend Date (London Stock Exchange) 10 September 2015;
Record Date (including currency conversion and currency election dates
for Australian & London stock exchanges) ;11 September 2015
Payment Date 29 September 2015"
"BHP Billiton Limited and BHP Billiton Plc shares are listed in the form of American Depositary Shares (ADSs) and traded as American Depositary Receipts (ADRs) on the NYSE. Each ADS represents two ordinary shares."
There are no withholding taxes for US holders on the ADS dividends for BHP or BBL.
He just bought $500,000,000 of Insurance Australia Group (IAG) shares, and is said to be looking at Aussie Banks: ANZ, Commonwealth, NAB, and WestPac.
I"ve read they intend to pay out 40% of net earnings in dividends. So let's hope they meet their goal. Some analysts predict that they will, based on performance of these assets within BHP Billiton. Long and holding
From what I read in the UBS reports and the press, BHP Billiton intends to maintain their current dividend, and South32 intends to pay out 40% of net earnings, which UBS expects to be around a 4% dividend. Good trick if they can pull it off. The South 32 assets produced a very small profit relative to other assets, so maybe they can do it. BHP has a conservative dividend policy of at least maintaining the dividend, and increasing slightly every year, if possible, rather than big payouts in high-profit years. We'll see. I'm holding.